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, 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 Three Month Periods ended March 31, 1994 and 1995
(Unaudited)
Three Months ended
March 31,
-----------------
1994 1995
---- ----
Revenues:
Rental income $122,287 122,287
Interest income 8,332 21,888
Other income 640 80
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Total revenues 131,259 144,255
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Costs and expenses:
Depreciation 103,150 103,150
Property operations:
Property management fees to affiliate 1,223 1,223
Other 2,352 1,964
General and administrative:
To affiliates 13,349 8,722
Other 22,514 15,557
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Total costs and expenses 142,588 130,616
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Net income (loss) $(11,329) 13,639
======= =======
Net income (loss) per weighted average
limited partnership unit outstanding $ (.23) .27
======= =======
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and March 31, 1995
(Unaudited)
Assets
------
December 31, March 31,
1994 1995
------------ ----------
Cash and cash equivalents $ 267,806 330,365
Securities available for sale 1,274,253 1,292,768
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) (3,314,659)
---------- ----------
4,818,516 4,715,369
Other assets, net 3,677 1,972
---------- ----------
$ 6,364,252 6,340,474
========== ==========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 40,853 41,408
Accounts payable 17,730 28,455
Other liabilities 218,678 231,372
Due to affiliates 2,045 2,294
---------- ----------
Total liabilities 279,306 303,529
Partners' capital:
49,312 limited partnership units issued and
outstanding 6,084,946 6,036,945
---------- ----------
$ 6,364,252 6,340,474
========== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Three Months Ended March 31, 1995
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1994 $ 6,087,973 (3,027) 6,084,946
Limited partner distributions (61,640) - (61,640)
Net income 13,503 136 13,639
----------- ------ -----------
Balance at March 31, 1995 $ 6,039,836 (2,891) 6,036,945
========== ====== ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Cash Flows
For the Three Months ended March 31, 1994 and 1995
(Unaudited)
1994 1995
---- ----
Operating Activities:
Net income (loss) $ (11,329) 13,639
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 103,150 103,150
Non-cash portion of rental income (8,457) (8,457)
Changes in operating assets and liabilities:
Increase in accrued expenses, accounts
payable, other liabilities, and due
to affiliates 9,108 32,680
Decrease in other assets, net 11 1,702
--------- --------
Net cash provided by operating activities 92,483 142,714
--------- --------
Investing Activities:
Increase in securities available for sale - (18,515)
--------- ---------
Net cash (used) in investing activities - (18,515)
--------- ---------
Financing Activities:
Limited partner distributions (61,640) (61,640)
--------- ---------
Net cash (used) in financing activities (61,640) (61,640)
---------- ---------
Increase in cash and cash equivalents 30,843 62,559
Cash and cash equivalents at beginning of year 1,401,267 267,806
--------- ---------
Cash and cash equivalents at end of quarter $1,432,110 330,365
========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
March 31, 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 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 March 31, 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 May 15,
1995 (including interest payments thereon) would amount to approximately
$86,000. A provision of $41,000 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 the year ending March 31, 1994 and 1995 compensation to general partners
and affiliates were as follows:
1994 1995
---- ----
Reimbursement for administrative
and accounting services $ 13,349 8,722
Property management fees 1,223 1,223
------ ------
Total $ 14,572 9,945
====== ======
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 and
March 31 1995, the Partnership owned one treasury bill that matures in May 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
March 31, 1995
A description of the Partnership's original 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.
* One West Nine Mile Holiday Inn Hotel ("Holiday Inn") - A 211 room hotel
building located in Hazel Park, Michigan through a joint venture in which
the Partnership had an 8.7% interest. This property was sold in December
1991.
Galleria and Federal Express are net leased to their tenants.
Interest income increased approximately $14,000 for the three month period ended
March 31, 1995 as compared to the comparable period in 1994 primarily due to an
increase in yields on the investment of funds.
Other general and administrative expenses decreased approximately $7,000 for the
three month period ended March 31, 1995 as compared to the same period in 1994
primarily due to a reduction in bank charges associated with the partners'
distribution account. General and administrative expense to affiliates decreased
for the three month period ended March 31, 1995 as compared to the comparable
period in 1994 primarily due to decreased costs associated with administrative
and accounting service reimbursements.
At March 31, 1995, the Partnership had cash and cash equivalents amounting to
approximately $330,000 and approximately $1.3 million in Treasury Bills included
in securities available for sale. From 1986 through 1989, the Partnership paid
distributions equal to approximately 7% of original capital. Based upon Holiday
Inn's operations, the January 1990 scheduled decline in minimum annual cash rent
from Galleria, the potential costs associated with the litigation discussed in
note 2 of notes to financial statements,the potential costs associated with the
asbestos at Holiday Inn and in order to maintain an adequate level of liquidity,
distributions for the first three quarters of 1990 were reduced to 4% per annum
of original capital. With the additional annual reduction in rent payments of
approximately $250,000 from the September 1990 lease modification on Galleria,
distributions were further reduced to 2% per annum of original capital
commencing with the distribution during the fourth quarter of 1990. During
March 1992, the Partnership made a special distribution of approximately
$300,000 representing the Partnership's proportionate share of cash proceeds
received from the sale of the One West Nine Holiday Inn. 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
March 31, 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
Registrant
By: I.R.E. Pension Advisors II, Corp.
Managing General Partner of Registrant
Date: May 10, 1995 By: /s/ Glen R. Gilbert
-------------------------------------
Glen R. Gilbert, Senior Vice President
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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
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 330365
<SECURITIES> 1292768
<RECEIVABLES> 0
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<PP&E> 8030028
<DEPRECIATION> 3314659
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<OTHER-SE> 6036945<F2>
<TOTAL-LIABILITY-AND-EQUITY> 6340474
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<TOTAL-REVENUES> 144255
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