Item 1. Business
The Navistar Financial Dealer Note Trust 1990 (the "1990 Trust") was formed pursuant to a Pooling and Servicing Agreement dated as of December 1, 1990 among Navistar Financial Securities Corporation, as seller (the "Seller"), Navistar Financial Corporation, as servicer (the "Servicer"), and Chemical Bank (Successor to Manufacturers Hanover Trust Company), as 1990 Trust Trustee. Wholesale dealer notes (the "Dealer Notes") and security interests in the vehicles financed thereby were transferred to the 1990 Trust in exchange for three classes of floating rate pass-through certificates (the "Investor Certificates") which were remarketed to the public. The Seller's undivided fractional interest in the 1990 Trust (the "Seller Interest") is evidenced by a Seller Certificate.
Additional Dealer Notes are sold on a daily basis by the Seller to the 1990 Trust to replace those Dealer Notes which have been liquidated or charged off as uncollectible. Accordingly, the aggregate amount of Dealer Notes in the 1990 Trust will fluctuate from day to day as new Dealer Notes are generated and as existing Dealer Notes are removed.
Under the terms of the Pooling and Servicing Agreement, the Seller is required to maintain a minimum investment in the 1990 Trust (the "Minimum Seller Interest"), a portion of which is subordinated to the Investor Certificates. If the amount of Dealer Notes in the 1990 Trust is less than the combined ownership interest evidenced by the Investor Certificates and Minimum Seller Interest, the Seller must transfer additional funds (the "Investment Securities") to the 1990 Trust to maintain the Seller Interest at an amount not less than the Minimum Seller Interest.
On June 8, 1995, the Navistar Financial Dealer Note Master Trust (the "Master Trust") was formed pursuant to a Pooling and Servicing Agreement among Navistar Financial Securities Corporation, as seller, Navistar Financial Corporation, as servicer, Chemical Bank (Successor to Manufacturers Hanover Trust Company), as 1990 Trust Trustee and The Bank of New York, as Master Trust Trustee. On June 8, 1995, the 1990 Trust issued Class A-4 Certificates in the amount of $207.9 million to the Master Trust which, in turn, issued Series 1995-1 Certificates in the amount of $200.0 million to the public.
The 1990 Trust is the active trust and will hold the Dealer Notes and certain related assets until the termination of the 1990 Trust. The termination of the 1990 Trust will occur upon the repayment of the three classes of Investor Certificates issued in 1990 (Class A-1, Class A-2 and Class A-3) at which time the Master Trust will become the active trust.
Item 2.

Item 2. Properties
Not applicable.
Item 3.

Item 3. Legal Proceedings
The registrant knows of no material pending legal proceedings involving either the Dealer Notes or the trustees, or the Seller or Servicer in respect of the trusts.
PART I
Item 4.

Item 4. Submission of Matters to a Vote of Security Holders
During October 1994, holders of the Class A-1, Class A-2 and Class A-3 Certificates were solicited to amend the 1990 Pooling and Servicing Agreement for the following matters:
1. Allow Navistar Financial Securities Corporation to sell to the 1990 Trust Dealer Notes originated by Navistar Financial Corporation that finance new vehicles manufactured by an entity other than Navistar International Transportation Corp.
2. Modify the limit for Investor Certificateholders' exposure to individual dealers by allowing an individual dealer's Dealer Note principal balance to reach the greater of up to 2.0% of the aggregate principal balance of Dealer Notes and Investment Securities in the 1990 Trust or the present $4.0 million.
3. Allow the proceeds from the issuance of a new class of certificates to be invested in Investment Securities rather than Dealer Notes until such time as additional Dealer Notes become available.
Navistar Financial Securities Corporation received consent on each of the above matters from 67.7% of the Certificateholders resulting in an amendment of the 1990 Pooling and Servicing Agreement effective March 23, 1995.
PART II
Item 5.

Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
Not applicable.
Item 6.

Item 6. Selected Financial Data
Not applicable.
Item 7.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
As of October 31, 1995, the combined aggregate principal balance of Dealer Notes and Investment Securities was $847.1 million. Reference is made to Exhibit 13 for additional information regarding principal and interest payments in respect of the Investor Certificates and information regarding servicing compensation and other fees paid by the trusts during the fiscal year.
As of October 31, 1995, the combined aggregate principal balance of Dealer Notes and Investment Securities allocated by the 1990 Trust to Investor Certificates and the Seller Certificate were $507.9 million and $339.2 million, respectively.
PART II
Item 8.

Item 8. Financial Statements and Supplementary Data
Not applicable.
Item 9.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
PART III
Item 10.

Item 10. Directors and Executive Officers of the Registrant
Not applicable.
Item 11.

Item 11. Executive Compensation
Not applicable.
Item 12.

Item 12. Security Ownership of Certain Beneficial Owners and Management
Not applicable.
Item 13.

Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14.

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Exhibits
3 Articles of Incorporation and By-Laws
10 Material Contracts
An Annual Summary of the Certificateholders' Statement, the Servicer Certificate and the Servicer and Settlement Certificate listed below is an annualized version of the monthly Servicer Certificates prepared by the Servicer.
13 - Report of Independent Certified Public Accountants
13 - Annual Summary of Servicer and Settlement Certificates
13 - Annual Summary of Servicer Certificates
13 - Annual Summary of Certificateholders' Statements
27 - Financial Data Schedule
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(b) Reports on Form 8-K:
The Registrant filed the following reports on Form 8-K during the three months ended October 31, 1995:
(i) Form 8-K dated September 25, 1995
(ii) Form 8-K dated October 25, 1995
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
NAVISTAR FINANCIAL SECURITIES CORPORATION on behalf of NAVISTAR FINANCIAL DEALER NOTE TRUST 1990 and NAVISTAR FINANCIAL DEALER NOTE MASTER TRUST (Exact name of Registrant as specified in its charter)
By: /s/PHYLLIS E. COCHRAN January 29, 1996 Phyllis E. Cochran Vice President and Controller
EXHIBIT INDEX


Item 1. BUSINESS
General
IDS Life Account RE (the Account) was established by a resolution of the Board of Directors of IDS Life Insurance Company (IDS Life) as a separate asset account, pursuant to Minnesota law. The Account was formed to make real estate related investments in connection with the sale of individual deferred variable annuity contracts (Contracts) offered by IDS Life. The Account commenced operations on August 7, 1987 when the annuity contracts were first offered for sale to the public. Effective May 1, 1995, the Account discontinued new contract sales. The Account holds assets that are segregated from all of IDS Life's other assets and are not chargeable with liabilities arising out of any other business of IDS Life.
The Account is not registered as an investment management company under the Investment Company Act of 1940. The Account is under the control and management of the Board of Directors of IDS Life and its officers. The owners of the Contracts have no voting rights with respect to the Account.
IDS Life does not guarantee the investment performance of the Account and is not responsible for the liabilities of the Account. However, IDS Life is responsible for the fulfillment of the terms of each Contract, including payment of death benefits and the guarantees of the minimum annuity purchase rates contained in the Contracts.
Investment Objective
The investment objectives of the Account previously were to provide for payment of retirement income under the Contracts by seeking to: (i) preserve and protect the Account's assets in real (i.e., inflation-adjusted) terms; (ii) provide for compounding of income through reinvestment of cash flow from investments; and (iii) provide for increases in income through capital appreciation of real property investments and, to the extent available, through participation in the capital appreciation, gross revenues or income of the real properties subject to mortgage loans or land sale- leasebacks. There is no guarantee that the investment objectives of the Account will be attained. The assets of the Account have been invested primarily in real estate related investments in accordance with the diversification requirements regarding variable annuities contained in Section 817(h) of the Internal Revenue Code (the "Code").
The Account previously sought to have approximately 50 to 70 percent of the Account's assets invested in income-producing real property investments such as office buildings, shopping centers, apartment complexes and other real properties, with approximately 15 to 40 percent of the Account's assets invested in mortgage loans and land sale-leaseback investments, which could include participation in the appreciation or the gross revenues or income of the real properties that are subject to the mortgage loans or land sale- leaseback investments. The remaining portion of the Account's assets generally were to be invested in short-term debt instruments and intermediate term bonds with maturities of up to five years.
The Account has experienced substantial net contract terminations over the past several years, which have adversely affected its liquidity and ability to acquire additional real estate related investments. As a result, the Account does not intend to acquire additional real estate related investments. Further, the Account intends to liquidate the real estate related investments that it currently holds when it becomes advantageous or necessary to do so.
IDS Life has purchased and expects to continue to purchase accumulation units in order to maintain the Account's liquidity. IDS Life makes these payments so that no contract holder is disadvantaged because sales of new contracts have been discontinued. These payments for accumulation units have been made to enable the Account to pay off amounts borrowed under its line of credit with IDS Life and as needed in order to fund all of the Account's obligations under the contracts such as paying surrenders. By purchasing accumulation units, IDS Life has an ownership interest in the Account and participates in the increase or decrease in value of the Account's investments just as other owners of accumulation units do. IDS Life may realize a gain or loss on its accumulation units when redeemed.
IDS Life currently expects to hold the accumulation units it purchases until the surrender of all outstanding contracts or until the Account's liquidity improves (through, for example, one or more sales of real estate related investments) thereby permitting the Account to satisfy its anticipated contract obligations. Because IDS Life may purchase a significant amount of accumulation units, IDS Life may be subject to certain conflicts of interest it would not otherwise have if it had not purchased such accumulation units, including, among other things, a conflict in approving periodic valuations of real estate related investments made by the Investment Adviser, JMB Annuity Advisers.
Competition
As of December 31, 1995, IDS Life was aware of 3 other real estate variable annuity products that have been registered with the Securities and Exchange Commission and that are being offered for sale by competitors. These products differed from the Account in various features although their structure and investment objectives were similar to the Account's prior to its termination of new contract sales. In addition, the Account competed against other real estate investment funds and registered investment companies including limited partnerships, real estate investment trusts, unit investment trusts, pension and profit sharing trusts, corporations, etc., all of which may or may not be offered for sale by commercial and investment banks, realty corporations, insurance companies, savings and loan associations, diversified financial service companies, and other financial service intermediaries. The Account had been in competition for real property investments, mortgage loans and land sale-leasebacks with numerous other entities, as well as with individuals, corporations, real estate investment trusts, real estate partnerships and other entities engaged in real estate investment activities, including certain affiliates of the JMB Annuity Advisers (the Investment Adviser) and IDS Life. The real properties that are the subject of the Account's real estate related investments are in competition with other real properties (including those in which the Investment Adviser, IDS Life or their affiliates may have an interest) in the areas in which they are located, particularly with respect to obtaining new tenants and the retention of existing tenants. Such competition is based upon, among other things, effective rents charged, services to tenants and the facilities available.
Employees
IDS Life Account RE does not directly employ any persons. The business of the Account is under the control and management of IDS Life's Board of Directors, its principal officers, and its investment committee to the Account. The Investment Adviser, an affiliate of JMB Realty Corporation, provides investment selection, management, disposition, and consulting services with respect to the real estate related investments of the Account pursuant to an investment advisory agreement.
Item 2.

Item 2. PROPERTIES
Description of the Account's real estate related investments is hereby incorporated herein by reference to pages 21 to 44 of the Registrant's prospectus included in Form S-1 (as amended), File number 33-13375 to be filed April 1, 1996, which pages are filed herewith as Exhibit 99.2 to this report.
Item 3.

Item 3. LEGAL PROCEEDINGS
There are no material current or pending legal proceedings to which the Registrant is a party, or to which the Registrant's assets are subject.
Item 4.

Item 4. SUBMISSIONS OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable. PART II
Item 5.

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SECURITY HOLDERS MATTERS
The Contracts were offered for sale through the registered representatives of IDS Life. There is no established public trading market for the Contracts. In addition, the Contracts were not bid for, but were sold at the Account's current accumulation unit value. A contract owner may elect to surrender all or part of the Contract while the Contract is in force prior to the earlier of the retirement date or the death of the first to die of the annuitant or owner. A description of surrenders, withdrawals and transfers is hereby incorporated herein by reference to pages 62 to 63 under the heading "Contract Surrender" and 67 to 68 under the headings "Suspension and Delay of Payments" and "Transfer of Ownership" in the Registrant's prospectus included in Form S-1 (as amended), File Number 33-13375, to be filed April 1, 1996, which pages are filed herewith as Exhibit 99.1 to this report. For the year ended December 31, 1995, the high and low accumulation unit values were $1.10 and $.99 per unit, respectively. The number of contract owners at December 31, 1995 was 1,260.
Item 6.

Item 6. SELECTED FINANCIAL DATA
IDS LIFE ACCOUNT RE of IDS LIFE INSURANCE COMPANY
December 31, 1995
NOTES TO FINANCIAL STATEMENTS
1. Organization
IDS Life Account RE (the Account) is a segregated asset account of IDS Life Insurance Company (IDS Life) under Minnesota law. A registration statement under the Securities Act of 1933 relative to the deferred variable annuity contracts (the Contracts) issued by the Account became effective on August 6, 1987. Effective May 1, 1995, the Account discontinued new contract sales. The assets of the Account are held for the exclusive benefit of contract owners and are not chargeable with liabilities arising out of any other business conducted by IDS Life.
2. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared on the accrual basis of accounting. Significant accounting policies followed by the Account are summarized below.
Investments in Securities Investments in short-term securities maturing more than 60 days from the valuation date are valued at the market price or approximate fair value based on current interest rates; those maturing in 60 days or less are valued at amortized cost. The Account also may invest in intermediate-term bonds with maturities of up to five years which are valued at fair value as determined by reference to market quotations, market indices, matrices and data from independent brokers.
Security transactions are accounted for on the date securities are purchased or sold. Interest income, including amortization of premium and discount, is accrued daily.
Consolidation and Unconsolidated Joint Ventures The Account's policy is to consolidate the underlying assets, liabilities and operations of property investments where 50 percent or greater ownership position is maintained. Investments in unconsolidated joint ventures with less than 50 percent ownership interest are accounted for on the equity method of accounting.
Investments in Real Property, Mortgage Loans and Land/Sale-Leasebacks The Account initially values real estate related investments at their cost (including acquisition or mortgage placement fees and other acquisition or placement expenses) unless circumstances otherwise indicate that a different value should be used. Subsequently, the value of these investments will be periodically determined by JMB Annuity Advisers (the Investment Adviser). Procedures utilized to determine the estimated value include the following: (i) at the time of purchase and once every two years thereafter, each real property investment and each real property underlying a participating mortgage loan or land sale-leaseback investment will be appraised by an independent appraiser or an existing appraisal will be updated, (ii) various assumptions including, but not limited to, occupancy and rental rates, expense levels, net operating income, average capital costs and capitalization rates upon sale will be used in determining the discounted present value of an investment's estimated cash flow and its estimated sale proceeds or its asset value under a direct capitalization methodology, and (iii) for fixed interest rate mortgage loans and fixed rental rate land sale-leaseback investments, estimated values will be determined by comparison to current interest rates on U.S. Treasury debt as adjusted for a risk differential of the Account's investments. The relative weight to be given to a particular methodology or other relevant factors in determining the estimated asset value of a particular real property will depend upon an assessment of the existing and anticipated market conditions and property specific factors relevant to such real property. There is no assurance that the assumptions, estimates and methodologies used in valuing the Account's real estate related investments will in fact prove accurate or that such values would in fact be realized. Such estimates involve subjective judgments as the actual price of real estate can only be determined between independent third parties in sales transactions. In addition, any expenses that may be borne by the Account in connection with the disposition of a real estate related investment are not deducted in determining its estimated value.
Because the Account values its real property investments at estimated fair values, no provision for depreciation expense is recorded.
Each day the Account will record estimated income and expenses attributable to real estate related assets. Periodically, adjustments to reflect the difference between estimated and actual income and expenses will be made.
Federal Income Taxes IDS Life is taxed as a life insurance company. The Account is treated as part of IDS Life for federal income tax purposes. Under existing federal income tax law, no income taxes are payable with respect to any income of the Account.
Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported results of operations during the period. Actual results could differ from those estimates. 3. Fees and Expenses
The Account pays a mortality and expense risk fee to IDS Life which is accrued daily and is equal, on an annual basis, to 1.00 percent of the average daily asset value, as defined, of the Account. The mortality risk is IDS Life's guarantee to make retirement payments according to the terms of the Contract, no matter how long annuitants live. The expense risk portion of the fee is paid to IDS Life for its guarantee that the various fees paid by the Account to IDS Life will not be increased in the future. For the years ended December 31, 1995, 1994 and 1993, the Account paid IDS Life a mortality and expense risk fee of $482,896, $502,607 and $549,250, respectively.
The Account also pays IDS Life an asset management fee equal, on an annual basis, to 1.25 percent of the average daily asset value, as defined, of the Account. A portion of this fee, equal to 0.95 percent of the average daily asset value, is paid by IDS Life to the Investment Adviser. The total fee may be adjusted upward to a maximum of 1.50 percent depending upon the performance of the Account's real property investments as measured against the FRC Property Index. The performance-related portion of the fee is calculated and recorded on an annual basis when the FRC Property Index is released each year for the preceding calendar year. No performance fee was paid by the Account in 1995 for 1994. The performance fee paid by the Account in 1994 for 1993 was $137,299. The performance fee paid by the Account in 1993 for 1992 was $87,287. Any performance fee adjustment will be paid to the Investment Adviser. For the years ended December 31, 1995, 1994 and 1993, the Account paid total asset management fees of $603,620, $765,557 and $773,849, respectively.
IDS Life receives from the Account an acquisition and mortgage placement fee equal to 3.75 percent of the total cash to be paid or advanced by the Account (net of any borrowings in the case of real property investments) in connection with each real property investment, mortgage loan or land sale-leaseback investment made by the Account. A portion of this fee, equal to 3.50 percent, is paid to the Investment Adviser in consideration for its services in connection with the acquisition or placement of real estate related investments of the Account. No acquisition and mortgage placement fees were paid in 1995, 1994 or 1993.
The Account pays for all operational expenses incurred on its behalf. For the years ended December 31, 1995, 1994 and 1993, IDS Life was reimbursed $56,102, $51,223 and $83,122, respectively, for personnel-related expenses incurred in the administration of the Account.
4. Investments in Unconsolidated Joint Venture Partnerships and Participation in Mortgage Loan
Joint Venture Partnership - N/S Associates
IDS Life, on behalf of the Account, entered into a joint venture partnership called N/S Associates, which on April 4, 1988 acquired interests in two enclosed super regional shopping malls that are described below.
The terms of N/S Associates' partnership agreement provide that its annual net cash flows and net sales or refinancing proceeds generally will be distributed among all of the partners in accordance with their respective percentage ownership interests in N/S Associates.
The Account contributed approximately $12,008,000 to N/S Associates as its capital contribution. The percentage interest of the Account in N/S Associates is 5.92 percent. In connection with the purchase of the shopping malls, the Account paid to IDS Life and the Investment Adviser their respective portions of the acquisition fee amounting to approximately $450,000.
Summary of Real Estate Investments Made Through N/S Associates
Milwaukee, Wisconsin - Northridge Mall
The Account, through N/S Associates, owns an interest in an existing enclosed super regional shopping center in Milwaukee, Wisconsin, known as Northridge Mall. The mall shops and four adjacent department stores comprising the shopping center contain approximately 1,053,000 square feet of gross leasable area, of which N/S Associates owns approximately 399,000 square feet consisting of mall shops (approximately 388,000 square feet) and storage space (approximately 11,000 square feet). The remaining 654,000 square feet of gross leasable area are occupied by four department stores, three of which own their own stores and a portion of the parking area. The fourth department store leases its space from an unaffiliated third party.
N/S Associates acquired its interest in the shopping center in April 1988 for a purchase price of approximately $108,107,000, of which $89,653,000 was paid in cash at closing, subject to the existing mortgage loans with a then outstanding aggregate balance of approximately $18,454,000. In addition to the purchase price, a reserve of $8,900,000 was established, all of which had been used to pay for certain capital improvements made at the shopping center. In February 1995, the two mortgage loans secured by the property were repaid with a portion of the proceeds from the refinancing of the Southridge Mall mortgage loan.
The shopping center is being managed by an affiliate of the Investment Adviser under a management agreement. The affiliate of the Investment Adviser receives an annual fee equal to 3.75 percent of the gross receipts of the property plus reimbursement of certain direct expenses in connection with the property management.
Greendale, Wisconsin - Southridge Mall
The Account, through N/S Associates, owns an interest in an existing enclosed super regional shopping center in Greendale, Wisconsin, known as Southridge Mall. The mall shops and five adjacent department stores comprising the shopping center contain approximately 1,297,000 square feet of gross leasable area, of which N/S Associates owns approximately 437,000 square feet, including the space leased to one of the department stores. The remaining 860,000 square feet of gross leasable area are occupied by four other department stores, three of which own their own stores and a portion of the parking area. The fourth department store leases its space from an unaffiliated third party.
N/S Associates acquired its interest in the shopping center for a purchase price of approximately $115,401,000, of which $96,865,000 was paid in cash at closing. In addition to the purchase price, a reserve of approximately $7,250,000 was established for capital improvements, all of which had been used to pay for certain capital improvements made at the shopping center. In February 1995, the mortgage loan secured by the property was repaid with a portion of the proceeds from a new mortgage loan in the principal amount of $35,000,000. The new mortgage loan has a term of seven years, bears interest at 8.35 percent per annum and requires monthly payments of interest only prior to maturity. Proceeds from the new mortgage loan were also used to repay the two mortgage loans secured by Northridge Mall. The remaining net proceeds from the new loan were used to pay approximately $2,900,000 of tenant improvement and other capital costs incurred for Northridge and Southridge Malls.
The shopping center is being managed by an affiliate of the Investment Adviser under a management agreement. The affiliate of the Investment Adviser receives an annual fee equal to 3.75 percent of the gross receipts of the property plus reimbursement of certain direct expenses in connection with the property management.
Joint Venture Partnership - Monmouth Associates
IDS Life, on behalf of the Account, entered into a joint venture partnership called Monmouth Associates, which on October 27, 1988 (i) acquired certain land underlying a super regional shopping center in Eatontown, New Jersey known as Monmouth Mall, (ii) leased the land to the owner of the shopping center pursuant to a long-term ground lease, and (iii) executed a first leasehold mortgage loan to the owner of the shopping center secured by the leasehold real estate and the improvements thereon as more fully described below. The owner of the shopping center (the Borrower/Lessee) is a partnership whose partners are not affiliated with Monmouth Associates.
The terms of Monmouth Associates' partnership agreement provide that its annual net cash flows and net sales or refinancing proceeds generally will be distributed among all of the partners in accordance with their respective percentage interests in Monmouth Associates. The Account contributed approximately $10,000,000 to Monmouth Associates as its initial capital contribution. The Account has made additional capital contributions of approximately $685,000. The percentage interest of the Account in Monmouth Associates is 6.97 percent. In connection with the investment, the Account paid to IDS Life and the Investment Adviser their respective portions of the acquisition and mortgage placement fee amounting to approximately $375,000.
Summary of Real Estate Investment Made Through Monmouth Associates
Eatontown, New Jersey - Monmouth Mall
The Account, through Monmouth Associates, acquired an interest in the land underlying a shopping center in Eatontown, New Jersey known as Monmouth Mall. The mall is located on approximately 90 acres of land, of which Monmouth Associates owns approximately 88.5 acres, subject to the rights of one of the department store tenants to acquire the land underlying its store and the improvements thereon for nominal consideration. The remaining acres are owned by 2 department stores. Monmouth Associates acquired its interest in the land for a purchase price of approximately $13,000,000.
Monmouth Associates entered into an agreement whereby the land underlying the mall is leased back to the Borrower/Lessee under a long-term ground lease. The long-term ground lease, which has a term of 75 years, provides for monthly base rent aggregating $1,170,000 annually with minimum payments of $650,000. The long-term ground lease also provides for contingent rent, payable quarterly out of the excess, if any, of substantially all of the gross receipts from the shopping center received by the Borrower/Lessee over certain base amounts, equal to the sum of (x) a specified annual amount (commencing in the fourth lease year at $390,000 per annum and increasing in the sixth lease year to $520,000 per annum), increased until paid at the "applicable rate" of interest payable under the first leasehold mortgage loan described below (such amount as so increased herein called the "rent shortfall amount"), plus (y) 15 percent of the balance of such excess gross receipts remaining after deducting the aggregate amount paid at such time of the rent shortfall amount under the long-term ground lease and the "interest shortfall amount" under the first leasehold mortgage loan as described below.
In addition, Monmouth Associates made a first leasehold participating mortgage loan in the original principal amount of $128,920,000 to the Borrower/Lessee which is secured by the leasehold real estate and the improvements thereon. The current loan amount is $127,670,000. The loan has a term of 15 years, which may be extended from time to time at the option of Monmouth Associates for up to an additional 20 years. The loan provides for monthly payments of base interest at a base rate of approximately 5.98 percent per annum for the first two loan years, approximately 7.97 percent per annum for the third loan year and approximately 5.00 percent per annum for each loan year thereafter. The first leasehold mortgage also provides for quarterly payments of contingent interest, payable out of the excess, if any, of substantially all of the gross receipts from the shopping center received by the Borrower/Lessee over certain base amounts, equal to the sum of (x) the difference between the amount of interest payable on the loan at the "applicable rate" and that payable at the base rate described above, increased until paid at the applicable rate (such amount as so increased herein called the "interest shortfall amount"), plus (y) 45 percent of the balance of such excess gross receipts remaining after deducting the aggregate amount paid at such time of the rent shortfall amount under the ground lease and the interest shortfall amount under the first leasehold mortgage loan. The "applicable rate" under the loan is 5.98 percent per annum for the first two loan years, 7.97 percent per annum for the next three loan years and 8.97 percent per annum for each loan year thereafter. In addition, upon a joint sale or refinancing of the land and improvements or at maturity of the leasehold mortgage loan, Monmouth Associates is entitled to receive certain participations in the proceeds from such sale or refinancing after payment of its investment in the land and/or repayment of the principal amount of the leasehold mortgage loan. For financial reporting purposes, Monmouth Associates discontinued the accrual of contingent interest on the leasehold mortgage loan in April 1992 as a result of uncertainty as to the collectibility of such contingent interest in light of the previous decrease in the estimated value of Monmouth Mall. In addition, for financial reporting purposes, no contingent rent was accrued under the ground lease for 1995, 1994 or 1993. In 1995, Monmouth Associates wrote off the receivable balance of $3,576,000 primarily related to the accrued interest resulting from the difference between the accrual and pay rates ("contingent interest") recorded prior to 1992, due to the uncertainty as to the collectibility of these amounts.
Monmouth Associates is obligated to make certain additional loans to the Borrower/Lessee under certain circumstances to finance the cost of 60 percent of tenant improvements or other ordinary capital expenditures. In addition, in May 1994, Monmouth Associates made a loan to finance the cost of a renovation of the shopping center, which commenced during the third quarter of 1994. The renovation consists of, among other things, the addition of a food court and cinema and the re-merchandising of approximately 300,000 square feet of gross leasable area. The renovation loan from Monmouth Associates bears interest at a fixed interest rate of 10.5 percent per annum. In addition, Monmouth Associates' participation in certain levels of sale or refinancing proceeds from the property will be increased until Monmouth Associates has received aggregate payments equal to an internal rate of return of 11 percent per annum on its investments in the land and/or the first leasehold mortgage loan. The maximum amount of the renovation loan is $29,100,000, and the cost of the renovation is currently estimated to be $28,500,000. As of December 31, 1995, Monmouth Associates had funded approximately $21,476,000, using its cash reserves, cash flow and additional capital contributions made pro rata based upon the respective interests of the joint venture partners in Monmouth Associates. The renovation loan requires monthly payments of interest only until maturity when the entire principal amount and any accrued and unpaid interest will be due. The renovation loan will mature contemporaneously with the first leasehold mortgage loan in October 2003, subject to acceleration or extension of the loan by Monmouth Associates under certain circumstances.
Joint Venture - 1225 Connecticut Avenue, N.W.
Washington, D.C. - 1225 Connecticut Avenue, N.W.
In May 1990, IDS Life, on behalf of the Account, acquired an interest in a newly formed Delaware corporation, 1225 Investment Corporation (the Corporation) owned jointly with certain other persons described below. The Corporation acquired an office building located in Washington, D.C. known as 1225 Connecticut Avenue, N.W. (1225 Connecticut).
The office building, which was completed in 1968, is an eight-story reinforced concrete frame building containing 184,432 square feet of rentable office space, 18,498 square feet of rentable retail space, 6,416 square feet of below grade storage space and 100,024 square feet of subsurface parking space for over 300 automobiles.
The Corporation has elected to qualify as a real estate investment trust (REIT) pursuant to sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the Code). For each taxable year that the Corporation qualifies as a REIT, the Corporation in general will not be subject to federal corporate income tax or the District of Columbia corporate franchise tax on its regular taxable income and will not be taxed on long-term capital gain income to the extent its income is distributed as dividends. If the Corporation were to fail to qualify as a REIT, it would be taxed at rates applicable to a corporation on its taxable income, whether or not distributed.
The Account owns approximately 16.3 percent of the outstanding shares of common stock of the Corporation. Certain of the outstanding shares of common stock of the Corporation not owned by the Account are owned by an affiliate of the Investment Adviser.
The Corporation purchased 1225 Connecticut from the seller for a purchase price of approximately $54,125,000 (net of prorations and miscellaneous closing costs), consisting of $51,425,000 paid in cash and assumption of approximately $2,700,000 of mortgage indebtedness then encumbering the property. The Corporation paid approximately $2,130,000 for real estate brokerage commissions to an independent third party and certain closing costs. The Account contributed $9,000,000 for its interest in the Corporation. The Account has also paid acquisition fees amounting to $337,500.
In January 1994, the Corporation refinanced its mortgage loan with a first mortgage loan in the principal amount of $7,000,000 bearing interest at 6.98 percent per annum. The new loan requires monthly payments of interest only aggregating $488,600 per annum until maturity in February 2001 when the principal amount together with accrued interest will be due and payable. Under certain circumstances, the principal amount of the loan may be prepaid in whole (but not in part), subject to a prepayment premium. Pursuant to the deed of trust securing the mortgage loan, the Corporation is prohibited from modifying Ernst & Young's primary lease or from entering into certain other tenant leases without the lender's consent. Prior to selling the property or encumbering the property with any additional debt, the Corporation must obtain the consent of the lender, which may be arbitrarily withheld. However, subject to certain restrictions, the Corporation has a one-time right to transfer title to the property together with an assumption of the mortgage loan.
The property is being managed under an agreement pursuant to which the manager is obligated to manage 1225 Connecticut, collect all of the receipts from operations and, to the extent available from such receipts, pay all of the expenses of 1225 Connecticut. The manager is paid a fee equal to 2.5 percent of the gross revenues of 1225 Connecticut, plus reimbursement for certain direct expenses of the manager. The property had previously been managed by JMB Properties Company, an affiliate of the Investment Adviser. In December 1994, JMB Properties Company sold substantially all of its assets to an unaffiliated third party, and certain management personnel of JMB Properties Company became management personnel of the third party. As a result of the sale, the successor to JMB Properties Company's assets became the property manager of the 1225 Connecticut office building on the same terms that existed prior to the sale.
1225 Connecticut leases approximately 80 percent of the available space of the property to one tenant under leases, all with terms of 12 years. For the year ended December 31, 1995, such tenant represented approximately 77 percent of total revenues.
Pursuant to a lease currently in effect, an unaffiliated third party leases and operates the entire parking garage (subject to certain parking rights provided for tenants of the property) until November 1997. The lease provides for a fixed rent payment of $485,000 a year (which reflects an increase at the end of 1993 from $430,000 a year), provides that the lessee shall pay the operating expenses of the parking garage and does not provide such lessee with an option to extend the term of the lease. Unconsolidated Joint Ventures - Summary Information
Summary information for the Account of its investments in Unconsolidated Joint Ventures as of and for the years ended December 31, 1995 and 1994 is as follows:
Participation in Mortgage Loan - Riverpoint Associates
Chicago, Illinois - Riverpoint Center
In August 1989, IDS Life, on behalf of the Account, participated in the initial funding of a non-recourse participation first mortgage loan in the principal amount of $26,000,000. The Account's share of the initial funding was $2,666,660 or 10.26 percent of this loan. The remaining portion of the loan is funded by affiliates of the Investment Adviser (herein, the Account and said affiliates are collectively called the Lenders). The Loan is secured by a first mortgage on a shopping center known as Riverpoint Center in Chicago, Illinois. The shopping center is owned by a partnership (the Borrower) whose general partners are not affiliated with any of the Lenders. In connection with the loan, the Account paid to the Investment Adviser a mortgage placement fee amounting to approximately $108,000, less $37,500 in loan origination fees paid to the Investment Adviser by the Borrower, for a net fee paid of approximately $70,500 paid by the Account.
Additional amounts aggregating approximately $2,040,000 (of which the Account's share was approximately $209,000) have been funded since the Initial Funding. The Borrower did not qualify for any additional fundings above the $28,040,000 which has been funded to date, and no additional fundings will be made by the Lenders.
The ten-year loan requires periodic payments of interest only and bears basic interest at the rate of 8.84 percent per annum in the first loan year, 8.75 percent per annum during the second loan year, increasing 0.50 percent per annum in the fourth and 0.25 percent per annum in the seventh loan year to a maximum rate of 9.50 percent per annum, payable monthly in advance. The loan also provides for additional annual simple accrual of interest at the rate of 2.00 percent per annum payable upon prepayment or maturity. For financial reporting purposes, commencing in August of 1991, the Account suspended recognition of income related to the simple accrual interest receivable (deferred until maturity).The loan also provides for additional interest in an amount equal to a percentage of annual gross income from the underlying property (exclusive of tenant reimbursement of expenses) in excess of a base amount and, on sale or repayment of the loan, an amount equal to a percentage of the subsequent increase in the value of the underlying property in excess of a specified amount. Such amounts of additional interest payments made by the Borrower will be used to offset, on a dollar-for-dollar basis, the amount of accrued interest payable. The loan is generally non-recourse to the Borrower and its partners.
The shopping center, completed in 1989, is located on approximately 17 acres and consists of approximately 200,800 square feet of gross leasable area.
5. Investments in Wholly-owned Real Estate Property
Fairfax County, Virginia - West Springfield Terrace Apartments
In August 1989, IDS Life, on behalf of the Account, acquired a 244-unit garden apartment complex known as West Springfield Terrace Apartments, which is located in Fairfax County, Virginia.
The apartment complex, which was completed in 1978, consists of 17 separate three and four-story buildings of wood frame with brick veneer construction containing 52 one-bedroom units, 22 one-bedroom and den units, 118 two-bedroom units, 22 two-bedroom and den units, and 30 three-bedroom units. The complex contains a swimming pool, tennis court, clubhouse and approximately 380 parking spaces.
The Account paid $15,222,278 for the apartment complex in cash at closing, excluding closing costs and prorations. In connection with the acquisition of the property, the Account paid a prepayment charge at closing of $92,221 to the lender that held the mortgage loan on the property. The Account also paid to IDS Life and the Investment Adviser their respective portions of the acquisition fee amounting to $274,834. At the time of the acquisition it was anticipated that an additional amount of approximately $1,450,000 would be used by the Account to pay the cost of upgrading kitchens and bathrooms and certain other upgrades and capital improvements at the complex. The renovation project was subsequently increased to include replacing certain carpets in units as they were renovated and to increase the number of units that received certain upgrades. The renovation project was completed during 1992 at an aggregate cost of approximately $1,900,000. To date the Account has paid IDS Life and the Investment Adviser their respective portions of the acquisition fee amounting to $18,000 in connection with the renovation project. In November 1989, the Account obtained a loan from an institutional lender in the principal amount of $8,000,000 secured by a first mortgage on the property. At December 31, 1995, the current balance of the mortgage loan encumbering the property was approximately $7,770,000. The loan has a term of seven years and bears interest at a rate of 9.50 percent per annum. The loan required monthly payments of interest only during the first three loan years and thereafter is amortizable over a 27-year schedule through monthly payments of principal and interest aggregating $824,400 per annum until November 1996, when the remaining principal balance and any accrued and unpaid interest of approximately $7,704,000 is due and payable.
The apartment complex is being managed for a fee equal to 5.00 percent of the gross revenues from the property, plus reimbursement of certain direct expenses of the manager. The property had previously been managed by JMB Properties Company, an affiliate of the Investment Adviser, but since December 1994 has been managed on the same terms by an unaffiliated third party that purchased substantially all of JMB Properties Company's assets, as discussed in Note 4 in connection with the 1225 Connecticut office building.
6. Liquidity Arrangements with IDS Life
The Account has experienced substantial net contract terminations over the past several years, which have adversely affected its liquidity. In March 1994, the Account obtained a short-term revolving line of credit for up to $10 million from IDS Life to pay for contract surrenders and other obligations under the Contracts. On June 2, 1995, the line of credit was terminated and the Account repaid the outstanding balance under the line of credit with the proceeds from accumulation units purchased by IDS Life. For the year ended December 31, 1995, IDS Life cumulatively contributed $24,700,000 toward the purchase of accumulation units. IDS Life expects to continue to make additional payments into the Account for accumulation units in order to maintain the Account and its liquidity. As of December 31, 1995, IDS Life's portion of the Contract Owners' Equity was $22,644,467, which represents 63% of total Contract Owners' Equity.
Schedule III
IDS LIFE ACCOUNT RE of IDS LIFE INSURANCE COMPANY
Participation in Mortgage Loan on Real Estate and Interest Earned on Participation in Mortgage
December 31, 1995
IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Notes to Combined Financial Statements
Years ended December 31, 1995, 1994, and 1993
(1) Organization and Basis of Accounting
The accompanying combined financial statements have been prepared for the purpose of complying with Rule 3.09 of Regulation S-X of the Securities and Exchange Commission. The combined financial statements include the accounts of the unconsolidated joint ventures in which IDS Life Account RE of IDS Life Insurance Company owns an equity interest. The unconsolidated joint ventures are N/S Associates, Monmouth Associates and 1225 Investment Corporation.
The accompanying combined financial statements have been prepared on the market value accrual basis of accounting.
The preparation of the combined financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts 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.
The ventures have implemented Statement of Accounting Standards No. 95 "Statement of Cash Flows" which classifies receipts and payments according to whether they stem from operating, investing or financing activities. The ventures records amounts held in U.S. Government obligations at cost, which approximates market. For the purposes of these statements, the ventures' policy is to consider all such amounts held with original maturities of three months or less ($2,200,000 and $5,989,000 at December 31, 1995 and 1994, respectively) as cash equivalents with any remaining amounts reflected as short-term investments.
Investments in real estate are stated at estimated fair value. A description of the valuation process is contained in Note 2 of Notes to Financial Statements of the Account. Such note is incorporated herein by reference.
Market values have been estimated by the Investment Adviser. Such market values involve subjective judgments and the actual values can only be determined by negotiations with independent third parties.
No provision for State or Federal income taxes has been made for N/S Associates or Monmouth Associates as the liability for such taxes, if any, is expected to be that of the venture partners rather than the venture. 1225 Investment Corporation has elected and qualifies to be treated as a real estate investment trust for Federal income tax purposes. The Corporation had no Federal income tax liabilities for taxable years ended December 31, 1995, 1994 and 1993. IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Notes to Combined Financial Statements - (Continued)
Maintenance and repair expenses are charged to operations as incurred. Significant costs of physical improvements are capitalized as part of investments in real estate.
Fixed rental income is recorded when the obligation for the payment of rent is incurred according to the terms of the lease agreements.
Statement of Financial Accounting Standards No. 107 ("SFAS 107"), "Disclosures about Fair Value of Financial Instruments", requires entities with total assets exceeding $150 million at December 31, 1994 to disclose the SFAS 107 value of all financial assets and liabilities for which it is practicable to estimate. Value is defined in the Statement as the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The ventures believe the carrying amount of its assets and liabilities (excluding current portion of long-term debt) approximates SFAS 107 value due to the relatively short maturity of these instruments. There is no quoted market value available for any of the ventures' other instruments. Based upon estimates of current market rates for debt with similar terms, the ventures discounted the scheduled loan payments to maturity. Based upon this calculation, the ventures believe that the carrying value of the mortgage notes payable approximate market value at December 31, 1995 and 1994.
(2) Venture Agreements
A description of the venture agreements are contained in Note 4 of Notes to Financial Statements of the Account for the year ended December 31, 1995. Such note is incorporated herein by reference. IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Notes to Combined Financial Statements - (Continued)
(3) Mortgage Notes Payable
(a) Mortgage notes payable consist of the following at December 31, 1995 and 1994:
(b) Refinancing - Southridge
On February 1, 1995, the Partnership refinanced the existing mortgage note on Southridge Mall in the amount of $35,000,000. Proceeds, net of transaction costs, were used to repay the existing mortgage notes at Southridge and Northridge Malls (including prepayment penalties of $155,000 and $240,000, respectively). The remaining proceeds which were reserved for future leasing costs, capital improvements and other related costs, have been expended.
Five year maturities of mortgage notes payable are as follows:
1996 . . . . . . . . . . $ -- 1997 . . . . . . . . . . -- 1998 . . . . . . . . . . -- 1999 . . . . . . . . . . -- 2000 . . . . . . . . . . --
(4) Leases - As Property Lessor
The venture has determined that all leases relating to the two retail properties and the office building are properly classified as operating leases; therefore, rental income is reported when earned. Leases with tenants range in term from one to thirty-two years and provide for fixed minimum rent and partial to full reimbursement of operating costs. In addition, substantially all retail leases provide for additional rent based upon percentage of tenants' sale volumes over certain specified amounts. IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Notes to Combined Financial Statements - (Continued)
Minimum lease payments to be received in the future under the above operating lease agreements, are as follows: 1996 . . . . . . . . . . $ 21,306,282 1997 . . . . . . . . . . 20,488,269 1998 . . . . . . . . . . 18,517,784 1999 . . . . . . . . . . 16,734,147 2000 . . . . . . . . . . 14,709,466 Thereafter . . . . . . . 56,125,989 $147,881,937
Contingent rent (based on sales by property tenants) from the retail investments included in rental income is $1,058,000, $1,010,000 and $1,000,000 in 1995, 1994 and 1993, respectively.
Monmouth Associates entered into an agreement whereby the land underlying the Monmouth shopping center is leased under a long-term ground lease. The long-term ground lease, which has a term of 75 years, provides for accrual of annual base rent of $1,170,000 with minimum payments of $650,000 per annum.
(5) Related Party Transactions
NS Associates has entered into a management agreement with Urban Retail Properties Company, (the "Retail Manager"). The Retail Manager is entitled to receive a fee of 3.75% of gross receipts from the operations of the Malls. Management fees earned by the Retail Manager are included in property operating expenses and aggregated approximately $1,174,000 and $1,266,000 for the periods ended December 31, 1995 and 1994, respectively.
1225 Investment Corporation had entered into a management agreement with JMB Properties Company. During December 1994, JMB Properties Company assigned the management agreement to Heitman Washington D.C. Properties, Ltd. ("Office Manager"). The Office Manager is entitled to receive a fee of 2.5% of gross receipts from the operations of the Property. Management fees earned by the Office Manager are included in property operating expenses and aggregated approximately $175,000 and $196,000 for the years ended December 31, 1995 and 1994, respectively. IDS LIFE ACCOUNT RE OF IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Notes to Combined Financial Statements - (Continued)
(6) Subsequent Events
(a) NS Associates
In February 1996, the Investment Adviser authorized and paid a cash distribution to the partners aggregating $2,125,000. Each partner received its proportionate share based on its respective ownership percentage.
(b) 1225 Investment Corporation
In February 1996, 1225 Investment Corporation paid a dividend of $1,250,000 ($22.67 per share) to the shareholders of record as of December 31, 1995. Schedule III
IDS LIFE ACCOUNT RE of IDS LIFE INSURANCE COMPANY Monmouth Associates Unconsolidated Joint Venture of IDS Life Account RE Participation in Mortgage Loan on Real Estate and Interest Earned on Participation in Mortgage
December 31, 1995
Part 1 - Participation in Mortgage Part 2 - Interest Earned on Loan on Real Estate at Close of Year on Participation in Mortgage
Liens on Shopping Center: Principal unpaid Amount of Interest due Monmouth Mall Carrying at close mortgage being & accrued at Interest Eatontown, New Jersey Amount (A) of period foreclosed end of period Income Earned
1995 $ 108,000,000 $ 158,373,000 $ -- $ 742,000 $ 6,994,000
1994 $ 119,154,000 $ 141,056,000 $ -- $ 3,960,000 $ 7,641,000
1993 $ 119,650,000 $ 132,338,000 $ -- $ 3,437,000 $ 7,166,000
(A) - Reconciliation of the carrying value of the participation in the mortgage loan:
1995 1994 1993
Balance at the beginning of year........... $ 119,154,000 $ 119,650,000 $ 119,650,000
Changes during year: Additional fundings...................... 17,317,000 9,318,000 -- Unrealized depreciation.................. (28,471,000) (9,814,000) --
Balance at end of year..................... $ 108,000,000 $ 119,154,000 $ 119,650,000
Schedule IV IDS LIFE ACCOUNT RE of IDS LIFE INSURANCE COMPANY N/S Associates, Monmouth Associates and 1225 Investment Corporation Unconsolidated Joint Ventures of IDS Life Account RE
Combined Real Estate Owned and Rental Income
December 31, 1995
Part 1 - Real Estate Owned at End of Year (C) Amount at Cost of Unrealized which carried Amount of improvements, Appreciation at close of encumbrances Initial Cost etc. (Depreciation) period (A)(B) Retail properties: Northridge Mall, Milwaukee, WI $ -- $108,107,000 $ 14,560,000 $(74,667,000) $ 48,000,000 Southridge Mall, Greendale, WI $ 35,000,000 $115,401,000 $ 15,375,000 $(25,776,000) $105,000,000 Office Building: 1225 Connecticut Ave., Washington, D.C. $ 7,000,000 $ 54,775,000 $ 7,566,000 $ (8,071,000) $ 54,270,000 Ground Lease: Monmouth Mall, Eatontown, NJ $ -- $ 13,000,000 $ -- $ -- $ 13,000,000 $ 42,000,000 $291,283,000 $ 37,501,000 $(108,514,000) $220,270,000
Part 2 - Rental Income
Rents due and accrued at end of period Retail Properties: Northridge Mall, Milwaukee, WI $ 93,000 Southridge Mall, Greendale, WI $ 264,000 Office Building: 1225 Connecticut Ave., Washington, D.C. $ 19,000 Ground Lease: Monmouth Mall, Eatontown, NJ $ -- $ 376,000
(A) The aggregate cost of real estate owned at December 31, 1995 for Federal Income tax purposes was approximately $465,315,000.
(B) Reconciliation of real estate owned: 1995 1994 1993
Balance at the beginning of period.......... $254,500,000 $272,660,000 $279,726,000
Additions (deductions), including unrealized depreciation................... (34,230,000) (18,160,000) (7,066,000)
Balance at end of year...................... $220,270,000 $254,500,000 $272,660,000
(C) - Reconciliation for depreciation is not applicable as real estate owned is stated at estimated market value. /TABLE Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Account has no directors or officers. The directors and principal executive officers of IDS Life Insurance Company are listed below.
David R. Hubers, 53: Director, IDS Life, since September 1989; President and Chief Executive Officer, American Express Financial Corporation (AEFC), since August 1993, and Director since January 1984. Senior Vice President, Finance and Chief Financial Officer, AEFC, from January 1984 to August 1993.
Richard W. Kling, 55: Director, IDS Life, since February 1984; President, IDS Life, since March 1994; Executive Vice President, Marketing and Products, from January 1988 to March 1994. Senior Vice President, AEFC, since May 1994. Director of IDS Life Series Fund, Inc. and manager of IDS Life Variable Annuity Funds A & B.
Paul F. Kolkman, 49: Director, IDS Life, since May 1984; Executive Vice President, IDS Life, since March 1994; Vice President, Finance, IDS Life from May 1984 to March 1994; Vice President, AEFC, since January 1987.
Janis E. Miller, 44: Director and Executive Vice President, Variable Assets since March 1994; Vice President, AEFC, since June 1990; Director, Mutual Funds Product Development and Marketing, AEFC, from May 1987 to May 1990. Director of IDS Life Series Fund, Inc. and manager of IDS Life Variable Annuity Funds A and B.
James A. Mitchell, 54: Chairman of the Board since March 1994; Chief Executive Officer since November 1986; President from July 1984 to March 1994; Executive Vice President, AEFC, since March 1994; Director, AEFC, since July 1984; Senior Vice President, AEFC, from July 1984 to March 1994.
Barry J. Murphy, 44: Director and Executive Vice President, Client Service since March 1994; Senior Vice President, Operations, Travel Related Services (TRS) a subsidiary of American Express Company, since July 1992; Vice President, TRS, from November 1989 to July 1992; Chief Operating Officer, TRS, from March 1988 to November 1989. Stuart A. Sedlacek, 38: Director and Executive Vice President, Assured Assets since March 1994; Vice President, AEFC, since September 1988.
Melinda S. Urion, 42: Director and Controller, IDS Life, since September 1991; Executive Vice President since March 1994; Vice President and Treasurer from September 1991 to March 1994; Senior Vice President and Chief Financial Officer, AEFC, since November 1995; Corporate Controller, AEFC, from April 1994 to November 1995; Vice President, AEFC, from September 1991 to November 1995; Chief Accounting Officer, AEFC, from July 1988 to September 1991.
Morris Goodwin Jr., 44: Vice President and Treasurer since March 1994; Vice President and Corporate Treasurer, AEFC, since July 1989; Chief Financial Officer and Treasurer, American Express Trust Company, from January 1988 to July 1989.
William A. Stoltzmann, 47: Vice President, General Counsel and Secretary since 1985.
The directors, executive officers and certain other officers of JMB Realty Corporation (JMB), the managing partner of the Investment Adviser, are listed below. Many of such persons are also officers and/or directors of numerous affiliated companies of JMB and/or partners of certain partnerships (herein collectively referred to as the Associate Partnerships) which are partners, directly or indirectly, in publicly offered real estate limited partnerships sponsored by JMB.
Judd D. Malkin, 58, Chairman and Director of JMB, is a director of Urban Shopping Centers, Inc., an affiliate of JMB engaged in the business of owning, managing and developing shopping centers, an officer and/or director of various other JMB affiliates and a partner of the Associate Partnerships. Until December 1994, he was also a Trustee of JMB Group Trust I, JMB Group Trust II, JMB Group Trust III, JMB Group Trust IV and JMB Group Trust V, which until that time had been advised by an affiliate of the Investment Adviser. Mr. Malkin has been associated with JMB since October 1969. He is a Certified Public Accountant.
Neil G. Bluhm, 58, President and Director of JMB, is a director of Urban Shopping Centers, Inc., an affiliate of JMB engaged in the business of owning, managing and developing shopping centers, an officer and/or director of various other JMB affiliates and a partner of the Associate Partnerships. Until December 1994, he was also a Trustee of JMB Group Trust I, JMB Group Trust II, JMB Group Trust III, JMB Group Trust IV and JMB Group Trust V, which until that time has been advised by an affiliate of the Investment Adviser. Mr. Bluhm has been associated with JMB since August 1970. He is a member of the Bar of the State of Illinois and is a Certified Public Accountant. Burton E. Glazov, 57, Director of JMB, was until December 1990 also Executive Vice President of JMB. Mr. Glazov has been associated with JMB since June 1971. He is member of the Bar of the State of Illinois and is a Certified Public Accountant.
Stuart C. Nathan, 54, Executive Vice President and Director of JMB, is an officer and/or director of various JMB affiliates and a partner of the Associate Partnerships. Mr. Nathan has been associated with JMB since July 1972. He is also a director of Sportmart Inc., a retailer of sporting goods. He is member of the Bar of the State of Illinois.
John G. Schreiber, 49, Director of JMB, is also a director of Urban Shopping Centers, Inc., an affiliate of JMB engaged in the business of owning, managing and developing shopping centers, and was, until December 1990, Executive Vice President of JMB. Mr. Schreiber has been associated with JMB since December 1970. Mr. Schreiber is President of Schreiber Investments, Inc., a company which is engaged in the real estate investing business. He is also a senior advisor and partner of Blackstone Real Estate Partners, an affiliate of the Blackstone Group, L.P. Mr. Schreiber also serves as a Trustee of Amli Residential Property Trust, a publicly-traded real estate investment trust that invests in multi-family properties. He is also a director of a number of investment companies advised or managed by T. Rowe Price Associates and its affiliates. He holds a master's degree in business administration from the Harvard University Graduate School of Business.
A. Lee Sacks, 62, Director of JMB, is President and Director of JMB Insurance Agency, Inc. and a partner of various Associate Partnerships. Mr. Sacks has been associated with JMB since December 1972.
H. Rigel Barber, 47, Chief Executive Officer and Executive Vice President of JMB, is an officer of various JMB affiliates and a partner of various Associate Partnerships. Mr. Barber has been associated with JMB since March 1982. He holds a law degree from the Northwestern University Law School and is a member of the Bar of the State of Illinois.
Ira J. Schulman, 44, Executive Vice President of JMB, is an officer of various JMB affiliates and a partner of various Associate Partnerships. Mr. Schulman has been associated with JMB since February 1983. He holds a master's degree in business administration from the University of Pittsburgh.
Gary Nickele, 43, Executive Vice President and General Counsel of JMB, is an officer and/or director of various JMB affiliates and a partner of various Associate Partnerships. Mr. Nickele has been associated with JMB since February 1984. He holds a law degree from the University of Michigan Law School and is a member of the Bar of the State of Illinois.
Glenn E. Emig, age 48, Executive Vice President and Chief Operating Officer of JMB, is an officer of various JMB affiliates and a partner of various Associate Partnerships. Mr. Emig has been associated with JMB since December 1979. He holds a master's degree in business administration from the Harvard University Graduate School of Business.Item 11. EXECUTIVE COMPENSATION
Not applicable.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
IDS Life has purchased and expects to continue to purchase accumulation units in order to maintain the Account's liquidity. By purchasing accumulation units, IDS Life has an ownership interest in the Account and participates in the increase or decrease in value of the Account's investments just as other owners of accumulation units do. As of March 19, 1996, IDS Life owned 23,967,444 accumulation units.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Account incurred asset management fees for the year ended December 31, 1995 of $603,620 of which $458,751 was paid to the Investment Adviser and the remainder to IDS Life. Asset management fees incurred for the year ended December 31, 1994 were $765,557, of which $614,775 was paid to the Investment Adviser and the remainder to IDS Life.
For the years ended December 31, 1995 and 1994, IDS Life was paid or reimbursed $482,896 and $502,607, respectively, for mortality and expense risk fee and $56,102 and $51,225, respectively, for personnel-related expenses incurred in the administration of the Account.
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(A.1) See Item 8