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
September 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 September 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 -
September 30, 1996 and December 31, 1995 3
Statements of Operations -
Three Months Ended September 30, 1996 and 1995 4
Statements of Operations -
Nine Months Ended September 30, 1996 and 1995 5
Statements of Cash Flows -
Nine Months Ended September 30, 1996 and 1995 6
Statements of Partners' (Deficit) -
Nine Months Ended September 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
September 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
September 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 4,972,376 4,677,511
------------ ------------
Property, net 5,201,780 5,496,645
Cash -- 30,524
Cash - security deposits 36,427 35,350
Escrow deposits 268,794 283,000
Accounts receivable, net of allowance for doubtful
accounts of $143,715 and $113,510, respectively 14,048 7,411
Accounts receivable - affiliates 137,805 146,238
Mortgage costs, net of accumulated
amortization of $86,360 and $80,065 256,035 262,331
Other assets 7,787 44,619
------------ ------------
Total Assets $ 5,922,676 $ 6,306,118
============ ============
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 86,617 $ --
Mortgages payable 5,559,378 5,649,616
Accounts payable and accrued expenses 525,388 513,354
Accrued interest 42,469 48,846
Security deposits and prepaid rents 97,314 78,654
------------ ------------
Total Liabilities 6,311,166 6,290,470
------------ ------------
Losses of unconsolidated joint ventures
in excess of investment 909,635 864,503
------------ ------------
Minority interest in consolidated
joint venture 241,247 386,062
------------ ------------
Partners' (Deficit):
General partners (206,937) (197,803)
Limited partners (1,332,435) (1,037,114)
------------ ------------
Total Partners' (Deficit) (1,539,372) (1,234,917)
------------ ------------
Total Liabilities and Partners' (Deficit) $ 5,922,676 $ 6,306,118
============ ============
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF OPERATIONS
Three Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Three Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Income:
Rental $ 446,511 $ 452,041
Interest and other income 4,503 25,295
--------- ---------
Total income 451,014 477,336
--------- ---------
Expenses:
Property operations 315,271 354,745
Interest 130,321 116,127
Depreciation and amortization 101,165 101,485
Administrative:
Paid to affiliates 57,890 150,871
Other 19,589 26,992
--------- ---------
Total expenses 624,236 750,220
--------- ---------
Loss before allocated loss from joint venture
and loss allocated to minority interest (173,222) (272,884)
Allocated loss from joint venture (14,085) (1,070)
Loss allocated to minority interest 89,192 16,682
--------- ---------
Net loss $ (98,115) $(257,272)
========= =========
Loss per limited partnership unit $ (9.52) $ (24.96)
========= =========
Distributions per limited partnership unit $ -- $ --
========= =========
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
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Income:
Rental $ 1,296,490 $ 1,418,920
Interest and other income 51,709 63,017
----------- -----------
Total income 1,348,199 1,481,937
----------- -----------
Expenses:
Property operations 786,710 913,136
Interest 390,510 440,452
Depreciation and amortization 301,161 305,266
Administrative:
Paid to affiliates 134,321 254,152
Other 139,635 112,254
----------- -----------
Total expenses 1,752,337 2,025,260
----------- -----------
Loss before allocated loss from joint venture
and loss allocated to minority interest (404,138) (543,323)
Allocated loss from joint venture (45,132) (6,982)
Loss allocated to minority interest 144,815 20,920
----------- -----------
Net loss $ (304,455) $ (529,385)
=========== ===========
Loss per limited partnership unit $ (29.53) $ (51.35)
=========== ===========
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
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Cash flow from operating activities:
Net loss $(304,455) $(529,385)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 301,161 305,266
Loss from joint venture 45,132 6,982
Minority interest share of net loss (144,815) (20,920)
Changes in operating assets and liabilities:
Cash - security deposits (1,077) (215)
Escrow deposits 14,206 1,950
Accounts receivable (6,637) (14,542)
Other assets 36,832 32,273
Accounts payable and accrued expenses 12,034 247,505
Accrued interest (6,377) --
Security deposits 18,660 2,009
--------- ---------
Net cash (used in) provided by operating activities (35,336) 30,923
--------- ---------
Cash flow from investing activities:
Accounts receivable - affiliates 8,433 36,509
Capital expenditures -- --
Payments on note receivable -- (140,507)
Distributions from joint venture -- --
--------- ---------
Net cash provided by (used in) investing activities 8,433 (103,998)
--------- ---------
Cash flows from financing activities:
Cash overdraft 86,617 --
Principal payments on mortgages and notes (90,238) (60,134)
Distributions to partners -- (34,020)
--------- ---------
Net cash (used in) financing activities (3,621) (94,154)
--------- ---------
Increase (decrease) in cash (30,524) (167,229)
Cash - beginning of period 30,524 259,861
--------- ---------
Cash - end of period $ -- $ 92,632
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 396,887 $ 440,452
========= =========
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
STATEMENTS OF PARTNERS' (DEFICIT)
Nine Months Ended September 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 (15,882) -- (513,503)
----------- ----------- -----------
Balance, September 30, 1995 $ (190,730) 10,000 $ (808,369)
=========== =========== ===========
Balance, January 1, 1996 $ (197,803) 10,000 $(1,037,114)
Distributions to partners -- -- --
Net loss (9,134) -- (295,321)
----------- ----------- -----------
Balance, September 30, 1996 $ (206,937) 10,000 $(1,332,435)
=========== =========== ===========
See notes to financial statements
-7-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
NOTES TO FINANCIAL STATEMENTS
Nine Months Ended September 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 nine months ended September 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
for the nine month period ended September 30, 1996.
A summary of the combined assets, liabilities and equity of the joint
venture as of September 30, 1996 and December 31, 1995, and the results of
its operations for the nine month periods ended September 30, 1996 and 1995
are as follows:
-12-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
BALANCE SHEETS
September 30, 1996 and December 31, 1995
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS
- ------
Cash and cash equivalents $ 366,754 $ 92,150
Property, net of accumulated depreciation 2,113,337 2,439,455
Accounts receivable - affiliates 317,287 322,212
Other assets 373,411 461,237
----------- -----------
Total Assets $ 3,170,789 $ 3,315,054
=========== ===========
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Notes payable $ 5,023,109 $ 5,073,225
Accounts payable and accrued expenses 165,781 169,665
----------- -----------
Total Liabilities 5,188,890 5,242,890
----------- -----------
Partners' (Deficit):
General partners (909,635) (864,503)
Other investors (1,108,465) (1,063,333)
----------- -----------
Total Partners' (Deficit) (2,018,100) (1,927,836)
----------- -----------
Total Liabilities and Partners' (Deficit) $ 3,170,789 $ 3,315,054
=========== ===========
</TABLE>
-13-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
STATEMENTS OF OPERATIONS
Nine Months Ended September 30, 1996 and 1995
Nine Months Nine Months
Ended Ended
September 30, September 30,
1996 1995
---- ----
Income:
Rental $ 769,709 $ 817,949
Interest and other income 518 157
--------- ---------
Total income 770,227 818,106
--------- ---------
Expenses:
Property operations 95,835 43,962
Interest 342,560 367,908
Depreciation and amortization 378,093 380,748
Administrative 44,005 39,452
--------- ---------
Total expenses 860,491 832,070
--------- ---------
Net loss $ (90,264) $ (13,964)
========= =========
Allocation of net loss:
The Partnership $ (45,132) $ (6,982)
RPILP II (45,132) (6,982)
--------- ---------
$ (90,264) $ (13,964)
========= =========
A reconciliation of the investments in Research Triangle Industrial Park Joint
Ventures:
Investment in Joint Venture at beginning of period $(864,503)
Allocated loss (45,132)
---------
Investment in Joint Venture at end of period $(909,635)
=========
-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 September
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 (144,815)
----------
Balance, September 30, 1996 $ 241,247
==========
6. MORTGAGES PAYABLE
Northwind Office Park
A mortgage with a balance of $693,382 and $778,985 at September 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 $322,096 and $363,614 at September 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 $4,535,369 and $4,562,362 at September 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 $66,729
and $77,713 for the nine months ended September 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 nine months ended September 30,
1996 and 1995.
Accounts receivable - affiliates amounted to $137,805 at September 30,
1996. As of December 31, 1996, this balance has been fully 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 $3,420 for both the nine months ended September
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 nine month periods ended September
30, 1996 and 1995 as reported in the statements of operations, and as would
be reported for tax purposes respectively, is as follows:
September 30, September 30,
1996 1995
---- ----
Net loss -
Statement of operations $ (304,455) $ (529,385)
(Add to) deduct from:
Difference in depreciation ( 47,049) ( 99,330)
Difference in amortization of
loan discount 1,665 36,124
Allowance for doubtful accounts 16,500 11,447
Difference in depreciation -
Joint Ventures 144,888 44,460
----------- ----------
Net (loss) for tax purposes $ (188,451) $ (536,684)
=========== ==========
-18-
<PAGE>
INCOME TAXES (CONTINUED)
The reconciliation of partner's (deficit) at September 30, 1996 and
December 31, 1995 as reported in the balance sheets, and as reported for
tax purposes, is as follows:
September 30, December 31,
1996 1995
---- ----
Partner's (Deficit) - balance sheet $ (1,539,372) $ (1,234,917)
Add to (deduct from):
Accumulated difference in
depreciation (3,795,288) (3,748,239)
Accumulated amortization
of discounts on mortgage
payables 1,210,089 1,208,424
Syndication fees 1,133,176 1,133,176
Gain on sale of property ( 561,147) ( 561,147)
Allowance for doubtful
accounts 101,951 85,451
Other ( 47,606) ( 47,606)
Difference in Investment
in Joint Venture 607,800 462,912
------------- -------------
Partner's (Deficit) - tax return $ (2,890,397) $ (2,701,946)
============= =============
9. PENDING SALES
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
- -------------------------------
The Partnership struggled this quarter with continued low occupancy at the
Northwind Office Complex. Occupancy at this property has been a problem through
all of 1996. Management is putting together an aggressive marketing campaign
which will focus on heavier advertising and incentives to local brokers. Foxhunt
Apartments seems to be on an upward swing with economic occupancy increasing
from an average of 80.3% for the quarter ended June 30, 1996 to an average of
88.9% for the quarter ended September 30, 1996. Occupancy at Research Triangle
(a joint venture) continues to be very strong. Although operating revenue
decreased approximately 8.6% from the same nine month period in the previous
year, total expenses decreased a significant amount resulting in a better
financial position than during the same nine months of 1995. Management is
optimistic that the decrease in expenses will continue as more control is being
exercised over expenditures; with more control over spending now in place,
management is focusing on ways to increase operating revenue.
There were no distributions during the nine month period ended September 30,
1996, unlike the same period in 1995 in which there was a distribution of $3.30
per limited partnership unit. The Partnership has been utilizing its cash to
fund capital improvements; management expects to continue making improvements
(e.g. painting, carpet and appliance replacements, etc.) to the properties in an
effort to increase occupancies. At this point, management does not anticipate
making any distributions during 1996.
Management continues to work hard to close the pending sale of Foxhunt
Apartments which was entered into in July of 1996.
Results of Operations:
- ----------------------
For the quarter ended September 30, 1996, the Partnership's net loss was $98,115
or $9.52 per limited partnership unit. Net loss for the quarter ended September
30, 1995 amounted to $257,272 or $24.96 per unit. For the nine month period
ended September 30, 1996, the net loss was $304,455 or $29.53 per limited
partnership unit as compared to $529,385 or $51.35 per limited partnership unit
for the nine month period ended September 30, 1995.
-20-
<PAGE>
Results of Operations (continued):
- -----------------------------------
Partnership revenue for the quarter ended September 30, 1996 totaled $451,014, a
decrease of approximately $26,000 from the 1995 amount of $477,336. Total rental
revenue dropped slightly over $5,500, which can be attributed to continued
occupancy problems at the Northwind Office Complex. Management continues to
offer rental concessions and other promotions in an attempt to increase the
occupancies; additionally, management is focusing extra attention on collection
efforts to avoid delinquencies.
For the quarter ended September 30, 1996, Partnership expenses amounted to
$624,236, continuing the pattern which has been noted for the entire 1996 thus
far. Expenses dropped almost $126,000 from the same quarter in 1995. For the
nine month period ended September 30, 1996, Partnership expenses decreased just
under $273,000 from the same period in 1995. Management continues to monitor
closely payroll and associated costs, replacement expenditures and contracted
services costs in an attempt to keep property operations costs down in the
Partnership. There has also been a fairly significant drop in administrative
expenses paid to related parties primarily due to a drop in accounting and
portfolio management fees.
The Research Triangle Industrial Park Joint Venture generated a total net loss
of $90,264 for the nine month period ended September 30, 1996; 50% of the loss
(i.e. $45,132) is allocated to each joint venturer. The joint venture generated
a significantly higher net loss during the first nine months of 1996 as compared
to that for the nine month period ended September 30, 1995, which was $13,964.
The loss has increased primarily due to increased operations costs in the area
of contracted services for grounds work and roof repairs.
For the nine months ended September 30, 1996, the Partnership generated a tax
loss of $188,451 or $18.28 per limited partnership unit. The tax loss for the
first nine months of 1995 totaled $536,684 or $52.06 per unit.
-21-
<PAGE>
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
- -----------------------------------------
Exhibit 27 - Financial Data Schedule (Electronic filing only)
Reports on Form 8-K - None.
-22-
<PAGE>
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
<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
NINE MONTHS ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 36,427
<SECURITIES> 0
<RECEIVABLES> 295,568
<ALLOWANCES> 143,715
<INVENTORY> 0
<CURRENT-ASSETS> 720,896
<PP&E> 10,174,156
<DEPRECIATION> 4,972,376
<TOTAL-ASSETS> 5,922,676
<CURRENT-LIABILITIES> 751,788
<BONDS> 5,559,378
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,922,676
<SALES> 0
<TOTAL-REVENUES> 1,348,199
<CGS> 0
<TOTAL-COSTS> 1,752,337
<OTHER-EXPENSES> 99,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 390,515
<INCOME-PRETAX> (304,455)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (304,455)
<EPS-PRIMARY> (29.53)
<EPS-DILUTED> 0
</TABLE>
