FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended Commission File Number
June 30, 1996 0-11909
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
(Exact Name of Registrant as specified in its Charter)
Delaware 16-1212761
- -------------------- --------------------------------
(State of Formation) (IRS Employer Identification No.)
2350 North Forest Road
Suite 12-A
Getzville, New York 14068
(Address of Principal Executive Office)
Registrant's Telephone Number: (716) 636-0280
Indicate by a check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by a check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in part III of this Form 10-Q or any
amendment to this Form 10-Q. (X)
As of June 30, 1996, the issuer had 10,000 units of limited partnership interest
outstanding.
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
INDEX
-----
PAGE NO.
--------
PART I: FINANCIAL INFORMATION
- ------- ---------------------
Balance Sheets -
June 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended June 30, 1996 and 1995 4
Statements of Operations -
Six Months Ended June 30, 1996 and 1995 5
Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 6
Statements of Partners' (Deficit) -
Six Months Ended June 30, 1996 and 1995 7
Notes to Financial Statements 8 - 19
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- -------- FINANCIAL CONDITION AND RESULTS OF OPERATIONS 20 - 21
---------------------------------------------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
BALANCE SHEETS
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Property, at cost:
Land $ 848,015 $ 848,015
Buildings and improvements 8,901,141 8,901,141
Furniture and fixtures 425,000 425,000
------------ ------------
10,174,156 10,174,156
Less accumulated depreciation 4,873,310 4,677,511
------------ ------------
Property, net 5,300,846 5,496,645
Cash -- 30,524
Cash - security deposits 35,725 35,350
Escrow deposits 212,812 283,000
Accounts receivable, net of allowance for doubtful
accounts of $144,060 and $113,510, respectively 1,751 7,411
Accounts receivable - affiliates 181,288 146,238
Mortgage costs, net of accumulated
amortization of $84,262 and $80,065 258,134 262,331
Other assets 13,570 44,619
------------ ------------
Total Assets $ 6,004,126 $ 6,306,118
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 41,301 $ --
Mortgages payable 5,588,705 5,649,616
Accounts payable and accrued expenses 445,950 513,354
Accrued interest 48,846 48,846
Security deposits and prepaid rents 94,592 78,654
------------ ------------
Total Liabilities 6,219,394 6,290,470
------------ ------------
Losses of unconsolidated joint ventures
in excess of investment 895,551 864,503
------------ ------------
Minority interest in consolidated
joint venture 330,439 386,062
------------ ------------
Partners' (Deficit):
General partners (203,993) (197,803)
Limited partners (1,237,264) (1,037,114)
------------ ------------
Total Partners' (Deficit) (1,441,257) (1,234,917)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 6,004,126 $ 6,306,118
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF OPERATIONS
Three Months Ended June 30, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 411,373 $ 463,262
Interest and other income 20,758 23,347
--------- ---------
Total income 432,131 486,609
--------- ---------
Expenses:
Property operations 193,618 288,731
Interest 131,970 148,727
Depreciation and amortization 101,165 101,889
Administrative:
Paid to affiliates 52,424 42,118
Other 70,642 49,944
--------- ---------
Total expenses 549,819 631,409
--------- ---------
Loss before allocated loss from joint venture
and loss allocated to minority interest (117,688) (144,800)
Allocated loss from joint venture (10,274) (1,351)
Loss allocated to minority interest 41,341 1,931
--------- ---------
Net loss $ (86,621) $(144,220)
========= =========
Loss per limited partnership unit $ (8.40) $ (13.99)
========= =========
Distributions per limited partnership unit $ -- $ 1.65
========= =========
Weighted average number of
limited partnership units
outstanding 10,000 10,000
========= =========
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 849,979 $ 966,879
Interest and other income 47,206 37,722
----------- -----------
Total income 897,185 1,004,601
----------- -----------
Expenses:
Property operations 471,439 558,391
Interest 260,189 324,325
Depreciation and amortization 199,996 203,781
Administrative:
Paid to affiliates 76,431 103,281
Other 120,046 85,262
----------- -----------
Total expenses 1,128,101 1,275,040
----------- -----------
Loss before allocated loss from joint venture
and loss allocated to minority interest (230,916) (270,439)
Allocated loss from joint venture (31,048) (5,912)
Loss allocated to minority interest 55,623 4,238
----------- -----------
Net loss $ (206,340) $ (272,113)
=========== ===========
Loss per limited partnership unit $ (20.02) $ (26.39)
=========== ===========
Distributions per limited partnership unit $ -- $ 3.30
=========== ===========
Weighted average number of
limited partnership units
outstanding 10,000 10,000
=========== ===========
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Cash flow from operating activities:
Net loss $(206,340) $(272,113)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 199,996 203,781
Loss from joint venture 31,048 5,912
Minority interest share of net loss (55,623) (4,238)
Changes in operating assets and liabilities:
Cash - security deposits (375) (215)
Escrow deposits 70,188 75,526
Accounts receivable 5,660 (14,542)
Other assets 31,049 (113,983)
Accounts payable and accrued expenses (67,404) 64,318
Accrued interest -- --
Security deposits 15,938 7,089
--------- ---------
Net cash provided by (used in) operating activities 24,136 (48,465)
--------- ---------
Cash flow from investing activities:
Accounts receivable - affiliates (35,050) (9,968)
Capital expenditures -- --
Payments on note receivable 28,812
Distributions from joint venture -- --
--------- ---------
Net cash (used in) provided by investing activities (35,050) 18,844
--------- ---------
Cash flows from financing activities:
Cash overdraft 41,301 --
Principal payments on mortgages and notes (60,911) (26,297)
Distributions to partners -- (34,020)
--------- ---------
Net cash (used in) financing activities (19,610) (60,317)
--------- ---------
Increase (decrease) in cash (30,524) (89,938)
Cash - beginning of period 30,524 259,861
--------- ---------
Cash - end of period $ -- $ 169,923
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 260,189 $ 309,327
========= =========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF PARTNERS' (DEFICIT)
Six Months Ended June 30, 1996 and 1995
(Unaudited)
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
Balance, January 1, 1995 $ (173,828) 10,000 $ (261,866)
Distributions to partners (1,020) -- (33,000)
Net loss (8,163) -- (263,950)
----------- ----------- -----------
Balance, June 30, 1995 $ (183,011) 10,000 $ (558,816)
=========== =========== ===========
Balance, January 1, 1996 $ (197,803) 10,000 $(1,037,114)
Distributions to partners -- -- --
Net loss (6,190) -- (200,150)
----------- ----------- -----------
Balance, June 30, 1996 $ (203,993) 10,000 $(1,237,264)
=========== =========== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
NOTES TO FINANCIAL STATEMENTS
Six Months Ended June 30, 1996 and 1995
(Unaudited)
1. GENERAL PARTNER'S DISCLOSURE
In the opinion of the General Partners of Realmark Property Investors
Limited Partnership II, all adjustments necessary for the fair presentation
of the Partnership's financial position, results of operations, and changes
in cash flows for the six months ended June 30, 1996 and 1995 have been
made in the financial statements. The financial statements are unaudited
and subject to any year-end adjustments which may be necessary.
2. FORMATION AND OPERATION OF PARTNERSHIP
Realmark Property Investors Limited Partnership II (the "Partnership"), a
Delaware Limited Partnership, was formed March 25, 1982, to invest in a
diversified portfolio of income-producing real estate.
In September 1982, the Partnership commenced the public offering of units
of limited partnership interest. Other than matters relating to
organization, it had no business activities and, accordingly, had not
incurred any expenses or earned any income until the first interim closing
(minimum closing) of the offering which occurred January 31, 1983. All
items of income and expense arose subsequent to this date. On August 31,
1983, the offering was concluded, at which time 10,000 units of limited
partnership interest were outstanding. The General Partners are Realmark
Properties, Inc., a Delaware corporation, the corporate General Partner,
and Mr. Joseph M. Jayson, the individual General Partner. Joseph M. Jayson
is the sole shareholder of J.M. Jayson & Company, Inc. (JMJ) and Realmark
Properties, Inc. is a wholly-owned subsidiary of J.M. Jayson & Company,
Inc.
Under the Partnership agreement, the General Partners and affiliates can
receive compensation for services rendered and reimbursement for expenses
incurred on behalf of the Partnership.
-8-
<PAGE>
FORMATION AND OPERATION OF PARTNERSHIP (CONTINUED)
Net income or loss arising from the sale or refinancing shall be
distributed first to the limited partners in an amount equivalent to a 7%
return on the average of their adjusted capital contributions, then in an
amount equal to their capital contributions, then an amount equal to an
additional 5% of the average of their adjusted capital contributions after
the general partners receive a disposition fee, then to all partners in an
amount equal to their respective positive capital balances, and finally, in
the ratio of 86% to the limited partners and 14% to the general partners.
Partnership income or loss not arising from sale or refinancing shall be
allocated 97% to the limited partners and 3% to the general partners.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
----
For purposes of reporting cash flows, cash includes the following items:
cash on hand; cash in checking; and money market savings.
Cash - security deposits
------------------------
Cash - security deposits represents cash on deposit in accordance with
terms of a U.S. Department of Housing and Urban Development (HUD)
regulatory agreement for multi-family housing projects under Section
223(f).
Property and depreciation
-------------------------
Depreciation is provided using the straight-line method over the estimated
useful lives of the respective assets. Expenditures for maintenance and
repairs are expensed as incurred, and major renewals and betterments are
capitalized. The Accelerated Cost Recovery System are used to calculate
depreciation expense for tax purposes.
Minority interest in consolidated joint venture
-----------------------------------------------
The minority interest in a consolidated joint venture is stated at the
amount of capital contributed by the minority investor adjusted for its
share of joint venture losses.
-9-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Rental income
-------------
Rental income is recognized under the operating method. The outstanding
leases with respect to rental properties owned are for terms of no more
than one year for residential properties and five years for commercial
buildings.
Escrow deposits
---------------
Escrow deposits represent cash which is restricted for the payment of
property taxes or for repairs and replacements in accordance with the
mortgage agreement.
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
In January 1984 the Partnership acquired a 120 unit apartment complex
(Colony of Kettering) located in Kettering, Ohio for a purchase price of
$2,769,650, which included $197,032 in acquisition fees. The property was
sold in December 1986 for $3,850,000 which generated a total net gain for
financial statement purposes of $1,482,290. For income tax purposes, the
gain is being recognized under the installment method.
In February 1984 the Partnership acquired a 250 unit complex (Foxhunt)
located in Dayton, Ohio for a purchase price of $5,702,520, which included
$455,637 in acquisition fees.
In December 1983 the Partnership acquired an office complex (Northwind)
located in East Lansing, Michigan for a purchase of $3,876,410, which
included $123,950 in acquisition fees.
5. INVESTMENT IN JOINT VENTURES
In December 1983 the Partnership entered into an agreement with Adaron
Group (Adaron) and formed Research Triangle Industrial Park West Associates
Joint Venture (Joint Venture), the primary purpose of which was to
construct office/warehouse buildings as income producing property. Under
the terms of the agreement, the Partnership was to provide the majority of
the capital required for the purchase of land and completion of the Joint
Venture's development, while Adaron was to provide development supervision
and management services.
-10-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
The initial phase of development, which was sold in June 1987, consisted of
two buildings: a 101,000 square foot office/distribution building and a
42,000 square foot office building. The purchaser of the property was not
affiliated with either joint venture partner. The Partnership received
approximately $2,300,000 in proceeds from the sale, and in July 1987 these
proceeds were distributed to the limited partners.
On August 20, 1992 Realmark Property Investors Limited Partnership VI-A
(RPILP VI-A) purchased Adaron's Joint Venture interest, acquiring
substantially all of the rights previously held by Adaron. Ownership of the
Joint Venture is now divided equally between the Partnership and RPILP
VI-A. The original Joint Venture agreement provided that the Partnership be
allocated 95% of any income or loss incurred during phase I, while the most
recent agreement provides for the allocation of 50% of any income or loss
from phase II to both the Partnership and RPILP VI-A.
Net cash flow from the Joint Venture is to be distributed as follows:
To the Partnership until it has received a return of 8% (10.25% prior to
September 1986) per annum on the amount of capital contributed by the
Partnership. To the extent such return is not received from year to year,
it will accrue and be paid from the next available cash flow; to the Joint
Venturer up to an amount equal to that paid to the Partnership. No amount
will be accrued in favor of the other investor; any remaining amounts will
be distributed 60% to the Joint Venturer and 40% to the Partnership.
To the extent there are net proceeds from any sale or refinancing of the
subject property, said proceeds will be paid first to the Partnership to
the extent the 8% (10.25% prior to September 1986) per annum return on its
invested capital is unpaid. Any additional net proceeds will be payable to
the Partnership until it has received an amount equal to its capital
contributions, reduced by any prior distribution of sale or refinancing
proceeds. Thereafter, any remaining net proceeds will be divided 50% to the
Partnership and 50% to the other Joint Venturer.
-11-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
On August 20, 1992, the Partnership entered into an agreement with Adaron
Group to form the Research Triangle Land Joint Venture. The primary purpose
of this joint venture is to develop land on the site of Research Triangle.
The ownership of the joint venture is 50% attributable to Adaron Group and
50% to the Partnership. The value allocated to the land in this joint
venture is shown at cost of $412,500. This joint venture had no operations,
revenues or expenses for the six month period ended June 30, 1996.
A summary of the combined assets, liabilities and equity of the joint
venture as of June 30, 1996 and December 31, 1995, and the results of its
operations for the six month periods ended June 30, 1996 and 1995 are as
follows:
-12-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
BALANCE SHEETS
June 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 212,588 $ 92,150
Property, net of accumulated depreciation 2,222,042 2,439,455
Accounts receivable - affiliates 313,582 322,212
Other assets 418,475 461,237
----------- -----------
Total Assets $ 3,166,687 $ 3,315,054
=========== ===========
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Notes payable $ 5,035,874 $ 5,073,225
Accounts payable and accrued expenses 120,744 169,665
----------- -----------
Total Liabilities 5,156,618 5,242,890
----------- -----------
Partners' (Deficit):
General partners (895,551) (864,503)
Other investors (1,094,381) (1,063,333)
----------- -----------
Total Partners' (Deficit) (1,989,931) (1,927,836)
----------- -----------
Total Liabilities and Partners' (Deficit) $ 3,166,687 $ 3,315,054
=========== ===========
</TABLE>
-13-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1996 and 1995
Six Months Six Months
Ended Ended
June 30, June 30,
1996 1995
---- ----
Income:
Rental $ 506,807 $ 542,901
Interest and other income 380 145
--------- ---------
Total income 507,187 543,046
--------- ---------
Expenses:
Property operations 66,756 51,901
Interest 218,250 221,193
Depreciation and amortization 255,315 253,832
Administrative 28,961 27,944
--------- ---------
Total expenses 569,282 554,870
--------- ---------
Net loss $ (62,095) $ (11,824)
========= =========
Allocation of net loss:
The Partnership $ (31,048) $ (5,912)
RPILP II (31,048) (5,912)
--------- ---------
$ (62,095) $ (11,824)
========= =========
A reconciliation of the investments in Research Triangle Industrial Park Joint
Ventures:
Investment in Joint Venture at beginning of period $ (864,503)
Allocated loss (31,048)
----------
Investment in Joint Venture at end of period $ (895,551)
==========
-14-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
On September 27, 1991 the Partnership entered into an agreement to form a
joint venture with Realmark Property Investors Limited Partnership VI-A
(RPILP VI-A) and Realmark Property Investors Limited Partnership VI-B
(RPILP VI-B). The joint venture was formed for the purpose of operating the
Foxhunt Apartment complex owned by the Partnership. Under the terms of the
agreement, RPILP VI-A contributed $390,000 and RPILP VI-B $1,041,568 to buy
out the promissory note on the property. The Partnership contributed the
property net of the first mortgage.
The original joint venture agreement provided that any income, loss, gain,
cash flow, or sale proceeds be allocated 63.14% to the Partnership, 10.04%
to RPILP VI-A and 26.82% to RPILP VI-B. On April 1, 1992, utilizing
proceeds from a mortgage refinancing, the Partnership bought out RPILP
VI-A's interest and decreased RPILP VI-B's ownership interest to 11.5%. The
net loss of the joint venture from the date of inception through June 30,
1996 has been allocated to the minority interests in accordance with the
agreements and has been recorded as a reduction of their capital
contributions.
A reconciliation of the minority interests share in the Foxhunt Joint
Venture is as follows:
Balance, January 1, 1996 $ 386,062
Allocated loss ( 55,623)
---------
Balance, June 30, 1996 $ 330,439
=========
6. MORTGAGES PAYABLE
Northwind Office Park
---------------------
A mortgage with a balance of $706,262 and $787,000 at June 30, 1996 and
1995, respectively, bearing interest at 9.75%. The mortgage provides for
annual principal and interest payments of $147,660, payable in equal
monthly installments with the remaining balance due December 2002.
A mortgage with a balance of $331,619 and $389,667 at June 30, 1996 and
1995, respectively, bearing interest at 9.00%. The mortgage provides for
annual principal and interest payments of $57,936, payable in equal monthly
installments with the remaining balance originally due September 1995. The
Partnership has been granted an extension as it continues to seek
replacement financing.
-15-
<PAGE>
MORTGAGES PAYABLE (CONTINUED)
Foxhunt Apartments
------------------
A mortgage with a balance of $4,542,292 and $4,568,484 at June 30, 1996 and
1995, respectively, bearing interest at 9.00%. Annual principal and
interest payments of $436,296 are due in equal monthly installments until
maturity in March 2027.
The aggregate maturities of the mortgages for each of the next five years
and thereafter are as follows:
Year Amount
---- ------
1996 $ 457,765
1997 116,735
1998 128,394
1999 141,220
2000 155,328
Thereafter 4,650,174
------------
TOTAL $ 5,649,616
============
7. RELATED PARTY TRANSACTIONS
Management fees for the management of Partnership properties are paid to an
affiliate of the General Partner. The management agreement provides for 5%
of gross monthly rental receipts of the complex to be paid as fees for
administering the operations of the property. These fees totaled $33,000
and $47,343 for the six months ended June 30, 1996 and 1995, respectively.
According to the terms of the Partnership agreement, the general partners
are entitled to receive a Partnership management fee equal to 7% of net
cash flow (as defined in the Partnership agreement), 2% of which is
subordinated to the limited partners having received an annual cash return
equal to 7% of their adjusted capital contributions. No such fee has been
paid or accrued by the Partnership for the six months ended June 30, 1996
and 1995.
Accounts receivable - affiliates amounted to $181,288 at June 30, 1996.
This balance is in the process of being reimbursed.
-16-
<PAGE>
RELATED PARTY TRANSACTIONS (CONTINUED)
Computer service charges for the Partnership are paid or accrued to an
affiliate of the General Partner. The fee is based upon the number of
apartment units and totaled $2,280 for both the six months ended June 30,
1996 and 1995, respectively.
The general partners are also allowed to collect a property disposition fee
upon the sale of acquired properties. This fee is not to exceed the lesser
of 50% of amounts customarily charged in arm's-length transactions by
others rendering similar services for comparable properties or 3% of the
sales price. The property disposition fee is subordinate to payments to the
limited partners of a cumulative annual return (not compounded) equal to 7%
of their average adjusted capital balances and to repayment to the limited
partners of an amount equal to their original capital contributions. Fees
earned on the sale of Colony of Kettering and Research Phase I are
approximately $115,500 and $315,000, respectively. These amounts will not
be recorded as Partnership liabilities until such time as payment becomes
probable.
8. INCOME TAXES
No provision has been made for income taxes since the income or loss of the
Partnership is to be included in the tax returns of the individual
partners.
The tax returns of the Partnership are subject to examination by federal
and state taxing authorities. Under federal and state income tax laws,
regulations and rulings, certain types of transactions may be accorded
varying interpretations and, accordingly, reported Partnership amounts
could be changed as a result of any such examination.
-17-
<PAGE>
INCOME TAXES (CONTINUED)
The reconciliation of net loss for the six month periods ended June 30,
1996 and 1995 as reported in the statements of operations, and as would be
reported for tax purposes respectively, is as follows:
June 30, June 30,
1996 1995
---- ----
Net loss -
Statement of operations $ (206,340) $ (272,113)
(Add to) deduct from:
Difference in depreciation ( 31,366) ( 66,220)
Difference in amortization of
loan discount 1,110 14,997
Allowance for doubtful accounts 11,000 5,688
Difference in depreciation -
Joint Ventures 96,592 29,640
----------- ----------
Net (loss) for tax purposes $ ( 129,004) $ (288,008)
=========== ==========
The reconciliation of partner's (deficit) at June 30, 1996 and December 31,
1995 as reported in the balance sheets, and as reported for tax purposes,
is as follows:
June 30, December 31,
1996 1995
---- ----
Partner's (Deficit) - balance sheet $ (1,441,257) $ (1,234,917)
Add to (deduct from):
Accumulated difference in
depreciation (3,779,605) (3,748,239)
Accumulated amortization
of discounts on mortgage
payables 1,209,534 1,208,424
Syndication fees 1,133,176 1,133,176
Gain on sale of property ( 561,147) ( 561,147)
Allowance for doubtful
accounts 96,451 85,451
Other ( 47,606) ( 47,606)
Difference in Investment
in Joint Venture 559,504 462,912
------------ ------------
Partner's (Deficit) - tax return $ (2,830,950) $ (2,701,946)
============ ============
-18-
<PAGE>
9. SUBSEQUENT EVENTS
On July 16, 1996 the Corporate General Partner entered into a contract on
behalf of the Partnership to sell the Fox Hunt Apartments for a sales price
of $7,400,000. The contract is subject to a number of contingencies as were
described in Form 8-K filed on July 31, 1996. No firm closing date on the
sale has been established to date.
-19-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Although the Partnership continues to operate with a net loss for the six month
period ended June 30, 1996, there are signs of improvement as compared to the
same six month period in the previous year. Rental income has dropped
significantly from the six month period ended June 30, 1996 as compared to the
same period in 1995, however management has implemented successful controls over
expenses, such as closer monitoring of payroll and other operating expenses, to
balance the loss of revenues. Fox Hunt Apartments and Research Triangle Office
Complex continue to have stable occupancies, while Northwind Office Park is
struggling with lower than expected occupancies. The General Partner has been
sending out packages to lenders to refinance the Northwind property at a lower
interest rate than is currently being paid, but with the low occupancy, there is
no guaranty that they will be successful. Management continues to undertake
activities to stabilize occupancies, increase rents, and otherwise enhance the
value of the portfolio in anticipation of the possible refinancing or sale of
properties.
The Partnership made no distributions during the six month period ended June 30,
1996, and the General Partner does not anticipate making any distributions until
the cash flow from the properties improves and necessary capital improvements to
the properties have been completed. The General Partner has a signed contract
for the sale of the Fox Hunt Apartments, although a firm closing date has not
been established.
Results of Operations:
- ----------------------
For the quarter ended June 30, 1996, the Partnership's net loss was $86,621 or
$8.40 per limited partnership unit. Net loss for the quarter ended June 30, 1995
amounted to $144,220 or $13.99 per unit. For the six month period ended June 30,
1996, the net loss was $206,340 or $20.02 per limited partnership unit as
compared to $272,113 or $26.39 per limited partnership unit for the six month
period ended June 30, 1995.
Partnership revenue for the quarter ended March 31, 1996 totaled $432,131, a
decrease of approximately $55,000 from the 1995 amount of $486,609. Total rental
revenue dropped almost $52,000, which makes up most of the decrease in total
revenue. The majority of the decrease can be attributed to falling economic
occupancy levels at Northwind Office Complex. Compared to the prior year,
physical occupancy dropped, while rental concessions and delinquencies
increased. Management continues to offer rental concessions and other promotions
in an attempt to increase the occupancies.
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Results of Operations (continued):
- -----------------------------------
For the quarter ended June 30, 1996, Partnership expenses amounted to $549,819,
decreasing by almost $82,000 from the 1995 quarter amount. For the six month
period ended June 30, 1996, Partnership expenses decreased by over $146,000 from
the same period in 1995. A large decrease in property operations expenditures
should be noted; in this area, specifically, a decrease in payroll and
associated costs and appliance and equipment replacement costs related to Fox
Hunt, and a decrease in payroll and associated costs and contracted service
costs at Northwind are responsible for the decrease. Repairs and maintenance,
utility costs, and insurance expenses all remained fairly stable between the six
month periods ended June 30, 1996 and 1995.
The Research Triangle Industrial Park Joint Venture generated a total net loss
of $62,095 for the six month period ended June 30, 1996 with 50% or $31,048 of
the loss allocated to each joint venturer. The joint venture generated a net
loss of $11,824 for the six month period ended June 30, 1995 with $5,912
allocated to each venturer. The loss has increased primarily due to increased
operations costs in the area of contracted services for grounds work and roof
repairs.
For the six months ended June 30, 1996, the Partnership generated a tax loss of
$129,004 or $12.51 per limited partnership unit. The tax loss for the first six
months of 1995 totaled $288,008 or $27.94 per unit.
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REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
PART II
-------
OTHER INFORMATION
-----------------
Item 1 - Legal Proceedings
- --------------------------
The Partnership is not a party to, nor are any of the Partnership's properties
subject to any material pending legal proceedings other than ordinary, routine
litigation incidental to the Partnership's business.
Items 2, 3, 4 and 5
- -------------------
Not applicable.
Item 6 - Exhibits and reports on Form 8-K
- -----------------------------------------
Item 7 (c) - Financial Statements and Exhibits - Contract between the
Partnership and Partnership Equities, Inc. dated July 16, 1996 attached.
Exhibit 27 - Financial Data Schedule (Electronic filing only)
Form 8-K was filed July 31, 1996.
-22-
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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.
REALMARK PROPERTY INVESTORS
LIMITED PARTNERSHIP II
By: /s/Joseph M. Jayson January 2, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
Individual General Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By: REALMARK PROPERTIES, INC.
Corporate General Partner
/s/Joseph M. Jayson January 2, 1997
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/Michael J. Colmerauer January 2, 1997
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
REAL ESTATE PURCHASE AGREEMENT
FOX HUNT APARTMENTS
This purchase agreement ("Agreement" or "Contract"), made and entered into
by and between Realmark Property Investors Limited Partnership-II, a Delaware
limited partnership ("Seller") and Partnership Equities, Inc. ("Buyer").
RECITALS:
A. Buyer desires to purchase from Seller, and Seller wishes to sell to
Buyer, a certain parcel of real property and all of the improvements and
buildings situated thereon, and the hereditaments and appurtenances thereto,
consisting of an apartment complex (the "Real Property"), and all personal
property, equipment, fixtures and intellectual property (excluding, however, any
use of the name "Realmark" or any related or similar name, it being understood
that only the right, title and interest of Seller to the name of the apartment
complex shall be transferred, and also excluding software not able to be
transferred vis a vis existing licensing agreements, if any) owned by Seller,
utilized in the operation or management of the apartment complex, and located at
said apartment complex as described on EXHIBIT B (collectively the "Personal
Property"). The Real Property together with the Personal Property applicable to
the apartment complex will be herein referred to as the "Property".
B. Attached hereto and made a part hereof is the legal description of the
Real Property, marked with the name of the apartment complex and attached as
EXHIBIT A. A more detailed list of the Personal Property will be prepared by
Seller and submitted during the first ten (10) days of the due diligence period
set forth in Section 3 below and will thereafter be attached to this Agreement
as an amendment to EXHIBIT B. Any subsequent amendment to either EXHIBIT A or
EXHIBIT B, or to any other Exhibit to this Agreement, is to be considered an
integral part of this Agreement.
FOR AND IN CONSIDERATION of the mutual promises, covenants and agreements,
hereinafter set forth, the Parties agree as follows:
SECTION 1. PURCHASE PRICE.
(a) The purchase price to be paid Seller for the Real Property will
be $7,400,000.00 ("Purchase Price") paid in the following manner:
Initial Earnest Money Deposit
at signing of Purchase Agreement $ 10,000.00
<PAGE>
Additional Earnest Money Deposit
after Due Diligence Period (as
defined herein). 90,000.00
Cash at closing (subject to
credit for Earnest Money,
prorations and allocations per
Section 5) $ 7,300,000.00
--------------------
Total $ 7,400,000.00
and payable by Buyer on closing of title and delivery of the Deed ("Closing") in
immediately available good, federal funds. The Additional Earnest Money Deposit
shall be paid to the Escrow Agent within five (5) days after the expiration of
the Due Diligence Period.
(b) All existing debt, liens, impositions and similar encumbrances
affecting the Real Property will be discharged or, if annual liens, prorated in
accordance with Section 5 and paid at the Closing.
(c) The Initial Earnest Money in the amount stated in Section 1 (a)
above (the "Initial Earnest Money") will be deposited with Andrews, Sanchez,
Amigone, Mattrey & Marshall, LLP in Buffalo, New York, as Escrow Agent (the
"Escrow Agent"), within four (4) days from the date of Seller's execution (as
communicated to Buyer by written facsimile and orally by telephone on such date
of execution) of this Agreement. Within five (5) days after the end of the Due
Diligence Period (as hereinafter defined) Buyer will deposit an additional sum
of $90,000.00 as Additional Earnest Money (the "Additional Earnest Money") with
the Escrow Agent. The Initial Earnest Money and the Additional Earnest Money are
hereinafter collectively referred to as the "Earnest Money". Absent any contrary
provision of this Agreement, the total Earnest Money in the amount of
$100,000.00 will remain on deposit with the Escrow Agent until the Closing of
the Property. If either of the Earnest Money deposits are not made by the dates
as herein above set forth, Seller may terminate this Agreement. Interest on the
Earnest Money shall follow the principal sum on any payment or refund. Interest
payable to Buyer shall be credited to Tax ID #31-0863929. Upon any permitted
termination of this Agreement by Buyer, including but not limited to the failure
of the conditions precedent set out in Section 7, the Earnest Money shall be
returned to Buyer upon demand, and in compliance with all other terms and
provisions of this Agreement.
SECTION 2. PLACE AND TIME OF CLOSING.
(a) Subject to the conditions precedent set forth herein having been
met or waived, the Closing will take place on or before 270 days after execution
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<PAGE>
of this Agreement by both parties, unless extended as otherwise set forth in
this Agreement. As used herein the terms "Closing" will mean the meeting of the
parties at which delivery of the Deed and payment of the Purchase Price as
called for in Section 1 occurs for the Real Property.
(b) Buyer and Seller agree that they will use their best efforts to
complete the Closing within two hundred seventy (270) days from the execution of
this Agreement. Buyer agrees that it will use best efforts and good faith in
applying for a Bond Cap allocation and/or for financing for the Real Property
and will obtain same as soon as reasonably possible and will close on said Real
Property promptly thereafter. Notwithstanding the foregoing, and upon
satisfaction of all conditions precedent, Buyer shall complete the Closing by
April 15, 1997.
(c) This Agreement, as an offer to purchase when signed by Buyer,
shall automatically terminate if not accepted in final form by Seller by 5 P.M.,
Eastern Standard Time, five business days from the date on which Buyer executed
this Agreement as indicated below.
SECTION 3. PURCHASER'S CONTINGENCIES.
(a) DUE DILIGENCE. Buyer, or its designees, will have a period of sixty
(60) days after August 20, 1996 (the "Due Diligence Period"), to enter the
Property to make inspections, engineering tests, surveys, and other such tests,
examinations and inspections as Buyer may desire as long as such tests,
examinations, etc., do not unreasonably interfere with the operations or any
current use of the Property. All entry upon the Property and any and all contact
with on site employees of Seller by Buyer shall be upon prior notice to Seller
and, at Seller's option, accompanied by an agent of Seller.
If the Closing of the Property does not occur, Buyer will make such
repairs as necessary to leave the Property in the same condition as prior to
entry by Buyer.
(i) During the Due Diligence Period, Buyer will inspect the Real
Property, and if any, the plans and specifications for design, quality,
structural and mechanical integrity and maintenance during the Due Diligence
Period. At the signing of this Agreement or within ten (10) days thereafter,
Seller shall provide or make available at designated locations, those
operational and title information items which relate to the Property, reasonably
requested by Buyer, including, but not limited to:
o Inventory of Personal Property
o Current Rent Roll - December 1995 or April 1996
3
<PAGE>
o 1994 & 1995 year-end Operating Statements
o Operating Statement for the year 1996 to date (as of 4/30/96)
o December 1995 Operating Statement and 1996 Operating Budget
(It is specifically understood that Operating Budgets are
projections of Seller only and Seller makes no warranty or
representation with respect to any parties' achievement of any
such items in said Budget.)
o Detailed breakdown of the Property's payroll account including
a list of on-site personnel, salary and benefits
o Copy of current ad valorem tax bills, copy of each separate
utility bill for the Property for the past 3 months and a
listing by month of utility charges for 1995
o As-built survey, construction drawings, soil report,
compaction tests, and copies of all Certificates of Occupancy,
if any of the foregoing are in Seller's possession
o Copies of all third-party contracts (e.g., termite, landscape,
pool maintenance, etc.)
o Copies of any environmental reports, engineering reports,
feasibility studies, or appraisals in Seller's possession
(obtained within the last 36 months, it being understood that
Seller makes no warranty or representation with respect to the
information set forth in any of said studies)
o Copies of the latest insurance policy covering the Project,
with current coverage and deductibles along with a paid
invoice for said policy(s) (the same may be within a master
policy)
o Name, firm name, and telephone number for the lawyer most
recently involved with the Project. (It is agreed that at this
time the foregoing shall be identified as William H. Mattrey,
Esq., of Andrews, Sanchez, Amigone, Mattrey & Marshall, LLP,
(716) 852-1300.)
o Make available to Buyer all income information in Seller's
possession on all tenants currently leasing units in the
Property.
4
<PAGE>
o Originals or copies of all tenant leases, rent rolls for the
Property, including security deposits held by Seller in
connection with each apartment unit, credit reports and other
information concerning the leases which are currently in
Seller's file, service agreements, party-wall agreements, and,
if in Seller's possession engineering or architectural reports
for the Properties.
o Proof of zoning classification, if any, in Seller's possession
o A list of all equipment leases and/or any financing documents
for personal property, equipment, etc., affecting the
apartment complex
o Any other items which a prudent buyer reasonably requests and
needs in order to conduct a satisfactory due diligence review.
All of the foregoing will either be at the Property location or at Seller's
offices in Amherst, New York, or at Seller's option, will be forwarded to Buyer.
Any documents not provided by Seller to Buyer within the above ten (10) day
period will be made available by Seller, as soon as such documents are
available. In the event of any such failure to deliver any documents, except
those which are not in Seller's possession and which are so qualified
hereinabove as excusable items, the Due Diligence Period will be extended to a
date no less than five (5) days after delivery of the items not delivered within
the Due Diligence Period.
All Due Diligence materials must be maintained by Buyer on a confidential basis
and returned to Seller if Buyer terminates this Agreement. Buyer agrees that it
will not use the Due Diligence materials for any purpose other than to determine
whether to acquire the Property and agrees that it will not make contact with
Seller's tenants unless closing occurs. In addition, Buyer agrees that it will
under no circumstances make any offer, or use the Due Diligence materials, to
acquire the interest of any partner(s) of the selling entities for a period of
two (2) years after the date of this Contract. Buyer and/or its agents will not,
under any circumstances, disclose to any of Seller's employees that it is
contemplating acquisition of the Property without Seller's written consent prior
to closing. All reports desired by Buyer during its Due Diligence Period shall
be ordered by Buyer at Buyer's expense, but Buyer agrees that it will supply
copies of each and every report it receives immediately upon their completion
and availability to Buyer.
5
<PAGE>
(ii) During the Due Diligence Period, Buyer will conduct a review of
the economics and feasibility of acquiring and operating the Property as
required by its funding source, including inspection of all zoning and other
government permits and regulations and other matters and documents relating to
the operation of the Property, and as detailed in Section 3(a).
(iii) After Seller provides all required documents to the Buyer,
Buyer agrees to accept or reject all documents prior to the end of the Due
Diligence Period. If Buyer does not cancel this Contract during the Due
Diligence Period, Buyer shall be deemed to have accepted the Property and it
will close on the Property in accordance with this Contract, except for
cancellation in accordance with the specific provisions of this Contract.
(b) This Contract is contingent upon Buyer obtaining a "firm" commitment
(per the practice of HUD for 221D4 mortgages) for financing the purchase of Real
Property in accordance with the Contract upon terms and conditions satisfactory
to Buyer. Buyer agrees to apply for said commitment promptly upon the
commencement of its Due Diligence period set forth in (a) above, and shall have
a period of 150 days to obtain said commitment. Should Buyer be unable to obtain
said commitment within said 150-day period, either party may terminate this
Contract by written notice to the other in which case the Earnest Money shall be
returned to Buyer and neither party shall have any further liability, except the
obligation to restore the premises after due diligence. Buyer shall have the
right to extend the mortgage contingency period for up to 30 days on prior
written notice to Seller if the mortgage application is through HUD.
SECTION 4. DEED AND TITLE.
(a) Seller shall deliver to Buyer at Closing, a special or limited
warranty deed (or bargain and sale deed, where appropriate) ("Deed"), conveying
good and marketable fee simple title to the Property, subject only to such
easements, restrictions of record and title exceptions set forth in the
commitment for title insurance specifically approved by Buyer, and taxes not
delinquent. Further, the title insurance commitment for the Property must
contain provision for the endorsements that are reasonably required by Buyer's
funding source, which endorsements shall be ordered by Buyer at Buyer's expense.
In addition, Seller shall convey title to the Personal Property to Buyer, free
and clear of all liens and encumbrances (except those disclosed during due
diligence; e.g., equipment leases or personal property financing documents), by
the execution and delivery at Closing of a Bill of Sale in form and substance
reasonably satisfactory to Buyer, without warranty, except as to Seller's title.
(b) Seller agrees to provide a copy of its existing title insurance
policy to Buyer. Buyer shall then obtain an ALTA Form B Title Insurance
6
<PAGE>
Commitment (the "Title Commitment"), within thirty (30) days of the date of
execution of this Contract by both parties, issued by a title insurance company
selected by Buyer, committing to insure fee simple marketable title to the
Property in the amount of the Purchase Price for such Property in Buyer's name,
with all standard exceptions removed (except for the rights of tenants under
unrecorded leases and/or except for standard exceptions normally not removed
pursuant to local custom with respect to each Property), and containing no other
exceptions not specifically approved by Buyer. Buyer shall have ten (10) days
after receipt to examine the Title Commitment and inform Seller of Buyer's
objection to any exception contained in or title defect revealed by the Title
Commitments.
(c) If Buyer's examination of the Title Commitment reveals that the
Title Commitment for the Property contains objectionable exceptions or that the
title to the Property is defective and thereafter, the issuing title insurance
company refuses to delete the objectionable exceptions or the defects cannot be
cured within a reasonable period of time after written notice by Buyer,
specifically pointing out the objection/defects, or if the title company refuses
to issue endorsements as required by Buyer's lender, then Buyer may elect to
terminate this Agreement upon written notice to Seller. Notwithstanding the
foregoing, however, in order to terminate the Contract, an objectionable
exception or defect must be one which renders title unmarketable and uninsurable
because of such specified objection or defect, or the specified objection or
defect shall be materially inconsistent with the present use of the Property as
an apartment complex.
(d) Seller will pay for preparation of the Deed for the Property.
(e) Buyer will pay for any survey of the Property, the recording of
the Deed for the Property, state tax and register's fees on the Deed, the cost
of obtaining a title commitment, and the premium due for the title insurance
policy to be issued for the Property, and all endorsements.
(f) Seller and Buyer will each pay their own attorney's fees.
SECTION 5. PRORATIONS AND ALLOCATIONS. (a) Rents, taxes, service con-
tracts, equipment leases or other personal property financing, utility deposits,
insurance and other expenses whether or not a lien, assessed or to be assessed
for the tax year in which the transaction is consummated. will be prorated as to
the Property to the date of the Closing based on a 365-day year.
(b) Security deposits held by Owner or paid by any lessees at the
Property will be transferred to Buyer in full at Closing, including any interest
earned thereon and payable to the Tenant under State law.
7
<PAGE>
SECTION 6. CONDEMNATION OR CASUALTY. Seller agrees to give Purchaser
prompt written notice of any fire or other casualty occurring to all or any
portion of the improvements at the Property and/or Personalty between the date
hereof and the date of closing. If prior to the closing, there shall occur:
(i) damage to the improvements at the Property caused by fire or
other casualty which would cost 5% of the Purchase Price of the Property or more
to repair based on the estimate of a reputable third party contractor chosen by
Seller; or
(ii) the taking or condemnation of all or any portion of the Real
Property and/or the improvements as aforesaid as would materially interfere with
the use thereof; then, if any of such events set forth in (i) or (ii) above
occurs, Buyer or Seller, at its option, may terminate its obligations under this
Agreement by written notice given to Seller within seven (7) days after Buyer
has received the notice referred to above or at the closing, whichever is
earlier. If Buyer does not elect to terminate its obligations as aforesaid, the
closing shall take place as provided herein without an abatement of the purchase
price (except that Buyer shall be allowed a credit for any deductible under
Seller's insurance) and there shall be assigned to the Buyer at closing, all
interest of the Seller in and to any insurance proceeds or condemnation awards
which may be payable to Seller on account of such occurrence. Notwithstanding
the foregoing, should Buyer elect to terminate, Seller may notify Buyer within
15 days that Seller intends to restore the Premises fully and in that event,
Buyer's termination notice shall be null and void and Seller shall proceed as
outlined above at closing.
If, prior to the closing, there shall occur:
(i) damage to the Property caused by fire or other casualty which
would cost less than 5% of the allocable Purchase Price of the Property based on
the estimate of a reputable third party contractor chosen by Seller to which
Buyer has no reasonable objection; or
(ii) the taking or condemnation of all or any portion of the said
Real Property and/or improvements as aforesaid which is not material to the use,
thereof; then, if any of such events set forth in (i) or (ii) above occurs,
Buyer shall have no right to terminate its obligations under this Agreement, but
there shall be assigned to Buyer at closing all interest of Seller in and to any
insurance proceeds or condemnation awards which may be payable to Seller on
account of any such occurrence, and in addition, Buyer shall be allowed a credit
for any deductible under Seller's insurance policy.
8
<PAGE>
Seller shall be responsible for maintaining fire and extended
coverage insurance prior to closing as is currently in place.
SECTION 7. CONDITIONS. The following shall each be conditions precedent
to Buyer's obligations hereunder, unless specifically waived in whole or in part
in writing by Buyer:
(a) LITIGATION. There being no existing or pending claims, lawsuits,
or governmental proceedings, or appeals, which challenge Seller's title to the
Property.
(b) TITLE INSURANCE POLICY. Title to the Property at Closing being
marketable or insurable, and/or in accordance with the provisions of Section 4
above, free and clear of all liens and encumbrances. In addition, Buyer
receiving assurances at Closing from the title insurance company issuing the
Title Commitment, that after Closing, Buyer will be issued an ALTA Form B Title
Insurance Policy, with all standard exceptions, except as set forth in Section 4
above, and all other exceptions objected to by Buyer deleted from such policy,
insuring fee simple marketable title to the Property or in accordance with
Section 4 above, in the amount of the Purchase Price, in Buyer's name, free and
clear of all liens and encumbrances not otherwise specifically agreed to by
Buyer prior to Closing.
(c) PERSONAL PROPERTY. Seller conveying title to the Personal
Property to Buyer at Closing free and clear of all liens and encumbrances
(except for equipment leases and personal property financing disclosed during
due diligence) by a Bill of Sale without warranties except as to title in form
and substance reasonably satisfactory to Buyer.
(d) LAWS AND REGULATIONS. Prior to Closing Seller not having
received written notice of non-compliance under any and all Federal, State,
County and Municipal laws, ordinances, requirements and regulations, including
but not limited to any and all environmental laws and regulations, affecting the
Property. Notwithstanding the foregoing, however, in the event Seller does
receive a written notice of violation of any of the foregoing, then and in that
event, Seller shall have the option of curing the matter which is the subject of
such notice before closing and/or making reasonable arrangements to complete the
cure of such violation after closing, provided an escrow is established for the
cost of said cure; and provided Seller either cures the subject of such notice
or makes adequate provisions to cure same and escrow the funds as set forth
hereinabove to do so, then and in that event, Buyer shall have no right to
terminate this Contract.
(e) SELLER COOPERATION. Seller agrees to cooperate with and assist
Buyer and to execute any and all applications, petitions and attend and
participate in any necessary hearings, and undertake all other reasonable acts
9
<PAGE>
to obtain any necessary permits for which Buyer may make application prior to
closing, provided that Buyer shall bear all expenses incidental thereto,
including all of Seller's out-of-pocket expenses.
(f) COMPLIANCE WITH REPRESENTATIONS AND WARRANTIES. Seller will be
in compliance with all other representations and warranties made herein at
Closing to the reasonable satisfaction of Buyer.
(g) NOTICE OF CLOSING. If all the conditions specified herein have
not been met within 270 days after execution of this Contract, Buyer shall have
the option to terminate this Agreement, by giving written notice to Seller
specifying the condition not met and provided that Seller does not cure or
remove said condition within 60 days after such notice, or such extended time as
the parties may agree, and in that event the Earnest Money shall be returned to
Buyer. However, in the event that all conditions specified herein have been met
by the Closing date, Buyer shall close the Purchase within the time period
specified, subject to non-performance by Seller under the terms hereof.
SECTION 8. SELLER'S WARRANTIES. The following warranties of Seller shall
survive the Closing for a period of sixty (60) days.
(a) The legal description of the Property contained in the recitals
to this Agreement is substantially correct and will be confirmed by any survey
obtained by Buyer.
(b) To Seller's best knowledge and belief (Seller meaning Joseph M.
Jayson or an officer of the general partner of Seller) Seller has not received
written notification that the Property is not in compliance with all federal,
state, county and municipal laws, ordinances and regulations, including but not
limited to all federal, state, county and municipal environmental laws and
regulations, applicable to or affecting the Property, subject to Seller's right
to cure as hereinabove stated.
(d) Seller will convey fee simple, marketable or insurable title to
the Property to Buyer at Closing and will convey title to the Personal Property
to Buyer at Closing by Bill of Sale, in form and substance reasonably
satisfactory to Buyer, free and clear of all liens and encumbrances.
(e) Seller will not interfere with Buyer's opportunity to hire
Seller's on-site employees, who work at the Property, but Buyer will have no
obligation to hire any of those individuals. Buyer will make no efforts to hire
such employees until after all contingencies have been removed and no earlier
than 10 days before closing.
10
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(f) Seller shall be responsible for (and Buyer shall not assume the
obligation of) all employee wages, benefits (including payments for accrued
bonuses, vacation or sick pay, unemployment compensation, employment taxes,
medical claims or similar payments), contributions under any benefit program or
agreement, severance pay obligations and other related employee costs arising as
a result of any events, acts (or failures to act) prior to the Closing Date with
respect to the Property at which such persons are employed, whether or not
disclosed on the schedules to this Agreement.
(g) Seller retains all liability and responsibility for fulfilling
all federal and/or state COBRA and continuation of group health insurance
coverage requirements (pursuant to Section 4980B of the Code, sections 601-608
of ERISA, and any applicable state laws) with respect to Seller's current or
former employees (and their dependents). Buyer does not hereby and will not at
the Closing of the Property assume any obligation to provide medical insurance
coverage to persons that it employs because it acquires the Property.
SECTION 9. NON-PERFORMANCE.
(a) If Seller fails to deliver the Deed or meet any of the
conditions hereof willfully, Buyer, at Buyer's sole option, may terminate this
Agreement whereupon the Earnest Money shall be returned to Buyer on demand or
Buyer may bring an action for specific performance, and if Buyer prevails, all
costs and expenses of any such action shall be paid by Seller as a reduction of
the Purchase Price. The foregoing shall not prevent Buyer from bringing an
action for monetary damages. The foregoing shall be the sole and exclusive
remedies of Buyer. However, if Buyer elects to bring an action for monetary
damages, they shall be specifically limited, if proven, to an amount equal to
the Earnest Money as set forth hereinabove.
(b) If Buyer defaults at any time, Seller and Buyer agree that it
will be extremely difficult or impractical to fix Seller's actual damages.
Therefore, in such an event, the entire Earnest Money shall be delivered to
Seller as liquidated damages for loss of a bargain and not as a penalty. Buyer
will then be released from all liability to Seller related to this Agreement,
such liquidated damages being Seller's sole remedy.
SECTION 10. BROKERS, AGENTS AND CONSULTANTS. Seller represents and
warrants to Buyer that no broker, consultant or agent is due a commission or fee
from the proceeds of the Closing, claiming by, through or under Seller and
hereby agrees to indemnify and hold harmless Buyer from the claims of any agent,
consultant or broker for the payment of a commission or commissions.
11
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Buyer represents and warrants to Seller that no other broker, consultant
or agent is due a commission or fee from the proceeds of the closing claiming
by, through or under Buyer, and hereby agrees to indemnify and hold harmless
Seller and the Property from the claims of any other agent, consultant or broker
for the payment of any commission, finder's fee or other compensation.
SECTION 11. LEASES.
(a) Seller agrees that prior to the Closing it will not enter into
any long term commercial leases or service agreements without the prior written
consent of Buyer which will not be unreasonably withheld or delayed. This
provision shall not be applicable until after the expiration of Buyer's Due
Diligence Period.
(b) Seller shall assign the existing tenant leases to Buyer at
Closing along with all service contracts and other agreements affecting the
Property, provided that Buyer shall execute an assumption agreement or other
agreements with respect to all tenant leases and service contracts or other
agreements from and after the date of closing.
SECTION 12. INSURANCE. Seller will cancel its insurance coverage on the
Property effective at Closing of the Property, and Buyer will place new
insurance coverage on the Property effective on the same date.
SECTION 13. ASSIGNMENT. Buyer shall not have the right to assign this
Agreement, in whole or in part, to any party with whom it is not affiliated
without the express written consent of Seller. Upon any such assignment approved
by Seller, the assignee shall assume the obligations of Buyer and provided said
consent is obtained, Buyer shall thereafter be relieved of liability for the
performance of this Agreement. Seller's consent pursuant to this section shall
be in its sole discretion and shall include approval of all proposed assignment
documents.
SECTION 14. ENTIRE AGREEMENT. All prior understandings and agreements of
the parties are merged herein, and this Agreement reflects the entire
understanding of the parties. This Agreement may not be changed or terminated
orally.
SECTION 15. SUCCESSORS AND ASSIGNS. The terms of this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their respective
legal representatives, successors and assigns.
SECTION 16. INDEMNIFICATION.
(a) SELLERS INDEMNITY. Seller shall indemnify, defend and hold Buyer
harmless from any claims, demand, loss, liability, damage, or expense (including
12
<PAGE>
reasonable attorneys' fees) in connection with third-party claims for injury or
damage to personal property in connection with the ownership or operation of the
Properties prior to Closing. These indemnification obligations of Seller shall
be repeated at and shall survive the Closing.
(b) BUYERS INDEMNITY. Buyer shall indemnify, defend and hold
Seller harmless from any claim, demand, loss, liability, damage, or expense
(including reasonable attorneys' fees), due to Buyers operation of the Property
from and after Closing. The indemnification obligations of Buyer shall be
repeated at and shall survive the Closing.
SECTION 17. NOTICES. All notices required or permitted hereby shall be in
writing and delivered either in person or sent electronically, or by national
overnight express carrier. Notices shall be deemed to have been given when sent
as follows:
Buyer: Partnership Equities, Inc.
c/o The Wallick Companies
6880 Tussing Road
Columbus, OH 43068
Attention: Sandy Goldston
Seller: c/o Joseph M. Jayson
J. M. Jayson and Company
2350 North Forest Road
Suite 12 A
Getzville, NY 14068
Fax No.: (716) 636-0466
Copy to: William H. Mattrey
Andrews, Sanchez, Amigone,
Mattrey & Marshall, LLP
1300 Main Place Tower
Buffalo, NY 14202
Fax No.: (716) 852-1355
SECTION 18. CONSTRUCTION. Time shall be construed to be of the essence.
SECTION 19. GOVERNING LAW. This Agreement will be governed by and
construed according to New York law, except for matters of title or real estate
law which shall be governed by the laws of the state in which the Property is
located.
SECTION 20. ESCROW. The Escrow Agent hereby acknowledges receipt of the
Earnest Money and agrees to hold the same in escrow until the closing or sooner
termination of this Agreement and shall pay over and apply the proceeds thereof
in accordance with the terms of this Agreement. If, for any reason, the closing
does not occur and either party makes a written demand upon the Escrow Agent for
13
<PAGE>
payment of the Earnest Money, the Escrow Agent shall give written notice to the
other party of such demand. If the Escrow Agent does not receive a written
objection from the other party to the proposed payment within five (5) business
days after the giving of such notice, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection
within such five (5) day period, or if for any reason the Escrow Agent in good
faith shall elect not to make such payment, the Escrow Agent shall continue to
hold the Earnest Money until otherwise directed by written instructions from the
parties to this Agreement or until a final judgment (beyond any applicable
appeal period) by a Court of competent jurisdiction is rendered disposing of
such Earnest Money.
The Escrow Agent shall be liable as a depository only and its duties
hereunder are limited to the safekeeping of the Earnest Money and the delivery
of same in accordance with the terms of this Agreement. The Escrow Agent will
not be liable for any act or omission done in good faith, or for any claim,
demand, loss or damage made or suffered by any party to this Agreement,
excepting such as may arise through or be caused by the Escrow Agent's
negligence or willful misconduct.
SECTION 21. ASSIGNMENT OF BOND CAP ALLOCATION. If Buyer obtains a Bond Cap
allocation or a financing commitment or other related approvals with respect to
the Property, and should Buyer otherwise cancel this Contract as to such
Property or does not close for any reason whatsoever, then and in that event, to
the extent allowable by law, Buyer shall assign the Bond Cap allocation and all
related approvals or commitments with respect to such Property to Seller or its
designee wherever possible and/or if allowed by any lender or other authority
and Buyer will cooperate with Seller in all respects with respect to any
requirements to complete such assignment.
IN WITNESS WHEREOF, this Agreement has been executed by the parties, or by
the duly authorized officer of the parties, on the day and year shown below.
BUYER:
Executed JULY 16, 1996
-------------
PARTNERSHIP EQUITIES, INC.
By: /S/ SANFORD GOLDSTON
---------------------------------------------------------
CHAIRMAN
14
<PAGE>
SELLER:
Executed JULY 16, 1996
--------------
BY: REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP-II
BY: /S/ JOSEPH M. JAYSON
---------------------------------------------------------
G.P.
RECEIPT OF ESCROW AGENT
The undersigned hereby acknowledges receipt of the Earnest Money provided for
herein, and that the same is being held as Escrow Agent pursuant to the terms of
the above Purchase Agreement.
ANDREWS, SANCHEZ, AMIGONE, MATTREY & MARSHALL, LLP
as Escrow Agent
By: /S/ WILLIAM H. MATTREY
---------------------------------------------------------
Member
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II FOR
SIX MONTHS ENDED JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 35,725
<SECURITIES> 0
<RECEIVABLES> 327,099
<ALLOWANCES> 144,060
<INVENTORY> 0
<CURRENT-ASSETS> 703,280
<PP&E> 10,174,156
<DEPRECIATION> 4,873,310
<TOTAL-ASSETS> 6,004,126
<CURRENT-LIABILITIES> 630,689
<BONDS> 5,588,705
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,004,126
<SALES> 0
<TOTAL-REVENUES> 897,185
<CGS> 0
<TOTAL-COSTS> 1,128,101
<OTHER-EXPENSES> 24,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 260,189
<INCOME-PRETAX> (206,340)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (206,340)
<EPS-PRIMARY> (20.02)
<EPS-DILUTED> 0
</TABLE>
