SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended September 30, 2000
Commission File Number
0-14188
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
------------------------ -----
(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
Index to Financial Statements
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of December 31, 1999 and September 30, 2000 -
Unaudited
Statements of Operations for the nine and three month periods
ended September 30, 1999 and 2000 - Unaudited
Statement of Partners' Capital for the nine months ended
September 30, 2000 - Unaudited
Statements of Cash Flows for the nine months ended September 30,
1999 and 2000 - Unaudited
Notes to Unaudited Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Balance Sheets
December 31, 1999 and September 30, 2000
(Unaudited)
Assets
December 31, September 30,
1999 2000
---- ----
Cash and cash equivalents $ 484,362 405,057
Investments in real estate:
Office building 5,782,761 5,782,761
Less accumulated depreciation (4,201,927) (4,444,801)
----------- -----------
1,580,834 1,337,960
Other assets, net 3,093 20,183
----------- -----------
$ 2,068,289 1,763,200
=========== ===========
Liabilities and Partners' Capital
Accounts payable 28,420 18,795
Other liabilities 67,619 42,245
Due to affiliates 4,763 4,517
----------- -----------
Total liabilities 100,802 65,557
Partners' capital:
49,041 limited partnership units issued
and outstanding 1,967,487 1,697,643
----------- -----------
$ 2,068,289 1,763,200
=========== ===========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Operations
For the nine and three month periods ended September 30, 1999 and 2000
(Unaudited)
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 2000 1999 2000
---- ---- ---- ----
Revenues:
Rental income $ 188,123 188,123 62,707 62,707
Interest income 61,207 17,690 9,473 6,048
Sale of real estate 918,500 -- -- --
----------- -------- -------- -------
Total revenues 1,167,830 205,813 72,180 68,755
----------- -------- -------- -------
Costs and expenses:
Cost of sale of real estate 910,670 -- 8,007 --
Impairment loss of real estate 280,000 -- -- --
Depreciation 285,285 242,874 80,958 80,958
Property operations:
Property management fees to
affiliate 1,882 1,881 628 627
Other 15,321 3,606 1,638 613
General and administrative:
To affiliates 25,733 23,804 8,139 7,821
Other 19,879 19,620 5,250 6,904
----------- -------- -------- -------
Total costs and expenses 1,538,770 291,785 104,620 96,923
----------- -------- -------- -------
Net loss $ (370,940) (85,972) (32,440) (28,168)
=========== ======== ======== =======
Net loss per weighted
average limited partnership
unit outstanding $ (7.49) (1.74) (.65) (.57)
=========== ======== ======== =======
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 nine months ended September 30, 2000
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1999 $ 1,973,779 (6,292) 1,967,487
Limited partner distributions (183,872) -- (183,872)
Net loss (85,112) (860) (85,972)
----------- ----------- -----------
Balance at September 30, 2000 $ 1,704,795 (7,152) 1,697,643
=========== =========== ===========
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 nine months ended September 30, 1999 and 2000
(Unaudited)
September 30,
-------------
1999 2000
---- ----
Operating Activities:
Net loss $ (370,940) (85,972)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation 285,285 242,874
Impairment loss on real estate 280,000 --
Gain on sale of real estate, net (7,830) --
Non-cash portion of rental income (25,373) (25,374)
Changes in operating assets and liabilities:
Increase (decrease) in accounts
payable, other liabilities
and due to affiliates 2,774 (9,871)
Decrease (increase) in other
assets 7,047 (17,090)
----------- -----------
Net cash provided by operating
activities 170,963 104,567
----------- -----------
Investing Activities:
Proceeds on sale of real estate, net 810,867 --
----------- -----------
Net cash provided by
investing activities 810,867 --
----------- -----------
Financing Activities:
Limited partner distributions (2,734,036) (183,872)
----------- -----------
Net cash used by financing
activities (2,734,036) (183,872)
----------- -----------
Decrease in cash and
cash equivalents (1,752,206) (79,305)
Cash and cash equivalents at
beginning of period 2,235,268 484,362
----------- -----------
Cash and cash equivalents
at end of period $ 483,062 405,057
=========== ===========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Notes to Unaudited Financial Statements
September 30, 2000
Note 1 - General
The accompanying financial statements have been prepared by the Partnership in
accordance with the accounting policies described in its 1999 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 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. The Galleria Professional Building
is net leased to a tenant pursuant to a lease that expires in 2016.
Following is summarized financial information with respect to operations at the
Galleria Professional Building:
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 2000 1999 2000
---- ---- ---- ----
Rental income $774,029 743,366 257,224 247,635
Other income 5,502 10,050 721 4,066
-------- -------- -------- --------
779,531 753,416 257,945 251,701
-------- -------- -------- --------
Property operating expenses 507,974 506,867 165,930 174,695
Ground rent 28,026 28,026 9,342 9,342
-------- -------- -------- --------
536,000 534,893 175,272 184,037
-------- -------- -------- --------
Operating income $243,531 218,523 82,673 67,664
======== ======== ======== ========
On December 15, 1987, the Partnership purchased, from an unaffiliated seller, a
one-story 37,500 square foot office/warehouse building in Jacksonville, Florida.
The Federal Express Distribution Center was occupied solely by Federal Express
Corporation pursuant to a lease that expired May 31, 1998. In June 1999, the
Partnership sold the property to an unaffiliated third party for approximately
$918,500.
Note 3 - Other Liabilities
Other liabilities at December 31, 1999 and September 30, 2000 consisted
primarily of unearned rental income which arises from leases with non-level
payments being recognized ratably over the term of the lease.
Note 4 - Compensation or Reimbursements to General Partners and Affiliates
During the nine and three month periods ended September 30, 1999 and 2000,
compensation to general partners and affiliates was as follows:
Nine Months Ended Three Months Ended
September 30, September 30,
------------- -------------
1999 2000 1999 2000
---- ---- ---- ----
Reimbursement for administrative
and accounting services $25,733 23,804 8,139 7,821
Property management fees (a) 1,882 1,881 628 627
------- ------- ------- -------
Total 27,615 25,685 8,767 8,448
======= ======= ======= =======
(a) Property management fees are computed as 1% of rental income.
Note 5 - Management Representation
In the opinion of management, the accompanying financial statements contain such
adjustments as are necessary to present fairly the Partnership's unaudited
consolidated statements of financial condition at December 31, 1999 and
September 30, 2000, the unaudited consolidated statements of operations for the
nine and three month periods ended September 30, 1999 and 2000, the unaudited
consolidated statement of partners' capital for the nine months ended September
30, 2000 and the unaudited consolidated statements of cash flows for the nine
months ended September 30, 1999 and 2000. Such adjustments consisted only of
normal recurring items. The unaudited consolidated financial statements and
related notes are presented as permitted by Form 10-Q and should be read in
conjunction with the notes to consolidated financial statements appearing in the
Partnership's Annual Report on Form 10K for the year ended December 31, 1999.
<PAGE>
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, 2000
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 Partnership's expectations
and are subject to a number of risks and uncertainties, including but not
limited to, economic matters (both as a general matter and in particular in the
areas where the Partnership owns real estate), competitive and other factors
affecting the Partnership's operations, markets, property values and other
factors including factors associated with the continued ownership and operation
of real estate discussed elsewhere in this report and the documents filed by the
Partnership with the Securities and Exchange Commission. Many of these factors
are beyond the Partnership's control. Actual results could differ materially
from these forward-looking statements. In light of these risks and
uncertainties, there is no assurance that the results discussed in such
forward-looking statements contained in this report will, in fact, occur. The
Partnership does not undertake any obligation to publicly release the results of
any revisions to these forward-looking statements to reflect future events or
circumstances.
A description of the Partnership's investment properties during 1999 and 2000
follows:
* Galleria Professional Building - A 61,000 square foot office building
located in Fort Lauderdale, Florida.
* Federal Express Distribution Center - A 38,000 square foot warehouse
building located in Jacksonville, Florida. In June 1999, the
Partnership sold the property for approximately $918,500.
The Galleria Professional Building is net leased to a tenant pursuant to a lease
that expires in 2016. The Federal Express Distribution Center was occupied
solely by Federal Express Corporation pursuant to a lease that expired May 31,
1998. Federal Express Distribution Center vacated the property on that date. In
April 1999, the Partnership entered into a contract to sell the property and
based upon the proceeds anticipated to be received, the Partnership reduced the
carrying value of the property by approximately $280,000. In June 1999, the
Partnership sold the property to an unaffiliated third party for approximately
$918,500.
Interest income decreased approximately $44,000 and $3,000 for the nine and
three month periods ended September 30, 2000 as compared to the comparable
periods in 1999 primarily due to a decrease in investable funds.
Depreciation expense decreased approximately $42,000 for the nine months ended
September 30, 2000 as compared to the same period in 1999 due to the sale of
Federal Express Distribution Center in June 1999.
Other property operations cost and expenses decreased approximately $12,000 for
the nine months ended September 30, 2000 as compared to the comparable period in
1999 primarily due to decreases in real estate taxes and maintenance as a result
of the sale of Federal Express Distribution Center.
At September 30, 2000, the Partnership had approximately $405,000 of cash and
cash equivalents. Since the fourth quarter of 1990, the Partnership has annually
been paying distributions of $5.00 per $1,000 of original capital ($1.25
quarterly).
The Partnership's long-term prospects will be primarily affected by future net
income at the Galleria Professional Building. Due to the uncertainties involving
the real estate market, management cannot reasonably determine the Partnership's
long-term liquidity position. However, management believes the Partnership
currently has sufficient liquidity for operations and to meet its obligations
and commitments for the foreseeable future.
<PAGE>
Part II - Other Information
September 30, 2000
Item 1 through 5
Not applicable.
Item 6 - Exhibits and Reports on Form 8-K
a. Exhibits - None
b. No report on Form 8-K was filed during the quarter ended September 30,
2000.
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 10, 2000 By: /s/ Alan B. Levan
-----------------------------------------
Alan B. Levan, President
Date: November 10, 2000 By: /s/ Glen R. Gilbert
-----------------------------------------
Glen R. Gilbert, Executive Vice President
and Chief Financial Officer
