<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------
FORM 10-Q
------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 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
------------
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>
September 30, December 31,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
ASSETS
Properties held for sale:
Land $ 5,789,291 $ 5,789,291
Buildings and improvements 17,859,435 17,841,734
------------ ------------
23,648,726 23,631,025
Less accumulated depreciation 9,276,460 9,152,398
------------ ------------
Net properties held for sale 14,372,266 14,478,627
Investment in joint venture, at equity 1,360,857 1,237,802
Cash and cash equivalents 1,363,556 908,676
Certificates of deposit -0- 595,986
Accounts receivable, net of allowance
of $5,476 in 2000 and 1999, respectively 604,059 515,346
Other assets, at cost, net of accumulated
amortization of $687,640 and $631,315 in
2000 and 1999, respectively 590,143 534,092
------------ ------------
$ 18,290,881 $ 18,270,529
============ ============
LIABILITIES AND PARTNERS' EQUITY
Accounts payable $ 16,782 $ 19,004
Accrued property taxes 258,900 317,344
Security deposits, state excise tax payable
and other liabilities 91,948 76,156
Deferred income 14,856 57,420
------------ ------------
Total liabilities 382,486 469,924
------------ ------------
Partners' equity:
General Partners:
Capital contributions 1,000 1,000
Cumulative net earnings 724,594 689,241
Cumulative cash distributions (714,751) (684,246)
------------ ------------
10,843 5,995
------------ ------------
Limited Partners (314,687 interests):
Capital contributions, net of offering costs 27,029,395 27,029,395
Cumulative net earnings 16,100,723 14,503,014
Cumulative cash distributions (25,232,566) (23,737,799)
------------ ------------
17,897,552 17,794,610
------------ ------------
Total partners' equity 17,908,395 17,800,605
------------ ------------
$ 18,290,881 $ 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 Nine Months Ended
September 30, September 30,
----------------------- -------------------------
2000 1999 2000 1999
-------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME:
Rental $801,852 $ 741,124 $2,390,138 $2,286,104
Interest 23,399 18,155 66,981 51,819
Equity in earnings of joint venture 33,928 35,945 229,554 113,177
-------- ---------- ---------- ----------
859,179 795,224 2,686,673 2,451,100
-------- ---------- ---------- ----------
EXPENSES:
Depreciation 1,202 177,998 124,062 540,300
Property operating 188,094 217,217 610,299 594,504
General and administrative 88,058 62,111 266,850 239,863
Bad debts, net -0- 3,729 -0- 5,476
-------- ---------- ---------- ----------
277,354 461,055 1,001,211 1,380,143
-------- ---------- ---------- ----------
Net earnings before state excise taxes 581,825 334,169 1,685,462 1,070,957
State excise tax 19,500 -0- 52,400 -0-
-------- ---------- ---------- ----------
Net earnings $562,325 $ 334,169 $1,633,062 $1,070,957
======== ========== ========== ==========
Basic earnings per limited
partnership interest $ 1.75 $ 1.03 $ 5.08 $ 3.30
======== ========== ========== ==========
</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>
NINE MONTHS ENDED SEPTEMBER 30, 1999:
Balance at December 31, 1998 $ 622 $ 18,322,856 $ 18,323,478
Net earnings 33,278 1,037,679 1,070,957
Cash distributions (28,900) (1,416,090) (1,444,990)
-------- ------------ ------------
Balance at September 30, 1999 $ 5,000 $ 17,944,445 $ 17,949,445
======== ============ ============
NINE MONTHS ENDED SEPTEMBER 30, 2000:
Balance at December 31, 1999 $ 5,995 $ 17,794,610 $ 17,800,605
Net earnings 35,353 1,597,709 1,633,062
Cash distributions (30,505) (1,494,767) (1,525,272)
-------- ------------ ------------
Balance at September 30, 2000 $ 10,843 $ 17,897,552 $ 17,908,395
======== ============ ============
</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>
Nine Months Ended
September 30,
----------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,633,062 $ 1,070,957
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Bad debts, net -0- 5,476
Depreciation 124,062 540,300
Equity in earnings of joint venture (229,554) (113,177)
Amortization of other assets 56,324 58,688
Amortization of deferred income (4,874) (4,874)
Change in assets and liabilities:
Accounts receivable (88,713) (66,393)
Other assets (112,376) (100,542)
Accounts payable (2,222) (5,525)
Accrued property taxes, security deposits,
state excise tax payable, other liabilities
and deferred income (80,342) (46,654)
----------- -----------
Net cash provided by operating activities 1,295,367 1,338,256
----------- -----------
Cash flows from investing activities:
Additions to properties held for sale (17,701) (8,183)
Purchases of certificates of deposit (198,000) (694,986)
Proceeds from redemptions of certificates of deposit 793,986 696,000
Distributions from joint venture 106,500 165,450
----------- -----------
Net cash provided by investing activities 684,785 158,281
----------- -----------
Cash flows from financing activities - cash distributions (1,525,272) (1,444,990)
----------- -----------
Net increase in cash and cash equivalents 454,880 51,547
Cash and cash equivalents at beginning of period 908,676 745,995
----------- -----------
Cash and cash equivalents at end of period $ 1,363,556 $ 797,542
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MURRAY INCOME PROPERTIES II, LTD.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 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 and dissolved. 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 September 30, 2000 and December
31, 1999, $372,256 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 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 nine months
ended September 30, 2000, the Partnership has accrued state excise tax expense
to the state of Tennessee in the amount of $52,400. In the accompanying balance
sheet at September 30, 2000, other liabilities include $7,000 in deferred state
excise tax liabilities and state excise tax payable of $15,400, 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.
The following information relates to estimated fair values of the
Partnership's financial instruments as of September 30, 2000 and December 31,
1999. For cash and cash equivalents, certificates of deposit, accounts
receivable, accounts payable, accrued property taxes payable, security deposits
and state excise tax payable, 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 of a property, 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
the Partnership's 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 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 $13,765 and
$14,161 during the nine months ended September 30, 2000 and 1999, respectively.
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 September
30, 2000 and for the three and nine months ended September 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 and dissolved. 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, in September 2000, a contract was
signed for the sale of 1202 Industrial Place, and in October 2000, a contract
was signed for the sale of Germantown Collection. The General Partners
anticipate that these transactions will close in the fourth quarter. However,
the contracts are subject to a number of contingencies and there are no
assurances that the sales will be consummated at all or under the terms of the
existing contracts. 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 September 30, 2000, the Partnership had cash and cash equivalents of
$1,363,556. Such amounts represent cash generated from operations, working
capital reserves, and proceeds from the maturity of certificates of deposit.
Rental income from leases is accrued using the straight line method over
the related lease terms. At September 30, 2000 and December 31, 1999, $372,256
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 to the Partnership by the property management
companies) and interest receivable on short-term investments. The increase in
accounts receivable of $88,713 from December 31, 1999 to September 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 $58,444 from December 31, 1999 to
September 30, 2000 is primarily due to payments of 1999 property taxes offset by
accruals made for 2000 property taxes for the Partnership's properties.
During the three months ended September 30, 2000, the Partnership made Cash
Distributions from Operations of $561,942, relating to the three-month period
ended June 30, 2000. Subsequent to September 30, 2000, the Partnership made the
regular Quarterly Cash Distributions from Operations of $561,942, relating to
the three months ended September 30, 2000. The funds distributed were derived
from the net cash flow generated from operations of the Partnership's
9
<PAGE> 10
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 $104,034 for the nine months ended September 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 Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2000 1999 1999 2000
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Paddock Place Shopping Center
Rental income $337,585 $285,465 $984,416 $902,100
Bad debt expense -0- 3,729 -0- 5,476
Average occupancy 96% 89% 97% 90%
Germantown Collection Shopping Center
Rental income $296,367 $282,201 $900,794 $845,743
Bad debt expense -0- -0- -0- -0-
Average occupancy 100% 99% 100% 100%
1202 Industrial Place
Rental income $167,900 $173,458 $504,928 $538,261
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 $82,316 for the nine months ended September 30, 2000 as compared to
the same period in 1999. Increases in base rents and increases in tenant
reimbursements for common area maintenance costs and real estate taxes were due
primarily to higher occupancy.
Occupancy at Paddock Place averaged 96% for the third quarter, a two
percent decrease from the previous quarter. One tenant who occupied 1,935 square
feet paid a termination fee to the Partnership and terminated its lease
effective July 31, 2000. One tenant who occupies 1,304 square feet renewed its
lease for three years and a tenant who occupies 4,065 square feet renewed its
lease for two years.
Rental income at the Germantown Collection in Germantown (Memphis),
Tennessee increased $55,051 for the nine months ended September 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 remained 100% during the quarter. A tenant who
occupies 1,200 square feet assigned its lease to a new tenant.
Rental income at 1202 Industrial Place in Grand Prairie (Dallas), Texas
decreased $33,333 for the nine months ended September 30, 2000 as compared to
the same period in 1999 primarily due
10
<PAGE> 11
to a decrease in tenant reimbursements for common area costs, real estate taxes
and insurance costs.
Occupancy at 1202 Industrial Place remained 100% during the 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 of Texas' governing
agency. The Partnership has entered into 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 of Texas considers the
Partnership responsible for the contamination. Under Texas law, the Partnership
will not be responsible for investigation or the 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 which 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 in Pineville (Charlotte), North Carolina decreased $485,620 for
the nine months ended September 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 its 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. 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 legal fees.
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 Festival Shopping Center.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ------------------------
2000 1999 2000 1990
-------- -------- -------- ----------
<S> <C> <C> <C> <C>
Tower Place Shopping Center
Rental income $274,964 $448,250 $889,002 $1,374,622
Gain on termination of lease -0- -0- 898,562 -0-
Bad debt expense (recovery) 26 918 10,264 918
Average occupancy 77% 98% 77% 98%
</TABLE>
The Partnership's share of income from the joint venture increased
$116,377 for the nine months ended September 30, 2000 as compared to the same
period in 1999 for the reasons stated above.
11
<PAGE> 12
Occupancy at Tower Place averaged 77% for the third quarter, a one percent
increase over the previous quarter. Construction continued on the space that
will be occupied by Bally Total Fitness, and it is anticipated that they will
open for business in the first quarter of 2001. Subsequent to the end of the
third quarter of 2000, a lease was signed for the 9,600 square foot space
previously occupied by Famous Footwear. This tenant will begin paying rent in
January 2001. A tenant who occupied 1,600 square feet vacated its space prior to
the expiration of its lease.
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 $15,795
for the nine months ended September 30, 2000 as compared to the same period in
1999. The increase is due to higher landscaping costs and real estate taxes
offset by reductions in repair and maintenance costs. 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 utility costs being partially offset by decreases
in repair and maintenance costs. Property operating expenses at 1202 Industrial
Place decreased, with decreases in repair and maintenance costs partially offset
by increases in 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 for the nine months ended September 30,
2000 as compared to the same period in 1999, primarily due to increases in
investor services expenses, telephone expenses and salaries and benefits.
Words or phrases when used in this Form 10-Q or other filings with the
Securities and Exchange Commission, such as "does not believe" and "believes,"
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, security deposits and state excise tax payable. 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, 1989. (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, 1989. (File No.
0-17183)
10a Marketing Agreement with Murray Realty Investors IX, Inc. for
leasing services described in the Marketing Agreement commencing
on August 4, 1998 at 1202 Industrial Place. Reference is made to
Exhibit 10a to the Form 10-Q for the Quarter ended September 30,
1998 filed with the Securities and Exchange Commission on November
6, 1998. (File No. 0-27283)
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.
(b) Reports on Form 8-K filed during the quarter ended September 30,
2000:
None
14
<PAGE> 15
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: November 9, 2000 By: /s/ Mitchell Armstrong
---------------------------------
Mitchell Armstrong
President
Chief Financial Officer
<PAGE> 16
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, 1989. (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, 1989. (File No.
0-17183)
10a Marketing Agreement with Murray Realty Investors IX, Inc. for
leasing services described in the Marketing Agreement commencing
on August 4, 1998 at 1202 Industrial Place. Reference is made to
Exhibit 10a to the Form 10-Q for the Quarter ended September 30,
1998 filed with the Securities and Exchange Commission on November
6, 1998. (File No. 0-27283)
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>
