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 Commission File Number
March 31, 2000 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
Index to Financial Statements
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Balance Sheets as of December 31, 1999 and March 31, 2000 - Unaudited
Statements of Operations for the three months ended March 31, 1999 and
2000 - Unaudited
Statements of Partners' Capital for the three months ended March 31,
2000 - Unaudited
Statements of Cash Flows for the three months ended March 31, 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 March 31, 2000
(Unaudited)
Assets
1999 2000
---- ----
Cash and cash equivalents $ 484,362 449,137
Investments in real estate:
Office building 5,782,761 5,782,761
Less accumulated depreciation (4,201,927) (4,282,885)
----------- -----------
1,580,834 1,499,876
Other assets, net 3,093 19,679
----------- -----------
$ 2,068,289 1,968,692
=========== ===========
Liabilities and Partners' Capital
Accounts payable 28,420 23,870
Other liabilities 67,619 59,160
Due to affiliates 4,763 9,425
----------- -----------
Total liabilities 100,802 92,455
Partners' capital:
49,041 limited partnership units issued
and outstanding 1,967,487 1,876,237
----------- -----------
$ 2,068,289 1,968,692
=========== ===========
See accompanying notes to unaudited financial statements.
<PAGE>
I.R.E. Pension Investors, Ltd.-II
(A Florida Limited Partnership)
Statements of Operations
For the three months ended March 31, 1999 and 2000
(Unaudited)
Three Months Ended
March 31,
---------
1999 2000
---- ----
Revenues:
Rental income $ 62,709 62,709
Interest income 25,517 5,541
--------- ---------
Total revenues 88,226 68,250
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Costs and expenses:
Depreciation 103,150 80,958
Impairment loss on real estate 280,000 --
Property operations:
Property management fees to affiliate 628 627
Other 7,018 1,497
General and administrative:
To affiliates 9,088 8,358
Other 7,802 6,770
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Total costs and expenses 407,686 98,210
--------- ---------
Net loss $(319,460) (29,960)
========= =========
Net loss per weighted average
limited partnership unit outstanding $ (6.45) (.60)
========= =========
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, 2000
(Unaudited)
Limited General
Partners Partners Total
-------- -------- -----
Balance at December 31, 1999 $ 1,973,779 (6,292) 1,967,487
Limited partner distributions (61,290) -- (61,290)
Net loss (29,660) (300) (29,960)
----------- ----------- -----------
Balance at March 31, 2000 $ 1,882,829 (6,592) 1,876,237
=========== =========== ===========
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, 1999 and 2000
(Unaudited)
1999 2000
---- ----
Operating Activities:
Net loss $ (319,460) (29,960)
Adjustments to reconcile net loss
to net cash provided by
operating activities:
Depreciation 103,150 80,958
Impairment loss on real estate 280,000 --
Non-cash portion of rental income (8,457) (8,459)
Changes in operating assets and liabilities:
Increase in accounts
payable, other liabilities
and due to affiliates 4,278 112
Increase in other
assets (7,288) (16,586)
----------- -----------
Net cash provided by operating
activities 52,223 26,065
----------- -----------
Financing Activities:
Limited partner distributions (61,301) (61,290)
----------- -----------
Net cash used by financing
activities (61,301) (61,290)
----------- -----------
Decrease in cash and
cash equivalents (9,078) (35,225)
Cash and cash equivalents at
beginning of period 2,235,268 484,362
----------- -----------
Cash and cash equivalents
at end of period $ 2,226,190 449,137
=========== ===========
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, 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.
Following is summarized financial information with respect to operations at the
Galleria Professional Building:
Three Months Ended
March 31,
---------
1999 2000
---- ----
Rental income $261,961 254,020
Other income 903 3,577
-------- --------
262,864 257,597
-------- --------
Property operating expenses 179,576 164,708
Ground rent 9,342 9,342
-------- --------
188,918 174,050
-------- --------
Operating income $ 73,946 83,547
======== ========
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 March 31, 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 three months ended March 31, 1999 and 2000, compensation to general
partners and affiliates was as follows:
Three Months Ended
March 31,
---------
1999 2000
---- ----
Reimbursement for administrative
and accounting services $9,088 8,358
Property management fees (a) 628 627
------ ------
Total $9,716 8,985
====== ======
(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 March
31, 2000, the unaudited consolidated statements of operations for the three
months ended March 31, 1999 and 2000, the unaudited consolidated statements of
stockholders' equity for the three months ended March 31, 2000 and the unaudited
consolidated statements of cash flows for the three months ended March 31, 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
March 31, 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 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 $20,000 for the three months ended March
31, 2000 as compared to the comparable period in 1999 primarily due to a
decrease in investable funds.
Depreciation expense decreased approximately $22,000 for the three months ended
March 31, 2000 as compared to the same period in 1999 due to the sale of Federal
Express in June 1999.
Other property operations cost and expenses decreased approximately $6,000 for
the three months ended March 31, 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.
At March 31, 2000, the Partnership had approximately $449,000 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
March 31, 2000
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, 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: May 10, 2000 By: /s/ Alan B. Levan
-------------------
Alan B. Levan, President
Date: May 10, 2000 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 MARCH
31, 2000 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 449,137
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,782,761
<DEPRECIATION> (4,282,885)
<TOTAL-ASSETS> 1,968,692
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1,876,237
<TOTAL-LIABILITY-AND-EQUITY> 1,968,692
<SALES> 0
<TOTAL-REVENUES> 68,250
<CGS> 0
<TOTAL-COSTS> 98,210
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (29,960)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (29,960)
<EPS-BASIC> (0.60)
<EPS-DILUTED> (0.60)
</TABLE>
