SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 1997 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
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(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 Office) (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
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, 1996 and 1997
(Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1996 1997 1996 1997
------- ------- ------- -------
Revenues:
Rental income $ 251,720 251,720 125,860 125,860
Interest income 44,659 47,268 22,281 24,142
Other income 150 400 90 90
------- ------- ------- -------
Total revenues 296,529 299,388 148,231 150,092
------- ------- ------- -------
Costs and expenses:
Depreciation 206,301 206,301 103,151 103,151
Property operations:
Property management
fees to affiliate 2,517 2,517 1,258 1,258
Other 3,328 2,027 1,673 1,015
General and administrative:
To affiliates 16,220 14,664 7,551 6,608
Other 28,575 25,861 13,444 6,496
------- ------- ------- -------
Total costs and expenses 256,941 251,370 127,077 118,528
------- ------- ------- -------
Net income $ 39,588 48,018 21,154 31,564
======= ======= ======= =======
Net income per weighted
average limited partnership
unit outstanding $ .79 .97 .42 .64
======= ======= ======= =======
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1996 and June 30, 1997
(Unaudited)
Assets
1996 1997
---- ----
Cash and cash equivalents $ 332,701 398,207
Securities available for sale 1,590,253 1,630,703
Investments in real estate:
Office building 5,782,761 5,782,761
Warehouse building 2,147,267 2,147,267
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7,930,028 7,930,028
Less accumulated depreciation (4,036,716) (4,243,017)
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3,893,312 3,687,011
Other assets, net 2,337 18,183
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$5,818,603 5,734,104
========== =========
Liabilities and Partners' Capital
Accrued expenses 6,787 --
Accounts payable 27,424 21,109
Other liabilities 169,105 173,242
Due to affiliates 2,925 1,976
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Total liabilities 206,241 196,327
Partners' capital:
49,041 limited partnership units
issued and outstanding 5,612,362 5,537,777
--------- ---------
$5,818,603 5,734,104
========== =========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Partners' Capital
For the six months ended June 30, 1997
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1996 $ 5,615,063 (2,701) 5,612,362
Limited partner distributions (122,603) -- (122,603)
Net income 47,538 480 48,018
----------- ------ ---------
Balance at June 30, 1997 $ 5,539,998 (2,221) 5,537,777
=========== ====== =========
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, 1996 and 1997
(Unaudited)
1996 1997
---- ----
Operating Activities:
Net income $ 39,588 48,018
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 (42,599) 7,000
Decrease (increase) in other
assets, net 2,971 (15,846)
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Net cash provided by operating
activities 189,347 228,559
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Investing Activities:
Redemption and sale of securities
available for sale 2,949,941 3,190,189
Purchase of securities
available for sale (3,229,686) (3,230,639)
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Net cash used in
investing activities (279,745) (40,450)
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Financing Activities:
Limited partner distributions (123,280) (122,603)
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Net cash used by financing
activities (123,280) (122,603)
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Increase (decrease) in cash and
cash equivalents (213,678) 65,506
Cash and cash equivalents at
beginning of period 470,925 332,701
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Cash and cash equivalents
at end of period $ 257,247 398,207
========== ==========
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, 1997
Note 1 - General
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1996 Annual Report and
should be read in conjunction with the notes to financial statements which
appear in that report.
Note 2 - Real Estate
On December 15, 1987, the Partnership purchased the Federal Express Distribution
Center, a one story, 37,500 square foot office/warehouse building in
Jacksonville, Florida. The building was designed for and is occupied solely by
Federal Express Corporation pursuant to a lease, as extended that expires March
31, 1998. Federal Express has expressed their intention to relocate to a larger
facility and, therefore, will not be renewing their lease. The Partnership has
begun the search for either a replacement tenant or a buyer for the property.
On December 31, 1986, the Partnership purchased the Galleria Professional
Building, a six story office building containing 60,965 square feet of net
leaseable area in Fort Lauderdale, Florida.
Following is summarized financial information with respect to operations at the
Galleria Professional Building office building.
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
1996 1997 1996 1997
---- ---- ---- ----
Rental income $ 470,169 515,313 233,812 251,036
Other income 3,736 4,960 2,116 2,306
--------- ------- ------- -------
473,905 520,273 235,928 253,342
--------- ------- ------- -------
Property operating expenses 283,632 275,584 147,050 140,642
Ground rent 18,846 18,684 9,423 9,342
--------- ------- ------- -------
302,478 294,268 156,473 149,984
--------- ------- ------- -------
Operating income $ 171,427 226,005 79,455 103,358
========= ======= ======= =======
Note 3 - Other Liabilities
Other liabilities at December 31, 1996 and June 30, 1997 consists primarily of
unearned rental income, which as stated in the 1996 Annual Report (note 1),
arises from leases with non-level payments being recognized ratably over the
term of the lease.
Note 4 - Compensation to General Partners and Affiliates
During the six and three month periods ended June 30, 1996 and 1997,
compensation to general partners and affiliates was as follows:
Six Months Ended Three Months Ended
June 30, June 30,
-------- --------
1996 1997 1996 1997
---- ---- ---- ----
Reimbursement for administrative
and accounting services $16,220 14,664 7,551 6,608
Property management fees 2,517 2,517 1,258 1,258
------- ------ ----- -----
Total $18,737 17,181 8,809 7,866
======= ====== ===== =====
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, 1996, the Partnership
held one treasury bill that matured in February 1997, the cost of which
approximated fair value. At June 30, 1997, the Partnership held one treasury
bill that matures in August 1997, the cost of which 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, 1997
A description of the Partnership's investment properties follows:
* Federal Express Distribution Center - A 38,000 square foot warehouse
building located in Jacksonville, Florida.
* Galleria Professional Building - A 61,000 square foot office building
located in Fort Lauderdale, Florida.
The Galleria Professional Building and the Federal Express Distribution Center
are net leased to their tenants.
Interest income increased approximately $3,000 and $2,000 for the six and threee
month periods ended June 30, 1997 as compared to the comparable periods in 1996
primarily due to an increase in investable funds.
Other general and administrative expenses decreased approximately $3,000 and
$7,000 for the six and three month periods ended June 30, 1997 as compared to
the 1996 periods primarily due to a decrease in legal fees associated with the
preparation of a sale contract on the Federal Express Distribution Center in
1996 which was subsequently cancelled and interest accrued in 1996 on the
rescission of partnership units. This decrease was offset in part by an increase
in professional fees associated with the appraisal of the Federal Express
Distribution Center in 1997.
The original lease on the Federal Express Distribution Center expired on June
30, 1997. Federal Express had expressed their intention to relocate to a larger
facility and had requested an extension of their lease through March 1998. The
extension was granted and the Partnership has begun the search for either a
replacement tenant or a buyer for the property.
At June 30, 1997, the Partnership had approximately $398,000 of cash and cash
equivalents and approximately $1.6 million in Treasury Bills included in
securities available for sale. The Partnership has been paying distributions of
2% per annum of original capital on a quarterly basis since the fourth quarter
of 1990.
The Partnership's long term prospects will be primarily affected by future net
income at the Galleria Professional Building and finding a replacement tenant
for or the sale of the Federal Express Distribution Center. Due to the
uncertainties involving the real estate market and the status of the Federal
Express Distribution Center, management cannot reasonably determine the
Partnership's long term liquidity position. However, management believes the
Partnership has sufficient liquidity for operations and to meet its obligations
and commitments over the next few years.
Except for historical information contained herein, the matters discussed in
this report are forward-looking statements made pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995. These
forward-looking statements are based largely on the Company's expectations and
are subject to a number of risks and uncertainties, including but not limited
to, economic, competitive and other factors affecting the Company's operations,
markets, property values and other factors discussed elsewhere in this report
and the documents filed by the Company with the Securities and Exchange
Commission. Many of these factors are beyond the Company's control. Actual
results could differ materially from these forward-looking statements. In light
of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this report will, in fact, occur.
<PAGE>
I.R.E. Pension Investors, Ltd. -II
(A Florida Limited Partnership)
Part II - Other Information
June 30 1997
Item 1 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, 1997.
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 12, 1997 By: /s/ Alan B. Levan
------------------------------
Alan B. Levan, President
Date: August 12, 1997 By: /s/ Glen R. Gilbert
------------------------------
Glen R. Gilbert, Executive Vice
President and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE JUNE
30, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000775440
<NAME> I.R.E. Pension Investors, Ltd. - II
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 398,207
<SECURITIES> 1,630,703
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,782,761
<DEPRECIATION> 2,147,267
<TOTAL-ASSETS> 5,734,104
<CURRENT-LIABILITIES> 196,327
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,537,777
<TOTAL-LIABILITY-AND-EQUITY> 5,734,104
<SALES> 0
<TOTAL-REVENUES> 299,388
<CGS> 0
<TOTAL-COSTS> 251,370
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> 48,018
<INCOME-TAX> 0
<INCOME-CONTINUING> 48,018
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<NET-INCOME> 48,018
<EPS-PRIMARY> 0.97
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</TABLE>
