<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000 ...................
OR
------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
COMMISSION FILE NO.
0-17183
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MURRAY INCOME PROPERTIES II, LTD.
(Exact Name of Registrant as Specified in its Charter)
TEXAS 75-2085586
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5550 LBJ FREEWAY, SUITE 675, DALLAS, TEXAS 75240
(Address of principal executive offices) (Zip Code)
(972) 991-9090
(Registrant's Telephone Number, including Area Code)
Indicate by 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
------- -------
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Properties held for sale:
Land $ 5,789,291 $ 5,789,291
Buildings and improvements 17,854,910 17,841,734
------------ ------------
23,644,201 23,631,025
Less accumulated depreciation 9,275,258 9,152,398
------------ ------------
Net properties held for sale 14,368,943 14,478,627
Investment in joint venture, at equity 1,383,929 1,237,802
Cash and cash equivalents 1,187,644 908,676
Certificates of deposit 99,000 595,986
Accounts receivable, net of allowance
of $5,476 in 2000 and 1999 615,386 515,346
Other assets, at cost, net of accumulated
amortization of $668,682 and $631,315 in
2000 and 1999, respectively 581,155 534,092
------------ ------------
$ 18,236,057 $ 18,270,529
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 20,863 $ 19,004
Accrued property taxes 174,976 317,344
Security deposits, state excise tax payable,
and other liabilities 87,813 76,156
Deferred income 44,393 57,420
------------ ------------
Total liabilities 328,045 469,924
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 713,323 689,241
Cumulative cash distributions (703,512) (684,246)
------------ ------------
10,811 5,995
------------ ------------
Limited Partners (314,687 interests):
Capital contributions, net of offering costs 27,029,395 27,029,395
Cumulative net earnings 15,549,669 14,503,014
Cumulative cash distributions (24,681,863) (23,737,799)
------------ ------------
17,897,201 17,794,610
------------ ------------
Total partners' equity 17,908,012 17,800,605
------------ ------------
$ 18,236,057 $ 18,270,529
============ ============
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 3
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME:
Rental $ 768,150 $ 734,751 $1,588,286 $1,544,980
Interest 21,768 16,858 43,582 33,664
Equity in earnings of joint venture 34,253 40,370 195,626 77,232
---------- ---------- ---------- ----------
824,171 791,979 1,827,494 1,655,876
---------- ---------- ---------- ----------
EXPENSES:
Depreciation 1,202 182,259 122,860 362,302
Property operating 232,158 190,820 422,205 377,287
General and administrative 76,187 80,071 178,792 177,752
Bad debts (recoveries), net -0- 1,747 -0 1,747
---------- ---------- ---------- ----------
309,547 454,897 723,857 919,088
---------- ---------- ---------- ----------
Net earnings before income taxes 514,624 337,082 1,103,637 736,788
State excise tax 16,700 -0- 32,900 -0-
---------- ---------- ---------- ----------
Net earnings $ 497,924 $ 337,082 $1,070,737 $ 736,788
========== ========== ========== ==========
Basic earnings per limited
partnership interest $ 1.55 $ 1.04 $ 3.33 $ 2.27
========== ========== ========== ==========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1999:
Balance at December 31, 1998 $ 622 $ 18,322,856 $ 18,323,478
Net earnings 22,683 714,105 736,788
Cash distributions (19,266) (944,060) (963,326)
------------ ------------ ------------
Balance at June 30, 1999 $ 4,039 $ 18,092,901 $ 18,096,940
============ ============ ============
SIX MONTHS ENDED JUNE 30, 2000:
Balance at December 31, 1999 $ 5,995 $ 17,794,610 $ 17,800,605
Net earnings 24,082 1,046,655 1,070,737
Cash distributions (19,266) (944,064) (963,330)
------------ ------------ ------------
Balance at June 30, 2000 $ 10,811 $ 17,897,201 $ 17,908,012
============ ============ ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,070,737 $ 736,788
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts, net -0- 1,747
Depreciation 122,860 362,302
Equity in earnings of joint venture (195,626) (77,232)
Amortization of other assets 37,366 36,577
Amortization of deferred income (3,249) (3,249)
Change in assets and liabilities:
Accounts receivable (100,040) (76,590)
Other assets (84,430) (43,354)
Accounts payable 1,859 8,352
Accrued property taxes, security deposits
state excise tax payable, other liabilities
and deferred income (140,489) (135,111)
----------- -----------
Net cash provided by operating activities 708,988 810,230
----------- -----------
Cash flows from investing activities:
Additions to investment properties (13,176) (8,183)
Purchases of certificates of deposit (198,000) (495,986)
Proceeds from redemptions of certificates of deposit 694,986 497,000
Distributions from joint venture 49,500 110,850
----------- -----------
Net cash provided by investing activities 533,310 103,681
----------- -----------
Cash flows from financing activities - cash distributions (963,330) (963,326)
----------- -----------
Net increase (decrease) in cash and cash equivalents 278,968 (49,415)
Cash and cash equivalents at beginning of period 908,676 745,995
----------- -----------
Cash and cash equivalents at end of period $ 1,187,644 $ 696,580
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000 AND 1999
1. BASIS OF ACCOUNTING
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.
On March 10, 2000, in a special meeting of the Limited Partners, the
Limited Partners approved the proposed sale of the Partnership's properties, in
one or a series of sale transactions (which may include one or more properties
owned by Murray Income Properties I, Ltd. ("MIP I"), an affiliate of the
Partnership under joint management), the subsequent dissolution and liquidation
of the Partnership upon the sale of the Partnership's last property, and an
amendment to the Partnership Agreement to permit the proposed asset sale,
dissolution and liquidation on the terms set forth in a proxy statement mailed
to the Limited Partners on or about January 14, 2000. As a result, the
Partnership has begun marketing the properties for sale, and continues to
operate until such time as the properties are sold. If the Partnership is
successful in selling the properties, then after the sale of the last property
and the settlement of all other business affairs, the Partnership will be
liquidated. Effective March 10, 2000, the Partnership's properties are reported
as properties held for sale at the lower of carrying value or fair value less
estimated cost to sell. Management of the Partnership expects no loss to result
from the sale of properties, and no adjustment was made to account for the
reclassification to properties held for sale.
Rental income is recognized as earned under the leases. Accordingly, the
Partnership accrues rental income for the full period of occupancy using the
straight line method over the related terms. At June 30, 2000 and December 31,
1999, $357,983 and $326,341, respectively, of accounts receivable related to
such accruals.
Other assets consist primarily of deferred leasing costs which are
amortized using the straight line method over the lives of the related leases.
Prior to March 10, 2000, depreciation was provided over the estimated
useful lives of the respective assets using the straight line method. The
estimated useful lives of the buildings and improvements range from three to
twenty-five years. No depreciation is provided on properties held for sale after
March 10, 2000, the date on which the Partnership changed the classification of
its properties to properties held for sale.
No provision for federal income taxes has been made as the liabilities for
such taxes are those of the individual Partners rather than the Partnership. The
Partnership files its tax return on the accrual basis used for Federal income
tax purposes. The Partnership owns and operates two shopping centers (Germantown
Collection and Paddock Place) located in the state of Tennessee. In 1999,
Tennessee passed the "Tax Revision and Reform Act of 1999" that imposes state
taxes on limited partnerships doing business within the state. This law is
applicable to the Partnership effective January 1, 2000. For the six months
ended June 30, 2000, the Partnership has accrued state excise tax expense to the
state of Tennessee in the amount of $32,900. In the accompanying balance sheet
at June 30, 2000, other liabilities include $900 in deferred state excise tax
liabilities and state excise tax payable of $32,000, both attributable to the
state of Tennessee.
6
<PAGE> 7
Basic earnings per limited partnership interest are based upon the limited
partnership interests outstanding at period-end and the net earnings allocated
to the Limited Partners in accordance with the terms of the Partnership
Agreement, as amended.
Certificates of deposit are held at commercial banks and are stated at
cost, which approximates market. For purposes of reporting cash flows, the
Partnership considers all certificates of deposit and highly liquid debt
instruments with original maturities of three months or less to be cash
equivalents.
The following information relates to estimated fair values of the
Partnership's financial instruments as of June 30, 2000 and December 31, 1999.
For cash and cash equivalents, certificates of deposit, accounts and notes
receivable, accounts payable, accrued property taxes payable, and security
deposits, the carrying amounts approximate fair value because of the short
maturity of these instruments.
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, Cash Distributions from
Operations ("Operating Distributions") are allocated and paid 7% to the
Non-corporate General Partner, 3% to the Corporate General Partner and 90% to
the Limited Partners. An amount equal to 5% of Operating Distributions out of
the 7% allocated to the Non-corporate General Partner and the entire amount of
Operating Distributions allocated to the Corporate General Partner is
subordinated to the prior receipt by the Limited Partners of a non-cumulative
7% annual return from either Operating Distributions or Cash Distributions from
Sales or Refinancings. Net profits or losses, excluding depreciation and gain or
loss from sales or refinancing, are allocated to the General Partners and
Limited Partners in the same proportions as the Operating Distributions for the
year. All depreciation is allocated to those Limited Partners subject to Federal
income taxes. Cash Distributions from the sale or refinancing of a property are
allocated as follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the Limited Partners and 1% to the Non-corporate General Partner
until the Limited Partners have been returned their Original Invested
Capital from Cash Distributions from Sales or Refinancings, plus their
Preferred Return from either Cash Distributions from Operations or Cash
Distributions from Sales or Refinancings.
(b) Next, all Cash Distributions from Sales or Refinancings shall be allocated
99% to the General Partners and 1% to the Non-corporate General Partner in
an amount equal to any unpaid Cash Distributions from Operations
subordinated to the Limited Partners' 7% non-cumulative annual return. Such
99% shall be allocated 62 1/2% to the Non-corporate General Partner and
37 1/2% to the Corporate General Partner.
(c) Next, all Cash Distributions from Sales or Refinancings shall be allocated
1% to the Non-corporate General Partner and 99% to the Limited Partners and
the General Partners. Such 99% will be allocated 85% to the Limited
Partners and 15% to the General Partners. Such 15% shall be allocated
62 1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate
General Partner.
(d) Upon the sale of the last property owned by the Partnership, Cash
Distributions from Sales or Refinancings shall be allocated and paid to the
Partners in an amount equal to, and in proportion with, their existing
capital account balances. Such distributions shall be made only after
distribution of all Cash Distributions from Operations and only after all
allocations of Partnership income, gain, loss, deduction and credit
(including net gain from the sale or other disposition of the properties)
have been closed to the Partners' respective capital accounts.
7
<PAGE> 8
3. PROPERTIES HELD FOR SALE
The Partnership owns and operates Paddock Place Shopping Center in
Nashville, Tennessee, Germantown Collection Shopping Center located in
Germantown (Memphis), Tennessee and 1202 Industrial Place (an office/warehouse
facility) located in Grand Prairie, Texas.
The Partnership has adopted Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information",
which established standards for the way that public business enterprises report
information about operating segments in audited financial statements, as well as
related disclosures about products and services, geographic areas, and major
customers. The Partnership defines each of its shopping centers and its
warehouse as operating segments; however, management has determined that all of
its properties have similar economic characteristics and also meet the other
criteria which permit the properties to be aggregated into one reportable
segment. Management of the Partnership makes decisions about resource allocation
and performance assessment based on the same financial information presented
throughout these financial statements.
4. INVESTMENT IN JOINT VENTURE
The Partnership owns a 15% interest in Tower Place Joint Venture, a joint
venture that owns and operates Tower Place Festival Shopping Center located in
Pineville (Charlotte), North Carolina. The Partnership accounts for the joint
venture by using the equity method. The remaining 85% interest in the joint
venture is owned by Murray Income Properties I, Ltd. ("MIP I"), an affiliated
real estate limited partnership. The Tower Place Joint Venture Agreement
provides that the Partnership will share profits, losses, and cash distributions
according to the Partnership's 15% ownership interest in the joint venture. The
Tower Place Festival Shopping Center is held for sale as are the other
properties of the Partnership. As such, Tower Place Joint Venture has recorded
the shopping center at the lower of carrying value or fair value less estimated
costs to sell.
5. TRANSACTIONS WITH AFFILIATES
Murray Realty Investors IX, Inc. ("MRI IX"), the Corporate General Partner,
entered into a property management agreement with the Partnership for the
management of 1202 Industrial Place, effective January 1, 1996. Pursuant to this
agreement, MRI IX earned property management fees in the amount of $9,196 and
$9,620, respectively, during the six months ended June 30, 2000 and 1999.
6. OTHER
Information furnished in this interim report reflects all adjustments
consisting of normal recurring adjustments which, in the opinion of management,
are necessary to reflect a fair presentation of the results for the periods
presented.
The financial information included in this interim report as of June 30,
2000, and for the three and six months ended June 30, 2000 and 1999, has been
prepared by management without audit by independent public accountants. The
Partnership's 1999 annual report contains audited financial statements including
the notes to the financial statements and should be read in conjunction with the
financial information contained in this interim report.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
On March 10, 2000, in a special meeting of the Limited Partners, the
Limited Partners approved the proposed sale of the Partnership's properties, in
one or a series of sale transactions (which may include one or more properties
owned by Murray Income Properties I, Ltd. ("MIP I"), an affiliate of the
Partnership under joint management), the subsequent dissolution and liquidation
of the Partnership upon the sale of the Partnership's last property, and an
amendment to the Partnership Agreement to permit the proposed asset sale,
dissolution and liquidation on the terms set forth in a proxy statement mailed
to the Limited Partners on or about January 14, 2000. As a result, the
Partnership has begun marketing the properties for sale, and continues to
operate until such time as the properties are sold. If the Partnership is
successful in selling the properties, then after the sale of the last property
and the settlement of all other business affairs, the Partnership will be
liquidated. Effective March 10, 2000, the Partnership's properties are reported
as properties held for sale at the lower of carrying value or fair value less
estimated cost to sell. Management of the Partnership expects no loss to result
from the sale of properties, and no adjustment was made to account for the
reclassification to properties held for sale.
In April, 2000, the Partnership's properties were put on the market and the
General Partners began actively soliciting offers. In August, 2000, a contract
was signed for the sale of Paddock Place and the General Partners anticipate
that the transaction will close in the fourth quarter. However, the contract is
subject to a number of contingencies and there are no assurances that the sale
will be consummated at all or under the terms of the existing contract. The
General Partners are also negotiating with potential purchasers for the sale of
the Germantown Collection and 1202 Industrial Place. There is no guarantee that
these negotiations will result in a signed contract or a sale of these
properties. Offers have been received for Tower Place Festival, though not under
terms which are acceptable to the General Partners. This property will continue
to be actively marketed for sale. Tower Place Festival Shopping Center is owned
by Tower Place Joint Venture, which is owned 15% by the Partnership and is
accounted for under the equity method.
As of June 30, 2000, the Partnership had cash, cash equivalents and
certificates of deposit of $1,286,644. Such amounts represent cash generated
from operations and working capital reserves.
Rental income from leases is accrued using the straight line method over
the related lease terms. At June 30, 2000 and December 31, 1999, $357,983 and
$326,341, respectively, of accounts receivable related to such accruals.
Accounts receivable also consist of tenant receivables, receivables for rent
collected (but not yet remitted by the property management companies managing
the properties), and interest receivable on short-term investments. The increase
in accounts receivable of $100,040 (exclusive of bad debts and recoveries) from
December 31, 1999 to June 30, 2000 is primarily due to increases in receivables
related to the accruals described above and increases in receivables for rent
collected (but not yet remitted by the property management companies managing
the properties) at Germantown and Paddock Place.
The decrease in accrued property taxes of $142,368 from December 31, 1999
to June 30, 2000 is primarily due to the payment of 1999 property taxes for the
Partnership's properties.
During the three months ended June 30, 2000, the Partnership made Cash
Distributions from Operations of $481,663 (which was reduced by $2,855 related
to 1999 North Carolina state income taxes paid on behalf of the partners in
connection with the operations of Tower Place Joint Venture) relating to the
three-month period ended March 31, 2000. Subsequent to June 30, 2000, the
Partnership made Cash Distributions from Operations of $561,942 relating to the
three months
9
<PAGE> 10
ended June 30, 2000. The funds distributed were derived from the net cash flow
generated from operations of the Partnership's properties and from interest
earned, net of administrative expenses, on funds invested in short-term money
market instruments and certificates of deposit.
Future liquidity is currently expected to result from cash generated from
the operations of the Partnership's properties (which could be affected
negatively in the event of weakened occupancies and/or rental rates), interest
earned on funds invested in short-term money market instruments and certificates
of deposit, and ultimately through the sale of the Partnership's properties.
Results of Operations
Rental income increased $43,306 for the six months ended June 30, 2000 as
compared to the same period in 1999. The following information details the
rental income generated, bad debt expense incurred and average occupancy for the
periods shown for the Partnership's properties.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Paddock Place Shopping Center
Rental income $299,754 $273,688 $646,831 $616,635
Bad debt expense -0- 1,747 -0- 1,747
Average occupancy 98% 90% 97% 90%
Germantown Collection Shopping Center
Rental income $300,496 $287,671 $604,427 $563,542
Bad debt expense -0- -0- -0- -0-
Average occupancy 100% 100% 100% 100%
1202 Industrial Place
Rental income $167,900 $173,392 $337,028 $364,803
Bad debt expense -0- -0- -0- -0-
Average occupancy 100% 100% 100% 100%
</TABLE>
Rental income at Paddock Place Shopping Center in Nashville, Tennessee
increased $30,196 for the six months ended June 30, 2000 as compared to the same
period in 1999. Increases in base rents due to higher occupancy were offset by
decreases in tenant reimbursements for common area maintenance costs and real
estate taxes.
Occupancy at Paddock Place averaged 98% during the second quarter, a two
percent increase over the previous quarter. A new tenant who signed a lease for
1,439 square feet took occupancy in April.
Rental income at the Germantown Collection in Germantown (Memphis),
Tennessee increased $40,885 for the six months ended June 30, 2000 as compared
to the same period in 1999. Increases in base rents due to higher rental rates
and increases in tenant reimbursements for real estate taxes were partially
offset by decreases in tenant reimbursements for common area maintenance costs.
Occupancy at Germantown averaged 100% for the second quarter, unchanged
from the previous quarter. A tenant who occupies 1,550 square feet renewed its
lease for 5 years.
Rental income at 1202 Industrial Place in Grand Prairie (Dallas), Texas
decreased $27,775 for the six months ended June 30, 2000 as compared to the same
period in 1999 primarily due to a decrease in tenant reimbursements for common
area costs, real estate taxes and insurance costs.
10
<PAGE> 11
Occupancy at 1202 Industrial Place remained 100% during the second quarter,
unchanged from the previous quarter.
The Partnership has been apprised of the probable presence of hazardous
substances under this property. Based on currently available information, the
hazardous substances are comprised of chlorinated solvents and their degradation
products. These substances have been detected in the ground water.
The hazardous substances beneath the Partnership's property are believed to
have migrated from an adjacent property owned by an unrelated corporation. The
owner of the adjacent property has placed its property in the Texas Voluntary
Cleanup Program (VCP). Under the VCP, the owner of the adjacent property is
expected to clean up the contamination, including the contamination under the
Partnership's property, to a level acceptable to the state. The Partnership has
entered an agreement with the owner of the adjacent property to investigate and
assess the impact to the Partnership's property.
There is no indication at this time that the state considers the
Partnership responsible for the contamination. Under Texas law, the Partnership
will not be responsible for investigation or property so long as the Partnership
provides the responsible party with access to the Partnership's property. The
Partnership is currently negotiating an indemnity agreement with the owner of
the adjacent property that the Partnership expects will protect against
liabilities and other losses related to the presence of hazardous substances
beneath the Partnership's property originating from the adjacent property.
"Equity in earnings of joint venture" represents the Partnership's 15%
interest in the earnings of Tower Place Joint Venture. Rental income at Tower
Place Festival Shopping Center in Pineville (Charlotte), North Carolina
decreased $312,334 for the six months ended June 30, 2000 as compared to the
same period in 1999 primarily due to lower occupancy. General Cinema, which
occupied approximately 28% of the total leaseable space at Tower Place,
terminated its lease on February 14, 2000, after payment of approximately
$2,200,000, as consideration for the termination of the lease. Pursuant to a
lease with Bally Total Fitness Corporation, signed on February 14, 2000, a new
Bally facility is being constructed on the site previously occupied by the
theater. This new fitness facility, along with 6,500 square feet of additional
retail space, is being built utilizing working capital reserves, and it is
expected that no outside financing will be required. The addition of the Bally
Total Fitness facility and the 6,500 square feet of retail space are anticipated
to enhance the value of the shopping center which is currently being marketed
for sale. Tower Place's total operating expenses decreased, with decreases in
property management fees being offset by increases in repair and maintenance
costs. The following information details rental income generated, gain on
termination of lease, bad debt expense incurred and average occupancy for the
periods shown for Tower Place Shopping Center.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Tower Place Shopping Center
Rental income $271,051 $468,585 $614,038 $926,372
Gain on termination of lease -0- -0- 898,562 -0-
Bad debt expense (recovery) -0- -0- 10,238 -0-
Average occupancy 76% 99% 77% 98%
The Partnership's share of income from the joint venture increased $118,394
for the six months ended June 30, 2000 as compared to the same period in 1999
for the reasons stated above.
</TABLE>
11
<PAGE> 12
Occupancy at Tower Place averaged 76% for the second quarter, a two percent
decrease from the previous quarter. During the second quarter, the building
previously occupied by General Cinema was demolished and in July construction
began on Bally Total Fitness space. The General Partners anticipate that Bally
will open for business during the first quarter of 2001. During the first
quarter, a tenant who had occupied 3,287 square feet vacated its space upon the
expiration of its lease. In April this space, along with an adjacent space
containing 1,604 square feet, was leased to a new tenant who will open for
business during the third quarter. In June a new tenant who signed a lease for
1,050 square feet took occupancy of its space.
Prior to March 10, 2000, depreciation was provided over the estimated
useful lives of the respective assets using the straight line method. The
estimated useful lives of the building and improvements range from three to
twenty-five years. No depreciation is provided on properties held for sale after
March 10, 2000, the date on which the Partnership changed the classification of
its properties to Properties held for sale.
Property operating expenses consist primarily of utility costs, repair and
maintenance costs, leasing and promotion costs, real estate taxes, insurance,
and property management fees. Total property operating expenses increased
$44,918 for the six months ended June 30, 2000 as compared to the same period in
1999. The increase is due to higher repair and maintenance costs and real estate
taxes. Property operating expenses at Paddock Place increased, with increases in
repair and maintenance costs being partially offset by lower utilities and snow
removal costs. Property operating expenses at Germantown increased, with
increases in landscaping costs, property management fees and real estate taxes
being partially offset by decreases in repair and maintenance costs. Property
operating expenses at 1202 Industrial Place increased primarily due to increases
in repair and maintenance costs and real estate taxes.
General and administrative expenses incurred are related to legal and
accounting costs, rent, investor services costs, salaries and benefits and
various other costs required for the administration of the Partnership. General
and administrative expenses increased slightly for the six months ended June 30,
2000 as compared to the same period in 1999 primarily due to increases in office
rent, telephone expenses and salaries and benefits.
Words or phrases when used in the Form 10-Q or other filings with the
Securities and Exchange Commission, such as "does not believe", "believes", and
"anticipates" or similar expressions, are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995.
12
<PAGE> 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Partnership's financial instruments consist of cash and cash
equivalents, accounts receivable, accounts payable, accrued property taxes
payable and security deposits. The carrying amount of these instruments
approximate fair value due to the short-term nature of these instruments.
Therefore, the Partnership believes it is relatively unaffected by interest rate
changes or other market risks.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
2a Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934. Reference is made to the Partnership's
Schedule 14A, filed with the Securities and Exchange Commission
on January 13, 2000. (File No. 0-17183)
2b Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 9, 2000. (File
No. 0-17183)
2c Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 23, 2000.
(File No. 0-17183)
3a Agreement of Limited Partnership of Murray Income Properties II,
Ltd. Reference is made to Exhibit A of the Prospectus dated
February 20, 1986 contained in Amendment No. 1 to Partnership's
Form S-11 Registration Statements filed with the Securities and
Exchange Commission on February 13, 1986. (File No. 33-2294)
3b Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 15, 1989. Reference is made to
Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-17183)
3c Amended and Restated Certificate and Agreement of Limited
Partnership dated as of January 10, 1990. Reference is made to
Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-17183)
10a Management Agreement with Murray Realty Investors IX, Inc. for
management and operation services described in the Management
Agreement dated January 1, 1996 at 1202 Industrial Place.
Reference is made to Exhibit 10a to the 1996 Form 10-Q filed with
the Securities and Exchange Commission on May 13, 1996. (File No.
0-17183)
27 Financial Data Schedule. Filed herewith.
99a Glossary as contained in the Prospectus dated February 20, 1986
filed as part of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained
in the Prospectus dated February 20, 1986 filed as part of
Amendment No. 2 to Registrant's Form S-11. Registration Statement
(File No. 33-2394). Filed herewith.
99c Amendment number nine to the Agreement of Limited Partnership
contained in the Proxy Statement dated October 11, 1989. Filed
herewith.
14
<PAGE> 15
99d Management Compensation as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No. 2 to
Registrant's Form S-11 Registration Statement (File No. 33-2394).
Filed herewith.
(b) Reports on Form 8-K filed during the quarter ended June 30, 2000:
None
15
<PAGE> 16
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.
MURRAY INCOME PROPERTIES II, LTD.
By: Murray Realty Investors IX, Inc.
A General Partner
Date: August 14, 2000 By: /s/ Mitchell Armstrong
----------------------------------
Mitchell Armstrong
President
Chief Financial Officer
16
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
2a Proxy Statement pursuant to Section 14(a) of the Securities
Exchange Act of 1934. Reference is made to the Partnership's
Schedule 14A, filed with the Securities and Exchange Commission
on January 13, 2000. (File No. 0-17183)
2b Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 9, 2000. (File
No. 0-17183)
2c Definitive Soliciting Additional Materials to Proxy Statement
pursuant to Section 14(a) of the Securities Exchange Act of 1934.
Reference is made to the Partnership's Schedule 14A, filed with
the Securities and Exchange Commission on February 23, 2000.
(File No. 0-17183)
3a Agreement of Limited Partnership of Murray Income Properties II,
Ltd. Reference is made to Exhibit A of the Prospectus dated
February 20, 1986 contained in Amendment No. 1 to Partnership's
Form S-11 Registration Statements filed with the Securities and
Exchange Commission on February 13, 1986. (File No. 33-2294)
3b Amended and Restated Certificate and Agreement of Limited
Partnership dated as of November 15, 1989. Reference is made to
Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-17183)
3c Amended and Restated Certificate and Agreement of Limited
Partnership dated as of January 10, 1990. Reference is made to
Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 1990. (File No.
0-17183)
10a Management Agreement with Murray Realty Investors IX, Inc. for
management and operation services described in the Management
Agreement dated January 1, 1996 at 1202 Industrial Place.
Reference is made to Exhibit 10a to the 1996 Form 10-Q filed with
the Securities and Exchange Commission on May 13, 1996. (File No.
0-17183)
27 Financial Data Schedule. Filed herewith.
99a Glossary as contained in the Prospectus dated February 20, 1986
filed as part of Amendment No. 2 to Registrant's Form S-11
Registration Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained
in the Prospectus dated February 20, 1986 filed as part of
Amendment No. 2 to Registrant's Form S-11. Registration Statement
(File No. 33-2394). Filed herewith.
99c Amendment number nine to the Agreement of Limited Partnership
contained in the Proxy Statement dated October 11, 1989. Filed
herewith.
99d Management Compensation as contained in the Prospectus dated
February 20, 1986 filed as part of Amendment No. 2 to
Registrant's Form S-11 Registration Statement (File No. 33-2394).
Filed herewith.
</TABLE>
17
