10-Q 1 file001.txt FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001. 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 Identification No.) incorporation or organization) 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 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 -------------------------------- (A New York Limited Partnership) INDEX Page Number PART I. FINANCIAL INFORMATION Item 1: Financial Statements ------ Balance Sheets 3 Statements of Operations 4 Statements of Cash Flows 5 Notes to Unaudited Financial Statements 6 Item 2: Management's Discussion and Analysis ------ of Financial Condition and Results of Operations 7 Item 3: Quantitative and Qualitative Disclosures About Market Risk 8 ------ PART II. OTHER INFORMATION Item 6: Exhibits and Reports on Form 8-K 9 ------ Signatures 10 -2- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INVESTMENT PROPERTIES ASSOCIATES -------------------------------- (A New York Limited Partnership) BALANCE SHEETS AS AT SEPTEMBER 30, 2001 AND DECEMBER 31, 2000

~~JUNE~~SEPTEMBER 30., 2001 DECEMBER 31, 2000 ------------------ ----------------- 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 51,~~745~~631,~~956~~374 9,514,349 Due from managing agent (Helmsley-Spear, Inc.) ~~687~~205,~~768~~430 730,578 Receivables, principally from rentals 608,~~858~~215 8,215 Other assets ~~587~~510,~~410~~654 553,350 ------------ ------------ $ 94,~~235~~508,~~299~~980 $ 12,959,799 ============ ============ LIABILITIES AND PARTNERS' CAPITAL (DEFICIENCY) ---------------------------------------------- Accounts payable $ 9243,~~031~~462 $ 113,368 Accrued real estate taxes 270,~~150~~843 11,086 Distributions payable to General Partners, Special Limited Partners and Limited Partners 7,214 3,915,446 Sundry liabilities and other accrued expenses ~~317~~319,~~410~~114 394,918 ------------ ------------ ~~418~~440,~~805~~633 4,434,818 ------------ ------------ Partners' Capital (Deficiency) General Partners (2,~~463~~489,~~794~~908) (2,465,397) Special Limited Partners 63,~~110~~762,~~540~~581 5,966,387 Limited Partners (represented by the equivalent of 820,000 Participation Interests) 52,~~169~~795,~~748~~674 5,023,991 ------------ ------------ 84,~~816~~068,~~494~~347 8,524,981 ------------ ------------ $ 94,~~235~~508,~~299~~980 $ 12,959,799 ============ ============

Note: The balance sheet at December 31, 2000 has been derived from the audited financial statements at that date. See accompanying notes to financial statements. -3- INVESTMENT PROPERTIES ASSOCIATES -------------------------------- (A New York Limited Partnership) STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE ~~SIX~~NINE MONTHS ~~ENDED~~ FOR THE THREE MONTHS ~~ENDED~~ -------------------~~----------~~ -------------------- ENDED ENDED ----- ----- ~~JUNE~~SEPT 30, 2001 ~~JUNE~~SEPT 30, 2000 ~~JUNE~~SEPT 2030, 2001 ~~JUNE~~SEPT 30, 2000 ------------- ------------- ------------- ------------- Revenues: --------- Gross revenues from real estate $ 1162,~~252~~788 $ 5,~~854~~726,~~474~~371 $ 851,~~020~~536 $ 1(128,~~797,052~~103) Real estate tax refund ~~660~~1,~~495~~245,541 -- ~~143~~585,~~457~~046 -- Interest ~~196~~212,~~091~~988 ~~953~~1,~~677~~114,994 6316,~~261~~897 ~~481~~161,~~061~~317 Other Income 43,139 -- 43,139 -- ------------ ------------ ------------ ------------ ~~867~~1,~~838~~564,456 6,~~808~~841,~~151~~365 ~~214~~696,~~738~~618 233,~~278,113~~214 ------------ ------------ ------------ ------------ Expenses: --------- Real estate taxes ~~118~~187,~~565~~258 ~~641~~460,~~737~~353 8268,~~912~~693 ~~210~~(181,~~567~~384) Interest on mortgages -- 43,584 -- -- Other expenses ~~399~~641,~~510~~554 2,~~309~~549,~~974~~095 ~~226~~242,~~291~~044 ~~688~~239,~~336~~121 Depreciation and amortization of real estate -- ~~477~~536,~~149~~818 -- ~~163~~59,~~317~~669 ------------ ------------ ------------ ------------ ~~518~~828,~~075~~812 3,~~472~~589,~~444~~850 ~~309~~310,~~203~~737 1117,~~062,220~~406 ------------ ------------ ------------ ------------ Income (~~Loss~~loss) before items shown below ~~349~~735,~~763~~644 3,~~335~~251,~~707~~515 385,881 (9484,~~465~~192) ~~1,215,893~~ Gain on sale of real estate --95,096 ~~151~~150,~~381~~500,~~339~~239 --95,096 ~~113~~(881,~~892,265~~100) ------------ ------------ ------------ ------------ ~~349~~830,~~763~~740 ~~154~~153,~~717~~751,~~046~~754 480,977 (94965,~~465~~292) ~~115,108,158~~ ------------ ------------ ------------ ------------ ~~Payments~~Guaranteed payments required under the Limited Partnership Agreement: To the Limited Partners 711,~~500~~250 3,750 3,750 -- To the General and Special Limited Partners 5076,~~750~~125 5559,~~375~~429 25,375 74,~~500~~054 ------------ ------------ ------------ ------------ 5887,~~250~~375 5963,~~125~~179 29,125 74,~~500~~054 ------------ ------------ ------------ ------------ Net income (~~Loss~~loss) transferred to Partners' Capital Accounts $~~291~~ 743,~~513~~365 $~~154~~153,~~657~~688,~~921~~575 $~~(123~~ 451,~~590)~~852 $~~115~~ (969,~~100,658~~346) ============ ============ ============ ============ Net income (~~Loss~~loss) allocable as follows (based on terms of the Limited Partnership Agreement): General Partners $ 14,~~603~~088 $ 1,~~107~~102,~~662~~331 $ ~~(680)~~2,485 $ ~~874~~(5,~~499~~331) Special Limited Partners ~~144~~367,~~153~~594 99,~~588~~109,~~882~~540 223,441 (61479,~~115~~342) ~~78,625,414~~ Limited ~~Partner~~Partners (represented by the equivalent of 820,000 Participation Interests - unchanged during the periods) ~~145~~371,~~757~~683 53,~~961~~476,~~377~~704 225,926 (61484,~~795~~673) ~~35,600,745~~ ------------ ------------ ------------ ------------ $~~291~~ 743,~~513~~365 $~~154~~153,~~657~~688,~~921~~575 $~~(123~~ 451,~~590)~~852 $~~115~~ (969,~~100,658~~346) ============ ============ ============ ============ Per Participation Interest: Net ~~Income~~income (~~Loss~~loss) $ 0.~~1778~~4533 $ 65.~~8066~~2155 $ (0.~~0753)~~2755 $ 43(0.~~4155~~5911) ============ ============ ============ ============

See accompanying notes to financial statements. -4- INVESTMENT PROPERTIES ASSOCIATES -------------------------------- (A New York Limited Partnership) STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND SEPTEMBER 30, 2000

2001 2000 ---- ---- OPERATING ACTIVITIES: Net income $ ~~291~~743,~~513~~365 $ ~~154~~153,~~657~~688,~~921~~575 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization of real estate -- ~~477~~536,~~149~~818 Gain on sale of real estate --(138,235) (~~151~~150,~~381~~500,~~339~~239) Amortization of deferred leasing commissions -- ~~183~~232,~~703~~161 Changes in operating assets and liabilities: Decrease in due from managing agent 42525,~~810~~148 ~~739~~2,~~318~~237,301 ~~(Increase)~~ Decrease in receivables ~~(52,643)~~-- 361,~~994~~993 ~~(Increase)~~Decrease in other assets ~~(34~~42,~~060)~~209 ~~(635~~232,~~735)~~294 (Decrease) in accounts payable (2126,~~337~~767) (~~358~~475,~~456~~621) ~~(Decrease)~~ Increase in accrued real estate ~~tax~~taxes (859,~~936)~~757 490,~~300~~531 (Decrease) in accrued interest -- (29,278) (Decrease) in sundry liabilities and other accrued expenses (7775,~~508~~804) (~~635~~648,~~512~~684) (Decrease) in deposits and rents received in advance -- (~~183~~1,~~135~~696,853) ------------- ------------- Net Cash Provided By Operating Activities ~~139~~1,~~839~~129,673 34,~~200~~028,~~930~~998 ------------- ------------- INVESTING ACTIVITIES: Property improvements -- (~~595~~1,~~997~~477,097) Net proceeds from sale of real estate --95,583 165,952,915 ------------- ------------- Net Cash Provided By Investing Activities --95,583 ~~165~~164,~~356~~475,~~918~~818 ------------- ------------- FINANCING ACTIVITIES: Distributions of net operating revenues to General Partners, Special Limited Partners and Limited Partners (39,~~908~~108,~~232~~231) (~~232~~234,~~972~~979,~~467~~781) Principal payments on mortgage payable -- (4,000,000) ------------- ------------- Net Cash Used in Financing Activities (39,~~908~~108,~~232~~231) (~~236~~238,~~972~~979,~~467~~781) ------------- ------------- Decrease in Cash and Cash Equivalents (37,~~768~~882,~~393~~975) (6870,~~414~~474,~~619~~965) Cash and Cash Equivalents at beginning of period 9,514,349 79,770,013 ------------- ------------- Cash and Cash Equivalents at end of period $ 51,~~745~~631,~~956~~374 $ 119,~~355~~295,~~394~~048 ============= ============= Supplemental disclosure of cash flow information: Cash paid during the period for interest $ -- $ 72,862 ============= =============

See accompanying notes to financial statements. -5- 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, 2000, 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 September 30, 2001 and the results of operations for the three and nine month periods ended September 30, 2001 and 2000. NOTE 3 The results of operations for the three and nine month periods ended September 30, 2001 and 2000 are not necessarily indicative of the results to be expected for the full year. NOTE 4 - Taxes The net (loss) income for Federal income tax purposes is $(16,783) (September 30, 2001) and $146,390,123 (September 30, 2000) as compared with net income of $743,365 and $153,688,575 respectively, as shown in the statements of operations. The differences result principally from (i) rents received in advance and recognized currently for income tax purposes, and (ii) differences in depreciation expense and gain on the sale of real estate resulting from differences in the basis of real estate for tax and financial reporting purposes. NOTE 5 - Sale of Property On July 11, 2001 the Company sold its undeveloped land in Houston, Texas for $100,000. The sales proceeds were used to pay closing costs and other commitments of approximately $5,000. In connection with the sale, the Company recognized a gain for financial reporting purposes of approximately $95,000. NOTE 6 - Distributions to Partners On July 18, 2001, the Company paid a special dividend of $5,200,000 to its General and Special Limited Partners and holders of record as of the close of business on July 6, 2001 of its participations of Limited Partnership Interests from its available cash. In accordance with the Company's Limited Partnership Agreement, one-half of the net proceeds was distributed to the General and Special Limited Partners and one-half to the holders of its participations of Limited Partnership Interests. NOTE 7 - Subsequent Event 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. However, there can be no assurances that such sale will be consummated. -6- INVESTMENT PROPERTIES ASSOCIATES -------------------------------- (A New York Limited Partnership) ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Gross revenue from rentals for 2001 decreased approximately 100% as compared to 2000. The decrease was primarily due to the sale of the 1328 Broadway, 261 Fifth Avenue and 245 Fifth Avenue properties which occurred during 2000. Gross revenue from real estate in 2001 related to the settlement of certain closing adjustments relating to the sales of the aforementioned. As a result of the aforementioned property sales, in 2001 the Company's properties consist of two parcels of undeveloped land located in Houston, Texas (which were sold on July 11, 2001) and a vacant office property located at 570 Broad Street, Newark, New Jersey (which is under contract for sale, subject to certain closing conditions), neither of which are currently generating any rental income. The decrease in interest income was due to the reduction of investments in commercial paper as a result of the distribution made to partners of the net proceeds from the sales of properties. The real estate tax refund was attributable to the settlement in 2001 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 real estate taxes and other expenses in 2001 as compared to 2000 is principally attributable to the sale of the 1328 Broadway, 261 Fifth Avenue and 245 Fifth Avenue properties, which occurred in 2000. The decrease in interest expense was due to the repayment of mortgage principal balance in 2000 upon the sale of the 1328 Broadway property. The decrease in depreciation and amortization of real estate was due to the sale of the 1328 Broadway, 261 Fifth Avenue and 245 Fifth Avenue properties in 2000. The Company's remaining office property located in Newark, New Jersey is being held as vacant. Accordingly, no depreciation is being recorded. On July 18, 2001, the Company paid a special dividend of $5,200,000 to its General and Special Limited Partners and holders of record as of the close of business on July 6, 2001 of its participations of Limited Partnership Interests from its available cash. In accordance with the Company's Limited Partnership Agreement, one-half of the net proceeds was distributed to the General and Special Limited Partners and one-half to the holders of its participations of Limited Partnership Interests. 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. However, there can be no assurances that such sale will be consummated. -7- INVESTMENT PROPERTIES ASSOCIATES -------------------------------- (A New York Limited Partnership) ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At September 30, 2001, 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. -8- PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None. (b) Reports on Form 8-K On October 24, 2001, the Registrant filed a Current Report on Form 8-K relating to the sale of its 570 Broad Street, Newark, New Jersey property, which is subject to certain closing conditions. Items 1, 2, 3, 4 and 5 are not applicable and have been omitted. -9- 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 Dated: December 4, 2001 -10-

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