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
March 31, 1997 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 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 three month periods ended March 31, 1996 and 1997
(Unaudited)
Three Months Ended
March 31,
---------
1996 1997
---- ----
Revenues:
Rental income $ 125,860 125,860
Interest income 22,378 23,126
Other income 60 310
-------- --------
Total revenues 148,298 149,296
-------- --------
Costs and expenses:
Depreciation 103,150 103,150
Property operations:
Property management fees to affiliate 1,259 1,259
Other 1,655 1,012
General and administrative:
To affiliates 8,669 8,056
Other 15,131 19,365
-------- --------
Total costs and expenses 129,864 132,842
-------- --------
Net income $ 18,434 16,454
======== ========
Net income per weighted average
limited partnership unit outstanding $ .37 .33
======== ========
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 March 31, 1997
(Unaudited)
Assets
1996 1997
---- ----
Cash and cash equivalents $ 332,701 342,212
Securities available for sale 1,590,253 1,610,077
Investments in real estate:
Office building 5,782,761 5,782,761
Warehouse building 2,147,267 2,147,267
---------- ----------
7,930,028 7,930,028
Less accumulated depreciation (4,036,716) (4,139,866)
---------- ----------
3,893,312 3,790,162
---------- ----------
Other assets, net 2,337 19,208
---------- ----------
$5,818,603 5,761,659
========== ==========
Liabilities and Partners' Capital
Accrued expenses 6,787 -
Accounts payable 27,424 28,478
Other liabilities 169,105 160,648
Due to affiliates 2,925 5,018
---------- ----------
Total liabilities 206,241 194,144
Partners' capital:
49,041 limited partnership units issued
and outstanding 5,612,362 5,567,515
---------- ----------
$5,818,603 5,761,659
========== ==========
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 three months ended March 31, 1997
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1996 $ 5,615,063 (2,701) 5,612,362
Limited partner distributions (61,301) - (61,301)
Net income 16,289 165 16,454
----------- ------ ---------
Balance at March 31, 1997 $ 5,570,051 (2,536) 5,567,515
=========== ====== =========
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 three months ended March 31, 1996 and 1997
(Unaudited)
1996 1997
Operating Activities:
Net income $ 18,434 16,454
Adjustments to reconcile net income
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 (decrease) in accrued
expenses, accounts payable, other
liabilities and due to affiliates 338 (21,723)
Decrease in other
assets, net 1,388 1,212
---------- ----------
Net cash provided by operating
activities 114,853 90,636
---------- ----------
Investing Activities:
Redemption and sale of securities
available for sale 1,350,087 1,590,253
Purchase of securities
available for sale (1,609,427) (1,610,077)
---------- ----------
Net cash used in
investing activities (259,340) (19,824)
---------- ----------
Financing Activities:
Limited partner distributions (61,640) (61,301)
---------- ----------
Net cash used by financing
activities (61,640) (61,301)
---------- ----------
Increase (decrease) in cash and
cash equivalents (206,127) 9,511
Cash and cash equivalents at
beginning of period 470,925 332,701
---------- ----------
Cash and cash equivalents
at end of period $ 264,798 342,212
========== ==========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
March 31, 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 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 ten year lease which commenced June 8,
1987 and expires June 30, 1997. Federal Express has expressed their intention to
relocate to a larger facility and has requested an extension of their lease
through March 1998.
On December 31, 1986, the Partnership purchased Galleria Professional Building,
a six story office building containing 60,965 square feet of net leasable area
in Fort Lauderdale, Florida.
Following is summarized financial information with respect to operations at the
Galleria Professional Building office building.
Three months ended
March 31,
---------
1996 1997
---- ----
Rental income 236,357 264,277
Other income 1,620 2,654
------- -------
237,977 266,931
Property operating expenses 136,582 134,942
Ground rent 9,423 9,342
------- -------
146,005 144,284
------- -------
Operating income 91,972 122,647
======= =======
Note 3 - Other Liabilities
- --------------------------
Other liabilities at December 31, 1996 and March 31, 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 three month periods ended March 31, 1996 and 1997, compensation to
general partners and affiliates were as follows:
1996 1997
---- ----
Reimbursement for administrative
and accounting services $ 8,669 8,056
Property management fees 1,259 1,259
----- -----
Total $ 9,928 9,315
===== =====
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 March 31, 1997, the Partnership held one treasury
bill that matures in May 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
March 31, 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.
Other general and administrative expenses increased approximately $4,000 for the
three month period ended March 31, 1997 as compared to the 1996 primarily due to
an increase in professional fees associated with the appraisal of the Federal
Express Distribution Center. This increase was offset with a decrease in legal
fees associated with the preparation of a sale contract on the Federal Express
Distribution Center in 1996.
The lease on the Federal Express Distribution Center expires on June 30, 1997.
Federal Express has expressed their intention to relocate to a larger facility
and has requested an extension of their lease through March 1998. It is
anticipated that the extension will be granted and the Partnership has begun the
search for either a replacement tenant or a buyer for the property.
At March 31, 1997, the Partnership had approximately $342,000 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 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, 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
March 31 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 March 31,
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: May 9, 1997 By: /s/ Glen R. Gilbert
--------------------
Glen R. Gilbert, Senior Vice President
and Chief Financial Officer
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<NAME> I.R.E. Pension Investors, Ltd. - II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
<CASH> 342,212
<SECURITIES> 1,610,077
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 7,930,028
<DEPRECIATION> 4,139,866
<TOTAL-ASSETS> 5,761,659
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,567,515
<TOTAL-LIABILITY-AND-EQUITY> 5,761,659
<SALES> 0
<TOTAL-REVENUES> 149,296
<CGS> 0
<TOTAL-COSTS> 132,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16,454
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,454
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
</TABLE>
