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, 1996 0-13624
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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: (954) 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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<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Operations
For the Three Month Periods ended March 31, 1995 and 1996
(Unaudited)
Three Months Ended
March 31,
------------------
1995 1996
---- ----
Revenues:
Rental income $ 298,812 336,784
Interest income 39,271 39,314
Other income 2,872 1,080
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Total revenues 340,955 377,178
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Costs and expenses:
Depreciation 127,511 137,593
Property operations:
Taxes 17,310 17,160
Insurance 10,786 11,579
Utilities 55,962 55,743
Property management fees
to affiliate 18,101 20,272
Repairs and maintenance 54,181 54,008
Other 19,937 26,110
General and administrative:
To affiliates 11,251 11,183
Other 11,874 3,331
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Total costs and expenses 326,913 336,979
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Net income $ 14,042 40,199
======= =======
Net income per weighted
average limited partnership
unit outstanding $ .22 .62
======= =======
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1995 and March 31, 1996
(Unaudited)
Assets
December 31, March 31,
1995 1996
----------- ---------
Cash and cash equivalents $ 624,850 442,747
Securities available for sale 2,517,404 2,817,213
Investments in real estate:
Office building 7,129,075 7,151,545
Less accumulated depreciation (3,529,452) (3,667,045)
----------- ------------
Net investment in real estate 3,599,623 3,484,500
Other assets, net 68,673 65,104
---------- ----------
$ 6,810,550 6,809,564
========== ==========
Liabilities and Partners' Capital
Accrued expenses 1,987 18,617
Accounts payable and other liabilities 164,293 106,183
Due to affiliates 12,215 12,510
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Total liabilities 178,495 137,310
Partners' capital:
63,776 limited partnership units issued
and outstanding 6,632,055 6,672,254
---------- ----------
$ 6,810,550 6,809,564
========== ==========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Three Months Ended March 31, 1996
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1995 $ 6,650,305 (18,250) 6,632,055
Net income 39,797 402 40,199
--------- ------- ---------
Balance at March 31, 1996 $ 6,690,102 (17,848) 6,672,254
========= ======== =========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Statements of Cash Flows
For the Three Months Ended March 31, 1995 and 1996
(Unaudited)
1995 1996
---------- ------
Operating Activities:
Net income $ 14,042 40,199
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 127,511 137,593
Non-cash portion of rental income 484 717
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses
accounts payable and other liabilities,
and due to affiliates 60,821 (41,185)
(Increase) decrease in other assets, net (1,775) 2,852
-------- ---------
Net cash provided by operating activities 201,083 140,176
-------- ---------
Investing Activities:
Increase in securities available for sale (35,013) (2,817,213)
Decrease in securities available for sale -- 2,517,404
Property improvements (89,440) (22,470)
-------- ----------
Net cash (used) in investing activities (124,453) (322,279)
-------- ----------
Increase (decrease) in cash and
cash equivalents 76,630 (182,103)
Cash and cash equivalents at beginning of year 303,072 624,850
-------- ---------
Cash and cash equivalents at end of quarter $ 379,702 442,747
======== =========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
March 31, 1996
Note 1 - General
- ----------------
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1995 Annual Report and
should be read in conjunction with the notes to financial statements which
appear in that report.
Note 2 - Litigation
- -------------------
In May 1995, the lease of a tenant occupying approximately 5,000 square feet at
Independence Tower expired. Prior to expiration, the Partnership attempted to
negotiate a renewal with the tenant, however, the parties were never able to
reach agreement. The tenant contends that a lease extension was agreed to by the
parties. The tenant brought an action against the Partnership seeking specific
performance under the lease the tenant claims exists, or in the alternative,
damages that would be sustained by tenant if it was forced to move, an
injunction to keep the Partnership from seeking an order for eviction, damages
caused by the Partnership's unfair and deceptive trade practices and for
attorneys' fees. Subsequently, the Partnership brought an action for possession
of the premises. The tenant also had a note due to the Partnership for prior
delinquent rent and when a default occurred under the terms of the note, the
Partnership filed suit against the tenant and the co-maker under the note. A
trial is scheduled in June 1996 regarding the possession portion of the above.
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
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 three month periods ended March 31, 1995 and 1996 compensation to
general partners and affiliates were as follows:
Three Months Ended
March 31,
----------------
1995 1996
---- ----
Reimbursement for
administrative and
accounting services $ 11,251 11,183
Property management fees 18,101 20,272
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Total $ 29,352 31,455
======= =======
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, 1995 and
March 31, 1996 the cost of securities available for sale approximated their fair
value.
Note 6 - 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.
<PAGE>
I.R.E. Pension Investors, Ltd.
(A Florida Limited Partnership)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
March 31, 1996
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 periods ended March 31, 1996 as compared to the comparable
period in 1995 all relate to the operations of Independence Tower. Rental income
increased approximately $38,000 for the three month period ended March 31, 1996
as compared to the comparable period in 1995 primarily due to additional rents
received from an increase in occupancy. Depreciation expense increased
approximately $10,000 for the three month period ended March 31 1996 as compared
with the prior year comparable period due to depreciation related to additional
property improvements. Property management fees to affiliate increased
approximately $2,000 for the three month period ended March 31, 1996 as compared
to the same period in 1995 due to an increase in rental income. Property
operations, other increased approximately $6,000 for the three month period
ended March 31, 1996, as compared to the same period in 1995 primarily due to an
increase in legal fees. Other general and administrative expenses decreased
approximately $9,000 for the period ended March 31, 1996, as compared to the
comparable period in 1995 primarily due to a decrease in auditing fees and
professional fees.
A summary of the Partnership's cash flows is as follows:
Three Months Ended March 31,
----------------------------
1995 1996
---- ----
Net cash provided (used) by:
Operating activities $ 201,083 140,176
Investing activities (124,453) (322,279)
-------- --------
$ 76,630 (182,103)
======== ========
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 a 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 March 31, 1996, the Partnership had cash and cash equivalents of
approximately $443,000 and approximately $2.8 million in Treasury Bills included
in securities available for sale. A distribution of approximately $1.0 million
($15.75 per limited partnership unit) will be made on May 31, 1996 to unit
holders of record on May 15, 1996. Management is of the opinion that the
Partnership's liquidity, based on its current activities and after the above
distribution 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.
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.
In November 1995, the Partnership entered into an agreement to sell Independence
Tower to an unaffiliated third party for a sales price of $4.0 million, subject
to a number of conditions pursuant to the agreement. During the first quarter of
1996, this agreement was terminated in accordance with its terms. Currently,
management is actively seeking to sell Independence Tower. Upon sale of the
property and resolution of outstanding issues, the Board of Directors of the
Managing General Partner will consider the possible liquidation of the
Partnership.
<PAGE>
Part II - Other Information
March 31, 1996
Item 1 - Legal Proceedings
- --------------------------
Knight Communications, Inc. v. I.R.E. Pension Investors, Ltd., In the North
Carolina Superior Court Division 95-CVS-7381. I.R.E. Pension Investors, Ltd.
v. Knight Communications, Inc. North Carolina District Court Division -
95-CVD-9645. I.R.E. Pension Investors, Ltd. v. Randall Knight in the North
Carolina Superior Court Division 96-CVS-1383. In May 1995, the lease of a
tenant occupying approximately 5,000 square feet at Independence Tower
expired. Prior to expiration, the Partnership attempted to negotiate a
renewal with the tenant, however, the parties were never able to reach
agreement. The tenant contends that a lease extension was agreed to by the
parties. The tenant brought an action against the Partnership seeking
specific performance under the lease the tenant claims exists, or in the
alternative, damages that would be sustained by tenant if it was forced to
move, an injunction to keep the Partnership from seeking an order for
eviction, damages caused by the Partnership's unfair and deceptive trade
practices and for attorneys' fees. Subsequently, the Partnership brought an
action for possession of the premises. The tenant also had a note due to the
Partnership for prior delinquent rent and when a default occurred under the
terms of the note, the Partnership filed suit against the tenant and the
co-maker under the note. A trial is scheduled in June 1996 regarding the
possession portion of the above.
Item 2 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, 1996 By: /s/ Glen R. Gilbert
--------------------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<NAME> I.R.E. PENSION INVESTORS, LTD.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 442,747
<SECURITIES> 2,817,213
<RECEIVABLES> 142,943
<ALLOWANCES> 87,483
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<CURRENT-ASSETS> 0
<PP&E> 7,151,545
<DEPRECIATION> 3,667,045
<TOTAL-ASSETS> 6,809,564
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 6,672,254
<TOTAL-LIABILITY-AND-EQUITY> 6,809,564
<SALES> 0
<TOTAL-REVENUES> 377,178
<CGS> 0
<TOTAL-COSTS> 336,979
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 40,199
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<NET-INCOME> 40,199
<EPS-PRIMARY> 0.62
<EPS-DILUTED> 0.62
</TABLE>
