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
September 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
- --------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (954) 760-5200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
$250 Per Unit - Minimum Purchase 20 Units/
8 Units for Individual Retirement Accounts,
Keogh Plans and Corporate Pension Plans
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Operations
For the Nine and Three Month Periods ended September 30, 1994 and 1995
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- ------------------
1994 1995 1994 1995
---- ---- ---- ----
Revenues:
Rental income $ 366,861 370,431 122,287 125,857
Interest income 34,405 67,620 14,308 23,364
Other income 1,270 200 90 60
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Total revenues 402,536 438,251 136,685 149,281
------- ------- ------- -------
Costs and expenses:
Depreciation 309,451 309,451 103,150 103,150
Property operations:
Property management fees
to affiliate 3,669 3,704 1,223 1,258
Other 6,684 5,578 1,959 1,655
General and administrative:
To affiliates 31,729 25,329 8,960 7,777
Other 38,498 28,344 5,351 4,476
------- ------- ------- -------
Total costs and expenses 390,031 372,406 120,643 118,316
------- ------- ------- -------
Net income $ 12,505 65,845 16,042 30,965
======= ======= ======= =======
Net income per weighted
average limited partnership
unit outstanding $ .25 1.32 .32 .62
======= ======= ======= =======
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1994 and September 30, 1995
(Unaudited)
Assets
------
December 31, September 30,
1994 1995
------------ -------------
Cash and cash equivalents $ 267,806 386,231
Securities available for sale 1,274,253 1,330,274
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) (3,520,959)
--------- ---------
4,818,516 4,509,069
Other assets, net 3,677 4,461
--------- ---------
$ 6,364,252 6,230,035
========= =========
Liabilities and Partners' Capital
---------------------------------
Accrued expenses 40,853 43,677
Accounts payable 17,730 24,682
Other liabilities 218,678 193,310
Due to affiliates 2,045 2,495
--------- ---------
Total liabilities 279,306 264,164
Partners' capital:
49,312 limited partnership units issued
and outstanding 6,084,946 5,965,871
--------- ---------
$ 6,364,252 6,230,035
========= =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Nine Months Ended September30, 1995
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1994 $ 6,087,973 (3,027) 6,084,946
Limited partner distributions (184,920) - (184,920)
Net income 65,187 658 65,845
--------- ------ ---------
Balance at September 30, 1995 $ 5,968,240 (2,369) 5,965,871
========= ====== =========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Cash Flows
For the Nine Months ended September 30, 1994 and 1995
(Unaudited)
1994 1995
---- ----
Operating Activities:
Net income $ 12,505 65,845
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 309,451 309,451
Non-cash portion of rental income (25,371) (25,371)
Changes in operating assets and liabilities:
Increase (decrease) in accrued expenses,
accounts payable, other liabilities,
and due to affiliates (26,861) 10,225
(Increase) in other assets, net (2,188) (784)
--------- ----------
Net cash provided by operating activities 267,536 359,366
--------- ----------
Investing Activities:
Decrease in securities available for sale - 1,274,253
(Increase) in securities available for sale - (1,330,274)
--------- ----------
Net cash (used) in investing activities - (56,021)
--------- ----------
Financing Activities:
Limited partner distributions (184,920) (184,920)
--------- ----------
Net cash (used) in financing activities (184,920) (184,920)
--------- ----------
Increase in cash and cash equivalents 82,616 118,425
Cash and cash equivalents at beginning of year 1,401,267 267,806
--------- ----------
Cash and cash equivalents at end of quarter $1,483,883 386,231
========= ==========
See accompanying notes to unaudited financial statements.
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
September 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
purchased partnership interests after November 28, 1995 may be entitled to
rescission. In September 1995, plaintiffs filed a motion for leave to file
consolidated class action amendments and a new motion for class certification.
That motion remains pending.
In the September 1995 motion, limited partners holding approximately $67,750 of
limited partnership interests are included in the group requesting rescission.
If rescission was made to all limited partners in this group, refunds at
November 15, 1995 (including interest payments thereon) would amount to
approximately $89,000. An accrual of $44,000 is included 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 nine and three month periods ended September 30, 1994 and 1995
compensation to general partners and affiliates were as follows:
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- ------------------
1994 1995 1994 1995
---- ---- ---- ----
Reimbursement for
administrative and
accounting services $ 31,729 25,329 8,960 7,777
Property management fees 3,669 3,704 1,223 1,258
------ ------ ------ ------
Total $ 35,398 29,033 10,183 9,035
====== ====== ====== ======
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 and or 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 September 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
September 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.
Rental income increased approximately $4,000 for the nine and three month
periods ended September 30, 1995 as compared to the 1994 periods, as a result of
a scheduled rental increase at Federal Express, effective July 1995.
Interest income increased approximately $33,000 and $9,000 for the nine and
three month periods ended September 30, 1995, respectively, as compared to the
comparable periods in 1994 primarily due to increases in funds available for
investment and yields on those investments.
Other general and administrative expenses decreased approximately $10,000 for
the nine month period ended September 30, 1995 as compared to the same period in
1994 primarily due to a reduction in auditing fees and bank charges associated
with the partners' distribution account. General and administrative expense to
affiliates decreased for the nine and three month periods ended September 30,
1995 as compared to the comparable period in 1994 primarily due to decreased
costs associated with administrative and accounting service reimbursements.
At September 30, 1995, the Partnership had cash and cash equivalents amounting
to approximately $386,000 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
September 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
Registrant
By: I.R.E. Pension Advisors II, Corp.
Managing General Partner of Registrant
Date: November 7, 1995 By: /s/ Glen R. Gilbert
--------------------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
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<LEGEND>
This schedule contains summary financial information extracted from the third
quarter Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 386231
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0
0
<OTHER-SE> 5965871
<TOTAL-LIABILITY-AND-EQUITY> 6230035
<SALES> 0
<TOTAL-REVENUES> 438251
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<TOTAL-COSTS> 372406
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 65845
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