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
June 30, 1995 0-14188
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I.R.E. PENSION INVESTORS, LTD.-II
(Exact name of Registrant as specified in its
Certificate of Limited Partnership)
Florida 59-2582239
- ----------------------- ------------------------------------
(State of Organization) (I.R.S. Employer Identification Number)
1750 E. Sunrise Boulevard
Fort Lauderdale, Florida 33304
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (305) 760-5200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
$250 Per Unit - Minimum Purchase 20 Units/
8 Units for Individual Retirement Accounts,
Keogh Plans and Corporate Pension Plans
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Operations
For the Six and Three Month Periods ended June 30, 1994 and 1995
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- -----------------
1994 1995 1994 1995
-------- ------- ------ ------
Revenues:
Rental income $ 244,574 244,574 122,287 122,287
Interest income 20,097 44,256 11,765 22,368
Other income 1,180 140 540 60
------- ------- ------- -------
Total revenues 265,851 288,970 134,592 144,715
------- ------- ------- -------
Costs and expenses:
Depreciation 206,301 206,301 103,151 103,151
Property operations:
Property management fees
to affiliate 2,446 2,446 1,223 1,223
Other 4,725 3,923 2,373 1,959
General and administrative:
To affiliates 22,769 17,552 9,420 8,830
Other 33,147 23,868 10,633 8,311
------- ------- ------- -------
Total costs and expenses 269,388 254,090 126,800 123,474
------- ------- ------- -------
Net income (loss) $ (3,537) 34,880 7,792 21,241
======== ======= ======= =======
Net income (loss) per weighted
average limited partnership
unit outstanding $ (.07) .70 .16 .43
========= ======== ======= =======
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and June 30, 1995
(Unaudited)
Assets
------
December 31, June 30,
1994 1995
------------ -----------
Cash and cash equivalents $ 267,806 384,146
Securities available for sale 1,274,253 1,311,235
Investments in real estate:
Office building 5,782,761 5,782,761
Warehouse building 2,247,267 2,247,267
----------- -----------
8,030,028 8,030,028
Less accumulated depreciation (3,211,512) (3,417,809)
------------ ------------
4,818,516 4,612,219
Other assets, net 3,677 100
---------- ----------
$ 6,364,252 6,307,700
========== ==========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 40,853 42,542
Accounts payable 17,730 23,514
Other liabilities 218,678 242,268
Due to affiliates 2,045 2,830
---------- ----------
Total liabilities 279,306 311,154
Partners' capital:
49,312 limited partnership units issued
and outstanding 6,084,946 5,996,546
---------- ----------
$ 6,364,252 6,307,700
========== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Six Months Ended June 30, 1995
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1994 $ 6,087,973 (3,027) 6,084,946
Limited partner distributions (123,280) - (123,280)
Net income 34,531 349 34,880
---------- ------ ----------
Balance at June 30, 1995 $ 5,999,224 (2,678) 5,996,546
========== ======== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Cash Flows
For the Six Months ended June 30, 1994 and 1995
(Unaudited)
1994 1995
------- -------
Operating Activities:
Net income (loss) $ (3,537) 34,880
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 206,301 206,301
Non-cash portion of rental income (16,914) (16,914)
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses,
accounts payable, other liabilities,
and due to affiliates (2,253) 48,758
Decrease in other assets, net 2,082 3,577
--------- ---------
Net cash provided by operating activities 185,679 276,602
--------- ---------
Investing Activities:
Increase in securities available for sale - (36,982)
--------- ----------
Net cash (used) in investing activities - (36,982)
--------- ----------
Financing Activities:
Limited partner distributions (123,280) (123,280)
---------- ----------
Net cash (used) in financing activities (123,280) (123,280)
---------- ----------
Increase in cash and cash equivalents 62,399 116,340
Cash and cash equivalents at beginning of year 1,401,267 267,806
--------- ---------
Cash and cash equivalents at end of quarter $1,463,666 384,146
========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
June 30, 1995
NOTE 1 - GENERAL
- ----------------
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1994 Annual Report and
should be read in conjunction with the notes to financial statements which
appear in that report.
NOTE 2 - LITIGATION
- -------------------
During May 1988, an individual investor filed an action against two individual
defendants, who allegedly sold securities without being registered as securities
brokers, two corporations organized and controlled by such individuals, and
against approximately sixteen publicly offered limited partnerships, including
Registrant, 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 constitutes 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. In
accordance with the Court's order, in April 1990, funds were placed in escrow to
rescind sales of 179 Partnership units. Approximately $52,000 was placed in
escrow representing $34,700 for the recision of units and $17,300 for interest
thereon. The financial statements reflected the recision of units as a
reduction of partners' capital and included the interest portion as a charge to
general and administrative, other in 1990.
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 the 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 Financial Corporation 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 $225,500 of limited
partnership interests in the Partnership. As of June 30, 1995, limited partners
holding approximately $90,000 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 August 15, 1995
(including interest payments thereon) would amount to approximately $88,000. A
provision of $43,000 has been made in the accompanying financial statements for
interest on amounts that would be due upon rescission, however, the financial
statements do not reflect a rescission of the units subject to the Court ruling.
Accordingly partners' capital, units outstanding, per unit information,
including income (loss) per unit amounts, have not been adjusted for the
potential rescission of units.
NOTE 3 - OTHER LIABILITIES
- --------------------------
Other liabilities consist principally of deferred rental income on the Galleria
Professional Building lease and relates to non-level payments being recognized
ratably over the term of the lease in accordance with generally accepted
accounting principles (GAAP) instead of as received under the terms of the
lease.
NOTE 4 - COMPENSATION TO GENERAL PARTNERS AND AFFILIATES
- --------------------------------------------------------
During six and three month periods ended June 30, 1994 and 1995 compensation to
general partners and affiliates were as follows:
Six Months Ended Three Months Ended
June 30, June 30,
-------------------- -----------------
1994 1995 1994 1995
--------- -------- ------ --------
Reimbursement for
administrative and
accounting services $ 22,769 17,552 9,420 8,830
Property management fees 2,446 2,446 1,223 1,223
------- ------- ------ ------
Total $ 25,215 19,998 10,643 10,053
======= ======= ====== ======
NOTE 5 - SECURITIES AVAILABLE FOR SALE
- --------------------------------------
The Partnership's securities are available for sale. In accordance with
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities ("FAS 115") issued in May 1993 by the
Financial Accounting Standards Board ("FASB"), these securities are carried at
fair value, with any related unrealized appreciation or and depreciation
reported as a separate component of partners capital. At December 31, 1994, the
Partnership owned one treasury bill that matured in May 1995 in which cost
approximated fair value. At June 30, 1995, the Partnership owned one treasury
bill that matures in November 1995 in which cost approximated fair value.
NOTE 6 - RECLASSIFICATIONS
- --------------------------
For comparative purposes, certain prior year balances have been reclassified to
conform with the 1995 financial statement presentation.
NOTE 7 - MANAGEMENT REPRESENTATION
- ----------------------------------
In the opinion of Partnership Management, all adjustments, none of which were
other than normal recurring accruals, necessary for a fair presentation of the
accompanying financial information have been included.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Management's Discussion and Analysis of Financial Condition
and Results of Operations
June 30, 1995
A description of the Partnership's investment properties follows:
* Federal Express Distribution Center ("Federal Express") - A 38,000 square
foot warehouse building located in Jacksonville, Florida.
* Galleria Professional Building ("Galleria") - A 61,000 square foot office
building located in Fort Lauderdale, Florida.
Galleria and Federal Express are net leased to their tenants.
Interest income increased approximately $24,000 and $11,000 for the six and
three month periods ended June 30, 1995 as compared to the comparable periods in
1994 primarily due to an increase in yields on the investment of funds.
Other general and administrative expenses decreased approximately $9,000 for the
six month period ended June 30, 1995 as compared to the same period in 1994
primarily due to a reduction in bank charges associated with the partners'
distribution account. Other general and administrative expenses decreased
approximately $2,000 for the three month period ended June 30, 1995 as compared
to the same period in 1994 primarily due to a decrease in auditing fees.
General and administrative expense to affiliates decreased for the six and three
month periods ended June 30, 1995 as compared to the comparable period in 1994
primarily due to decreased costs associated with administrative and accounting
service reimbursements.
At June 30, 1995, the Partnership had cash and cash equivalents amounting to
approximately $384,000 and approximately $1.3 million in Treasury Bills included
in securities available for sale. Management is of the opinion that its present
liquidity is appropriate in light of normal operations and the other items
discussed above.
In addition to the items discussed above, the Partnership's long term prospects
will be primarily effected by future net income at Galleria and renewal of the
Federal Express lease. Due to the uncertain economic climate in general and the
real estate market in particular, management cannot reasonably determine the
Partnership's long term liquidity position.
Part II - Other Information
June 30, 1995
ITEM 1 THROUGH 5
- ----------------
Not applicable.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
a. Index to exhibits
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession - Not applicable.
(4) Instruments defining the rights of security holders, including
indentures - Not applicable.
(10) Material contracts - Not applicable.
(11) Statement re computation of per unit earnings - Not applicable.
(15) Letter re unaudited interim financial information - Not applicable.
(18) Letter re change in accounting principles - Not applicable.
(19) Report furnished to security holders - Not applicable.
(22) Published report regarding matters submitted to vote of security
holders - Not applicable.
(23) Consents of experts and counsel - Not applicable.
(24) Power of attorney - Not applicable.
(27) Financial data schedule - Included as Exhibit 27.
(99) Additional exhibits - Not applicable.
b. Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
I.R.E. PENSION INVESTORS, LTD.-II
Page 15 of 16
Registrant
By: I.R.E. Pension Advisors II, Corp.
Managing General Partner of Registrant
Date: August 11, 1995 By: /s/ Glen R. Gilbert
-------------------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<NAME> I.R.E. PENSION INVESTORS, LTD. - II
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 384146
<SECURITIES> 1311235
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
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<PP&E> 8030028
<DEPRECIATION> 3417809
<TOTAL-ASSETS> 6307700
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 5996546<F2>
<TOTAL-LIABILITY-AND-EQUITY> 6307700
<SALES> 0
<TOTAL-REVENUES> 288970
<CGS> 0
<TOTAL-COSTS> 254090
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 34880
<INCOME-TAX> 0
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<F1>Entity maintains a non classified balance sheet.
<F2>Represents partners' capital.
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