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
March 31, 1998 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 March 31, 1998, 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 -
March 31, 1998 and December 31, 1997 3
Statements of Operations -
Three Months Ended March 31, 1998 and 1997 4
Statements of Cash Flows -
Three Months Ended March 31, 1998 and 1997 5
Statements of Partners' (Deficit) -
Three Months Ended March 31, 1998 6
Notes to Financial Statements 7 - 18
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ------- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF
----------------------------------
OPERATIONS 19 - 21
----------
-2-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
---- ----
ASSETS
- ------
<S> <C> <C>
Property, at cost:
Land $ 848,015 $ 848,015
Buildings and improvements 8,923,273 8,923,273
Furniture and fixtures 425,000 425,000
---------------- -----------------
10,196,288 10,196,288
Less accumulated depreciation 5,509,275 5,396,130
---------------- -----------------
Property, net 4,687,013 4,800,158
Cash - security deposits 71,333 70,895
Escrow deposits 335,141 277,566
Accounts receivable, net of allowance for doubtful
accounts of $59,482 and $49,139, respectively 10,659 2,846
Mortgage costs, net of accumulated
amortization of $98,952 and $96,854 243,443 245,542
Other assets 17,951 23,176
---------------- -----------------
Total Assets $ 5,365,540 $ 5,420,183
================ =================
LIABILITIES AND PARTNERS' (DEFICIT)
- -----------------------------------
Liabilities:
Cash overdraft $ 252,788 $ 151,190
Mortgages payable 5,303,876 5,343,052
Accounts payable and accrued expenses 542,200 457,535
Accounts payable - affiliates 67,038 76,669
Accrued interest 40,335 40,427
Security deposits 74,418 70,884
---------------- -----------------
Total Liabilities 6,280,655 6,139,757
---------------- -----------------
Losses of unconsolidated joint ventures
in excess of investment 485,927 533,391
---------------- -----------------
Minority interest in consolidated
joint venture 367,294 375,901
---------------- -----------------
Partners' (Deficit):
General partners (178,012) (173,828)
Limited partners (1,590,324) (1,455,038)
---------------- -----------------
Total Partners' (Deficit) (1,768,336) (1,628,866)
---------------- -----------------
Total Liabilities and Partners' (Deficit) $ 5,365,540 $ 5,420,183
================ =================
</TABLE>
See notes to financial statements
-3-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 476,467 $ 472,033
Interest and other income 22,280 11,608
---------------- -----------------
Total income 498,747 483,641
---------------- -----------------
Expenses:
Property operations 344,325 194,394
Interest 121,204 124,748
Depreciation and amortization 115,634 47,091
Administrative:
Paid to affiliates 43,697 39,418
Other 69,429 42,816
---------------- -----------------
Total expenses 694,289 448,467
---------------- -----------------
Income (loss) before allocated loss from joint venture
and loss allocated to minority interest (195,542) 35,174
Allocated income (loss) from joint venture 47,465 (1,611)
(Income) loss allocated to minority interest 8,607 (75,913)
---------------- -----------------
Net loss $ (139,471) $ (42,350)
================ =================
Loss per limited partnership unit $ (13.53) $ (4.11)
================ =================
Distributions per limited partnership unit $ - $ -
================ =================
Weighted average number of
limited partnership units
outstanding 10,000 10,000
================ =================
</TABLE>
See notes to financial statements
-4-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
STATEMENTS OF CASH FLOWS
------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flow from operating activities:
Net loss $ (139,471) $ (42,350)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Depreciation and amortization 117,039 47,091
Loss from joint venture (47,465) 1,611
Minority interest share of net income (loss) (8,607) 75,914
Changes in operating assets and liabilities:
Cash - security deposits (438) (19,062)
Escrow deposits (57,575) (53,217)
Accounts receivable (7,813) (3,341)
Other assets 5,225 5,538
Accounts payable and accrued expenses 84,665 (174,691)
Accrued interest (92) 175
Security deposits 3,534 19,604
---------------- -----------------
Net cash (used in) operating activities (50,997) (142,729)
---------------- -----------------
Cash flow from investing activities:
Accounts receivable - affiliates - -
Capital expenditures - -
Distributions from joint venture - -
---------------- -----------------
Net cash (used in) provided by investing activities - -
---------------- -----------------
Cash flows from financing activities:
Cash overdraft 101,598 170,907
Principal payments on mortgages and notes (39,176) (35,899)
Accounts payable - affiliates (11,425) -
---------------- -----------------
Net cash provided by (used in) financing activities 50,997 135,008
---------------- -----------------
(Decrease) in cash - (7,721)
Cash - beginning of period - 7,721
---------------- -----------------
Cash - end of period $ - $ -
================ =================
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 121,296 $ 124,573
================ =================
</TABLE>
See notes to financial statements
-5-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
STATEMENTS OF PARTNERS' (DEFICIT)
---------------------------------
Three Months Ended March 31, 1998
---------------------------------
(Unaudited)
<TABLE>
<CAPTION>
General Limited Partners
Partners
Amount Units Amount
------ ----- ------
<S> <C> <C> <C>
Balance, January 1, 1998 $ (173,828) 10,000 $ (1,455,038)
Distributions to partners - - -
Net loss (4,184) - (135,286)
--------------- --------------- -----------------
Balance, March 31, 1998 $ (178,012) 10,000 $ (1,590,324)
=============== =============== =================
</TABLE>
See notes to financial statements
-6-
<PAGE>
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP II
--------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
Three Months Ended March 31, 1998 and 1997
------------------------------------------
(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 three months ended March
31, 1998 and 1997 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
--------------------------------------
RealmarkProperty 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.
-7-
<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
------------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results copuld differ from those
estimates.
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).
-8-
<PAGE>
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
-----------------------------------------------------
Property and depreciation
-------------------------
Depreciation is provided using the straight-line method over the
estimated useful lives of the respective assets and totaled $408,814,
$309,806 and $405,312 for the years ended December 31, 1997, 1996, and
1995, respectively. The useful lives of the Partnership's assets range
from 15 to 25 years. 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.
Mortgage Costs
--------------
Mortgage costs incurred in obtaining property mortgage financing have
been deferred and are being amortized over the term of the mortgage
using the straight-line method.
Investment in Unconsolidated Joint Ventures
-------------------------------------------
The Partnership's investment in Research Triangle Industrial Park West
Associates Joint Venture and Research Triangle Land Joint Venture are
unconsolidated joint ventures which are accounted for on the equity
method.
Minority Interest in Consolidated Joint Venture
-----------------------------------------------
The minority interest in a consolidated joint venture formed to operate
Foxhunt Apartments is stated at the amount of capital contributed by
the minority investor adjusted for its share of joint venture losses.
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.
-9-
<PAGE>
4. ACQUISITION AND DISPOSITION OF RENTAL PROPERTY
----------------------------------------------
In December 1983 the Partnership acquired an office complex (Northwind)
located in East Lansing, Michigan for a purchase of $3,876,410, which
included $285,713 in acquisition fees.
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.
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.
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.
-10-
<PAGE>
INVESTMENT IN JOINT VENTURES (CONTINUED)
---------------------------------------
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.
In 1994, engineering and surveying costs in the amount of $20,484,were
capitalized as part of the cost of the land. The book value of the land
joint venture as of December 31, 1997, 1996, and 1995 was $432,984. The
only operations of the joint venture is the payment of real estate
taxes and insurance premiuims for this vacant piece of land. Payment of
these bills is to be divided equally between the Partnership and
Adaron.
Bills paid entirely by the one joint venturer will be reflected through
a receivable or payable on the Partnership books. There was a $500
receivable from Adaron and a $500 payable to an affiliate of the
Partnership as of December 31, 1997 representing premiums on the 1997
insurance policy. The receivable and payable at December 31, 1996 was
$243 and $243, respectively.
-11-
<PAGE>
On August 20, 1992, the Partnership entered into an agreement with the
Adaron Group to form the Research Traingle Land Joint Venture. The
primary purpose of this joint venture is to develop the undeveloped
land on the site of Research Triangle Industrial Park West. 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 upon acquisition was $412,500. The joint venture has no
outstanding debt at December 31, 1997 and 1996.
A summary of the combined assets, liabilities and equity of the joint
venture as of March 31, 1998 and December 31, 1997, and the results of
its operations for the three month periods ended March 31, 1998 and
1997 are as follows:
On September 21, 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 income/loss of the joint venture from the
date of inception through March 31, 1998 has been allocated to the
minority interests in accordance with the agreements and has been
recorded as an addition/reduction to their capital contributions.
A reconciliation of the minority interests share in the Foxhunt Joint
Venture is as follows:
Balance, January 1, 1998 $ 375,901
Allocated income/(loss) (8,607)
----------------
Balance, March 31, 1998 $ 367,294
================
-12-
<PAGE>
6. MORTGAGES AND NOTES PAYABLE
---------------------------
Northwind Office Park
---------------------
A U.S. Department of Housing and Urban Developemtn (HUD) guaranteed
mortgage with a balance of $550,734 at March 31, 1998 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 $267,438 at March 31, 1998 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 not been granted an extension and therefore the loan is
currently callable on demand.
Foxhunt Apartments
------------------
A mortgage with a balance of $4,487,727 at March 31, 1998 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
---- ------
1998 $ 367,737
1999 141,220
2000 155,328
2001 170,847
2002 168,047
Thereafter 4,300,697
------------
TOTAL $ 5,303,876
============
The mortgages and note are secured by substancially all of the
properties of the partnership.
-13-
<PAGE>
7. FAIR VALUE OF FINANCIAL INSTRUMENTS: Statement of Financial
Accounting Standards of No. 107 requires disclosure about fair value of certain
financial instruments. The fair value of cash, accounts receivable, accounts
receivable-affiliates, accounts payable, accured expenses and deposit
liabilities approximate the carrying value due to the short-term nature of these
instruments.
9. RELATED PARTY TRANSACTIONS: Management fees for the management of
Partnership properties are paid to an affiliate of the General Partner. the
management agreement provide for 5% of gross monthly rental receipts of the
complex to be paid as fees for administering the operations of the property.
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 inthe Parnership 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 three months ended March 31, 1998 and 1997.
Computer service charges for the Partnership are paid or accured to an
affiliate of the General Partner. The fee is based upon the number of apartment
units and totaled $925 and $1,140 for the three months ended March 31, 1998 and
1997, respectively.
Pursuant to the terms of the partnerhsip agreement, the Corporate
General partner charges the Partnership for reimbursement of certain costs and
expenses incurred by the corporate general partner and its affiliates in
connection with the administration of the Partneship. These charges were for the
Partnership's allocated share of such costs and expenses as payroll, legal,
rent, depreciation, printing, mailing, travel, and communication costs related
to Partnership accounting, partner communication and relations, and property
marketing and are included in property operations. Additionally, Partnership
accounting and portfolio management fees, investor services fees and brokerage
fees allocated based on total assets, number of partners and number of units,
respectively. These charges totaled $93,246, and $84,438 and $151,075 in 1997,
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 the 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 contributions. Fees earned on the sale of Colony
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 payment becomes profitable.
-14-
<PAGE>
Accounts payable-affiliates totaled $67,038 as of March 31, 1998
10. 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.
The reconciliation of net loss for the three month periods ended March
31, 1998 and 1997 as reported in the statements of operations, and as
would be reported for tax purposes respectively, is as follows:
March 31, March 31,
1998 1997
---- ----
Net loss -
Statement of operations $(139,471) $ (42,350)
(Add to) deduct from:
Difference in depreciation (113,145) (19,745)
Difference in amortization of
loan discount - -
Allowance for doubtful accounts 7,813 6,890
Difference in depreciation -
Joint Ventures 38,152 28,895
----------- --------------
Net loss for tax purposes $ (206,651) $ (26,310)
=========== ==============
The reconciliation of partner's (deficit) at March 31, 1998 and
December 31, 1997 as reported in the balance sheets, and as reported
for tax purposes, is as follows:
-15-
<PAGE>
March 31, December 31,
1998 1997
---- ----
Partner's (Deficit) - balance sheet $ (1,768,336) $ (1,816,222)
Add to (deduct from):
Accumulated difference in
depreciation (3,825,365) (3,712,220)
Accumulated amortization
of discounts on mortgage
payables 1,208,424 1,208,424
Syndication fees 1,133,176 1,133,176
Gain on sale of property (561,147) (561,147)
Allowance for doubtful
accounts 53,554 45,741
Other (228,298) (228,298)
Difference in Investment
in Joint Venture 685,960 647,808
------------- --------------
Partner's (Deficit) - tax return $ (3,302,032) $ (3,282,738)
============= ==============
-16-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
------------------------------------------------
BALANCE SHEETS
--------------
March 31, 1998 and December 31, 1997
------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS
- ------
<S> <C> <C>
Cash and cash equivalents $ 1,161,489 $ 1,127,231
Property, net of accumulated depreciation 1,768,382 1,798,721
Accounts receivable - other 5,146 35,731
Other assets 724,473 613,810
------------------ -----------------
Total Assets $ 3,659,490 $ 3,575,493
================== =================
LIABILITIES AND PARTNERS' (DEFICIT)
- ----------------------------------
Liabilities:
Notes payable $ 5,544,615 $ 5,558,723
Accounts payable and accrued expenses 92,359 90,069
Accounts payable - affiliates 885 -
------------------ -----------------
Total Liabilities 5,637,859 5,648,792
------------------ -----------------
Partners' (Deficit):
General partners (940,560) (1,136,064)
Other investors (1,037,809) (937,235)
------------------ -----------------
Total Partners' (Deficit) (1,978,369) (2,073,299)
------------------ -----------------
Total Liabilities and Partners' (Deficit) $ 3,659,490 $ 3,575,493
================== =================
</TABLE>
-17-
<PAGE>
RESEARCH TRIANGLE INDUSTRIAL PARK JOINT VENTURES
------------------------------------------------
STATEMENTS OF OPERATIONS
------------------------
Three Months Ended March 31, 1997 and 1998
------------------------------------------
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1998 1997
---- ----
<S> <C> <C>
Income:
Rental $ 289,403 $ 246,104
Interest and other income 218 1,448
------------------ -----------------
Total income 289,621 247,552
------------------ -----------------
Expenses:
Property operations 24,704 12,436
Interest 115,521 107,553
Depreciation and amortization 37,881 113,867
Administrative 16,585 16,917
------------------ -----------------
Total expenses 194,691 250,773
------------------ -----------------
Net income (loss) $ 94,930 $ (3,221)
================== =================
Allocation of net income (loss):
The Partnership $ 47,465 $ (1,611)
RPILP II 47,465 (1,610)
------------------ -----------------
$ 94,930 $ (3,221)
================== =================
</TABLE>
A reconciliation of the investment in Reasearch Triangle Industrial Park Joint
Venture is as follows:
1998
---------------
Investment in joint venture at beginning of year (937,234)
Allocated income (loss) 47,465
Distribution from joint venture -
===============
Investment in joint venture at March 31, 1998 (889,769)
===============
-18-
<PAGE>
PART II: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
Liquidity and Capital Resources
- -------------------------------
The Partnership's net loss for the quarter ended March 31, 1998 was
significantly higher than that which resulted in the same quarter of 1997.
Research Triangle Office Complex continues to generate the cash which the
Partnership needs to fund the shortfalls which Northwind Office Park generates.
Management is continually monitoring the operations of both Research Triangle
and Foxhunt to insure continued positive cash flow for the Partnership.
Management continues to market vacant space at the Northwind Office Park in
search of tenants. The low occupancy has caused the property to fall behind in
the payment of its real estate taxes and has made it virtually impossible to
refinance the property. One of the mortgages on the property came due in 1995,
and although the lender continues to accept payments, a formal extension has not
been granted, and therefore the loan is technically in default. Without an
increase in occupancy, the lack of cash flow could result in the property being
lost in a foreclosure.
There were no Partnership distributions for either the three months ended March
31, 1998 or 1997. Management continues to look for a lender to refinance both
Northwind and Research Triangle in an attempt to reduce debt service by securing
lower interest rates. If cash flow improves in the coming quarters, the General
Partners envision making a distribution to the partners.
Results of Operations:
- ---------------------
For the quarter ended March 31, 1998, the Partnership's net loss was $139,471 or
$13.53 per limited partnership unit. Net loss for the quarter ended March 31,
1997 amounted to $42,350 or $4.11 per limited partnership unit.
Partnership revenue for the quarter ended March 31, 1998 totaled $498,747, an
increase from the 1997 amount of $483,641. Total rental revenue was responsible
for the entire increase in revenues; the increase in rental income totaled over
$4,400. Interest and other income decreased just under $11,000. The increase in
other income can be attributed to reimbursed property taxes from prior years
overpayment.
-19-
<PAGE>
For the quarter ended March 31, 1998, Partnership expenses amounted to $344,325,
increasing over $149,000 from the 1997 quarter amount. Interest expense remained
fairly constant between the quarters ended March 31, 1998 and 1997, while
administrative charges increased between the two years. Improved occupancies and
collections resulted in an increase in management fees; a large increase in
portfolio management and accounting fees was also noted. These increases were
primarily due to activities undertaken to stabilize occupancies and otherwise
enhance the value of the portfolio in anticipation of the possible refinancing
or sale of properties.
The Research Triangle Industrial Park Joint Venture generated a total net income
of $94,930 for the three month period ended March 31, 1998. The joint venture
generated a net loss of $3,221 for the three month period ended March 31, 1997.
A slight increase in rental revenue resulted.
For the three months ended March 31, 1998, the Partnership generated a tax loss
of $206,651 or $20.66 per limited partnership unit. The tax loss for the first
three months of 1997 totaled $26,310 or $2.55 per unit.
-20-
<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
- -----------------------------------------
None.
-21-
<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 May 20, 1998
---------------------------- ------------------------
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 May 20, 1998
------------------------------ ------------------------
Joseph M. Jayson, Date
President and Director
/s/ Michael J. Colmerauer May 20, 1998
------------------------------ ------------------------
Michael J. Colmerauer Date
Secretary
-22-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 71,333
<SECURITIES> 0
<RECEIVABLES> 566,280
<ALLOWANCES> 108,621
<INVENTORY> 0
<CURRENT-ASSETS> 434,429
<PP&E> 10,196,288
<DEPRECIATION> 5,509,275
<TOTAL-ASSETS> 5,365,540
<CURRENT-LIABILITIES> 976,779
<BONDS> 5,303,876
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,365,540
<SALES> 0
<TOTAL-REVENUES> 498,747
<CGS> 0
<TOTAL-COSTS> 694,289
<OTHER-EXPENSES> 56,072
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,204
<INCOME-PRETAX> (139,470)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (139,471)
<EPS-PRIMARY> (13.53)
<EPS-DILUTED> 0
</TABLE>
