5
<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION Washington, D.C.
20549
FORM 10-Q
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended June 30, 1999
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 Number: 0-
18149
DEAN WITTER REALTY YIELD PLUS II,
L.P.
(Exact name of registrant as specified in governing
instrument)
Delaware 13-
3469111
(State of organization)
(IRS Employer
Identification No.)
2 World Trade Center, New York, NY
10048
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code:
(212) 392-1054
Former name, former address and former fiscal year,
if changed since last report: not applicable
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>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DEAN WITTER REALTY YIELD PLUS II, L.P.
BALANCE SHEETS
<CAPTION>
June
30, December 31,
1999
1998
<S>
<C>
<C>
ASSETS
Investment in unconsolidated partnership
$14,948,206
$13,923,431
Cash and cash equivalents
1,666,004
2,062,767
Other assets
16,935
10,050
$16,631,145 $15,996,248
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $
47,031 $
81,320
Partners' capital:
General partners
3,511,144
3,444,225
Limited partners ($500 per Unit, 173,164 Units
issued) 13,072,970
12,470,703
Total partners' capital
16,584,114
15,914,928
$16,631,145 $15,996,248
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
INCOME STATEMENTS
Three and six months ended June 30, 1999 and 1998
<CAPTION>
Three
months ended Six months ended
June 30,
June 30,
1999
1998 1999 1998
<S> <C> <C> <C>
<C>
Revenues:
Equity in earnings of
unconsolidated $ $12,575,1 $
$13,140,9
Partnerships 270,703 28
639,009 95
Rental -
- -
Interest and other 41,869 436,113
75,179 914,443
165,740 214,010
312,572
714,188
13,176,98 14,269,44
1 8
Expenses:
Property operating -
- -
Depreciation and - 228,187
- - 426,614
amortization 22,031
45,002
General and administrative 58,116 122,441
42,931 116,421
22,031
329,234
45,002 665,476
Net income $ $12,847,7 $ $13,603,9
290,541 47
669,186 72
Net income allocated to:
Limited partners $ $12,831,1 $ $13,511,7
General partners 261,487 58
602,267 60
29,054 16,589
66,919 92,212
$ $12,847,7 $ $13,603,9
290,541 47
669,186 72
Net income per Unit of
limited $ $ $ $
partnership interest 1.51 74.10
3.48 78.03
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
STATEMENT OF PARTNERS' CAPITAL
Six months ended June 30, 1999
<CAPTION>
Limited
General
Partners
Partners Total
<S>
<C> <C>
<C>
Partners' capital at January 1, 1999
$12,470,703
$3,444,225 $15,914,928
Net income 602,267
66,919
669,186
Partners' capital at June 30, 1999 $13,072,970
$3,511,144 $16,584,114
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
STATEMENTS OF CASH FLOWS
Six months ended June 30, 1999 and 1998
<CAPTION>
1999
1998 <S>
<C>
<C>
Cash flows from operating activities:
Net income $
669,186
$13,603,972
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Equity in earnings of unconsolidated partnerships
(639,009)
(13,140,995)
Depreciation and amortization -
122,441
Decrease in deferred assets -
18,624
(Increase) decrease in other assets (6,885)
408,854
(Decrease) increase in accounts payable
and other liabilities (34,289)
14,558
Net cash (used in) provided by operating activities
(10,997)
1,027,454
Cash flows from investing activities:
Distributions from unconsolidated partnerships
663,360
32,901,416
Contributions to unconsolidated partnerships
(1,049,126)
(171,214)
Net cash (used in) provided by investing
activities (385,766)
32,730,202
Cash flows used in financing activities:
Cash distributions -
(33,559,376)
(Decrease) increase in cash and cash equivalents
(396,763) 198,280
Cash and cash equivalents at beginning of period
2,062,767 2,680,667
Cash and cash equivalents at end of period
$1,666,004 $ 2,878,947
Supplemental disclosure of non-cash investing
activities: Reclassification of real estate held
for sale:
Decrease in real estate:
Building and improvements $ -
$
7,304,626
Accumulated depreciation -
(1,310,547)
Increase in real estate held for sale $ -
$ 5,994,079
See accompanying notes to financial statements.
</TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
Notes to Financial Statements
1. The Partnership
Dean Witter Realty Yield Plus II, L.P. (the
"Partnership") is a
limited partnership organized under the laws of
the State of Delaware in 1988. The Managing
General Partner of the Partnership is Dean
Witter Realty Yield Plus II Inc., which is wholly-
owned by Dean Witter Realty Inc. ("Realty").
The Partnership's records are maintained on the
accrual basis of accounting for financial and tax
reporting purposes.
The Partnership's interests in GCGA Limited
Partnership ("GCGA"), the partnership which owns the
the One Congress Street property, and DW Michelson
Associates, the partnership which owned the
Michelson property (sold 4/98), are accounted for on
the equity method.
Net income per Unit amounts were calculated by
dividing net income allocated to Limited
Partners, in accordance with the Partnership
Agreement, by the weighted average number of Units
outstanding.
In the opinion of management, the
accompanying financial
statements, which have not been audited, include all
adjustments necessary to present fairly the results
for the interim periods. Except for the gain on
the sale of the Michelson property included in
equity in earnings of unconsolidated partnerships in
the second quarter of 1998, such adjustment
consists only of normal recurring accruals.
These financial statements should be read in
conjunction with the annual financial statements and
notes thereto included in the Partnership's
annual report on Form 10-K filed with the
Securities and Exchange Commission for the year
ended December 31, 1998. Operating results of
interim periods may not be indicative of the
operating results for the entire year.
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
Notes to Financial Statements
2. Investments in Unconsolidated Partnerships
Summarized financial information of GCGA is as
follows:
<CAPTION>
Three months
ended Six months
ended
June 30,
June 30,
1999 1998
1999 1998
<S> <C> <C> <C> <C>
Revenue $ $ $ $
3,694,33 2,657,868
7,673,21 5,153,769 9 3
Expenses:
Interest on second
mortgage loan 2,085,87 1,787,625
4,091,72 3,575,250
Other interest 2 0
Property operating 948,215 1,897,118
Depreciation and 946,737 1,893,93
amortization 1,755,334 0 2,947,769
1,744,45
0 459,082 3,443,41
918,164
5
568,856
1,254,97
0
5,345,91 4,950,256 10,684,0
9,338,301 5 35
Net loss $(1,651, $(2,292,3 $(3,010,
$(4,184,5
576) 88) 822) 32)
GCGA's second mortgage loan is a participating
mortgage loan from the Partnership (42%) and Dean
Witter Realty Yield Plus L.P., an affiliated public
partnership (58%). The Partnership does not
recognize interest income on its share of the
second mortgage
loan; instead, the Partnership recognizes its share
of GCGA's earnings exclusive of GCGA's interest
expense on the second mortgage loan.
</TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
Notes to Financial Statements
3. Related Party Transactions
An affiliate of Realty provided property management
services for the two properties sold during 1998.
The affiliate received property management fees of
$33,255 for the six months ended June 30, 1998 for
these services. This amount is included in property
operating expenses.
Realty performs administrative functions,
processes investor transactions and prepares tax
information for the Partnership. Effective January
1, 1999, the affiliate reduced fees for these
services because of the greatly decreased level of
Partnership activity. For the six-month periods
ended June 30, 1999 and 1998, the Partnership
incurred approximately $18,600 and $86,000,
respectively, for these services. These amounts are
included in general and administrative expenses.
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF
FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership completed a $86,582,000 public
offering in 1990. The Partnership has no plans to
raise additional capital.
As a result of property sales in 1998, Partnership
cash flow from operations decreased during the six
months ended June 30, 1999 compared to 1998.
The Partnership's interest in the partnership which
owns the One Congress Street property ("GCGA") is
the Partnership's sole property interest. GCGA
was negotiating the terms of an agreement to
sell the property to an unaffiliated third party;
however, the third party has withdrawn its offer to
purchase the property. As a result, GCGA will
remarket the property for sale beginning in the
third quarter of 1999. There can be no assurance that
the property will be sold.
Currently, the vacancy rate in the downtown Boston
office market, the location of One Congress
Street, is approximately 7% and rental rates in
this market are stable. There is no new
significant construction in this market. During the
three months ended June 30, 1999, occupancy at both
the parking garage and the office space at the
property remained at 100%. The retail space, which is
not a significant portion of the overall space,
remained substantially vacant. No significant leases
expire before 2003.
In 1989, the Partnership and Dean Witter Realty Yield
Plus, L.P., an affiliate, (collectively, the "New
GP") made a participating second mortgage loan to
GCGA. On October 27, 1997, the loan was
restructured and the New GP became the general
partner of GCGA.
Subsequently, the New GP identified several areas of
the parking garage at the One Congress Street
property which were in need of repair. In 1998, the
New GP had GCGA fund repairs for several of the
problems at the garage that the New GP believed
required immediate attention, and hired an engineering
firm to investigate the overall garage space to
determine what additional repairs are required.
During the first quarter of 1999, the engineering firm
issued its preliminary report to GCGA, and during
the second quarter of 1999, a second
engineering firm reviewed the
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
first firm's work for reasonableness and completeness.
The New GP is currently working with the engineering
firms to determine and plan the necessary repair work.
Based on the engineers' reports, the New GP
believes that the cost of such repairs could be
significant. However, the New GP does not expect to
begin any repair work until 2000. GCGA will fund
the repair costs by borrowing additional funds from
the New GP.
The Partnership will fund its 42% share of the
additional GCGA loan from its cash reserves.
However, if the property is sold, any costs which
have not been funded by the time of the closing of
the sale may, instead, be deducted from the
property's sale price.
During the three and six months ended June 30,
1999, the One Congress Street property generated
positive cash flow from operations, and it is
anticipated that the property will continue to do
so during the remainder of 1999.
During the three and six months ended June 30,
1999, the Partnership's contributions to GCGA to fund
its share of tenant improvements and leasing
commissions at the One Congress Street property and
the Partnership's cash used in operations exceeded
its distributions from GCGA. This deficiency was
funded from Partnership cash reserves.
The Partnership did not pay any cash distributions
during the six months ended June 30, 1999. Generally,
future cash distributions will be paid from cash
reserves and proceeds received from the sale of the
One Congress Street property.
Except as discussed above and in the financial
statements, the Managing General Partner is not
aware of any trends or events, commitments or
uncertainties that may have a material impact on
liquidity.
Operations
Fluctuations in the Partnership's operating results
for the threeand six-month periods ended June 30,
1999 compared to 1998 are primarily attributable to
the following:
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
Rental revenue, property operating expenses and
depreciation and amortization expenses decreased
in 1999 compared to 1998 primarily as a result of
the sale of the Century Alameda property in August
1998.
Equity in earnings of unconsolidated partnerships
decreased in 1999 compared to 1998 due to the sale
of the Michelson property
in April 1998. This decrease was partially offset
by increased earnings from the Partnership's
investment in GCGA, primarily as a result of an
increase in occupancy at the office space at the One
Congress Street property from 70% in 1998 to 100% in
1999.
During the three and six-month periods ended June
30, 1999,
interest and other revenues decreased by
approximately $110,000 due to interest earned in
1998 on the proceeds from the Michelson sale before
such proceeds were distributed to the Limited
Partners
General and administrative expenses decreased in 1999
compared to 1998 primarily due to the sales of the
Michelson and Century Alameda property interests.
There were no other individually significant factors
which caused changes in revenues or expenses.
Inflation
Inflation has been consistently low during the
periods presented in the financial statements and,
as a result, has not had a significant
effect on the operations of the Partnership or its
properties.
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits.
An exhibit index has been filed as
part of this Report on Page E1.
b) Reports on Form 8-K.
None.
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
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.
DEAN WITTER REALTY
YIELD PLUS
II, L.P.
By: Dean Witter Realty
Yield Plus
II Inc.
Managing General
Partner
Date: August 12, 1999 By: /s/E. Davisson
Hardman, Jr.
E. Davisson Hardman,
Jr.
President
Date: August 12, 1999 By: /s/Charles M.
Charrow
Charles M. Charrow
Controller
(Principal
Financial and Accounting Officer)
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
Quarter Ended June 30, 1999
Exhibit Index
<CAPTION>
Exhibit No. Description
<S> <C>
27 Financial Data Schedule
E1
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Registrant is a limited partnership which invests in a real estate joint
venture. In accordance with industry practice, its balance sheet is un
classified. For full information, refer to the accompanying unaudited
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,666,004
<SECURITIES> 0
<RECEIVABLES> 16,935
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,631,145<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,584,114<F2>
<TOTAL-LIABILITY-AND-EQUITY> 16,631,145<F3>
<SALES> 0
<TOTAL-REVENUES> 714,188<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 45,002<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 669,186
<INCOME-TAX> 0
<INCOME-CONTINUING> 669,186
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 669,186
<EPS-BASIC> 3.48<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include an investment
in unconsolidated partnership of $14,948,206.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of $47,031.
<F4>Total revenue includes equity in earnings of unconsolidated partnership
of $639,009 and other revenue of $75,179.
<F5>Other expenses consist of general and administrative expenses.
<F6>Represent net income per Unit of limited partnership interest.
</FN>
</TABLE>
