IR PASS-THROUGH CORP.
c/o Winthrop Management LLC
Five Cambridge Center
Cambridge, MA 02142
(617) 234-3000
Integrated ARROs Fund I (the "Fund")
------------------------------------
September, 2000
Dear Unitholder:
Enclosed for your review are the Fund's unaudited financial statements as of
June 30, 2000. As you are aware, the Funds' investments are passive in nature
and consist of interest-bearing payment obligations that originated from a
series of net lease real estate partnerships. As such, the primary source of
payment for these obligations is the lease payments received from the
partnerships' corporate tenants. We are pleased to report that all tenant
obligations continue to be met and, on an overall basis, the credit ratings of
these tenants have not materially changed since the initial offering of the
Units.
As previously reported, the Fund has made arrangements with Royal Alliance
Associates (212-551-5100) to act as a market maker and with DCC Securities Corp.
(800-945-0440) to facilitate trading, as a broker, between buyers and sellers of
Units. Please contact these firms directly if you have any questions regarding
such activities.
If you have any specific questions regarding your holdings in the Fund, please
call the Trustee, Bankers Trust Company at (800) 735-7777.
Sincerely,
Integrated ARROs Fund I
By: IR Pass-through Corp., Sponsor
<PAGE>
Integrated ARROs Fund I
Statement of Assets and Liabilities
June 30, 2000
(unaudited)
Assets
Cash $ 236,509
Investment in payment obligations, at
minimum termination value (cost $2,634,352) 10,307,164
----------------
Total Assets 10,543,673
================
Liabilities
Distributions payable 236,509
----------------
Net Assets $ 10,307,164
================
Net Asset Value per unit (2,771 units outstanding) $ 3,719.65
================
See notes to financial statements
<PAGE>
Integrated ARROs Fund I
Statement of Operations
Six Months Ended June 30, 2000
(unaudited)
Investment income:
Interest and discount earned $ 548,175
===================
See notes to financial statements
<PAGE>
Integrated ARROs Fund I
Statement of Changes in Net Assets
June 30, 2000
(unaudited)
Decrease in net assets from operations:
Net investment income $ 548,175
---------------
Net increase in net assets resulting from operations 548,175
Total declared as distributions to Unitholders (569,769)
---------------
Net decrease in net assets (21,594)
Net Assets:
Beginning of period 10,328,758
---------------
End of period $ 10,307,164
===============
See notes to financial statements
<PAGE>
Integrated ARROs Fund I
Notes to Financial Statements
1. GENERAL
The accompanying unaudited financial statements, notes and discussions
should be read in conjunction with the audited financial statements,
related notes and discussions contained in the Form N-SAR Semi-Annual
Report for the year ended December 31, 1999, which is herein incorporated
by reference.
The financial information contained herein is unaudited; however, in the
opinion of management, all adjustments necessary for a fair presentation of
such financial information have been included. All of the aforementioned
adjustments are of a normal recurring nature and there have not been any
non-recurring adjustments included in the results reported for the current
period.
Integrated ARROs Fund I (the "Fund") is a grantor trust created under the
laws of the State of New York and registered under the Investment Company
Act of 1940 as a closed-end, non-diversified management investment company.
2. SIGNIFICANT ACCOUNTING POLICIES
Security Valuation
The Payment Obligations are valued at the lower of fair market value (as
determined by the Board of Directors of the Sponsor) or Minimum Termination
Amount (as defined in the Trust Indenture).
Federal Income Taxes
The Fund is classified as a grantor trust. As a consequence, the Fund is
not subject to Federal Income Taxation.
3. CONFLICTS OF INTEREST
IR Pass-through Corporation is the Sponsor of the Fund and was/is a wholly
owned subsidiary of Integrated Resources, Inc. ("Integrated") and its
post-bankruptcy successor, Presidio Capital Corp. ("Presidio"). Presidio is
an indirect but wholly owned subsidiary of NorthStar Capital Investment
Corp., the majority shareholder of Presidio.
Subject to the rights of the unitholders under the Trust Indenture,
Presidio is responsible for the administration of the Fund through its
indirect ownership of all of the shares of the Sponsor.
<PAGE>
AP-PCC III, L.P. ("AP-PCC"), an unaffiliated third party, provides
administrative services to Presidio, who in turn provides services to the
Fund.
4. COMMITMENTS AND CONTINGENCIES
The original prospectus of the Fund contemplated the Sponsor bearing all
costs of administering the Fund only through the period in which the Fund
will be receiving primary term payments. However, upon the period when the
Fund will be receiving renewal term payments, the Fund was to bear a
portion of such costs equal to the percentage of the renewal term payments
received by the Fund in such year to all of the payments received by the
Fund in such year.
Based on a present value estimate of legal, accounting, trustee fees, and
printing and mailing costs, the Sponsor filed a claim in Integrated's
bankruptcy in 1994 and received $450,000 (the "Settlement Fund") in
settlement of such claim. It was projected at the time of the settlement
that such amount would be sufficient to enable the Sponsor to meet its
obligations to the Fund, and its similar obligations to ARROs Fund II,
through approximately the year 2000. However, there was no assurance given
at the time of the settlement that the Settlement Fund, together with
interest earned, would in fact be sufficient to fund the Sponsor's
obligations through the year 2000. As of June 30, 1998, the Settlement Fund
had been fully depleted. As a result of the full depletion of the
Settlement Fund during the first six months of 1998, the Fund has had to
pay administrative expenses from current payment obligations received.
Consequently, the Fund paid $33,689 in expenses from the proceeds of the
January 2000 through June 2000 payment obligations received.
5. DISTRIBUTION PAYABLE
The Sponsor declared a $236,509 ($85.35 per unit) distribution payable to
unitholders of record as of June 30, 2000. Such distribution was paid on
July 17, 2000.
<PAGE>
Integrated ARROs Fund I
Schedule of Selected Per Unit Operating Performance, Ratios and
Supplemental Data
<TABLE>
<CAPTION>
Six Months Ended Year Ended
June 30, 2000 December 31, 1999
Per Unit Operating Performance (unaudited) (audited)
------------------------------ ------------------------ ------------------------
<S> <C> <C>
Net asset value, beginning of period $ 3,727.45 $ 3,754.79
Net investment income 197.83 509.65
Distributions from net investment
income and partial prepayments (205.62) (536.99)
------------------------ ------------------------
Net asset value, end of period $ 3,719.66 $ 3,727.45
======================== ========================
Total investment return $ 197.83 $ 509.65
======================== ========================
Ratios/Supplemental Data
------------------------
Net assets, end of period $ 10,307,164 $ 10,328,758
Ratio of expenses to average net assets 0.33% 0.32%
Ratio of net investment income to
average net assets 5.31%(1) 13.62%
Portfolio turnover rate N/A N/A
</TABLE>
(1) Not annualized.
<PAGE>
Integrated ARROs Fund I
Schedule of Portfolio Investments
June 30, 2000
<TABLE>
<CAPTION>
Partnership/
Date Payment Original
Obligation Property Type of Principal
Incurred Lessee Location(s) Property Amount
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walando Walgreen Orlando, FL Office/ $820,000
03/18/81 Company Warehouse
Building
Santex (2) Albertson's Venice, FL Retail 570,000
07/01/81 Inc. Livermore, CA Facilities
Lando Albertson's Portland, OR Retail 783,451
10/21/81 Inc. Orlando, FL Facilities
(amended Huntsville, AL
04/15/82)
Denville Xerox Lewisville, TX Plant 963,048
12/22/81 Corporation Facility
(amended
01/27/84)
Elway Safeway Billings, MT Retail 1,429,042
03/18/82 Stores, Inc. Fort Worth, TX Facilities (5)
Aurora, CO
Mamoth Lakes, CA
Walstaff Walgreen Flagstaff, AZ Warehouse/ 1,159,762
04/15/82 Arizona Distribution
(amended Drug Co. Building
06/17/82) (3)
Walcreek Hercules Walnut Creek, Office 1,306,709
08/01/82 Credit Inc. CA Building
(amended (4)
06/29/83,
12/3/84)
-----------------
$7,032,012
=================
<CAPTION>
Discount To
Partnership/ Arrive at
Date Payment Simple Minimum Periodic Minimum
Obligation Interest Accrued Termination Payment During Termination
Incurred Rate Interest Amount Primary Term (1) Amount
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walando 13.0% $1,463,084 1,307,835 5/1/96-4/1/06 $975,249
03/18/81 $11,883/mo
Santex (2) 17.0% $1,228,430 827,914 9/1/96-8/1/06 970,516
07/01/81 $13,342/mo
Lando 16.0% $1,968,665 1,790,554 7/1/97-1/1/07 961,562
10/21/81 $62,656/semi
(amended
04/15/82)
Denville 15.0% 2,400,531 2,229,622 8/1/98-7/1/08 1,133,957
12/22/81 $12,038/mo
(amended
01/27/84)
Elway 18.5% 4,020,061 3,395,429 7/1/97-6/1/07 2,053,674
03/18/82 $22,027/mo (6) (5)
Walstaff 16.0% 2,911,106 2,206,272 2/1/98-6/1/03 1,864,596
04/15/82 $156,738/semi
(amended
06/17/82)
Walcreek 18.5% $2,976,484 1,935,583 0/1/97-9/1/07 2,347,610
08/01/82 $30,155/mo
(amended
06/29/83,
12/3/84)
----------------- ---------------- ------------------
$16,968,361 $13,693,209 $10,307,164
================= ================ ==================
</TABLE>
(1) Primary Term of the applicable net lease.
(2) Two Payment Obligations, one for each property, treated as one.
(3) Guaranteed by Walgreen Company.
(4) Guaranteed by Hercules Incorporated
(5) As adjusted, due to the exercise of economic discontinuance in the
Huntsville, Texas lease.
<PAGE>
INTEGRATED ARROS FUND I
SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS
JANUARY 1, 2000 THROUGH JUNE 30, 2000
<TABLE>
<CAPTION>
ACCRUED ACCRUED
DATE INTEREST DATE INTEREST
--------- ---------- --------- ----------
<S> <C> <C> <C>
01-Jan-00 16,837,880 23-Feb-00 16,917,597
02-Jan-00 16,841,072 24-Feb-00 16,920,789
03-Jan-00 16,844,263 25-Feb-00 16,923,981
04-Jan-00 16,847,455 26-Feb-00 16,927,173
05-Jan-00 16,850,647 27-Feb-00 16,930,364
06-Jan-00 16,853,839 28-Feb-00 16,933,556
07-Jan-00 16,857,030 29-Feb-00 16,847,303
08-Jan-00 16,860,222 01-Mar-00 16,850,495
09-Jan-00 16,863,414 02-Mar-00 16,853,686
10-Jan-00 16,866,606 03-Mar-00 16,856,878
11-Jan-00 16,869,797 04-Mar-00 16,860,070
12-Jan-00 16,872,989 05-Mar-00 16,863,262
13-Jan-00 16,876,181 06-Mar-00 16,866,453
14-Jan-00 16,879,373 07-Mar-00 16,869,645
15-Jan-00 16,882,564 08-Mar-00 16,872,837
16-Jan-00 16,885,756 09-Mar-00 16,876,029
17-Jan-00 16,888,948 10-Mar-00 16,879,220
18-Jan-00 16,892,140 11-Mar-00 16,882,412
19-Jan-00 16,895,331 12-Mar-00 16,885,604
20-Jan-00 16,898,523 13-Mar-00 16,888,795
21-Jan-00 16,901,715 14-Mar-00 16,891,987
22-Jan-00 16,904,907 15-Mar-00 16,895,179
23-Jan-00 16,908,098 16-Mar-00 16,898,371
24-Jan-00 16,911,290 17-Mar-00 16,901,562
25-Jan-00 16,914,482 18-Mar-00 16,904,754
26-Jan-00 16,917,673 19-Mar-00 16,907,946
27-Jan-00 16,920,865 20-Mar-00 16,911,138
28-Jan-00 16,924,057 21-Mar-00 16,914,329
29-Jan-00 16,927,249 22-Mar-00 16,917,521
30-Jan-00 16,930,440 23-Mar-00 16,920,713
31-Jan-00 16,933,632 24-Mar-00 16,923,905
01-Feb-00 16,847,379 25-Mar-00 16,927,096
02-Feb-00 16,850,571 26-Mar-00 16,930,288
03-Feb-00 16,853,762 27-Mar-00 16,933,480
04-Feb-00 16,856,954 28-Mar-00 16,936,672
05-Feb-00 16,860,146 29-Mar-00 16,939,863
06-Feb-00 16,863,338 30-Mar-00 16,943,055
07-Feb-00 16,866,529 31-Mar-00 16,856,802
08-Feb-00 16,869,721 01-Apr-00 16,859,994
09-Feb-00 16,872,913 02-Apr-00 16,863,185
10-Feb-00 16,876,105 03-Apr-00 16,866,377
11-Feb-00 16,879,296 04-Apr-00 16,869,569
12-Feb-00 16,882,488 05-Apr-00 16,872,761
13-Feb-00 16,885,680 06-Apr-00 16,875,952
14-Feb-00 16,888,872 07-Apr-00 16,879,144
15-Feb-00 16,892,063 08-Apr-00 16,882,336
16-Feb-00 16,895,255 09-Apr-00 16,885,528
17-Feb-00 16,898,447 10-Apr-00 16,888,719
18-Feb-00 16,901,639 11-Apr-00 16,891,911
19-Feb-00 16,904,830 12-Apr-00 16,895,103
20-Feb-00 16,908,022 13-Apr-00 16,898,295
21-Feb-00 16,911,214 14-Apr-00 16,901,486
22-Feb-00 16,914,406 15-Apr-00 16,904,678
<CAPTION>
ACCRUED ACCRUED
DATE INTEREST DATE INTEREST
--------- ---------- --------- ----------
<S> <C> <C> <C>
16-Apr-00 16,907,870 08-Jun-00 16,898,142
17-Apr-00 16,911,062 09-Jun-00 16,901,334
18-Apr-00 16,914,253 10-Jun-00 16,904,526
19-Apr-00 16,917,445 11-Jun-00 16,907,717
20-Apr-00 16,920,637 12-Jun-00 16,910,909
21-Apr-00 16,923,829 13-Jun-00 16,914,101
22-Apr-00 16,927,020 14-Jun-00 16,917,293
23-Apr-00 16,930,212 15-Jun-00 16,920,484
24-Apr-00 16,933,404 16-Jun-00 16,923,676
25-Apr-00 16,936,595 17-Jun-00 16,926,868
26-Apr-00 16,939,787 18-Jun-00 16,930,060
27-Apr-00 16,942,979 19-Jun-00 16,933,251
28-Apr-00 16,946,171 20-Jun-00 16,936,443
29-Apr-00 16,949,362 21-Jun-00 16,939,635
30-Apr-00 16,863,109 22-Jun-00 16,942,827
01-May-00 16,866,301 23-Jun-00 16,946,018
02-May-00 16,869,493 24-Jun-00 16,949,210
03-May-00 16,872,684 25-Jun-00 16,952,402
04-May-00 16,875,876 26-Jun-00 16,955,594
05-May-00 16,879,068 27-Jun-00 16,958,785
06-May-00 16,882,260 28-Jun-00 16,961,977
07-May-00 16,885,451 29-Jun-00 16,965,169
08-May-00 16,888,643 30-Jun-00 16,968,361
09-May-00 16,891,835
10-May-00 16,895,027
11-May-00 16,898,218
12-May-00 16,901,410
13-May-00 16,904,602
14-May-00 16,907,794
15-May-00 16,910,985
16-May-00 16,914,177
17-May-00 16,917,369
18-May-00 16,920,561
19-May-00 16,923,752
20-May-00 16,926,944
21-May-00 16,930,136
22-May-00 16,933,328
23-May-00 16,936,519
24-May-00 16,939,711
25-May-00 16,942,903
26-May-00 16,946,095
27-May-00 16,949,286
28-May-00 16,952,478
29-May-00 16,955,670
30-May-00 16,958,862
31-May-00 16,872,608
01-Jun-00 16,875,800
02-Jun-00 16,878,992
03-Jun-00 16,882,184
04-Jun-00 16,885,375
05-Jun-00 16,888,567
06-Jun-00 16,891,759
07-Jun-00 16,894,950
</TABLE>
