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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to __________
Commission File Number: 0-5537
INVESTMENT PROPERTIES ASSOCIATES
--------------------------------
(Exact Name of Registrant as specified in its charter)
A New York Limited Partnership 13-2647723
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 East 42nd Street, New York, New York 10165
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 687-6400
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
820,000 Participations in Limited Partnership Interest
------------------------------------------------------
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (ss. 229.405 of this chapter) is not contained herein, and
will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
Aggregate market value of the voting stock held by non-affiliates of the
Registrant -- Not applicable.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes_________ No_________
Documents Incorporated by Reference -- None.
PART I
This report contains certain forward-looking statements. Actual results
could differ materially from those projected in the forward-looking statements
as a result of any number of factors discussed herein including, without
limitation, under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business." When used in this
report, the words "anticipate," "estimate," "intend," "believe," "project," and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks, uncertainties and assumptions. Should
one or more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
anticipated, expected, estimated, intended, believed or projected.
Item 1. Business.
Investment Properties Associates ("IPA" or "Registrant") is a New York
limited partnership formed pursuant to a Limited Partnership Agreement dated as
of May 15, 1969, as amended on October 2, 1969, October 31, 1969, December 3,
1969, and May 30, 1997 (the "Partnership Agreement").
Harry B. Helmsley, a General Partner of Registrant, died on January 4,
1997. Upon his death, Mr. Helmsley's general partnership interest in Registrant
was converted to a special limited partner interest, which was inherited by his
spouse, Leona M. Helmsley, from Mr. Helmsley's estate as of December 31, 1997
(the "Converted Special L.P. Interest"). Under the terms of the Partnership
Agreement as in effect on the date of Mr. Helmsley's death, the General Partners
were required to create a new limited partnership with the same attributes as
Registrant and to convey all of the assets and liabilities of Registrant to such
entity. Such action would have involved substantial transfer tax, insurance
premium costs and other related expenses and no benefit to the partners of
Registrant or to the holders of Participation Interests ("Participation
Interests" or "PPIs") in the limited partnership interest of the limited partner
of Registrant. Accordingly, Registrant obtained the approval of the holders of a
majority of the PPIs to, among other things, amend the Agreement to permit the
remaining General Partners to elect to continue the business of Registrant in
the event of the death of a General Partner and to make such election with
respect to the death of Mr. Helmsley. Such amendments were effective on May 30,
1997 (the "Amendments"). As contemplated by the amended Partnership Agreement,
effective July 3, 1997, H Associates L.L.C. ("H Associates"), an entity owned by
Leona M. Helmsley, was admitted as a General Partner of Registrant. H
Associates' economic interest in Registrant was acquired from Helmsley-Noyes
Company, Inc., also a General Partner of Registrant.
On June 10, 1998, ScogBell Acquisition, L.L.C., a Delaware limited
liability company ("ScogBell"), purchased from Leona Helmsley all of her
interests in Registrant. The interests from this sale that were acquired by
ScogBell from Leona Helmsley included, among other things, general partnership
interests (0.05%), special limited partnership interests (33.29%) and an
aggregate of 282,377 PPIs. Also on June 10, 1998, ScogBell acquired 28,550 PPIs
in the over-the-counter market. As a result, ScogBell became a beneficial owner
of 310,927 PPIs in Registrant which represents 37.9% of the outstanding PPIs.
At December 31, 2000, Registrant owned fee titles to one commercial
property in Newark, New Jersey and two unimproved real properties in Houston,
Texas (collectively, the "Properties"). During 2000, Registrant sold three of
its properties.
On January 18, 2000, Registrant sold its 50% undivided interest in the
Marbridge Building, located at 1328 Broadway, in New York, New York for a sales
price of $43,500,000. In connection with the sale, Registrant paid sales
commissions of $1,646,000 to an affiliate of one of the General Partners and
other closing costs of approximately $1,400,000.
On May 8, 2000, Registrant sold the 245 and 261 Fifth Avenue properties in
New York, New York together for a sales price of $135,000,000. In connection
with the sale, Registrant paid sales commissions of $5,110,000 to an affiliate
of one of the General Partners and other closing costs of approximately
$4,400,000.
Registrant declared a special distribution of the net proceeds of the sale
from the Marbridge Building of $37,000,000. A distribution of $18,500,000 was
paid to the General Partners and Special Limited Partners in January 2000 and
$18,500,000 was paid to the holders of Participation Interests in February 2000.
Registrant also declared a special distribution of the net proceeds of the
sale from the 245 and 261 Fifth Avenue properties of $120,000,000. A
distribution of $60,000,000 was paid to the General Partners and Special Limited
Partners in May 2000 and $60,000,000 was paid to the holders of Participation
Interests in June 2000.
The $8,000,000 first mortgage loan with Apple Bank secured by the Marbridge
Building, located at 1328 Broadway (in which Registrant had a 50% tenancy in
common interest) and which bore interest only at a rate of 8.5% per annum became
due on April 30, 1999. Registrant repaid its 50% share of such loan on January
18, 2000 upon the sale of its 50% tenancy in common interest in the 1328
Broadway property.
As a result of the sale of its 50% undivided interest in the Marbridge
Building and of the 245 and 261 Fifth Avenue properties, Registrant's remaining
properties consist of a commercial property located in Newark, New Jersey (which
is currently vacant) and two unimproved parcels located in Houston, Texas.
Neither of these properties are currently leased. Registrant will seek to sell
these properties in 2001, but there can be no assurances that a sale will be
concluded.
(a) Financial Information About Segments. Registrant's sole business is the
ownership and operation of commercial real estate. All of Registrant's revenues,
operating profit or loss and assets relate solely to such industry segment.
(b) Narrative Description of Business. Registrant's only business was the
ownership and operation of commercial real properties which it leased to various
tenants. As previously discussed, during 2000 Registrant disposed of its
remaining income producing properties and, at December 31, 2000, Registrant's
remaining properties consisted of one vacant commercial property and two
unimproved parcels of land. The primary cost associated with Registrant's
remaining properties is real estate taxes.
2
All of the properties owned and operated by Registrant are set forth in Item 2.
Registrant's needs for working capital are provided for with existing cash
balances which were generated from the sale of properties.
Registrant employs three people who handle maintenance of its remaining
properties. All of the Registrant's other operating functions, which consist
primarily of property management and administrative services, are performed by
Helmsley-Spear, Inc. ("HSI") or affiliates of HSI, which entities may be deemed
to be affiliates of Registrant. Management fees and leasing commissions charged
by HSI aggregated approximately $393,000 during the fiscal years ended December
31, 2000, $1,288,000 in 1999 and $1,969,600 in 1998. HSI also earned $6,754,000,
$3,962,000 and $3,025,000 in brokerage commissions in 2000, 1999 and 1998,
respectively, in connection with the sale of the 50% undivided interest in the
Marbridge Building and the 245 Fifth Avenue and 261 Fifth Avenue properties in
2000, the Mojud and 1440 Broadway properties in 1999, and the Chicago Properties
in 1998. Registrant believes that such services are supplied at prices that
approximate those that would be available from non-affiliates. See Item 13.
Item 2. Properties.
General. At December 31, 2000, Registrant's Properties included fee titles
to one commercial property located in Newark, New Jersey and two unimproved real
properties located in Houston, Texas.
The table below sets forth a description of each of the Properties owned by
Registrant on December 31, 2000, its location, type of ownership and rentable
area in square feet.
3
Total Rentable
Property Description Ownership Area (Sq. Ft.)
- -------- ----------- --------- --------------
Texas
Edgewood Shopping Center
(Houston) Unimproved Land Fee --
Bellway Shopping Center
(Houston) Unimproved Land Fee --
New Jersey
570 Broad Street (Newark)(1) 14-story office bldg. Fee 190,000
Item 3. Legal Proceedings.
There are no material pending legal proceedings to which Registrant is a
party or of which any of Registrant's property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of holders of PPIs at a meeting or
otherwise during the fourth quarter of 2000.
- ---------------------------
(1) Vacant since 1996
4
PART II
Item 5. Market for the Registrant's Participation Interests
and Related Security Holder Matters.
As discussed above, Registrant is a limited partnership. PPIs represent the
beneficial interest of the Registrant's sole Limited Partner. As of December 31,
2000, there was no regular market for these securities and quotations are
limited and sporadic. During the third quarter, PPI's ceased to be traded in the
over-the-counter market on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"). The symbol is "IVPA."
The range of high and low closing bid quotations for PPIs in the
over-the-counter market for the two most recent years was as follows:
2000 (1) 1999
---------------------- ---------------------
High Low High Low
------ ------- ------ -----
First Qtr. 150 50 117 69
Second Qtr. 80 3 3/4 119 1/2 105
Third Qtr. 9 6 120 105
Fourth Qtr. 7 5 150 114
The foregoing over-the-counter quotations represent prices between dealers
and do not include retail mark-up, mark-down or commission and may not
necessarily represent actual transactions. As of December 31, 2000, there were
510 holders of record of PPIs.
5
Pursuant to the Partnership Agreement, Registrant is required to make
certain cash distributions to holders of PPIs. Net operating revenues for each
calendar year are distributable to the partners of Registrant approximately as
follows:
General Partners (as a group): .55%
Irving Schneider
Minlyn, Inc.
ScogBell AG, Inc. (formerly known as
Helmsley-Noyes Company, Inc.)
ScogBell
Converted Special L.P. Interest
ScogBell .95%
Special Limited Partners (as a group): 48.50%
ScogBell
Irving Schneider
Limited Partner (nominee for
holders of PPIs): 50.0%
The Limited Partner is the nominee for the holders of PPIs and all
distributions to the Limited Partner are distributed ratably to the holders of
820,000 Participation Interests. If with respect to any calendar year the
Limited Partner's distributive share (computed on the same basis as that used in
preparing Registrant's Federal income tax return) of income (loss), plus
one-half of such partner's distributive share of long-term capital gains,
exceeds the net operating revenue allocated to the Limited Partner as referred
to in the preceding paragraph, then Registrant must also distribute additional
funds in an amount equal to such excess to the holders of PPIs. If Registrant
does not have funds for such distribution (from cash on hand or borrowings), the
Partnership Agreement obligates the General Partners to lend or contribute funds
to Registrant for such purpose.
In 2000, Registrant had "net operating revenues" of $3,908,231, of which
$1,954,116 in the aggregate (or $2.38 per PPI) was distributed on April 2, 2001
to the holders of record of PPIs as of December 31, 2000 and an aggregate of
$1,954,116 was also distributed to the Special Limited Partners and General
Partners on that date. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
In 1999, Registrant had "net operating revenues" of $12,606,987, of which
$6,949,055 in the aggregate (or $8.47 per PPI) was distributed on March 31, 2000
to the holders of record of PPIs as of December 31, 1999 and an aggregate of
$6,949,055 was also distributed to the Special Limited Partners and General
Partners on that date. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
"Net operating revenues" is defined in Registrant's partnership agreement
as follows: for any year, (i) net taxable income of the Registrant, plus (ii)
depreciation and amortization expenses allowable for income tax purposes during
such year (but only to the extent of mortgage repayments), (iii) plus
amortization of Bond issuance costs and Bond discount (which is not relevant
after 1994), (iv) plus amortization of financing costs, (v) less principal
repayments on mortgages. In recent years, cash distributions to Registrant's
partners have generally exceeded the amount defined as net operating revenues.
See Item 7 below.
6
Item 6. Selected Financial Data.
2000 1999 1998 1997 1996
---- ---- ---- ---- ----
Income Statement Data
Gross revenues from $ 5,969,098 $ 31,640,834 $ 43,454,081 $46,463,473 $52,216,081
real estate
Net Income transferred to $153,829,678 $150,779,832 $112,747,733 $ 8,726,836 $ 8,452,069
Partner's capital accounts
Net operating revenues, as $ 3,908,231 $ 12,606,987 $ 9,803,570 $ 9,174,787 $ 8,342,911
defined
Net income per PPI: (1) $ 65.3015 $ 87.8823 $ 60.4848 $ 5.5280 $ 5.8636
Balance Sheet Data
Total assets $ 12,959,799 $102,611,031 $ 49,762,234 $53,585,976 $55,393,657
Mortgages payable $ -- $ 4,000,000 $ 23,847,488 $36,847,488 $40,314,558
Affiliate Loans $ -- $ -- $ -- $18,000,000 $18,000,000
- ---------------------
(1) Net income per PPI for 2000 reflects the reallocation of income from the
capital account of the Limited Partner and the credit of such amount to the
capital accounts of the General Partners and Special Limited Partners from
the numbers previously reported for the quarter ended June 30, 2000, as
described in Note 14 of the Notes to Financial Statements. The impact of
such adjustment on Net Income per PPI was ($22.2117), but such adjustment
had no impact on reported net income of Registrant and no impact on the
amount of entitlement to the net proceeds from the sale of partnership
property of the General Partners, Special Limited Partners or Limited
Partner.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Liquidity and Capital Resources
As previously discussed, Registrant disposed of its remaining income
producing properties during 2000 and at December 31, 2000, Registrant's
remaining properties consist of one vacant commercial property in Newark, New
Jersey and two unimproved parcels of land in Houston, Texas. Registrant will
seek to dispose of its remaining properties in 2001 and wind down its affairs,
although no assurances can be made in this regard.
Registrant has sold significant assets during 2000 and will seek to sell
remaining assets in 2001, but there can be no assurance that such sales will be
consummated.
On January 18, 2000, Registrant sold its 50% undivided interest in the
Marbridge Building located at 1328 Broadway in New York, New York for a sales
price of $43,500,000. In connection with the sale, Registrant repaid its 50%
share of the outstanding mortgage with Apple Bank of $4,000,000, paid a sales
commission of $1,646,000 to an affiliate of one of the General Partners and paid
other closing costs of approximately $1,400,000.
7
On May 8, 2000, Registrant sold the 245 and 261 Fifth Avenue properties in
New York, New York for a combined sales price of $135,000,000. In connection
with the sale, Registrant paid sales commission of $5,110,000 to an affiliate of
one of the General Partners and other closing costs of approximately $4,400,000.
Registrant is required to make certain cash distributions to its partners
for each year. See Item 5. On January 18, 2000, Registrant declared a special
distribution of $37,000,000 to its partners in connection with the sale on such
date of Registrant's 50% undivided interest in the Marbridge Building, of which
$18,500,000 was paid to the General Partners and Special Limited Partners in
January 2000 and $18,500,000 was paid to the holders of PPIs in February 2000.
On May 8, 2000, Registrant declared a special distribution to its partners
of approximately $120,000,000 in connection with the sale of the 245 and 261
Fifth Avenue properties, of which $60,000,000 was paid to the General Partners
and Special Limited Partners in May 2000 and $60,000,000 was paid to the holders
of Participation Interests in June 2000.
Registrant anticipates satisfying its working capital requirements for
fiscal year 2001 generally through existing cash reserves from the sale of
properties and/or the sale of its remaining Properties.
Net cash provided by operating activities was approximately $4.4 million in
2000, as compared to $12.4 million in 1999. Such decrease was primarily due to
decreased property operating income as a result of the sale of Registrant's
properties in New York. Net cash provided by investing activities was
approximately $164.4 million in 2000, as compared to $148.2 million in 1999.
Such increase was primarily attributable to a net increase in the proceeds
received from the sales of properties of $15.4 million. Net cash used in
financing activities was approximately $239 million in 2000, as compared to
$94.7 million in 1999. Such increase was primarily due to increased
distributions of approximately $160.2 million.
Impact of Year 2000
Registrant did not experience any material problems relating to Year 2000
issues, either with its internal systems or the products and services of third
parties.
8
Results of Operations
2000 Compared to 1999
Gross Revenues from rentals for 2000 decreased approximately $25,672,000
(approximately 81%) as compared to 1999, primarily due to the impact of the
sales of the 50% undivided interest in the Marbridge Building (sold in January
2000), the 245 Fifth Avenue and 261 Fifth Avenue properties (sold in May 2000),
and the 1440 Broadway property (sold in December 1999). Total expenses decreased
by approximately $14,160,000 (approximately 79%) as a result of the
aforementioned property sales. Net income for 2000 increased approximately
$3,050,000 primarily due to an increase of approximately $14,065,000 in the gain
on sale of real estate offset by a decline in property operating income of
approximately $11,196,000 as a result of the aforementioned property sales.
During 2000, Registrant's rental income was generated by the operations of
its 50% undivided interest in the Marbridge Building and of the 245 and 261
Fifth Avenue properties, which were sold during 2000.
For 2000, Registrant's interest expense decreased approximately $1,633,000
(approximately 97%), due to the repayment of Registrant's 50% share of the
$8,000,000 mortgage loan on the Marbridge Building on January 18, 2000 in
connection with the sale of Registrant's 50% undivided interest in such
property.
Registrant's real estate tax expense in 2000 decreased approximately
$4,086,000 (approximately 88%), due to the sale of its 50% undivided interest in
the Marbridge Building in January 2000 and the sale of the 261 and 245 Fifth
Avenue properties in May 2000. Registrant, under certain commercial leases, was
able to pass a portion of the increases in real estate taxes, operating expenses
and increases in the consumer price index to the tenants based on lease
escalation clauses.
Management fees decreased approximately $407,000 (approximately 79%), due
to the sale of the aforementioned properties.
Payroll and related expenses decreased approximately $1,467,000
(approximately 77%), due to the sale of the aforementioned properties.
Repairs and maintenance expenses decreased approximately $1,544,000 (87%),
due to the sale of the aforementioned properties.
Other property expenses decreased approximately $3,089,000 (approximately
79%), due to the sale of the aforementioned properties.
Administrative expenses increased approximately $44,000 (approximately 7%),
due to the increased professional fees associated with the administration of the
partnership activities.
Depreciation and amortization expenses decreased approximately $1,978,000
(approximately 70%), due to the aforementioned sales.
9
1999 Compared to 1998
Gross revenues from rentals for 1999 decreased approximately $11,813,000
(approximately 27%) as compared to 1998, primarily due to decreases in revenue
due to the impact of the sale of the Chicago Properties (sold in September 1998)
and the sale of the Mojud Building (sold in April 1999), offset in part by
increases in revenue from Registrant's other New York properties. Net income for
1999 increased approximately $38,032,000 primarily due to an increase of
$35,139,000 in the gain on sale of properties. Total expenses decreased by
approximately $14,764,000 (approximately 45%) as a result of the sale of the
Chicago Properties in September 1998 and the Mojud Building in April 1999.
During 1999, Registrant's rental income was generated primarily by the
operations of its New York properties. Leasing activity remains active in New
York and Registrant anticipates continuing its practice of negotiating new
leases and renewing existing leases upon their expiration; however, there is no
assurance that some of Registrant's tenants will not go out of business, reduce
their space requirements or relocate.
For 1999, Registrant's interest expense decreased approximately $2,166,000
(approximately 56%), primarily due to lower levels of average outstanding
indebtedness during 1999 which resulted from mortgage principal repayments of
$13,000,000 made in 1998 and the repayments of Affiliate Loans of $18,000,000
made in 1998. In addition, Registrant repaid the outstanding balance of its
mortgage loan with Chase in December 1999.
Registrant's real estate tax expense in 1999 decreased approximately
$2,515,000 (approximately 35%), due to the sale of the Chicago Properties in
September 1998 and the sale of the Mojud building in April 1999. Registrant,
under certain commercial leases, is able to pass a portion of the increases in
real estate taxes, operating expenses and increases in the consumer price index
to the tenants based on lease escalation clauses.
Management fees decreased approximately $605,000 (approximately 54%), due
to the sale of the Chicago Properties in September 1998 and the sale of the
Mojud building in April 1999.
Payroll and related expenses decreased approximately $2,323,000
(approximately 55%), due to the sale of the Chicago Properties in September 1998
and the sale of the Mojud building in April 1999.
Repairs and maintenance expenses decreased approximately $1,357,000
(approximately 43%), due to the sale of the Chicago Properties in September 1998
and the sale of the Mojud building in April 1999.
Other property expenses decreased approximately $4,550,000 (approximately
54%), due to the sale of the Chicago Properties in September 1998 and the sale
of the Mojud building in April 1999.
Administrative expenses increased approximately $283,000 (approximately
91%), due to increased professional fees associated with the administration of
partnership activities and increased regulatory filing requirements.
Depreciation and amortization expenses decreased approximately $1,098,000
(approximately 28%), due to the sale of the Chicago Properties in September 1998
and the sale of the Mojud building in April 1999.
10
Item 7A. Disclosures About Market Risk.
At December 31, 2000, Registrant had no interest bearing indebtedness and
accordingly was not exposed to market risk with respect to changes in interest
rates, and does not anticipate a need to seek additional borrowing.
Item 8. Financial Statements and Supplementary Data.
The response to this Item is submitted in a separate section of this
report.
Item 9. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure.
None.
11
PART III
Item 10. General Partners of the Registrant.
(a) (b) Identification of General Partners.
Registrant is a limited partnership. It does not have directors or
executive officers. The information set forth below is provided with respect to
the General Partners of the Registrant, who may be considered to occupy
positions equivalent to directors or executive officers. There is no specific
term of office for any General Partner of the Registrant. Each General Partner,
with the exception of ScogBell, has served in such capacity since December 4,
1969.
The names, ages, and business experience during the past five years of the
General Partners of the Registrant, including their principal occupations and
employment during that period and the name and principal business of any
corporation or other organization in which such occupations and employment were
carried on, is as follows:
Irving Schneider - 81; Executive Vice President of Helmsley-Spear, Inc. Mr.
Schneider has been in the real estate business for over 50 years and owns and
operates, individually or through partnerships, numerous real estate
investments.
Minlyn, Inc. was formed in 1968. All of its stock is owned by Mr.
Schneider. Mr. Schneider is a director of Reliance Group Holdings, Inc. and
Reliance Insurance Company.
Registrant has been advised that ScogBell was created in June 1998 to
acquire, hold, finance and sell interests in Registrant. Control of ScogBell is
vested exclusively with ScogBell AG Manager, Inc. and ScogBell SB Manager, Inc.,
as managers.
ScogBell AG, Inc. (formerly known as Helmsley-Noyes Company, Inc.), was
incorporated in 1926 and it is a real estate management firm in New York City
which was acquired by ScogBell on June 10, 1998.
Harry B. Helmsley was a General Partner of Registrant until his death on
January 4, 1997. He was succeeded by H Associates on July 3, 1997. H Associates
acquired a nominal general partner interest from Helmsley-Noyes Corporation in
connection with its admission as a General Partner. On June 10, 1998, H
Associates ceased to be a General Partner of Registrant and was replaced by
ScogBell as a General Partner pursuant to a sale of its entire beneficial
ownership position. See "Business."
Item 11. Executive Compensation.
Registrant is a limited partnership. It does not have officers, executive
officers or directors. The information set forth below is provided with respect
to the General Partners and the Special Limited Partners of the Registrant, who
may be considered to act in capacities similar to directors, or perform
policy-making functions similar to those of executive officers or officers in
charge of a principal business unit, division or function.
Paragraph 11A(3) of the Partnership Agreement provides for certain
guaranteed payments to be made to the General Partners and Special Limited
Partners of Registrant equal to 8-3/4% per annum of their "Remaining Original
Cash Contribution." The Remaining Original Cash Contribution is $1,500,000, less
12
the cumulative amounts distributed to the General Partners and Special Limited
Partners from time to time in respect of the net proceeds from the sale of
Registrant's properties. The Remaining Original Cash Contribution as of December
31, 2000 was $1,160,000. For the fiscal year ended December 31, 2000, Registrant
paid or accrued, pursuant to such paragraph 11A(3), guaranteed payments to the
General and Special Limited Partners in an aggregate amount of $101,500 as
follows: Irving Schneider - $33,732, ScogBell - $67,576, ScogBell AG, Inc.
(formerly known as Helmsley-Noyes Company, Inc.) - $91 and Minlyn, Inc. - $101.
Under the terms of the Partnership Agreement, since January 1, 1973, the
General Partners are entitled to receive an annual payment equal to 1/2% of the
gross revenue from real estate of Registrant. During the fiscal year ended
December 31, 2000, Registrant accrued in connection with such annual payments an
aggregate of $34,054 as follows: Irving Schneider - $10,216, ScogBell AG, Inc.
(formerly known as Helmsley-Noyes Company, Inc.) - $1,022, ScogBell - $21,681
and Minlyn, Inc. - $1,135. Mr. Schneider and ScogBell are entitled to receive
distributions of net operating revenues in each of their respective capacities
as Special Limited Partners. See "Item 5" above.
Registrant does not provide any compensation to the General Partners or the
other persons in the form of option or stock appreciation right grants,
long-term incentive plans, or a defined benefit or actuarial plans. The
Registrant has no standard arrangements for payment of fees to General Partners
(other than for their interest as General Partners, as described above), or
employment contracts or change-of-control agreements.
Item 12. Security Ownership of Certain
Beneficial Owners and Management.
(a) Registrant is a limited partnership. Except to the extent set forth
below, it does not have voting securities. The right to control the business of
Registrant is vested in the General Partners of Registrant by virtue of
provisions of the Partnership Agreement and Article 8A of the New York
Partnership Law.
The Partnership Agreement provides for modification or amendments of the
Partnership Agreement upon obtaining the consents or affirmative votes of
specified percentages of the Special Limited Partners and the Limited Partners,
each voting as a class. The sole limited partner votes as directed by the
holders of PPIs.
To the extent that the Special Limited Partnership Interests and PPIs are
considered voting securities, the following information is provided as to
holders of 5% or more of each such class at December 31, 2000:
13
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
- -------------- ------------------- ----------- ---------
Special Limited ScogBell Direct 66.66%
Partnership Interest 660 Madison Ave.
New York, NY 10021
Irving Schneider Direct 33.34%
880 Fifth Avenue
New York, NY
Converted Special ScogBell Direct 100.00%
Limited Partner Interest 660 Madison Ave.
New York, NY 10021
PPIs ScogBell 310,927(1) 37.92%
660 Madison Ave.
New York, NY 10021
Long Island Jewish Medical Center 90,095 10.99%
270-05 76th Avenue Direct
New Hyde Park, NY 11040
- ---------------------
(1) Includes PPIs purchased from the following: 258,877 PPIs owned directly by
Leona M. Helmsley; also 4,000 PPIs held by Helmsley-Noyes Company, Inc.
(0.5%), a company owned by Helmsley Enterprises, Inc., which in turn is
wholly-owned by the Harry B. Helmsley Revocable Trust, under agreement
dated December 13, 1989; 13,000 PPIs held by HBH Holdings Corp. (1.6%),
6,500 PPIs held by Park Lane Hotel, Inc. (0.8%) and 28,550 PPIs in the
over-the-counter market.
14
(b) Registrant is a limited partnership and, as such, its affairs are
managed by its General Partners. The following table sets forth the amount and
nature of the beneficial ownership at December 31, 2000 of each class of
partnership interests by its General Partners individually and as a group:
Amount and
Nature of
Name and Address of Beneficial Percent
Title of Class Beneficial Owner Ownership of Class
- -------------- ------------------- ----------- --------
General Partnership Irving Schneider
Interests 880 Fifth Avenue
New York, NY Direct(1) 90.91%
ScogBell Indirect 9.09%
660 Madison Ave.
New York, NY 10021
As a group 100.00%
Special Limited ScogBell Direct(2) 66.66%
Partnership Interests 660 Madison Ave.
New York, NY 10021
Irving Schneider Direct(1) 33.34%
880 Fifth Avenue
New York, NY
As a group 100.00%
Converted Special
Limited Partner Interest ScogBell Direct(2) 100.00%
660 Madison Ave.
New York, NY 10021
Participation Interests ScogBell 310,927 37.92%
660 Madison Ave.
New York, NY 10021 Direct(3)
- ---------------------
(1) Mr. Irving Schneider owns approximately 90% of such interest directly and
10% indirectly through his ownership of Minlyn, Inc.; 60 East 42nd Street,
New York, New York, which is also a General Partner of Registrant.
(2) The Special Limited Partnership Interests have the rights set forth in the
Partnership Agreement and are not securities issued by Registrant. The
Converted Special L.P. Interest represents the economic interest in
Registrant formerly owned by Harry B. Helmsley in his capacity as a General
Partner. See "Business."
(3) Includes PPIs purchased from the following: 258,877 PPIs owned directly by
Leona M. Helmsley; also 4,000 PPIs held by Helmsley-Noyes Company, Inc.
(0.5%), a company owned by Helmsley Enterprises, Inc., which in turn is
wholly-owned by the Harry B. Helmsley Revocable Trust, under agreement
dated December 13, 1989; 13,000 PPIs held by HBH Holdings Corp. (1.6%),
6,500 PPIs held by Park Lane Hotel, Inc. (0.8%) and 28,550 PPIs in the
over-the-counter market.
15
Item 13. Certain Relationships and Related
Transactions.
(a) Transactions with Management and Others.
(b) Certain Business Relationships.
As set forth in Item 11(a) above, during the year ended December 31, 2000,
Registrant paid certain fees and certain guaranteed payments to each of its
corporate General Partners, ScogBell AG, Inc. (formerly known as Helmsley-Noyes
Company, Inc.) and Minlyn, Inc., pursuant to the Partnership Agreement. See Item
10 hereof as to the ownership of said corporations. HSI, either directly or
through various subsidiaries, acts as managing agent of the Properties. For such
management and leasing brokerage services, HSI charged Registrant the aggregate
sum of approximately $393,000 during the fiscal year ended December 31, 2000.
Leasing commissions charged by HSI are based upon varying percentages of the
annual rent paid by tenants obtained by HSI. Property management fees charged by
HSI are based upon negotiated amounts that are believed to be below market rate.
Leasing fees charged by HSI to Registrant are believed to be, from Registrant's
perspective, on a basis that approximate those that would be available to
Registrant from non-affiliates at arm's-length. In 2000, HSI also earned
$6,754,000 in brokerage commissions in connection with the sale of the 50%
undivided interest in the Marbridge Building and the 245 Fifth Avenue and 261
Fifth Avenue properties. The amount of the commissions paid for such services is
believed by Registrant to be no more than the amount which Registrant would be
required to pay to unrelated parties performing such services.
(c) Indebtedness of Management.
None.
16
PART IV
Item 14. Exhibits, Financial Statement
Schedules, and Reports on Form 8-K.
(a) (1) and (2) The response to this portion of Item 14 is submitted as a
separate section of this report.
(a) (3) Exhibits. Subject to Rule 12b-32 of the Securities Act of 1934
regarding incorporation by reference, listed below are the exhibits which are
filed as part of this report and are hereby incorporated by reference (according
to the numbers assigned to them in Item 601 of Regulation S-K):
(3)(i) Registrant's Limited Partnership Agreement dated as of May
15, 1969, as amended on October 2, 1969, October 31, 1969,
and December 3, 1969 is hereby incorporated by reference to
Exhibits 3.1, 3.2, 3.3 and 3.4 to Registration Statement No.
2-33132 which was declared effective by the SEC on December
4, 1969.
(ii) Amendment to Agreement of Limited Partnership, dated as of
May 30, 1997.
(10.1) Management Agreement dated May 20, 1969 between
Helmsley-Spear, Inc. and Registrant is hereby incorporated
by reference to Exhibit 12.1 to Registration Statement No.
2-33132. The leasing commissions and management fees
currently being charged to the Registrant are consistent
with the rates generally charged in the areas where the
properties are located.
(10.2) Forms of Promissory Notes, dated November 30, 1994,
evidencing the Affiliate Loans is hereby incorporated by
reference to Exhibit 10.2 of Registrant's Report on Form
10-K for the fiscal year ended December 31, 1994.
(b) Reports on Form 8-K filed during the period covered by this Report:
(i) On May 10, 2000, Registrant filed a Current Report on Form
8-K relating to the completion of the sale of 245 Fifth Avenue and 261
Fifth Avenue, New York, N.Y. for $135,000,000
(ii) On April 25, 2000, Registrant filed a Current Report on Form
8-K relating to the contract to sell 245 Fifth Avenue and 261 Fifth
Avenue, New York, New York for $135,000,000.
(iii) On April 13, 2000, Registrant filed a Current Report on
Form 8-K relating to its intention to sell 245 Fifth Avenue and 261
Fifth Avenue, New York, New York.
(iv) On February 15, 2000 Registrant filed a Current Report on
Form 8-K relating to the sale of 1440 Broadway, New York, New York,
for $152,000,000
(v) On January 21, 2000, Registrant filed a Current Report on
Form 8-K relating to the sale of 1328 Broadway, New York, New York for
$43,500,000.
(d) Financial Statement Schedules-- The response to this portion of Item 14
is submitted as a separate section of this report.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
INVESTMENT PROPERTIES ASSOCIATES
By: /s/ Irving Schneider
--------------------------------
Irving Schneider
General Partner
Dated: April 12, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the date first indicated above.
/s/ Irving Schneider
- ---------------------------- General Partner,
Irving Schneider Principal Executive,
Financial and
Accounting Officer
MINLYN, INC. General Partner
By: /s/ Irving Schneider
-------------------------
Irving Schneider
President
SCOGBELL AG, INC. General Partner
By: /s/ Craig Effron
-------------------------
Craig Effron
President
SCOGBELL ACQUISITION, L.L.C. General Partner
By: /s/ Craig Effron
-------------------------
President
ScogBell AG Manager, Inc., Manager
Annual Report On Form 10-K
Item 14(A)(1) And (2) And Item 14(D)
List Of Financial Statements And Financial Statement Schedule
Financial Statements And Financial Statement Schedule
Year Ended December 31, 2000
Investment Properties Associates
(A New York Limited Partnership)
New York, New York
Investment Properties Associates
(A New York Limited Partnership)
Index Of Financial Statements And Financial Statement Schedule
Page
----
Report of Independent Auditors...............................................S-1
Balance Sheets-December 31, 2000 and 1999............................S-2 and S-3
Statements of Income-Years Ended December 31, 2000
1999 and 1998......................................................S-4 and S-5
Statements of Changes in Partners' Capital (Deficiency)-
Years Ended December 31, 2000, 1999 and 1998...............................S-6
Statements of Cash Flows-Years Ended December 31, 2000
1999 and 1998..............................................................S-7
Notes to Financial Statements........................................S-8 to S-21
The following financial statement schedule of Investment Properties Associates
is included in Item 14(d):
Schedule III-Real Estate and Accumulated Depreciation..............S-22 and S-23
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under the
related instructions, are inapplicable or have been otherwise disclosed, and
therefore have been omitted.
Report of Independent Auditors
Investment Properties Associates
We have audited the accompanying balance sheets of Investment Properties
Associates (a New York Limited Partnership) as of December 31, 2000 and 1999,
and the related statements of income, changes in partners' capital (deficiency)
and cash flows for each of the three years in the period ended December 31,
2000. Our audits also included the financial statement schedule listed in the
index at Item 14. These financial statements and schedule are the responsibility
of the Partnership's management. Our responsibility is to express an opinion on
these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards 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. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Investment Properties
Associates at December 31, 2000 and 1999, and the results of its operations and
its cash flows for each of the three years in the period ended December 31,
2000, in conformity with accounting principles generally accepted in the United
States. Also, in our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
New York, New York
March 22, 2001
S-1
Investment Properties Associates
(A New York Limited Partnership)
Balance Sheets
December 31,
2000 1999
-------------------------
Assets
Real estate, at cost (Notes 3 and 5) $ 8,033,347 $ 40,649,960
Less accumulated depreciation
and amortization 5,880,040 26,391,697
-------------------------
2,153,307 14,258,263
Cash and cash equivalents 9,514,349 79,770,013
Due from managing agent (Helmsley-
Spear Inc.) including tenants'
security deposits of $-- (2000)
and $1,963,001 (1999) (Note 6) 730,578 2,822,168
Receivables, principally for rentals 8,215 467,232
Deferred charges, including deferred
leasing commissions of $-- (2000) and
$2,115,053 (1999)
(Note 6) 553,350 5,293,355
-------------------------
Total assets $12,959,799 $102,611,031
=========================
See accompanying notes.
S-2
Investment Properties Associates
(A New York Limited Partnership)
Balance Sheets
December 31,
2000 1999
------------------------
Liabilities and partners' capital
(deficiency)
Accounts payable $ 113,368 $ 678,177
Accrued real estate taxes 11,086 1,480,861
Accrued interest -- 29,278
Distributions payable to General Partners,
Special Limited Partners and Limited
Partner (Note 9) 3,915,446 77,979,781
Guaranteed payments due to General
Partners, Special Limited Partners and
Limited Partner (Note 7) 180,553 300,721
Accrued leasing commissions and
management fees due to Helmsley-
Spear, Inc. (Note 6) 41,820 231,113
Sundry and accrued liabilities 172,545 610,712
Mortgage payable (Note 5) -- 4,000,000
Deposits, and rents received in advance of
$-- (2000) and $85,406 (1999) -- 1,696,853
-------------------------
Total liabilities 4,434,818 87,007,496
-------------------------
Commitments and contingencies
(Notes 10 and 13)
Partners' capital (deficiency)
(Notes 1, 7 ,8, 9 and 14):
General Partners (2,465,397) (2,683,508)
Special Limited Partners 5,966,387 13,643,808)
Limited Partner (represented by
the equivalent of 820,000
Participation Interests) 5,023,991 31,930,851
-------------------------
8,524,981 15,603,535
-------------------------
Total liabilities and partners'
capital (deficiency) $12,959,799 $102,611,031
=========================
See accompanying notes.
S-3
Investment Properties Associates
(A New York Limited Partnership)
Statements of Income
Year ended December 31,
2000 1999 1998
---------------------------------------------
Revenues:
Gross revenues from real estate (Note 11) $ 5,969,098 $ 31,640,834 $ 43,454,081
Interest and other income 1,174,914 798,599 917,010
---------------------------------------------
7,144,012 32,439,433 44,371,091
---------------------------------------------
Expenses:
Leasehold rentals -- -- 409,095
Real estate taxes 547,845 4,633,769 7,149,045
Interest (Notes 4 and 5) 43,584 1,676,492 3,842,192
Management fees (Note 6) 109,737 517,005 1,121,955
Payroll and related expenses 431,153 1,898,115 4,220,947
Repairs and maintenance expenses 239,056 1,783,373 3,139,757
Other property expenses 825,410 3,914,440 8,463,862
Administrative expenses 636,900 592,736 309,626
Co-owners' share of expense -- -- 25,027
Depreciation and amortization of real estate 598,174 1,974,245 2,781,850
Amortization of leasing commissions 232,160 831,865 1,100,072
Amortization of mortgage refinancing costs -- 1,593 24,323
---------------------------------------------
3,664,019 17,823,633 32,587,751
---------------------------------------------
Income before items shown below 3,479,993 14,615,800 11,783,340
Gain on sales of real estate (Note 3) 150,500,239 136,434,754 101,295,596
---------------------------------------------
Income before guaranteed payments required
under the Limited Partnership agreement $153,980,232 $151,050,554 $113,078,936
See accompanying notes.
S-4
Investment Properties Associates
(A New York Limited Partnership)
Statements of Income (continued)
Year ended December 31,
2000 1999 1998
-----------------------------------------------
Guaranteed payments required under the
Limited Partnership agreement (Note 7):
To the Limited Partner $ 15,000 $ 15,000 $ 15,000
To General and Special Limited Partners 101,500 101,500 101,500
To General Partners 34,054 154,222 214,703
-----------------------------------------------
150,554 270,722 331,203
-----------------------------------------------
Net income $153,829,678 $150,779,832 $112,747,733
===============================================
Net income allocable as follows (Notes 8 and 14):
General Partners $ 1,103,106 $ 865,880 $ 694,652
Special Limited Partners 99,179,316 77,850,455 62,455,572
Limited Partner 53,547,256 72,063,497 49,597,509
-----------------------------------------------
$153,829,678 $150,779,832 $112,747,733
===============================================
Net Income Per Limited Partner Participation
Interest (820,000 units outstanding): $ 65.3015 $ 87.8823 $ 60.4848
===============================================
See accompanying notes.
S-5
Investment Properties Associates
(A New York Limited Partnership)
Statements of Changes in Partners' Capital (Deficiency)
Special
General Limited Limited
Total Partners Partners Partner
---------------------------------------------------------------------------
Partners' Capital (Deficiency)
January 1, 1998 $(37,970,893) $(3,089,297) $(50,128,009) $ 15,246,413
Distribution to General Partners,
Special Limited Partners and
Limited Partner (Note 9) (68,055,027) (374,303) (33,653,211) (34,027,513)
Net income for the year ended
December 31, 1998 (Note 8) 112,747,733 694,652 62,455,572 49,597,509
---------------------------------------------------------------------------
Partners' Capital (Deficiency)
December 31, 1998 6,721,813 (2,768,948) (21,325,648) 30,816,409
Distribution to General Partners,
Special Limited Partners
and Limited Partner (Note 9) (141,898,110) (780,440) (70,168,615) (70,949,055)
Net income for the year ended
December 31, 1999 (Note 8) 150,779,832 865,880 77,850,455 72,063,497
---------------------------------------------------------------------------
Partners' Capital (Deficiency)
December 31, 1999 15,603,535 (2,683,508) (13,643,808) 31,930,851
Distribution to General Partners,
Special Limited Partners and
Limited Partner (Note 9) (160,908,232) (884,995) (79,569,121) (80,454,116)
Net income for the year ended
December 31, 2000
(Notes 8 and 14) 153,829,678 1,103,106 99,179,316 53,547,256
---------------------------------------------------------------------------
Partners' Capital (Deficiency)
December 31, 2000 $ 8,524,981 $(2,465,397) $ 5,966,387 $ 5,023,991
===========================================================================
See accompanying notes.
S-6
Investment Properties Associates
(A New York Limited Partnership)
Statements of Cash Flows
Year ended December 31,
2000 1999 1998
---------------------------------------------------------
Operating activities:
Net income $ 153,829,678 $ 150,779,832 $ 112,747,733
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 830,334 2,807,703 3,906,245
Deferred rent -- (1,082,359) (1,045,707)
Gain on sale of real estate (150,500,239) (136,434,754) (101,295,596)
Changes in operating assets and liabilities:
Due from managing agent 2,091,590 (446,415) 337,226
Receivables, net 459,017 139,042 987,957
Deferred charges, net 676,101 (121,133) (3,077,192)
Accounts payable (564,809) (476,892) (1,055,285)
Accrued real estate tax 11,088 (1,586,162) (1,817,833)
Accrued interest (29,278) (125,747) (238,119)
Guaranteed payments due to General Partners
Special Limited Partners and Limited Partner (120,168) (400,107) 316,203
Accrued leasing commissions and management fees (189,293) (60,292) (480,943)
Sundry and accrued liabilities (438,167) (469,253) 232,297
Deposits and rents received in advance (1,696,853) (162,447) (122,489)
---------------------------------------------------------
Net cash provided by operating activities 4,359,001 12,361,016 9,394,497
---------------------------------------------------------
Investing activities:
Property improvements (595,995) (1,371,534) (2,201,413)
Net proceeds from sale of real estate 164,953,897 149,599,635 117,803,063
---------------------------------------------------------
Net cash provided by investing activities 164,357,902 148,228,101 115,601,650
---------------------------------------------------------
Financing activities:
Distributions to General Partners, Special Limited
Partners and Limited Partner (234,972,567) (74,802,647) (82,405,306)
Principal payments on mortgages payable (4,000,000) (19,847,488) (13,000,000)
Principal payments on notes payable to related parties -- -- (18,000,000)
---------------------------------------------------------
Net cash used in financing activities (238,972,567) (94,650,135) (113,405,306)
---------------------------------------------------------
(Decrease) increase in cash and cash equivalents (70,255,664) 65,938,982 11,590,841
Cash and cash equivalents at beginning of year 79,770,013 13,831,031 2,240,190
---------------------------------------------------------
Cash and cash equivalents at end of year $ 9,514,349 $ 79,770,013 $ 13,831,031
=========================================================
Supplemental disclosure of cash flow information
Cash paid during the year for interest $ 72,862 $ 1,802,239 $ 4,080,311
=========================================================
Supplemental disclosure of non-cash investing and
financing activities:
Deferred rent receivable charged to cost of sales $ -- $ 1,993,760 $ --
Deferred leasing commissions charged to cost of sales 2,350,881 1,703,931 --
See accompanying notes.
S-7
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements
December 31, 2000 and 1999
1. Description of Business
Investment Properties Associates ("IPA") was formed as a limited partnership on
May 15, 1969 to acquire and operate commercial properties. Through January 4,
1997, the General Partners of IPA were Mr. Harry B. Helmsley and Mr. Irving
Schneider and two corporations owned or controlled by them. Collectively, the
General Partners owned a 1.5% interest in IPA. Upon the death of Mr. Helmsley on
January 4, 1997, the general partnership interest owned by him automatically
converted to a Special Limited Partnership Interest owned by his estate. As a
result of this conversion, the total interests of the General Partners were
reduced to .55%. The Special Limited Partners are Mrs. Leona M. Helmsley, Mr.
Irving Schneider, and the Estate of Mr. Harry B. Helmsley and the Limited
Partner is Mr. John Bailey. Undivided interests in the limited partnership are
represented by 820,000 Participation Interests ("PPI's"). Changes in ownership
subsequent to January 4, 1997, are described below.
Under the terms of the Partnership Agreement in effect on the date of Mr.
Helmsley's death, the General Partners were required to create a new limited
partnership with the same attributes as IPA and convey all assets and
liabilities of IPA to that entity. Because such a course of action would have
resulted in substantial expense to IPA and no benefit to the partners and
holders of PPI's, the General Partners obtained approval of a majority of the
holders of the PPI's to continue the business of IPA, and the Partnership
Agreement was amended to that effect effective May 30, 1997.
Effective July 3, 1997, the Partnership Agreement was further amended to admit a
newly formed limited liability company owned by Mrs. Leona M. Helmsley as a
General Partner of IPA. This entity was allocated a portion of the general
partner interest owned by one of the corporate general partners.
On June 10, 1998, the General Partner interests of the corporation and limited
liability company owned by Mrs. Leona M. Helmsley, and the Special Limited
Partner interests owned by Mrs. Leona M. Helmsley and the Estate of Harry B.
Helmsley were acquired by ScogBell Acquisition, L.L.C. ("ScogBell"). Also on
June 10, 1998, ScogBell acquired 282,377 PPI's from Mrs. Leona M. Helmsley and
28,550 PPI's in the over-the-counter market.
S-8
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
2. Significant Accounting Policies
a. The preparation of financial statements in conformity with accounting
principals generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amount of assets
and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
b. Rental revenue from tenant leases is recognized on a straight line basis
over the terms of the associated leases.
c. Depreciation of buildings and building improvements is provided for by the
straight-line method over estimated useful lives of 19 to 39 years.
Leaseholds, leasehold improvements and tenants' alterations are amortized
over the terms of the related leases. Amounts applicable to tenants'
alterations and the related accumulated amortization are eliminated from
the accounts at the time the related lease expires or, if the tenant should
vacate the premises prior thereto, unamortized assets are charged to
operations in the year the premises are vacated.
d. Costs in connection with mortgage refinancings are included in deferred
charges and are being amortized over the terms of the related mortgages.
e. Leasing commissions are amortized over the terms of the related leases.
f. IPA's employees are covered under multi-employer defined contribution
pension plans. All contributions are funded currently based upon negotiated
union contracts. Information from the plans' administrators is not
available to permit IPA to determine its share of unfunded vested benefits.
During 2000, 1999 and 1998, IPA paid approximately $93,000, $273,000, and
$562,000, respectively, for employees to union plans for pension, welfare
and other benefits.
g. For the purpose of determining cash equivalents, IPA considers all highly
liquid investments with a maturity of three months or less, when purchased,
to be cash equivalents.
S-9
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
h. Financial Accounting Standards Board ("FASB") Statement No. 107,
"Disclosures About Fair Value of Financial Investments", defines fair
value of a financial instrument as the amount at which the instrument
could be exchanged in a current transaction between willing parties.
The methods and assumptions used to estimate the fair value of
financial instruments at December 31, 2000 and 1999 are as follows:
(i) The carrying value of cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities and deposits
and rents received in advance approximate fair value due to the
short maturities of these items.
(ii) The carrying value of mortgage payable approximates fair value
due to the short term maturity of the note.
i. Gains on sales of real estate are recognized at closing in accordance
with FASB Statement No. 66, "Accounting for Sales of Real Estate".
j. FASB Statement No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of," requires
impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the
undiscounted cash flow estimates to be generated by those assets are
less than the asset's carrying amount or on long-lived assets held for
sale when the assets carrying amount is greater than the fair market
value less costs of disposal for those assets on a property by
property basis. IPA evaluates each of its properties for indicators of
impairment by reference to the undiscounted cash flows to be generated
from the operation and sale of the properties. No indicators of
impairment were present, and, accordingly no provisions for impairment
have been recorded in any of the periods presented.
k. Basic earnings per share has been calculated by dividing the net
income allocated to the Limited Partner by the 820,000 PPI's
outstanding. As IPA has no potentially dilutive securities, no
presentation of diluted earnings per share is required.
l. Effective January 1, 1998, IPA adopted FASB Statement No. 131,
Disclosures about Segments of an Enterprise and Related Information
("Statement 131"). IPA is engaged in the ownership and operation of
commercial office properties and has one reportable segment. IPA
evaluates real estate performance and allocates resources based on net
S-10
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
operating income. The primary sources of revenue are generated from
tenant base rents and escalations of operating expenses and real
estate taxes. Operating expenses primarily consist of common area
maintenance. The commercial office property segment meets the
quantitative threshold for determining reportable segments. IPA has no
investment in foreign operations.
m. Certain amounts in the 1999 and 1998 financial statements have been
reclassified to conform to the 2000 presentation.
3. Real Estate
Real estate is summarized as follows:
Classification 2000 1999
-------------------------------------------------------------------------
Land $ 502,032 $ 4,935,164
Buildings and building improvements -- 21,401,388
Leaseholds and leasehold improvements 7,531,315 7,497,580
Tenants' alterations -- 6,815,828
----------------------------
$8,033,347 $40,649,960
============================
On May 8, 2000, IPA sold the 245 Fifth Avenue and the 261 Fifth Avenue, New
York, New York, properties for $135,000,000. The sales proceeds were used to pay
closing costs of approximately $4,400,000 and a sales commission to one of the
general partners of approximately $5,110,000. In connection with this
transaction, IPA recognized a gain on the sale of approximately $113,570,000. In
addition, distributions of $60,000,000 was paid to the General Partners and
Special Limited Partners in May 2000 and $60,000,000 was paid to holders of
Participation Interest in June 2000.
On January 18, 2000, IPA sold its 50% undivided interest in the 1328 Broadway,
New York, New York, property for $43,500,000. The sales proceeds were used to
repay IPA's 50% share of the $8,000,000 mortgage loan encumbering its interest
in the property, pay closing costs of approximately $1,400,000 and a sales
commission to one of the general partners of approximately $1,650,000.
S-11
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
3. Real Estate (continued)
In connection with this transaction, IPA recognized a gain on sale of
approximately $36,930,000. In addition, distributions of $18,500,000 was paid to
the General Partners and Special Limited Partners in January 2000 and
$18,500,000 was paid to the holders of Participation Interests in February 2000.
On December 16, 1999, IPA sold the 1440 Broadway property for $152,000,000. The
sales proceeds were used to repay mortgage debt of approximately $17,347,500,
sales commissions of $3,800,000 paid to an affiliate of one of the General
Partners and other closing costs of approximately $5,047,000. In connection with
this transaction, IPA recognized a gain on sale of approximately $130,557,000.
In addition, on December 16, 1999, IPA declared a special distribution to its
partners of approximately $128,000,000 of which 64,000,000 was paid to the
General Partners and Special Limited Partners in December 1999 and $64,000,000
was paid to the holders of Participation Interests in January 2000.
On May 18, 1999, IPA sold the Midland Savings Building located in Midland, Texas
for a sales price of $300,000. In connection with this transaction, IPA
recognized a gain of approximately $298,000.
On April 14, 1999, IPA sold the Mojud Building located in Long Island City, New
York for a sales price of $6,500,000. The sales proceeds were used to pay sales
commissions of $162,500 to an affiliate of one of the General Partners and other
closing costs of approximately $239,000. In connection with this transaction,
IPA recognized a gain of approximately $5,580,000.
On September 28, 1998, IPA sold its five Chicago commercial properties (the
"Chicago Properties") for $121,000,000. The sales proceeds were used to repay
mortgage debt, loans from the General Partners, accrued distributions payable to
the General Partners and Special Limited Partners, sales commissions of
$3,025,000 paid to an affiliate of one of the General Partners and other related
costs, aggregating approximately $64,000,000. In addition, IPA made a special
distribution to its partners of approximately $57,000,000. In connection with
this transaction, IPA recognized a gain on sale of approximately $100,683,900.
On January 22, 1998, IPA sold to an unrelated party its leasehold interest as
ground tenant under its lease with the City of Newark, NJ on the property
located at 1180 Raymond Blvd. As a consequence of the transaction, IPA was
relieved of liability for ground lease rent and real estate taxes on the
property after January 22, 1998. In connection with this transaction, IPA
recognized a gain of approximately $611,700.
S-12
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
4. Notes Payable to Related Parties
On November 30, 1994, affiliates of the General Partners loaned IPA $18,000,000,
evidenced by two promissory notes (the "Notes") in the amount of $6,000,000 and
$12,000,000. These notes were repaid in 1998 with the proceeds from the sale of
the Chicago properties.
The affiliate notes bore interest at a variable rate based on the Chase prime
rate and were payable on demand. Interest expense for the year ended December
31, 1998, with respect to the Notes was $1,160,124.
5. Mortgages Payable
As of December 31, 2000 and 1999, mortgages payable consist of the following:
Balance Balance
Outstanding Outstanding
December 31, December 31,
Description 2000 1999
- -------------------------------------------------------------------------------
Apple Bank for Savings (1):
Mortgage loan in the amount of
$8,000,000 with fixed interest
payments collateralized by 1328 Broadway
Building N.Y., N.Y. (in which IPA has a
50% tenancy in common interest) $ -- $4,000,000
Chase Manhattan Bank (2):
Mortgage loans with variable interest rates
collateralized by:
1440 Broadway, N.Y., N.Y. $ -- $ --
261 Fifth Avenue, N.Y., N.Y. -- --
245 Fifth Avenue, N.Y., N.Y. -- --
------------------------------
Total $ -- $4,000,000
==============================
(1) The loan with Apple Bank for Savings ("Apple") matured on April 24,
1998. The loan was extended to April 30, 1999, at an interest rate of
8.5% per annum and was repaid on January 18, 2000 using the proceeds
from the sale of IPA's undivided interest in the 1328 Broadway
property.
S-13
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
5. Mortgages Payable (continued)
(2) IPA executed a Note Modification Agreement (the "Agreement") on April
25, 1996, with Chase Manhattan Bank ("Chase") whereby mortgage loans
collateralized by five of IPA's properties; 1440 Broadway, NY, NY, 261
Fifth Avenue, NY, NY, 245 Fifth Avenue, NY, NY, One North Dearborn,
Chicago, IL and One North LaSalle, Chicago, IL were generally modified
to provide for: (a) an extension of the maturity date until January 2,
1997, at which time all outstanding principal and interest was due and
payable, (b) interest based on LIBOR plus 2.25% or Prime plus .375% at
IPA's option subject to certain limitations as defined in the
Agreement, (c) cross default and cross collateralization provisions
for the five properties, (d) IPA's guaranty of $6,000,000 of the
outstanding principal balance, and (e) principal payments of
$3,000,000 during 1996.
On March 28, 1997, a first modification to the Agreement was made between IPA
and Chase which extended the maturity date of the loan to January 2, 1998, and
provided for principal payments of $3,000,000 during 1997.
On March 23, 1998, a Second Modification to the Agreement was made between IPA
and Chase, which extended the maturity date of the loan to January 2, 1999, and
provided for principal payments of $3,000,000 during 1998. In addition, upon the
sale of its Chicago Properties in September, 1998, IPA repaid $16,847,488 of
principal to obtain a release for the Chicago Properties.
On January 2, 1999, a Third Modification to the Agreement was made between IPA
and Chase, which extended the maturity date of the loan to January 2, 2000, and
provided for principal payments of $3,000,000 during 1999. Scheduled principal
repayments aggregating $2,500,000 were made through September 15, 1999, with the
entire remaining balance of the loan being repaid in December 1999 with proceeds
from the sale of the Mojud, Midland and 1440 Broadway properties.
6. Management of Properties
The properties are managed by Helmsley-Spear, Inc. Mr. Irving Schneider is
co-chairman and Chief Operating Officer of Helmsley-Spear, Inc., and owns 50% of
its outstanding stock. In addition to providing general property management
services, Helmsley-Spear, Inc. locates tenants and negotiates leases for its
properties. Management fees are based upon negotiated percentages of revenues
for each property in the portfolio.
S-14
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
6. Management of Properties (continued)
Leasing commissions are based upon varying percentages of the annual rent paid
by tenants obtained by Helmsley-Spear, Inc. Management fees and leasing
commissions charged to IPA by Helmsley-Spear, Inc. aggregated $393,447 (2000),
$1,287,902 (1999), and $1,969,571 (1998).
Tenants' security deposits for certain properties are held by the managing agent
principally in special bank accounts; interest thereon accrues principally for
the benefit of the tenants.
7. Guaranteed Payments Due to Partners
The Limited Partnership Agreement requires that certain guaranteed payments be
made to partners and deducted as expenses in determining net income. The General
Partners and Special Limited Partners receive guaranteed payments equal to
8-3/4% per annum of their "Remaining Original Cash Contribution" ($1,160,000 at
December 31, 2000, 1999 and 1998). In addition, the General Partners receive
guaranteed payments equal to 1/2% of gross revenues, as defined, and the Limited
Partner receives $15,000 per annum.
S-15
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
8. Allocations of Partnership Income
In accordance with the terms of the Limited Partnership Agreement, elements of
income for financial reporting purposes were credited (but not distributed in
cash) to the capital accounts of the partners through January 3, 1997, as
follows (see Note 9 for the basis on which cash distributions are determined):
General Special Limited Limited
----------------------------------
A. Net income before items C, D, E
and F below 1.5% 48.5% 50.0%
B. Net losses, before items below 100.0% -- --
C. Depreciation and amortization
of real estate:
1.Equal to mortgage amortization
(as defined) 1.5% 48.5% 50.0%
2.Balance 3.0% 97.0% --
D. Bond discount amortization -- -- 100.0%
E. Gain on disposition of property:
1.To the extent of the aggregate
depreciation and amortization
of such property included
in C(2) above 3.0% 97.0% --
2.Balance 1.5% 48.5% 50.0%
F. Loss on disposition of property 100.0% -- --
S-16
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
8. Allocations of Partnership Income (continued)
Upon the death of Mr. Helmsley on January 4, 1997, and the conversion of his
General Partner interest into a Special Limited Partner interest, the elements
of income for financial reporting purposes are generally credited (but not
distributed in cash) to the capital accounts of the partners as follows:
General Special Limited Limited
----------------------------------
A. Net income before items C, D, E
and F below .55% 49.45% 50.0%
B. Net losses, before items below 36.67% 63.33% --
C. Depreciation and amortization of
real estate:
1.Equal to mortgage amortization
(as defined) .55% 49.45% 50.0%
2.Balance 1.1% 98.9% --
D. Bond discount amortization -- -- 100.0%
E. Gain on disposition of property:
1.To the extent of the aggregate
depreciation and amortization
of such property included
in C(2) above 1.1% 98.9% --
2.Balance .55% 49.45% 50.0%
F. Loss on disposition of property 36.67% 63.33% --
9. Cash Distributions
Net Operating Revenues, as defined, are distributable at the discretion of the
General Partners, as follows:
Through From
January 3, 1997 January 4, 1997
--------------------------------------
General Partners 1.5% .55%
Special Limited Partners 48.5% 49.45%
Limited Partner 50.0% 50.0%
Notwithstanding the foregoing, if with respect to any calendar year the Limited
Partner's distributive share (computed on the same basis as that used in
preparing IPA's Federal income tax return) of income (loss) plus one-half of
such partner's distributive share of long-term capital gains exceeds the cash
distributions referred to above, IPA must distribute an additional amount equal
to such excess to the Holders of the Participation Interests.
S-17
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
9. Cash Distributions (continued)
In 2000, 1999 and 1998, Net Operating Revenues, as defined in the Limited
Partnership Agreement, amounted to $3,908,231, $12,606,987 and $9,803,570,
respectively. At December 31, 2000, 1999 and 1998, accrued distributions
amounted to $3,915,446, $77,979,781 and $10,884,318, respectively.
10. Income Taxes
IPA has obtained a ruling from the Internal Revenue Service that IPA will be
classified as a partnership for Federal income tax purposes, and has received an
opinion of tax counsel that IPA, as a partnership, will not be subject to any
Federal income taxes, and that each holder of Participation Interests will be
treated for Federal income tax purposes as if he were a limited partner of IPA
to the extent of his proportionate interest in the Limited Partnership Interest.
Each partner of IPA and each holder of Participation Interests at any time
during the taxable year of IPA must take into account his distributive share of
all items of IPA's income, gain, loss, deduction or credit, without regard to
whether such partner or holder of Participation Interests has received or will
receive any distributions from IPA. Accordingly, no provision for income taxes
has been made in the accompanying statements of income.
The amount of income for federal tax purposes for the years ended December 31,
2000, 1999, and 1998, was $146,534,487, $150,375,301, and $111,019,115,
respectively, as compared with the net income of $153,829,678, $150,779,832, and
$112,747,733, respectively, shown in the statements of income. A reconciliation
of the differences between income as reflected in the accompanying statements of
income and the amount of income for federal tax purposes is as follows:
S-18
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
10. Income Taxes (continued)
December 31,
2000 1999 1998
---------------------------------------------------
Net income per statements of income $153,829,678 $150,779,832 $112,747,733
Depreciation and amortization 153,124 762,866 929,903
Gain on sale of property (7,414,167) 42,439 (1,233,105)
Loss on sale of property -- -- --
Loss on abandonment of property -- -- --
Deferred rental income -- (1,082,359) (1,045,707)
Other, net (34,148) (127,477) (379,709)
---------------------------------------------------
Income for federal tax purposes $146,534,487 $150,375,301 $111,019,115
===================================================
11. Gross Revenue From Real Estate
IPA earns rental income under leases principally with commercial tenants located
in its office buildings. Such leases generally provide for the tenant to pay
minimum rentals plus, in certain instances, a portion of increases in real
estate taxes, operating expenses and/or increases in the consumer price index
based on lease escalation clauses. Office leases generally range from 5 years to
15 years and contain various renewal options. In addition, IPA earns rental
income from retail stores. Such leases generally provide for minimum rentals
plus percentage rentals based on the store sales. Retail store leases generally
range from 1 to 5 years and contain various renewal options. All of the
aforementioned leases are accounted for as operating leases. Included in Gross
Revenues from Real Estate for the years ended 2000, 1999, and 1998, are $1,839,
$536,325, and $956,247, respectively, representing revenue from escalations and
percentage rentals. For the year ended 2000, 1999 and 1998, approximately
$259,290, $17,000, and $1,400, respectively, was received in connection with
lease cancellations with former tenants. As of December 31, 2000, IPA has no
minimum future rentals on noncancelable operating leases as their remaining
properties include two undeveloped parcels of land in Texas and a vacant office
property at 570 Broad Street, Newark, NJ.
S-19
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
12. Recently Issued Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
No. 133, "Accounting for Derivative Instruments and Hedging Activities" (the
"Statement"). In June 1999, the FASB issued Statement No. 137, which deferred
the effective date of Statement No. 133, requiring it to be adopted for all
fiscal quarters of all fiscal years beginning after June 15, 2000. The Company
expects to adopt the Statement effective January 1, 2001. The Statement will
require IPA to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
If a derivative is a hedge, depending on the nature of the hedge, changes in
fair value of the derivative will either be offset against the change in fair
value of the hedged asset, liability, or firm commitment through earnings, or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. IPA does not anticipate that the adoption of
this Statement will have a significant effect on its results of operations or
financial position.
13. Contingencies
IPA is involved in various legal matters and disputes arising in the normal
course of operations, the ultimate outcome of which is not expected to have a
material effect on the financial statements.
S-20
Investment Properties Associates
(A New York Limited Partnership)
Notes to Financial Statements (continued)
14. Summary of Quarterly Financial Information (Unaudited)
The separate results of operations of IPA for the years ended December 31, 2000
and 1999 are as follows:
2000
---------------------------------------------------------
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------
Gross revenue (expenses) from real estate $ 4,057,422 $ 1,797,052 $ (128,103) $ 242,727
Net income (loss) 39,557,263 115,100,658 (969,346) 141,103
Net income (loss) credited to the partners
capital accounts (a):
General Partners 233,163 874,499 (5,331) 776
Special Limited Partners 20,963,468 78,625,414 (479,342) 69,775
Limited Partner 18,360,632 35,600,745 (484,673) 70,552
---------------------------------------------------------
$39,557,263 $115,100,658 $ (969,346) $ 141,103
=========================================================
Net income (loss) per Limited Partner
Participation Interest 22.3910 43.4155 (0.5911) 0.0860
=========================================================
1999
---------------------------------------------------------
Three Months Ended
March 31 June 30 September 30 December 31
---------------------------------------------------------
Gross revenue from real estate $ 7,894,118 $ 7,849,392 $8,319,977 $ 7,577,347
Net income 3,415,467 9,037,349 4,237,424 134,089,592
Net income credited to the partners
capital accounts (a):
General Partners 51,232 135,560 23,306 655,782
Special Limited Partners 1,656,501 4,383,115 2,095,406 69,715,433
Limited Partner 1,707,734 4,518,674 2,118,712 63,718,377
---------------------------------------------------------
$ 3,415,467 $ 9,037,349 $4,237,424 $134,089,592
=========================================================
Net income per Limited Partner
Participation Interest 2.0826 5.5106 2.5838 77.7053
=========================================================
(a) The allocation of net income to the partners' capital accounts as
previously reported for the quarter ended June 30, 2000 differ from the
amounts set forth above due to an adjustment relating to the crediting of
gain on sale of real estate among the classes of partners. The impact of
such adjustment was to reallocate income in the amount of $18,213,584 from
the capital account of the Limited Partner and credit such amount to the
capital accounts of the General Partner and Special Limited Partner. The
impact of such adjustment on each of the 820,000 outstanding PPI's was
($22.2117). While the adjustment had the effect of reducing the net income
credited to the Limited Partner capital account and increasing the amount
of net income credited to the capital accounts of the General Partners and
Special Limited Partners, it had no impact on reported net income of IPA
and no impact on the amount of entitlement of the General Partners,
Special Limited Partners or Limited Partner to the distribution of net
proceeds from the sale of partnership property.
S-21
Investment Properties Associates
(A New York Limited Partnership)
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2000
Col. A Col. B Col. C Col. D
- ------------------------------------------------------------------------------------------
Initial Cost of Company
------------------------- Improvements
Capitalized
Buildings and Subsequent to
Description Encumbrances Land Improvements Acquisition
- ------------------------------------------------------------------------------------------
Edgewood and Bellway Shopping
Centers, Houston, Texas -- 447,893 -- --
570 Broad Street Building
Newark, New Jersey -- 502,032 5,937,404 1,593,911
- ------------------------------------------------------------------------------------------
Totals $ -- $949,925 $5,937,404 $1,593,911
==========================================================================================
Col. E Col. F Col. G Col. H
- ------------------------------------------------------------------------------------------
Gross Amount
at Which Carried Close of Period Life on which
- ---------------------------------- Depreciation in
Latest Income
Buildings Accumulated Date of Statements is
Land and Improvements Total Depreciation Construction Computed
- ------------------------------------------------------------------------------------------
-- -- -- -- 1957 24.3
502,032 7,531,315 8,033,347 5,880,040 1962 34.3
- ------------------------------------------------------------------------------------------
$502,032 $7,531,315 $8,033,347 $5,880,040
==========================================================================================
S-22
Investment Properties Associates
(A New York Limited Partnership)
Schedule III - Real Estate and Accumulated Depreciation (continued)
December 31, 2000
(a) Amounts shown represent 50% of amounts applicable to a tenancy in common,
in which IPA has an undivided one-half interest.
(b) Reconciliation of "Real Estate and Accumulated Depreciation":
Year ended December 31,
------------------------------------------------------
2000 1999 1998
------------------------------------------------------
Investment in Real Estate
Balance at beginning of year $ 40,649,960 $ 68,589,793 $136,524,047
Sale of real estate (33,212,608) (29,311,368) (67,998,324)
Abandonment of real estate
Improvements and additions 595,995 1,371,535 2,201,413
Fully depreciated assets written off
during the year -- -- (2,137,343)
------------------------------------------------------
Balance at end of year $ 8,033,347 $ 40,649,960 $ 68,589,793
======================================================
Accumulated Depreciation
Balance at beginning of year $ 26,391,697 $ 44,261,629 $ 95,613,778
Depreciation charged to costs
and expens 598,174 1,974,245 2,781,850
Less amounts applicable to sale
of real estate (21,109,831) (19,844,177) (51,996,656)
Less amounts applicable to fully depreciated
assets written off during the year
-- -- (2,137,343)
------------------------------------------------------
Balance at end of year $ 5,880,040 $ 26,391,697 $ 44,261,629
======================================================
The aggregate basis of real estate assets for Federal income tax purposes
amounted to $7,898,039 (2000), $44,822,622 (1999), and $71,268,168 (1998).
S-23