GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
201 Park Avenue South
New York, New York 10003
VIA EDGAR
- ---------
February 27, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: 1995 Annual Report to Policyowners of:
The Guardian Real Estate Account of
Guardian Ins & Ann Company Inc
(File No. 33-33686)
Dear Sir or Madam:
On behalf of the above-referenced registrant, transmitted herewith please find
an electronic copy of the Annual Report to Accountowners for the fiscal period
ended December 31, 1995, which is being filed pursuant to Sections 24(b) and
30(b) of the Investment Company Act of 1940 ("Act") and the rules thereunder
promulgated.
Pursuant to Section 30(d) of the Act, this report is currently being mailed to
all existing accountowners.
Please direct any questions concerning this filing to me at 212-598-8119.
Very truly yours,
/s/ Gregory M. Ward
Gregory M. Ward
Financial Communications Specialist
<PAGE>
[PHOTO]
Joseph D. Sargent, CLU
President and CEO
Dear Accountowner:
As the new President and Chief Executive Officer of The Guardian Insurance
& Annuity Company, Inc. and its parent, The Guardian Life Insurance Company of
America, I am pleased to introduce the 1995 annual report for The Guardian Real
Estate Account. I would like to take a moment and thank Arthur V. Ferrara for
his years of stewardship at the helm of The Guardian Insurance & Annuity Company
(GIAC). Although Mr. Ferrara has recently retired from The Guardian as Chairman
of the Board and Chief Executive Officer, we are pleased that he will continue
to serve on the Board of Directors of The Guardian Insurance & Annuity Company,
Inc. In my new position, I look forward to maintaining our commitment of
providing you with a full range of insurance and investment options to help you
build your future.
Although 1995 brought changes in leadership at GIAC, we will maintain the
tradition of our bedrock-strong commitment to you, our contractowners, and as a
provider of superior customer service.
I invite you to read an interview with The O'Connor Realty Advisors, the
Account's investment adviser for the real estate-related assets. They discuss
the Account's performance and the investment strategy during 1995.
Thank you for continuing to invest for your future through GIAC.
Regards,
/s/ Joseph D. Sargent
Joseph D. Sargent, CLU
President and Chief Executive Officer
1
<PAGE>
How has the Account performed in 1995?
The Guardian Real Estate Account had a positive total return of 2.36% for the
year ended December 31, 1995.(1)
How has the Account changed this year?
The Somerset Square properties owned by The Guardian Real Estate Account were
developed by the Keith Corporation and have been managed by Keith since the
buildings were purchased in 1989. Effective January 1, 1996, however, the
buildings are being managed by Farley-Whittier Partners, a Hartford-based full
service real estate firm. This change should have an operational and financial
positive impact on the properties. Farley-Whittier Partners has over 27 years of
property management and real estate experience in the Hartford area and offers a
competitive fee structure (3% versus 4% for Keith Corporation).
Also, during 1995, Curtin Matheson Scientific (CMS), the tenant which leases
100% of the Account's building in the Atlanta area, was purchased by Fisher
Scientific International Inc. Fisher Scientific is an international provider of
scientific instruments, equipment and supplies with a stronger balance sheet and
superior creditworthiness to CMS.
What factors affected the performance this year?
The value of the Account's real estate holdings was negatively affected by a
$1.5 million write-down (a 21% decline from the year-end 1994 value) in the
value of Somerset Square properties at the end of 1995. This write-down
reflected the continued and projected job losses in the Greater Hartford area,
as a result of consolidations in the insurance and banking industries. The
Account benefited by our bond holdings, which performed well in the surging U.S.
bond markets.
What are your expectations for the coming year?
Somerset Square Properties
The buildings' 1996 cash flows are anticipated to remain stable. Both buildings
will remain 100% occupied through 1996 and 1997 due to the leasing arrangements
that were made in 1994 and 1995.
Curtin Matheson Scientific
The property's 1996 cash flow is anticipated to remain stable through the
tenant's lease expiration in September, 2001. Due to Fisher Scientific's
proposed expansion goals, the property may be placed on the market for sublease.
However, under terms of the lease, Fisher Scientific will remain liable for the
remaining lease obligations.
- --------------------------------------------------------------------------------
(1) Total return figures are historical and assume the reinvestment of net
income and the deduction of all unsubsidized Account expenses. During 1995, GIAC
subsidized 25% of the Account's operating expenses. The Account's total return
would have been lower than reported without this subsidy. The actual total
returns for owners of the variable annuity contracts or variable life insurance
policies which provide for investment in the Account will be lower to reflect
separate account and contract/policy charges. Past performance is no guarantee
of future results. Investment return and principal will fluctuate so that the
value of your investment when redeemed may be worth more or less than original
cost.
2
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
December 31,
----------------------------------
1995 1994
----------- -----------
<S> <C> <C>
ASSETS:
Investment Properties at fair value (Cost basis: $22,262,034 and
$22,405,832, respectively) ................................... $10,950,000 $12,350,000
Long-term Investments at fair value (Cost basis: $2,467,984 and
$2,473,870, respectively) .................................... 2,527,808 2,128,404
Cash ........................................................... 1,139 1,402
Short-term Investments ......................................... 1,119,000 905,000
Receivables .................................................... 98,179 86,760
----------- -----------
TOTAL ASSETS ................................................. 14,696,126 15,471,566
=========== ===========
LIABILITIES:
Accrued Management Advisory Fees ............................... 45,769 34,804
Accrued Expenses ............................................... 115,205 111,489
Unearned Rent .................................................. -- 149,457
Annuitant Mortality Fluctuation Fund ........................... 81,727 72,500
Other Liabilities .............................................. 41,988 37,368
----------- -----------
TOTAL LIABILITIES ............................................ 284,689 405,618
----------- -----------
NET ASSETS REPRESENTING
CONTRACTOWNERS' EQUITY:
Value Guard II ................................................. 4,021,471 4,623,454
Guardian Investor .............................................. 4,606,301 4,812,744
ValuePlus ...................................................... 465,212 433,899
The Guardian Insurance & Annuity Co., Inc. ..................... 5,318,453 5,195,851
----------- -----------
TOTAL NET ASSETS ............................................. 14,411,437 15,065,948
----------- -----------
TOTAL LIABILITIES AND NET ASSETS ............................. $14,696,126 $15,471,566
=========== ===========
Number of Units Outstanding:
Variable Annuity Contractowners
Value Guard II ................................................. 464,336 542,296
Guardian Investor .............................................. 588,474 624,615
ValuePlus Contractowners ......................................... 52,127 49,518
The Guardian Insurance & Annuity Co., Inc. ....................... 568,614 568,614
Unit Value:
Variable Annuity Contractowners
Value Guard II ................................................. $8.6194 $8.5039
Guardian Investor .............................................. $7.7791 $7.6880
ValuePlus Contractowners ......................................... $8.9246 $8.7625
The Guardian Insurance & Annuity Company, Inc. .................... $9.3534 $9.1377
</TABLE>
See Notes to the Financial Statements
3
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
STATEMENTS OF OPERATIONS
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Rental ............................................. $ 2,115,716 $ 1,961,004 $ 2,490,806
Interest ........................................... 215,641 200,592 50,071
----------- ----------- -----------
Total Income ................................... 2,331,357 2,161,596 2,540,877
----------- ----------- -----------
EXPENSES:
Real Estate Operating Expenses ..................... 462,811 401,239 441,262
Real Estate Taxes .................................. 266,119 265,622 268,860
Management Advisory Fees ........................... 140,196 139,344 144,789
Repairs and Maintenance ............................ 213,737 222,849 193,859
Administrative Expenses ............................ 106,212 111,070 115,035
----------- ----------- -----------
Total Expenses ................................. 1,189,075 1,140,124 1,163,805
----------- ----------- -----------
Net Investment Income Before Realized Gains and Net
Unrealized (Depreciation)/Appreciation ............. 1,142,282 1,021,472 1,377,072
Net Unrealized (Depreciation)/Appreciation in Value of
Investments ........................................ (850,911) (1,259,381) (3,478,447)
----------- ----------- -----------
Net (Decrease)/Increase in Net Assets Resulting from
Operations ......................................... $ 291,371 $ (237,910) $(2,101,375)
=========== =========== ===========
Net (Decrease)/Increase in Net Assets Per Unit:
Value Guard II Contractowners ...................... $ 0.12 $ (0.15) $ (1.22)
=========== =========== ===========
Guardian Investor Contractowners ................... $ 0.09 $ (0.16) $ (1.17)
=========== =========== ===========
ValuePlus Contractowners ........................... $ 0.16 $ (0.13) $ (1.16)
=========== =========== ===========
The Guardian Insurance & Annuity Co., Inc. ......... $ 0.22 $ (0.08) $ (1.58)
=========== =========== ===========
Weighted Average Number of Units Outstanding:
Value Guard II Contractowners ...................... 503,389 608,410 735,018
=========== =========== ===========
Guardian Investor Contractowners ................... 604,926 627,737 559,546
=========== =========== ===========
ValuePlus Contractowners ........................... 50,606 68,922 67,526
=========== =========== ===========
The Guardian Insurance & Annuity Co., Inc. ......... 568,614 498,989 297,141
=========== =========== ===========
</TABLE>
4
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
STATEMENTS OF CHANGES IN NET ASSETS
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
The Guardian
Contractowners Insurance
------------------------------------------------------------- & Annuity
Value Guard II Guardian Investor ValuePlus Company, Inc.
------------------- -------------------- ---------------- -------------------
Units Amount Units Amount Units Amount Units Amount Total
------- ---------- ------- ---------- ------ -------- ------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance -- January 1, 1993 ..... 808,972 $8,013,756 500,560 $4,498,217 40,416 $408,557 283,185 $2,955,507 $15,876,037
Equity contributed/(withdrawn)
during 1993 .................. (136,902) (1,296,702) 100,358 872,515 42,729 408,675 181,774 1,800,000 1,784,488
Net (Decrease)/Increase in
Net Assets ................... -- (895,504) -- (656,878) -- (78,712) -- (470,281) (2,101,375)
------- ---------- ------- ---------- ------ -------- ------- ---------- -----------
Balance-- December 31, 1993 .... 672,070 5,821,550 600,918 4,713,854 83,145 738,520 464,959 4,285,226 15,559,150
Equity contributed/(withdrawn)
during 1994 .................. (129,774 (1,108,091) 23,697 198,176 (33,627) (295,377) 103,655 950,000 (255,292)
Net (Decrease)/Increase in
Net Assets ................... -- (90,005) -- (99,286) -- (9,244) -- (39,375) (237,910)
------- ---------- ------- ---------- ------ -------- ------- ---------- -----------
Balance-- December 31, 1994 .... 542,296 4,623,454 624,615 4,812,744 49,518 433,899 568,614 5,195,851 15,065,948
Equity contributed/(withdrawn)
during 1995 .................. (77,960) (695,241) (36,141) (275,581) 2,609 24,940 -- -- (945,882)
Net (Decrease)/Increase in
Net Assets ................... -- 93,258 -- 69,138 -- 6,373 -- 122,602 291,371
------- ---------- ------- ---------- ------ -------- ------- ---------- -----------
Balance-- December 31,1995 ..... 464,336 $4,021,471 588,474 $4,606,301 52,127 $465,212 568,614 $5,318,453 $14,411,437
======= ========== ======= ========== ====== ======== ======= ========== ============
</TABLE>
See Notes to the Financial Statements
5
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 1995, 1994 and 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net Investment Income ..................................... $ 1,142,282 $ 1,021,472 $ 1,377,072
Adjustments to reconcile net income to net
cash provided by operating activities:
Change in Other Receivables ............................. (11,419) (45,247) (14,626)
Change in Unearned Rent ................................. (149,457) (89,472) 238,929
Change in Accrued Management Advisory Fees .............. 10,965 (802) 19,718
Change in Accrued Expenses .............................. 3,716 36,312 2,644
Change in Annuitant Mortality Fluctuation Fund .......... 9,227 6,702 10,536
Amortization of Premium ................................. 5,886 5,887 --
Change in Other Liabilities ............................. 4,620 (9,139) 24,432
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................. 1,015,820 925,713 1,658,705
----------- ----------- -----------
INVESTING ACTIVITIES:
(Purchase)/Sale of Long-Term Investments .................. -- -- (2,479,757)
(Purchase)/Sale of Short-Term Investments ................. (214,000) 295,000 (240,000)
Capital Improvements, Net of Dispositions ................ 143,799 (969,789) (722,574)
----------- ----------- -----------
NET CASH PROVIDED BY/(USED IN)
INVESTING ACTIVITIES .................................... (70,201) (674,789) (3,442,331)
----------- ----------- -----------
FINANCING ACTIVITIES:
Contractowners' (Withdrawals)/Contributions ............. (945,882) (1,205,292) (15,512)
The Guardian Insurance & Annuity Co., Inc. (Withdrawals)/
Contributions ......................................... -- 950,000 1,800,000
----------- ----------- -----------
NET CASH PROVIDED BY/(USED IN)
FINANCING ACTIVITIES .................................... (945,882) (255,292) 1,784,488
----------- ----------- -----------
INCREASE/(DECREASE) IN CASH ......................... (263) (4,368) 862
CASH AT BEGINNING OF YEAR ........................... 1,402 5,770 4,908
----------- ----------- -----------
CASH AT END OF YEAR ................................. $ 1,139 $ 1,402 $ 5,770
=========== =========== ===========
</TABLE>
See Notes to the Financial Statements
6
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
Note 1 - Organization
Organization
The Guardian Real Estate Account (the "Account") of The Guardian Insurance
& Annuity Company, Inc. (GIAC) was established in 1987 under Delaware Insurance
Law as an insurance company separate account. Participating interests in the
Account are registered under the Securities Act of 1933 and are offered by GIAC
as an investment option under certain variable life insurance policies and
variable deferred annuity contracts (the "Contracts"). GIAC is a wholly owned
subsidiary of The Guardian Life Insurance Company of America ("The Guardian").
The obligations to Contractowners and beneficiaries arising under the
Contracts are general corporate obligations of GIAC. GIAC is the legal owner of
the assets in the Account. GIAC will at all times, however, maintain assets in
the Account with a total market value at least equal to the amounts credited
under each Contract which participates in the Account. These assets may not be
charged with liabilities which arise from any other business conducted by GIAC.
The Board of Directors of GIAC has authorized a total investment of up to
$25 million to enable the Account to acquire a portfolio of real estate-related
investments to meet its investment objectives and policies. Pursuant to this
authority, GIAC has contributed capital to the Account from time to time since
its inception to provide funds for acquisitions and to preserve liquidity. GIAC
has also withdrawn contributed funds when it has appeared that such withdrawals
would not adversely affect the interests of Contractowners and all legal
requirements have been met. GIAC's most recent contributions to the Account were
made on December 27, 1993, July 27,1994 and October 28, 1994, when $1,800,000,
$400,000 and $550,000 respectively were invested. At December 31, 1995, GIAC
maintained 37% ownership of the Account.
The Account is authorized to invest in income-producing real property,
participating mortgage loans, conventional mortgage loans, real property
purchase-leaseback transactions and in short-term or intermediate-term debt
instruments for liquidity purposes.
The Account has three properties. Two of the three properties are office
buildings located in Glastonbury, Connecticut which were acquired for $7,921,854
and $7,644,386, respectively. The third property is an office distribution
facility located in Kennesaw, Georgia which was acquired on October 1, 1991 for
$5,134,068, including acquisition fees.
7
<PAGE>
Note 2 - Summary of Significant Accounting Policies
Real Estate Investment Properties
Investments in real estate are stated at estimated fair value; accordingly,
the Account does not record depreciation. Real estate assets owned by the
Account are initially valued at their respective purchase prices. Thereafter,
the values will ordinarily be based upon appraisal reports on the real
estate-related assets prepared by independent real estate appraisers.
Independent appraisals are typically performed on at least an annual basis. The
Account reserves the right, however, to prepare the annual appraisals
internally. The property valuations are also reviewed internally at least every
three months and adjusted if it is determined that there has been a change in
the value of one or more of the properties since the last valuation.
The purpose of an appraisal is to estimate the fair value of a property as
of a specific date. Fair value is defined as the most probable price for which
the appraised property will sell in a competitive market under all conditions
requisite to fair sale, with the buyer and seller each acting prudently,
knowledgeably, and for self interest, and assuming that neither is under undue
duress. This estimation of fair value through the appraisal process inherently
requires the exercise of subjective judgements. Capital improvements are
recognized only to the extent that the valuation process acknowledges a
corresponding increase in fair value. The value of the Account's real estate
holdings was negatively affected by a $1.5 million write-down in the value of
Somerset Square properties at the end of 1995.
Short-term Investments
The short-term investments held by the Account will consist of the types
and quality of investments authorized for purchase by the Account. These
instruments include: U.S. Government securities; securities issued or fully
guaranteed by U.S. Government agencies; repurchase agreements; certificates of
deposit; banker's acceptances; and commercial paper. Short-term investments are
valued at amortized cost which approximates market.
At December 31, 1995, the Account's short-term investments consisted of a
repurchase agreement with State Street Bank and Trust Co. which matures on
January 2, 1996. The collateral under the repurchase agreement consists of a
U.S. Treasury Note, held in safekeeping in the name of the Account at State
Street Bank and Trust Co., the Account's custodian (Note 9). Repurchase
agreements held by the Account are fully collateralized (including the interest
earned thereon) and marked to market daily during the entire term of such
agreements. If the value of the underlying collateral falls below the value of
the repurchase price plus accrued interest, the Account will require the seller
to deposit additional collateral by the next business day. If the request for
additional collateral is not met, or the seller defaults,the Account maintains
the right to sell the collateral and may claim any resulting loss against the
seller.
Long-term Investments
Long-term investments are carried at market value. Securities listed on
national securities exchanges are valued based upon closing prices on these
exchanges. Securities traded in the over-the-counter market and listed
securities for which there have been no trades for the day are valued at the
mean of the bid and asked prices.
Net realized gain or loss on sales of investments is determined on the
basis of identified cost. Interest income, including amortization of premium and
discount, is recorded when earned.
8
<PAGE>
Revenue Recognition
Income from properties and other investments, as well as expenses, are
recorded on the accrual basis.
Federal Income Taxes
The operations of the Account are part of the operations of GIAC and, as
such, are included in the combined tax return of GIAC. GIAC is taxed as a life
insurance company under the Internal Revenue Code of 1986, as amended.
Under tax law, no federal income taxes are payable by GIAC with respect to
the operations of the Account. However, GIAC reserves the right to charge taxes
attributable to the Account in the future.
Note 3 - Investment Advisory Agreements And Related Parties Transactions
The investment managers of the Account are O'Connor Realty Advisors
Incorporated ("O'Connor Realty") and Guardian Investor Services Corporation
("GISC"). O'Connor Realty, a wholly owned subsidiary of J.W. O'Connor & Co.,
Inc., provides various management services with respect to the real
estate-related investments of the Account. GISC, a wholly owned subsidiary of
GIAC, provides services with respect to the assets maintained in cash and
short-term and intermediate-term marketable debt instruments.
The Account is charged a daily fee to compensate O'Connor Realty for its
investment management services. This fee amounts to 1.0% per year of the average
daily assets of the Account managed by O'Connor Realty. The Account is also
charged a daily fee to compensate GISC for its investment management services.
This fee amounts to 0.50% per year of the average daily net assets of the
Account managed by GISC.
GIAC has been assuming certain operating expenses of the Account since the
Account's inception. The amount of this subsidy has declined from 100% of such
expenses to the present level of 25%. GIAC has agreed to continue its 25%
assumption of certain operating expenses of the Account during 1995. For the
year ended December 31, 1995, GIAC assumed expenses of $25,573 related to the
Account. Total expenses assumed by GIAC were $32,362 and $31,440 for the years
ended December 31, 1994 and 1993, respectively.
For the year ended December 31, 1995, investment management fees earned by
GISC totalled $16,702 and investment management fees earned by O'Connor Realty
totalled $123,495. For the year ended December 31, 1994, investment management
fees earned by GISC totalled $16,446 and investment management fees earned by
O'Connor Realty totalled $122,898. For the year ended December 31, 1993,
investment management fees earned by GISC totalled $7,817 and investment
management fees earned by O'Connor Realty totalled $136,472. No portion of the
expenses directly related to the operations of the real estate-related
investments or O'Connor Realty's investment management fee are subsidized.
Note 4 - Real Estate-Related Expenses
In addition to investment management fees and expenses, certain other
expenses and charges attributable to the real estate-related operations of the
Account are also charged against the Account. All costs of acquisition,
administration and disposition of the real estate-related investments are
charged to the Account. These costs include brokerage fees, appraisal fees,
9
<PAGE>
attorneys' fees, architects' fees, engineers' fees and accountants' fees
incurred in connection with the investment process. In addition, the Account
will incur recurring costs such as mortgage servicing fees, annual audit
charges, appraisal fees, accounting and legal fees and various administrative
expenses. Other expenses, such as insurance costs, taxes and property management
fees, will ordinarily be deducted from rental income, thereby reducing the gross
income of the Account.
Note 5 - Leases
The buildings in the Account are leased to corporate tenants under various
lease arrangements. The leases expire at various times through 2000 in the
Glastonbury, Connecticut buildings. Leases renewed during 1993 and 1994 provide
for rental payments which are generally lower than previous rental rates,
reflecting market declines. The lease for the Kennesaw, Georgia facility expires
in the third quarter of 2001. Aggregate minimum rentals for the three buildings
are as follows:
Fiscal Year Ending
December 31,
------------
1996 2,113,057
1997 2,189,861
1998 1,817,825
1999 1,362,710
2000 699,897
2001 470,250
----------
Total $8,653,600
==========
Certain leases provide for additional rents based upon operating costs in
excess of given base amounts. For the year ended December 31, 1995, rental
income included approximately $79,089 of such additional rental income. For the
years ended December 31, 1994 and 1993, rental income included approximately
$86,757 and $243,000, respectively, of such additional rental income.
Note 6 - Annuitant Mortality Fluctuation Fund
The Annuitant Mortality Fluctuation Fund is a special fund established in
response to various regulatory requirements and provides for any possible
adverse experience inherent in the transaction of annuity business.
Note 7 - Other Charges
Included in the Account's total expenses are mortality and expense risk
charges which are calculated on a daily basis and applied to the Contracts and
thus to each Contractowner's interest by GIAC.
10
<PAGE>
NOTE 8
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
REAL ESTATE
December 31, 1995
<TABLE>
<CAPTION>
Costs
capitalized
subsequent
to Gross cost
Initial cost to Account acquisitions at close of period
----------------------- ------------ ------------------
Buildings Improvements Buildings
and and Carrying and
Description Encumbrances Land Improvements Costs Land Improvements Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
45 Somerset Square
Office Building --
Glastonbury, CT. .......... $0 $ 871,668 $ 7,050,186 $ 994,982 $ 871,668 $ 8,045,168 $ 8,916,836
115 Somerset Square
Office Building --
Glastonbury, CT. .......... 0 843,441 6,800,945 566,744 843,441 7,367,689 8,211,130
955 Cobb Place Blvd.
Office Building
Warehouse Facility --
Kennesaw, GA. ............. 0 751,187 4,382,881 0 751,187 4,382,881 5,134,068
- ------------------------------------------------------------------------------------------------------------------------------------
Total ................... $0 $2,466,296 $18,234,012 $1,561,726 $2,466,296 $19,795,738 $22,262,034
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Date of Date Fair
Description Construction Acquired Value
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
45 Somerset Square Construction completed
Office Building -- in late 1988 and early
Glastonbury, CT. .......... 1989 6/12/89 $ 2,800,000
115 Somerset Square Construction completed
Office Building -- in late 1988 and early
Glastonbury, CT. .......... 1989 6/12/89 2,950,000
955 Cobb Place Blvd.
Office Building
Warehouse Facility -- Construction completed
Kennesaw, GA. ............. in late 1991 10/01/91 5,200,000
- ---------------------------------------------------------------------------------------------
Total ................... $10,950,000
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
December 31, December 31, December 31,
A) Reconciliation of investment property owned: 1995 1994 1993
-----------------------------------------------
<S> <C> <C> <C>
Real Estate at beginning of year ................ 22,405,832 $21,436,043 $20,713,469
Net Acquisitions (dispositions) ................. -- -- --
Capital Improvements and Carrying Costs ......... (143,798) 969,789 722,574
-----------------------------------------------
Balance at the end of the year .................. 22,262,034 $22,405,832 $21,436,043
===============================================
</TABLE>
B) Total tax basis for properties based on historical
cost:
45 Somerset Square Office Building --
Glastonbury, CT. ................................... $7,552,189
115 Somerset Square Office Building --
Glastonbury, CT. ................................... 6,889,584
955 Cobb Place Blvd. Office Building
Warehouse Facility --
Kennesaw, GA. ...................................... 4,673,248
11
<PAGE>
NOTE 9
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
MARKETABLE SECURITIES
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
Market Value Amount Carried
Description Par Value Cost 12/31/95 on Balance Sheet
----------- --------- ---- ------------ ----------------
<S> <C> <C> <C> <C>
Marketable Securities:
Repurchase Agreement
State Street Bank and Trust Company
repurchase agreement at 5.60%
due 1/2/96, maturity value $1,119,696
(collateralized by $1,050,000 U.S. ..
Treasury Notes plus accrued interest,
7.125% due 2/29/00, market value at
12/29/95 was $1,141,765) ............ $1,119,000 $1,119,000 $1,119,000 $1,119,000
---------- ---------- ---------- ----------
Fixed Maturities:
Indianapolis Power & Light Company
7.375% due 8/1/07 ................... 1,000,000 1,066,548 1,090,400 1,090,400
GTE Southwest Inc. ....................
6.54% due 12/1/05 ................... 1,400,000 1,401,436 1,437,408 1,437,408
---------- ---------- ---------- ----------
2,400,000 2,467,984 2,527,808 2,527,808
---------- ---------- ---------- ----------
Total Marketable Securities ............... $3,519,000 $3,586,984 $3,646,808 $3,646,808
========== ========== ========== ==========
</TABLE>
12
<PAGE>
THE GUARDIAN REAL ESTATE ACCOUNT
OF
THE GUARDIAN INSURANCE & ANNUITY COMPANY, INC.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
of The Guardian Insurance & Annuity Company, Inc.
In our opinion, the accompanying statement of assets and liabilities and
the related statements of operations and changes in net assets and of cash flows
present fairly, in all material respects, the financial position of The Guardian
Real Estate Account of The Guardian Insurance & Annuity Company, Inc. at
December 31, 1995 and 1994 and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As explained in Note 2, the financial statements include real estate
investments the values of which have been determined by The Guardian Insurance &
Annuity Company, Inc. in accordance with procedures described in the Note, which
included receipt of independent appraisers' reports. We have tested the
procedures used by The Guardian Insurance & Annuity Company, Inc. in arriving at
its determination of fair value and have tested underlying documentation. In the
circumstances, we believe the procedures are reasonable and the documentation
appropriate. Because of the subjectivity inherent in any determination of fair
value of real estate, and because the real estate investments are held for
long-term operation and appreciation and thus are not presently for sale,
amounts ultimately realized from the real estate investments may vary
significantly from the fair values presented.
PRICE WATERHOUSE LLP
New York, New York
February 16, 1996
13
<PAGE>
[LOGO] The Guardian(R) FIRST CLASS MAIL
U.S. POSTAGE PAID
The Guardian Insurance & Annuity Company, Inc. NEWARK, NJ
PERMIT NO. 45
201 Park Avenue South
New York, NY 10003
EB-011034 12/95 [LOGO] Printed on recycled paper
[LOGO] The Guardian(R)
The Guardian Insurance &
Annuity Company, Inc.
A wholly owned subsidiary of The Guardian Life
Insurance Company of America
Annual Report to
Contractowners
THE
GUARDIAN
REAL ESTATE
ACCOUNT
Executive Offices
201 Park Avenue South
New York, New York 10003
Customer Service Office
P.O. Box 26100
Lehigh Valley, Pennsylvania 18002-6100
1-800-221-3253
DECEMBER 31, 1995
