SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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, 1996 0-14188
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 [ ]
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Operations For the Six and Three Month
Periods ended June 30, 1995 and 1996
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
1995 1996 1995 1996
---- ---- ---- ----
Revenues:
Rental income $ 244,574 251,720 122,287 125,860
Interest income 44,256 44,659 22,368 22,281
Other income 140 150 60 90
------- ------- ------- -------
Total revenues 288,970 296,529 144,715 148,231
------- ------- ------- -------
Costs and expenses:
Depreciation 206,301 206,301 103,151 103,151
Property operations:
Property management fees
to affiliate 2,446 2,517 1,223 1,258
Other 3,923 3,328 1,959 1,673
General and administrative:
To affiliates 17,552 16,220 8,830 7,551
Other 23,868 28,575 8,311 13,444
------- ------- ------- -------
Total costs and expenses 254,090 256,941 123,474 127,077
------- ------- ------- -------
Net income $ 34,880 39,588 21,241 21,154
======= ======= ======= =======
Net income per weighted
average limited partnership
unit outstanding $ .70 .79 .43 .42
======= ======= ======= =======
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1995 and June 30, 1996
(Unaudited)
Assets
December 31, June 30,
1995 1996
---- ----
Cash and cash equivalents $ 470,925 257,247
Securities available for sale 1,350,087 1,629,832
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 (3,624,114) (3,830,409)
----------- -----------
4,405,914 4,199,619
Other assets, net 3,077 100
---------- ----------
$ 6,230,003 6,086,798
========== ==========
Liabilities and Partners' Capital
Accrued expenses 45,366 47,055
Accounts payable 27,160 21,614
Other liabilities 223,988 167,940
Due to affiliates 1,387 1,779
---------- ----------
Total liabilities 297,901 238,388
Partners' capital:
49,312 limited partnership units issued
and outstanding 5,932,102 5,848,410
---------- ----------
$ 6,230,003 6,086,798
========== ==========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statement of Partners' Capital
For the Six Months Ended June 30, 1996
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1995 $ 5,934,192 (2,090) 5,932,102
Limited partner distributions (123,280) - (123,280)
Net income 39,192 396 39,588
--------- ------- ---------
Balance at June 30, 1996 $ 5,850,104 (1,694) 5,848,410
========= ======= =========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1996
(Unaudited)
1995 1996
-------- ------
Operating Activities:
Net income $ 34,880 39,588
Adjustments to reconcile net income 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 48,758 (42,599)
Decrease in other assets, net 3,577 2,971
--------- ----------
Net cash provided by operating activities 276,602 189,347
--------- ----------
Investing Activities:
Decrease in securities available for sale - 2,949,941
(Increase) in securities available for sale (36,982) (3,229,686)
Net cash (used) in investing activities (36,982) (279,745)
--------- ----------
Financing Activities:
Limited partner distributions (123,280) (123,280)
--------- ----------
Net cash (used) in financing activities (123,280) (123,280)
--------- ----------
Increase (decrease) in cash and cash equivalents 116,340 (213,678)
Cash and cash equivalents at beginning of year 267,806 470,925
------- ----------
Cash and cash equivalents at end of quarter $ 384,146 257,247
======= ==========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
June 30, 1996
Note 1 - General
- ----------------
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1995 Annual Report and
should be read in conjunction with the notes to financial statements which
appear in that report.
Note 2 - Litigation
- -------------------
In connection with certain litigation relating to an action filed by an
individual investor 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, (See Item 3.
"Litigation", Kugler, et.al. v. Gordon, Boula, et.al. in the Partnership's 1995
Annual Report) in April 1996, the Court entered summary judgment against the
Partnership. As a result of the summary judgment, it is estimated that class
members with original investments of approximately $67,750 having claims
amounting to approximately $112,000 (including interest through July 31, 1996
but not including attorney's fees to plaintiffs counsel) will have to be paid by
the Partnership. It is anticipated that amounts will be finalized and payments
thereon will occur during the third quarter of 1996. A liability for
approximately $47,000 has been previously established for this matter and 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. Accordingly, partners' capital, units outstanding, per
unit information, including income (loss) per unit amounts, have not been
adjusted for the 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 six and three month periods ended June 30, 1995 and 1996 compensation
to general partners and affiliates were as follows:
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
1995 1996 1995 1996
---- ---- ---- ----
Reimbursement for
administrative and
accounting services $ 17,552 16,220 8,830 7,551
Property management fees 2,446 2,517 1,223 1,258
------- ------- ------ ------
Total $ 19,998 18,737 10,053 8,809
======= ======= ====== ======
Note 5 - Securities Available for Sale
- --------------------------------------
The Partnership's securities are available for sale and are carried at fair
value, with any related unrealized appreciation and or depreciation reported as
a separate component of partners capital. At December 31, 1995, the Partnership
owned one treasury bill that matured in February 1996 in which cost approximated
fair value. At June 30, 1996, the Partnership owned one treasury bill that
matures in August 1996 in which cost approximates fair value.
Note 6 - 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.
<PAGE>
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, 1996
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 $7,000 and $4,000 for the six and three
month periods ended June 30, 1996 as compared to the 1995 period as a result of
a scheduled rental increase at Federal Express, effective July 1995.
Other general and administrative expenses increased approximately $5,000 for the
six and three month periods ended June 30, 1996 primarily due to an increase in
legal fees associated with the litigation discussed in note 2 and preparation of
draft sale contract and review of lease of Federal Express.
At June 30, 1996, the Partnership had cash and cash equivalents amounting to
approximately $257,000 and Treasury Bills of approximately $1.6 million Treasury
Bills included in securities available for sale. Management is of the opinion
that the Partnership's present liquidity, based on its current activities is
adequate to meet anticipated, normal operating requirements during the near
term.
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. Additionally, the Partnership might have to pay out
approximately $112,000 plus attorney's fees in connection with the litigation
discussed in note 2. 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.
<PAGE>
I.R.E. Pension Investors, Ltd. -II
(A Florida Limited Partnership)
Part II - Other Information
June 30, 1996
Item 1 - Legal Proceedings
- --------------------------
Kugler, et.al., on behalf of themselves and all others similarly situated, v.
Gordon, Boula, Financial Concepts, Ltd., et.al. In the Circuit Court of Cook
County, Illinois. In connection with certain litigation relating to an action
filed by an individual investor 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, (See Item 3.
"Litigation", Kugler, et.al. v. Gordon, Boula, et.al. in the Partnership's 1995
Annual Report) in April 1996, the Court entered summary judgment against the
Partnership. As a result of the summary judgment, it is estimated that class
members with original investments of approximately $67,750 having claims
amounting to approximately $112,000 (including interest through July 31, 1996
but not including attorney's fees to plaintiffs counsel) will have to be paid by
the Partnership. It is anticipated that amounts will be finalized and payments
thereon will occur during the third quarter of 1996. A liability for
approximately $47,000 has been previously established for this matter and 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. Accordingly, partners' capital, units outstanding, per
unit information, including income (loss) per unit amounts, have not been
adjusted for the rescission of units.
Item 2 through 5
- ----------------
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
- -----------------------------------------
a. Exhibit 27 - Financial data schedule
b. No report on Form 8-K was filed during the quarter ended June 30, 1996.
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: August 6, 1996 By: /s/ Glen R. Gilbert
--------------------------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from
the June 30, 1996 Form 10-Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 257,247
<SECURITIES> 1,629,832
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 8,030,028
<DEPRECIATION> 3,830,409
<TOTAL-ASSETS> 6,086,798
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,848,410
<TOTAL-LIABILITY-AND-EQUITY> 6,086,798
<SALES> 0
<TOTAL-REVENUES> 296,529
<CGS> 0
<TOTAL-COSTS> 256,941
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 39,588
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,588
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
