IR PASS-THROUGH CORP.
c/o Winthrop Management LLC
7 Bulfinch Place, Suite 500
P.O. Box 9507
Boston, MA 02114-9507
(617) 570-4600
Integrated ARROs Fund I (the "Fund")
- ------------------------------------
October, 2005
Dear Unitholder:
Enclosed for your review are the Fund's unaudited financial statements as of
June 30, 2005. On August 11, 2005 all six Payment Obligations owned by the Fund
were paid off. A distribution in the amount of $6,867.29 per unit was paid to
unitholders of record as of September 30, 2005. Such distribution was paid on
October 17, 2005.
If you have any specific questions regarding your holdings in the Fund, please
call the Trustee, Bankers Trust Company at (800) 735-7777.
Sincerely,
Integrated ARROs Fund I
By: IR Pass-through Corp., Sponsor
Integrated ARROs Fund I
Statement of Financial Condition
June 30, 2005
(unaudited)
Assets
Cash and Cash Equivalents $ 231,581
Investments in payment obligations, at minimum
termination value (cost $2,302,742) 9,194,937
---------------
Total Assets 9,426,518
===============
Liabilities
Distributions Payable 231,581
---------------
Net Assets $ 9,194,937
===============
Net Asset Value per unit (2,771 units outstanding) $ 3,318.27
===============
See notes to financial statements
Integrated ARROs Fund I
Statement of Operations
Six Months Ended June 30, 2005
(unaudited)
Investment Income:
Interest and discount earned, net of fund expenses $751,686
========
See notes to financial statements
Integrated ARROs Fund I
Statement of Changes in Net Assets
June 30, 2005
(unaudited)
Increase in net assets from operations:
Net investment income $ 751,686
---------------
Net increase in net assets resulting from operations 751,686
Total declared as distributions to Unit Holders (564,000)
---------------
Net increase in net assets 187,686
Net assets:
Beginning of period 9,007,251
---------------
End of period $ 9,194,937
===============
See notes to financial statements
Integrated ARROs Fund I
Schedule of Selected Per Unit Operating Performance, Ratios
and Supplemental Data
Six Months Ended Year Ended
June 30, 2005 December 31, 2004
(unaudited) (audited)
------------- -------------
Per Unit Operating Performance
Net asset value, beginning of period $ 3,250.54 $ 3,150.41
Net investment income 271.27 518.72
Distributions (203.54) (418.59)
------------- -------------
Net asset value, end of period $ 3,318.27 $ 3,250.54
============= =============
Total investment return $ 271.27 $ 518.72
============= =============
Ratios/Supplemental Data
Net assets, end of period $ 9,194,937 $ 9,007,251
Ratio of expenses to average net assets 0.42% 0.46%
Ratio of net investment income to average
net assets 8.26%(1) 16.21%
Portfolio turnover rate N/A N/A
(1) Not annualized.
Integrated ARROs Fund I
Notes to Financial Statements
1. GENERAL
The accompanying unaudited financial statements, notes and discussions
should be read in conjunction with the audited financial statements,
related notes and discussions contained in the Form N-SAR Semi-Annual
Report for the year ended December 31, 2004, which is herein incorporated
by reference.
The financial information contained herein is unaudited; however, in the
opinion of management, all adjustments necessary for a fair presentation
of such financial information have been included. All of the
aforementioned adjustments are of a normal recurring nature and there have
not been any non-recurring adjustments included in the results reported
for the current period.
Integrated ARROs Fund I (the "Fund") is a grantor trust created under the
laws of the State of New York and registered under the Investment Company
Act of 1940 as a closed-end, non-diversified management investment
company.
2. SIGNIFICANT ACCOUNTING POLICIES
Security Valuation
The Payment Obligations are valued at the lower of fair market value (as
determined by the Board of Directors of the Sponsor) or Minimum
Termination Amount (as defined in the Trust Indenture).
Federal Income Taxes
The Fund is classified as a grantor trust. As a consequence, the Fund is
not subject to Federal Income Taxation.
Cash and Cash Equivalents
Cash and cash equivalents represents payment obligations received by the
Fund and which were invested in U. S. Treasury bills with maturities of
three months or less.
3. THE SPONSOR
IR Pass-through Corporation is the Sponsor of the Fund and was/is a wholly
owned subsidiary of Integrated Resources, Inc. ("Integrated") and its
post-bankruptcy successor, Presidio Capital Corp. ("Presidio"). Presidio
is an indirect but wholly owned subsidiary of NorthStar Capital Investment
Corp., the majority shareholder of Presidio.
Subject to the rights of the unitholders under the Trust Indenture,
Presidio is responsible for the administration of the Fund through its
indirect ownership of all of the shares of the Sponsor. AP-PCC III, L.P.
("AP-PCC"), an unaffiliated third party, provides administrative services
to Presidio, who in turn provides services to the Fund.
4. COMMITMENTS AND CONTINGENCIES
The original prospectus of the Fund contemplated the Sponsor bearing all
costs of administering the Fund only through the period in which the Fund
will be receiving primary term payments. However, upon the period when the
Fund will be receiving renewal term payments, the Fund was to bear a
portion of such costs equal to the percentage of the renewal term payments
received by the Fund in such year to all of the payments received by the
Fund in such year.
Based on a present value estimate of legal, accounting, trustee fees, and
printing and mailing costs, the Sponsor filed a claim in Integrated's
bankruptcy in 1994 and received $450,000 (the "Settlement Fund") in
settlement of such claim. It was projected at the time of the settlement
that such amount would be sufficient to enable the Sponsor to meet its
obligations to the Fund, and its similar obligations to ARROs Fund II,
through approximately the year 2000. However, there was no assurance given
at the time of the settlement that the Settlement Fund, together with
interest earned, would in fact be sufficient to fund the Sponsor's
obligations through the year 2000. As of June 30, 1998, the Settlement
Fund had been fully depleted. As a result of the full depletion of the
Settlement Fund during the first six months of 1998, the Fund has had to
pay administrative expenses from current payment obligations received.
Consequently, the Fund paid $37,837 in expenses from the proceeds of the
January 2005 through June 2005 payment obligations received.
5. DISTRIBUTION PAYABLE
The Trustee declared a $231,581 ($83.57 per unit) distribution payable to
unitholders of record as of June 30, 2005. Such distribution was paid on
July 15, 2005.
6. SUBSEQUENT EVENTS
On August 11, 2005 the Fund's Trustee received $18,701,832 representing
the payoff of principal and accrued interest on all six Payment
Obligations. The Trustee declared a $19,029,265.89 ($6,867.29 per unit)
distribution payable to unitholders of record as of September 30, 2005.
Such distribution was paid on October 17, 2005.
Integrated ARROs Fund I
Schedule of Portfolio Investments
June 30, 2005
Discount To
Arrive at Lower Lower of
of Fair Market Fair Market
Partnership/ Value Value
Date Payment Original Simple or Minimum Periodic or Minimum
Obligation Property Type of Principal Interest Accrued Termination Payment During Termination
Incurred Lessee Location(s) Property Amount Rate Interest Amount Primary Term (1) Amount
- ------------------------------------------------------------------------------------------------------------------------------------
Walando Walgreen Orlando, FL Office/ $820,000 13.0% $1,282,812 $1,026,876 5/1/96-4/1/06 $1,075,936
03/18/81 Company Warehouse $11,883/mo
Building
Santex (2) Albertson's Venice, FL Retail 570,000 17.0% 912,144 619,580 9/1/96-8/1/06 862,564
07/01/81 Inc. Livermore, CA Facilities $13,342/mo
Lando Albertson's Portland, OR Retail 783,451 16.0% 1,968,522 1,543,409 7/1/97-1/1/07 1,208,564
10/21/81 Inc. Orlando, FL Facilities $62,656/semi
(amended Huntsville, AL
04/15/82)
Denville Xerox Lewisville, TX Plant 963,048 15.0% 2,400,142 2,018,503 8/1/98-7/1/08 1,344,687
12/22/81 Corporation Facility $12,038/mo
(amended
01/27/84)
Elway Safeway Billings, MT Retail 1,429,042 18.5% 4,019,580 2,941,190 7/1/97-6/1/07 2,507,432
03/18/82 Stores, Inc. Fort Worth, TX Facilities (4) $22,027/mo (4) (4)
Aurora, CO
Mamoth Lakes, CA
Walcreek Hercules Walnut Creek, Office 1,306,709 18.5% 2,375,227 1,486,182 10/1/97-9/1/07 2,195,754
08/01/82 Credit Inc. CA Building $30,155/mo
(amended (3)
06/29/83,
12/3/84)
---------- ----------- ---------- -----------
$5,872,250 $12,958,427 $9,635,740 $9,194,937
========== =========== ========== ===========
(1) Primary Term of the applicable net lease.
(2) Two Payment Obligations, one for each property, treated as one.
(3) Guaranteed by Hercules Incorporated
(4) As adjusted, due to the exercise of economic discontinuance in the Huntsville, Texas lease.
INTEGRATED ARROS FUND I
SCHEDULE OF ACCRUED INTEREST ON OUTSTANDING PAYMENT OBLIGATIONS
JANUARY 1, 2005 THROUGH JUNE 30, 2005
ACCRUED ACCRUED ACCRUED ACCRUED
DATE INTEREST DATE INTEREST DATE INTEREST DATE INTEREST
- --------- ---------- --------- ---------- --------- ---------- --------- ----------
01-Jan-05 12,922,649 23-Feb-05 12,975,422 17-Apr-05 12,938,749 09-Jun-05 12,902,077
02-Jan-05 12,925,333 24-Feb-05 12,978,105 18-Apr-05 12,941,433 10-Jun-05 12,904,760
03-Jan-05 12,928,016 25-Feb-05 12,980,788 19-Apr-05 12,944,116 11-Jun-05 12,907,444
04-Jan-05 12,930,699 26-Feb-05 12,983,472 20-Apr-05 12,946,799 12-Jun-05 12,910,127
05-Jan-05 12,933,383 27-Feb-05 12,986,155 21-Apr-05 12,949,483 13-Jun-05 12,912,810
06-Jan-05 12,936,066 28-Feb-05 12,988,839 22-Apr-05 12,952,166 14-Jun-05 12,915,494
07-Jan-05 12,938,749 01-Mar-05 12,902,077 23-Apr-05 12,954,850 15-Jun-05 12,918,177
08-Jan-05 12,941,433 02-Mar-05 12,904,760 24-Apr-05 12,957,533 16-Jun-05 12,920,861
09-Jan-05 12,944,116 03-Mar-05 12,907,444 25-Apr-05 12,960,216 17-Jun-05 12,923,544
10-Jan-05 12,946,799 04-Mar-05 12,910,127 26-Apr-05 12,962,900 18-Jun-05 12,926,227
11-Jan-05 12,949,483 05-Mar-05 12,912,810 27-Apr-05 12,965,583 19-Jun-05 12,928,911
12-Jan-05 12,952,166 06-Mar-05 12,915,494 28-Apr-05 12,968,266 20-Jun-05 12,931,594
13-Jan-05 12,954,849 07-Mar-05 12,918,177 29-Apr-05 12,970,950 21-Jun-05 12,934,277
14-Jan-05 12,957,533 08-Mar-05 12,920,860 30-Apr-05 12,973,633 22-Jun-05 12,936,961
15-Jan-05 12,960,216 09-Mar-05 12,923,544 01-May-05 12,886,871 23-Jun-05 12,939,644
16-Jan-05 12,962,899 10-Mar-05 12,926,227 02-May-05 12,889,555 24-Jun-05 12,942,327
17-Jan-05 12,965,583 11-Mar-05 12,928,910 03-May-05 12,892,238 25-Jun-05 12,945,011
18-Jan-05 12,968,266 12-Mar-05 12,931,594 04-May-05 12,894,921 26-Jun-05 12,947,694
19-Jan-05 12,970,949 13-Mar-05 12,934,277 05-May-05 12,897,605 27-Jun-05 12,950,377
20-Jan-05 12,973,633 14-Mar-05 12,936,960 06-May-05 12,900,288 28-Jun-05 12,953,061
21-Jan-05 12,976,316 15-Mar-05 12,939,644 07-May-05 12,902,971 29-Jun-05 12,955,744
22-Jan-05 12,979,000 16-Mar-05 12,942,327 08-May-05 12,905,655 30-Jun-05 12,958,427
23-Jan-05 12,981,683 17-Mar-05 12,945,011 09-May-05 12,908,338
24-Jan-05 12,984,366 18-Mar-05 12,947,694 10-May-05 12,911,022
25-Jan-05 12,987,050 19-Mar-05 12,950,377 11-May-05 12,913,705
26-Jan-05 12,989,733 20-Mar-05 12,953,061 12-May-05 12,916,388
27-Jan-05 12,992,416 21-Mar-05 12,955,744 13-May-05 12,919,072
28-Jan-05 12,995,100 22-Mar-05 12,958,427 14-May-05 12,921,755
29-Jan-05 12,997,783 23-Mar-05 12,961,111 15-May-05 12,924,438
30-Jan-05 13,000,466 24-Mar-05 12,963,794 16-May-05 12,927,122
31-Jan-05 13,003,150 25-Mar-05 12,966,477 17-May-05 12,929,805
01-Feb-05 12,916,388 26-Mar-05 12,969,161 18-May-05 12,932,488
02-Feb-05 12,919,071 27-Mar-05 12,971,844 19-May-05 12,935,172
03-Feb-05 12,921,755 28-Mar-05 12,974,527 20-May-05 12,937,855
04-Feb-05 12,924,438 29-Mar-05 12,977,211 21-May-05 12,940,538
05-Feb-05 12,927,121 30-Mar-05 12,979,894 22-May-05 12,943,222
06-Feb-05 12,929,805 31-Mar-05 12,982,577 23-May-05 12,945,905
07-Feb-05 12,932,488 01-Apr-05 12,895,816 24-May-05 12,948,588
08-Feb-05 12,935,172 02-Apr-05 12,898,499 25-May-05 12,951,272
09-Feb-05 12,937,855 03-Apr-05 12,901,183 26-May-05 12,953,955
10-Feb-05 12,940,538 04-Apr-05 12,903,866 27-May-05 12,956,638
11-Feb-05 12,943,222 05-Apr-05 12,906,549 28-May-05 12,959,322
12-Feb-05 12,945,905 06-Apr-05 12,909,233 29-May-05 12,962,005
13-Feb-05 12,948,588 07-Apr-05 12,911,916 30-May-05 12,964,689
14-Feb-05 12,951,272 08-Apr-05 12,914,599 31-May-05 12,967,372
15-Feb-05 12,953,955 09-Apr-05 12,917,283 01-Jun-05 12,880,610
16-Feb-05 12,956,638 10-Apr-05 12,919,966 02-Jun-05 12,883,294
17-Feb-05 12,959,322 11-Apr-05 12,922,649 03-Jun-05 12,885,977
18-Feb-05 12,962,005 12-Apr-05 12,925,333 04-Jun-05 12,888,660
19-Feb-05 12,964,688 13-Apr-05 12,928,016 05-Jun-05 12,891,344
20-Feb-05 12,967,372 14-Apr-05 12,930,699 06-Jun-05 12,894,027
21-Feb-05 12,970,055 15-Apr-05 12,933,383 07-Jun-05 12,896,710
22-Feb-05 12,972,738 16-Apr-05 12,936,066 08-Jun-05 12,899,394