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, 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 Office) (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
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.
<PAGE>
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 98% 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, 1995, 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 107,236 square feet owned
Charlotte, NC leasable office space
ITEM 3. LEGAL PROCEEDINGS
Kugler et. al, (formerly 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. While there has been no formal dismissal of the claims against the
Partnership, it has been determined that none of the sales made to investors of
the Partnership occurred during the time periods which are still being
considered in this case and therefore, there is no longer any ongoing claims
against the Partnership in this matter.
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 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, 1995.
(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, 1995.
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Revenues $ 1,440,418 1,109,557 1,146,293 1,266,818 1,527,208
========== ========== ========== ========== ==========
Net income (loss) $ (1,796,743) 61,421 (24,174) 42,284 (438,316)
========== ========== ========== ========== ==========
Net income (loss)
per weighted
average limited
partnership unit
outstanding (27.89) .95 (.38) .66 (6.80)
========== ========== ========== ========== ==========
Total assets $ 9,620,472 7,739,318 7,826,907 7,268,449 6,810,550
========== ========== ========== ========== ==========
Partners' capital $ 9,490,863 7,552,523 7,528,349 7,070,371 6,632,055
========== ========== ========== ========== ==========
Distributions
per weighted
average limited
partnership
unit outstanding $ - - 31.36 7.84 -
========== ========== ========== ========== ==========
TEM 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, 1995 as compared with
prior years primarily due to additional rents received as a consequence of an
increase in occupancy at Independence Tower. Occupancy at Independence Tower
increased from 88% in December 1994 to 95% in December 1995.
Interest income increased for the year ended December 31, 1995 as compared to
the comparable period in 1994 primarily due to increases in funds available for
investment and yield on those investments. 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.
Other income increased for the year ended December 31, 1995 as compared with the
same period in 1994 as a result of late fees charged to delinquent tenants at
Independence Tower. Other income decreased for the year ended December 31, 1994
as compared to the comparable period in 1993 due principally to decreased fees
resulting from investor transfers of partnership units.
Depreciation expense increased for the year ended December 31, 1995 as compared
to the comparable periods in 1994 and 1993 due to additional property
improvements at Independence Tower.
During the fourth quarter of 1995, the carrying value of Independence Tower was
reduced approximately $665,000 to its estimated fair value. This was based upon
an agreement to sell the property to an unaffiliated third party for a sales
price of approximately $4.0 million. (See note 6 (c)). This $665,000 reduced net
income for the 1995 fiscal year.
Insurance increased for the year ended December 31, 1995 as compared to the
comparable periods in 1994 and 1993 primarily due to an increase in Independence
Tower property insurance premium.
Utilities expense increased for the year ended December 31, 1995 as compared to
the comparable periods in 1994 and 1993 primarily due to an increase in
electrical consumption at Independence Tower.
The net increase in rental income in 1995 was the causal factor for the increase
in property management fees to affiliate for the year ended December 31, 1995 as
compared to the comparable periods in 1994 and 1993.
Repairs and maintenance increased for the year ended December 31, 1995 as
compared to the comparable periods in 1994 and 1993 primarily due to increases
in HVAC cost, janitorial cost, windows maintenance and general repair and
maintenance cost at Independence Tower.
Other property expenses increased for the year ended December 31, 1995 as
compared to the same period in 1994 primarily due to an increase in legal fees
as a result of a litigation with a tenant at Independence Tower.
Other general and administrative expenses decreased for the year ended December
31, 1995 as compared to the prior year comparable period in 1994 primarily due
to the elimination of interest accruals, during the third quarter of 1995,
relating to the Hess litigation. During the quarter ended September 30, 1995,
the interest that had been accrued through June 30, 1995 of approximately
$69,000 related to the Hess litigation was reversed based upon determination
that the Partnership had no ongoing claims against it.
General and administrative expense to affiliates decreased for the year ended
December 31, 1995 as compared to the 1994 and 1993 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:
1993 1994 1995
---- ---- ----
Net cash provided (used) by:
Operating activities $ 541,869 413,945 693,434
Investing activities (274,819) (2,553,170) (371,656)
Financing activities - (500,262) -
--------- ---------- --------
$ 267,050 (2,639,487) 321,778
========= =========== ========
The changes in operating activities were impacted by the changes in net income
(loss) described above, a provision in 1995 to state real estate at fair value
for Independence Tower 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 in 1995, 1994 and
1993. Such improvements normally are incurred in connection with the obtaining
or renewal of tenant leases. 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 reflect a cash distribution to limited partners.
Because of a 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,
1993 or 1995. 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, 1995, the Partnership had cash and cash equivalents of
approximately $624,850 and approximately $2.5 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.
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.
On November 6, 1995, the Partnership entered into an agreement to sell
Independence Tower to an unaffiliated third party for a sales price of
$4,000,000 with a closing scheduled to take place during the first half of 1996.
Consummation of this sale pursuant to its contract is subject to a number of
conditions and there is no assurance that the conditions will be met or that the
property will be sold pursuant to the agreement. 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>
ITEM 8. INDEX TO FINANCIAL STATEMENTS
Independent Auditors' Report
Financial Statements:
Balance Sheets - December 31, 1994 and 1995
Statements of Operations - For each of the Years in the Three Year Period
ended December 31, 1995
Statements of Partners' Capital - For each of the Years in the Three Year
Period ended December 31, 1995
Statements of Cash Flows - For each of the Years in the Three Year Period
ended December 31, 1995
Notes to Financial Statements
ITEM 14. FINANCIAL STATEMENT SCHEDULE
III. Properties and Accumulated Depreciation - December 31, 1995.
All other schedules are omitted as the required information is either not
applicable or is presented in the financial statements and related notes.
<PAGE>
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, 1995 and 1994, and the results of its operations and its cash
flows for each of the years in the three-year period ended December 31, 1995, 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 26, 1996
<PAGE>
I.R.E. PENSION INVESTORS, LTD.
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and 1995
Assets
1994 1995
-------- ------
Cash and cash equivalents $ 303,072 624,850
Securities available for sale 2,361,081 2,517,404
Investment in real estate:
Office building 7,562,066 7,129,075
Less accumulated depreciation (2,999,846) (3,529,452)
----------- -----------
Net investment in real estate 4,562,220 3,599,623
Other assets, net 42,076 68,673
---------- ----------
$ 7,268,449 6,810,550
========== ==========
Liabilities and Partners' Capital
Accrued expenses 72,640 1,987
Accounts payable and other liabilities 114,639 164,293
Due to affiliates 10,799 12,215
---------- ----------
Total liabilities 198,078 178,495
Partners' capital:
63,776 limited partnership units issued
and outstanding 7,070,371 6,632,055
---------- ----------
$ 7,268,449 6,810,550
========== ==========
See accompanying notes to financial statements.
<PAGE>
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, 1995
1993 1994 1995
---- ---- ----
Revenues:
Rental income $ 1,068,273 1,159,262 1,357,241
Tenant reimbursements 1,226 - -
Interest income 70,711 103,995 161,775
Other income 6,083 3,561 8,192
---------- --------- ---------
Total revenues 1,146,293 1,266,818 1,527,208
---------- --------- ---------
Costs and expenses:
Depreciation 430,330 490,817 529,606
Provision to state real estate
at fair value - - 665,000
Property operations:
Taxes 71,445 68,692 68,686
Insurance 17,424 35,383 44,404
Utilities 195,997 184,917 201,415
Property management fees to affiliate 64,170 69,769 81,934
Repairs and maintenance 199,131 196,349 255,770
Other 83,285 84,363 108,707
General and administrative:
To affiliates 63,987 51,582 41,424
Other 44,698 42,662 37,998
Reversal of interest accrued
related to the Hess litigation - - (69,420)
--------- --------- ---------
Total costs and expenses 1,170,467 1,224,534 1,965,524
--------- --------- ---------
Net income (loss) $ (24,174) 42,284 (438,316)
======== ========= =========
Net income (loss) per weighted average
limited partnership unit outstanding $ (.38) .66 (6.80)
========== ========= =========
See accompanying notes to financial statements.
<PAGE>
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, 1995
Limited General
Partners Partners Total
-------- -------- ---------
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
Net loss (433,932) (4,384) (438,316)
--------- ------- ---------
Balance at December 31, 1995 $ 6,650,305 (18,250) 6,632,055
========= ======== =========
See accompanying notes to financial statements.
<PAGE>
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, 1995
1993 1994 1995
--------- ---------- --------
Operating Activities:
Net income (loss) $ (24,174) 42,284 (438,316)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation 430,330 490,817 529,606
Non-cash portion of rental income 715 1,574 2,480
Provision to state real estate
at fair value - - 665,000
Changes in operating assets and
liabilities:
Increase (decrease) in accrued
expenses, accounts payable,
other liabilities,
and due to affiliates 111,763 (100,480) (19,583)
(Increase) decrease in other
assets, net 23,235 (20,250) (45,753)
---------- ---------- ----------
Net cash provided by operating
activities 541,869 413,945 693,434
---------- ---------- ----------
Investing Activities:
Purchase of securities available
for sale - (2,361,081) (4,930,459)
Maturities and redemptions of
securities available for sale - - 4,790,812
Property improvements (274,819) (192,089) (232,009)
---------- ---------- ----------
Net cash (used) in
investing activities (274,819) (2,553,170) (371,656)
---------- ---------- ----------
Financing Activities:
Limited partner distribution - (500,262) -
---------- ---------- ----------
Net cash (used) in financing
activities - (500,262) -
---------- ---------- ----------
Increase (decrease)in cash and cash
equivalents 267,050 (2,639,487) 321,778
Cash and cash equivalents at
beginning of year 2,675,509 2,942,559 303,072
---------- ---------- ----------
Cash and cash equivalents
at end of year $ 2,942,559 303,072 624,850
========== ========== ==========
See accompanying notes to financial statements.
<PAGE>
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.
Basis of Financial Statement Presentation - The financial statements have been
prepared in conformity with generally accepted accounting principles ("GAAP").
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the date of the statements of financial condition and income and expenses for
the periods presented. Actual results could differ significantly from those
estimates. A material estimate that is susceptible to significant change in the
next year relates to the determination of the allowance to state real estate at
fair value.
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
TaxPurposes:
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 matured in May 1995 for which cost
approximated fair value. At December 31, 1995 the Partnership owned one treasury
bill that matures in February 1996 for which cost approximated fair value.
Properties
Properties are stated at the lower of cost or fair 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 1995 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 collectibility. When this policy is followed a receivable is
created in the early years of the lease.
New Accounting Standards
In 1995, the FASB issued Statement of Financial Accounting Standard No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." ("FAS 121"). FAS 121 requires that long-lived assets, assets
held for sale and certain identifiable intangibles to be held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, the entity should estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. If the sum of the expected future cash flows (undiscounted and
without interest charges) is less than the carrying amount of the asset, an
impairment loss is recognized. Measurement of an impairment loss for long-lived
assets and identifiable intangibles that an entity expects to hold and use
should be based on the fair value of the asset. FAS 121 is effective for
financial statements for fiscal years beginning after December 15, 1995. Earlier
application is encouraged. Management is of the opinion that adoption of FAS 121
did not have a material effect on financial position or results of operations,
upon adoption on January 1, 1996.
(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)and (c).
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,
-----------------------------------
1996 1997 1998 1999 2000
--------- -------- ------- ------- -----
$1,180,000 1,015,000 514,000 259,000 187,000
========= ========= ======= ======= =======
The above table does not consider exercise of renewal options by existing
tenants, leasing premises that were not leased as of December 31, 1995 or
renewal of leases expiring during the above periods.
(3) Compensation To General Partners And Affiliates
During the year ending December 31, 1993, 1994 and 1995 compensation and
reimbursements to general partners and affiliates were as follows:
1993 1994 1995
---- ---- ----
Reimbursements for administrative and
accounting services $ 63,987 51,582 41,424
Property management fees 64,170 69,769 81,934
------- ------- -------
Total $ 128,157 121,351 123,358
======= ======= =======
(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.
1993 1994 1995
-------- -------- ------
Net income (loss):
Amount reported for financial statement
purposes $ (24,174) 42,284 (438,316)
Difference in financial statement/tax
depreciation expense 241,740 294,467 328,430
Adjustment to the carrying value of
real estate for financial statement
purposes - - 665,000
Difference between accrual basis of
accounting used for financial
statements and the method used for
income tax purposes (9,834) 8,100 (62,736)
-------- -------- --------
Amount reported for income tax purposes $ 207,732 344,851 492,378
======== ======== ========
1993 1994 1995
-------- -------- ------
Partners' capital:
Amount reported for financial
statement purposes $ 7,528,349 7,070,371 6,632,055
Difference in financial statement/tax
depreciation expense 1,125,261 1,419,728 1,748,158
Difference due to fair value
considerations in the carrying value
of real estate for financial
statement purposes - - 665,000
Difference between accrual basis of
accounting used for financial
statements and the method used for
income tax purposes 56,115 64,214 1,478
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 $10,460,774 10,305,362 10,797,740
========== ========== ==========
(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 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.
While there has been no formal dismissal of the claims against the Partnership,
it has been determined that none of the sales made to investors of the
Partnership occurred during the time periods which are still being considered in
this case and therefore, there is no longer any ongoing claims against the
Partnership in this matter.
Through June 20, 1995, an accrual of $69,000 for interest on amounts that would
be due upon rescission had been made. Based upon the determination that the
Partnership had no ongoing claims against it, the accrual was reversed during
the quarter ended September 30, 1995.
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.
(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.
(c) On November 6, 1995, the Partnership entered into an agreement to sell
Independence Tower to an unaffiliated third party for a sales price of
$4,000,000 with a closing scheduled to take place during the first half of
1996. Consummation of this sale pursuant to its contract is subject to a
number of conditions and there is no assurance that the conditions will be
met or that the property will be sold pursuant to the agreement. 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. Based upon the estimated sales price, an
allowance of $665,000 was established during the fourth quarter to state
the carrying value of Independence Tower at fair value.
<PAGE>
SCHEDULE III
Properties and Accumulated Depreciation
December 31, 1995
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 2,342,674
---------
2,342,674
---------
Allowance to state real
estate at fair
value (665,000)
--------
(665,000)
--------
Gross Amount:
Land 823,161
Building and Improvements 6,305,914
---------
Total $ 7,129,075
=========
Accumulated Depreciation $ 3,529,452
=========
Life on which depreciation is computed 20 years
========
<PAGE>
Reconciliation of Cost and Accumulated Depreciation For each of the
Years in the Three Year Period ended December 31, 1995
1993 1994 1995
---- ---- ----
Cost:
Balance at beginning of period $ 7,095,158 7,369,977 7,562,066
Allowance to state real
estate at fair value - - (665,000)
Additions:
Improvements 274,819 192,089 232,009
--------- --------- ---------
Balance at end of period $ 7,369,977 7,562,066 7,129,075
========= ========= =========
Accumulated Depreciation:
Balance at beginning of period $ 2,078,699 2,509,029 2,999,846
Addition:
Depreciation 430,330 490,817 529,606
--------- --------- ---------
Balance at end of period $ 2,509,029 2,999,846 3,529,452
========= ========= =========
The aggregate basis (not reduced by accumulated depreciation) for Federal income
tax purposes of the above property was approximately $7,794,000 at December 31,
1995.
<PAGE>
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 51 Director since 1985
Earl Pertnoy 69 Director since 1985
Carl E. B. McKenry, Jr. 67 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 51 President since 1985
Glen R. Gilbert 51 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 1995, 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. The following information is
provided with respect to units owned by directors and officers of the
managing general partner.
(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, 1995, 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 $41,424
Partners
Property management fees $81,934
c) Indebtedness of Management.
None.
d) Transactions with Promoters.
Not applicable.
<PAGE>
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.
(27) Financial Data schedule - Included as Exhibit 27.
(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 1995 has been sent to the
Partners of the Partnership. An annual report will be sent to the Partners
subsequent to this filing.
<PAGE>
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 26 1996
- -------------------------------------------------------
Alan B. Levan, Director and Principal Executive Officer
/S/ Earl Pertnoy March 26, 1996
- -------------------------------------------------------
Earl Pertnoy, Director
/S/ Carl E.B. McKenry, Jr. March 26, 1996
- -------------------------------------------------------
Carl E. B. McKenry Jr., Director
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 DECEMBER
31, 1995 FORM 10-K AND IS QUALIFIED IN ITS EVTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<NAME> I.R.E. PENSION INVESTORS, LTD.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> YEAR
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0
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</TABLE>
