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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002.
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)
(212) 687-6400
--------------
(Registrant's telephone number, including area code)
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.
|X| Yes |_| No
APPLICABLE ONLY TO ISSUERS 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
820,000 participations of Limited Partnership Interests are outstanding as
of the date hereof.
INVESTMENT PROPERTIES ASSOCIATES
FORM 10-Q
For the Fiscal Quarter Ended June 30, 2002
INDEX
Page
----
PART I. FINANCIAL INFORMATION...............................................1
Item 1. Financial Statements................................................1
Balance Sheets......................................................1
Statements of Operations............................................2
Statements of Cash Flows............................................3
Notes to Unaudited Financial Statements.............................4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations..........................................................5
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........6
PART II. OTHER INFORMATION...................................................7
Item 6. Exhibits and Reports on Form 8-K....................................7
Signatures..........................................................8
-i-
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
BALANCE SHEETS
JUNE 30, 2002 AND DECEMBER 31, 2001
JUNE 30, 2002 DECEMBER 31, 2001
------------- -----------------
ASSETS (Unaudited) (Note)
Real estate, at cost $8,033,347 $ 8,033,347
Less: Accumulated depreciation
and amortization 5,880,040 5,880,040
---------- -----------
2,153,307 2,153,307
Cash and cash equivalents 1,533,796 2,788,292
Due from managing agent
(Helmsley-Spear, Inc.) 233,184 229,291
Receivables 3,553 3,553
Other assets 442,988 457,515
---------- -----------
$4,366,828 $ 5,631,958
========== ===========
LIABILITIES AND PARTNERS'
CAPITAL (DEFICIENCY)
Accounts payable $ 17,085 $ 7,903
Distributions payable to
General Partners,
Special Limited Partners
and Limited Partners 7,213 698,179
Sundry liabilities and
other accrued expenses 298,770 415,799
Deposits -- 1,500,000
---------- -----------
323,068 2,621,881
---------- -----------
Partners' Capital (Deficiency)
General Partners (2,489,521) (2,495,206)
Special Limited Partners 3,797,448 3,286,292
Limited Partners (represented
by the equivalent of
820,000 Participation Interests) 2,735,833 2,218,991
---------- -----------
4,043,760 3,010,077
---------- -----------
$4,366,828 $ 5,631,958
========== ===========
Note: The balance sheet at December 31, 2001 has been derived from the audited
financial statements at that date.
See accompanying notes to financial statements.
1
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED FOR THE THREE MONTHS ENDED
----------------------------- ------------------------------
JUNE 30, 2002 JUNE 30, 2001 JUNE 30, 2002 JUNE 30, 2001
------------- ------------- ------------- -------------
Revenues:
Gross revenues from real estate $ -- $ 11,252 $ -- $ 8,020
Real estate tax refund -- 660,495 -- 143,457
Other income 1,501,500 -- 1,500 --
Interest 18,518 196,091 6,987 63,261
---------- -------- --------- ---------
1,520,018 867,838 8,487 214,738
---------- -------- --------- ---------
Expenses:
Real estate taxes 153,942 118,565 76,908 82,912
Other expenses 274,143 399,510 88,976 226,291
---------- -------- --------- ---------
428,085 518,075 165,884 309,203
---------- -------- --------- ---------
Income (loss) before items shown below 1,091,933 349,763 (157,397) (94,465)
---------- -------- --------- ---------
Guaranteed payments required
under the Limited Partnership
Agreement:
To the Limited Partners 7,500 7,500 3,750 3,750
To the General and Special
Limited Partners 50,750 50,750 25,375 25,375
---------- -------- --------- ---------
58,250 58,250 29,125 29,125
---------- -------- --------- ---------
Net income (loss) transferred to
partners' capital accounts $1,033,683 $291,513 $(186,522) $(123,590)
========== ======== ========= =========
Net income (loss) allocable as follows
(based on terms of the Limited
Partnership Agreement):
General Partners $ 5,685 $ 1,603 $ (1,026) $ (680)
Special Limited Partners 511,156 144,153 (93,235) (61,115)
Limited Partners (represented by
the equivalent of 820,000
Participation Interests - unchanged
during the periods) 516,842 145,757 (93,261) (61,795)
---------- -------- --------- ---------
$1,033,683 $291,513 $(186,522) $(123,590)
========== ======== ========= =========
Per Participation Interest:
Net income (loss) $ 0.6303 $ 0.1778 $ (0.1137) $ (0.0753)
========== ======== ========= =========
See accompanying notes to financial statements.
2
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001
2002 2001
---- ----
OPERATING ACTIVITIES:
Net income $ 1,033,683 $ 291,513
Adjustments to reconcile net
income to net cash (used in)
provided by operating activities:
Changes in operating assets
and liabilities:
(Increase) decrease in due
from managing agent (3,893) 42,810
Increase in receivables -- (52,643)
Decrease (increase) in other assets 14,527 (34,060)
Increase (decrease) in accounts payable 9,182 (21,337)
Decrease in accrued real estate taxes -- (8,936)
Decrease in sundry liabilities and
other accrued expenses (117,029) (77,508)
Decrease in deposits (1,500,000) --
----------- -----------
Net cash (used in) provided by
operating activities (563,530) 139,839
----------- -----------
FINANCING ACTIVITIES:
Distributions of net operating revenues
and proceeds from sale of real
estate to General Partners, Special
Limited Partners and Limited Partners (690,966) (3,908,232)
----------- -----------
Decrease in cash and cash equivalents (1,254,496) (3,768,393)
Cash and cash equivalents at beginning
of period 2,788,292 9,514,349
----------- -----------
Cash and cash equivalents at end of period $ 1,533,796 $ 5,745,956
=========== ===========
See accompanying notes to financial statements.
3
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1
As permitted by the Securities and Exchange Commission, the accompanying
unaudited financial statements and footnotes have been condensed and therefore,
do not contain all disclosures required by accounting principles generally
accepted in the United States. Reference should be made to the Company's Annual
Report Form 10-K for the year ended December 31, 2001, filed with the Securities
and Exchange Commission.
NOTE 2
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly its financial position as of June 30, 2002 and the results of
operations for the three and six month periods ended June 30, 2002 and 2001.
NOTE 3
The results of operations for the three and six month periods ended June 30,
2002 and 2001 are not necessarily indicative of the results to be expected for
the full year.
NOTE 4 - Taxes
The net income for Federal income tax purposes is $926,327 (six months ended
June 30, 2002) and $184,156 (six months ended June 30, 2001) as compared with
net income of $1,033,683 and $291,513 respectively, as shown in the statements
of income. The differences result principally from depreciation expense which
continues to be recognized for tax purposes.
NOTE 5 - Other Income
On October 22, 2001, the Company signed a contract, subject to certain closing
conditions, to sell its only remaining property, a vacant commercial office
building located at 570 Broad Street, Newark, New Jersey, for a purchase price
of $11,500,000. In connection with the contract, the Company received
non-refundable deposits from the buyer in the amount of $1,500,000. In January
2002, due to the buyer's inability to satisfy the closing conditions, the
contract expired and the Company resumed marketing activities with respect to
the Property. The Company retained the non-refundable deposits from the buyer in
the amount of $1,500,000.
4
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As a result of the sales of the Company's remaining income producing properties
in 2000, the Company no longer derives income from rental operations. The
activity of the Company consists of marketing for sale its remaining non-income
producing property, a vacant office property located at 570 Broad Street,
Newark, New Jersey.
The real estate tax refund in 2001 was attributable to the settlement of tax
certiorari appeals filed in a prior year relating to the Company's Chicago
properties which had been sold in 1998 and the 1328 Broadway and 261 Fifth
Avenue properties which had been sold in 2000.
The decrease in interest income was due to the reduction of investments in
commercial paper as a result of the distributions made to partners during 2001
and 2002 of the net proceeds from the sales of properties.
The increase in real estate taxes in 2002 as compared to 2001 is principally
attributable to a tax refund received in 2001 for the 570 Broad Street property.
The decrease in other expenses in 2002 as compared to 2001 is principally
attributable to a decrease in professional fees.
Other income in 2002 relates principally to the Company's retention of a
non-refundable deposit in the amount of $1,500,000 received in 2001 from a
prospective buyer of the 570 Broad Street property pursuant to a contract to
sell the 570 Broad Street property, which was subject to certain closing
conditions. As a result of the prospective buyer's inability to satisfy the
closing conditions of the sales contract, the contract expired in accordance
with its terms in January of 2002, and the buyer's deposit was forfeited to the
Company. See Note 5 of the accompanying notes to the financial statements.
As of December 31, 2001, the Company had accrued (i) a special dividend of
$410,000 to its General Partners and Special Limited Partners and holders of
record of the PPI's as of the close of business on December 31, 2001 from its
available cash and (ii) a distribution in the amount of $280,965 in respect of
2001 net operating revenues. These amounts were paid during the six months ended
June 30, 2002.
5
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At June 30, 2002, the Company 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 borrowings.
6
PART II. OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 99.1 Section 906 Sarbanes-Oxley Act of 2002 certification
of Mr. Irving Schneider as General Partner/Chief
Executive Officer
Exhibit 99.2 Section 906 Sarbanes-Oxley Act of 2002 certification
of Mr. Robert Hecht as Chief Financial Officer
(b) Reports on Form 8-K
None.
Items 1, 2, 3, 4 and 5 are not applicable and have been omitted.
7
INVESTMENT PROPERTIES ASSOCIATES
(A New York Limited Partnership)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
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 and Special Limited Partner
By: /s/ Robert Hecht
------------------------------------
Robert Hecht
Chief Financial Officer
Dated: August 28, 2002
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