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 March 31,
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>
March
31,
December 31,
1999
1998 ASSETS
<S>
<C>
<C>
Investment in unconsolidated partnerships
$14,677,503
$13,923,431
Cash and cash equivalents
1,684,078
2,062,767
Other assets
9,424
10,050
$16,371,005 $15,996,248
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and other liabilities $
77,432 $
81,320
Partners' capital:
General partners
3,482,090
3,444,225
Limited partners ($500 per Unit, 173,164 Units
issued) 12,811,483
12,470,703
Total partners' capital
16,293,573
15,914,928
$16,371,005 $15,996,248
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
INCOME STATEMENTS OF INCOME
Three months ended March 31, 1999 and 1998
<CAPTION>
1999
1998 <S>
<C>
<C>
Revenues:
Equity in earnings of unconsolidated partnerships
$ 368,306
$ 565,867
Rental -
478,330
Interest and other
33,310
48,270
401,616
1,092,467
Expenses:
Property operating -
198,427
Depreciation and amortization -
64,325
General and administrative
22,971
73,490
22,971 336,242
Net income $
378,645 $
756,225
Net income allocated to:
Limited partners $
340,780 $
680,602
General partners
37,865
75,623
$
378,645 $ 756,225
Net income per Unit of limited partnership interest
$ 1.97 $ 3.93
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
STATEMENT OF PARTNERS' CAPITAL
Three months ended March 31, 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 340,780
37,865
378,645
Partners' capital at March 31, 1999
$12,811,483
$3,482,090 $16,293,573
See accompanying notes to financial statements.
</TABLE>
<TABLE>
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
STATEMENTS OF CASH FLOWS
Three months ended March 31, 1999 and 1998
<CAPTION>
1999 1998 <S>
<C>
<C>
<C>
Cash flows from operating activities:
Net income $
378,645 $
756,225
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of unconsolidated
partnerships
(368,306)
(565,867)
Depreciation and amortization -
64,325
Decrease in other assets
626
333,798
(Decrease)increase in accounts payable and other
liabilities (3,888)
30,094
Net cash provided by operating activities
7,077 618,575
Cash flows from investing activities:
Distributions from unconsolidated partnerships
466,997
630,000
Contributions to unconsolidated partnerships
(852,763)
(153,925)
Net cash (used in) provided by investing activities
(385,766)
476,075
Cash flows used in financing activities:
Cash distributions -
(601,264)
(Decrease) increase in cash and cash equivalents
(378,689) 493,386
Cash and cash equivalents at beginning of period
2,062,767 2,680,667
Cash and cash equivalents at end of period
$1,684,078 $3,174,053
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,
consisting only of normal recurring
accruals, necessary to present fairly
the results for the interim periods.
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>
Quarter ended March 31,
1999
1998 <S>
<C> <C>
Revenue $
3,978,874 $
2,495,901
Expenses:
Interest on second mortgage loan 2,005,848
1,787,625
Other interest 947,193
948,903
Property operating 1,698,965
1,192,435
Depreciation and amortization 686,114
459,082
5,338,120 4,388,045
Net loss
$(1,359,246)
$(1,892,144)
GCGA's second mortgage loan is the
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 $22,825 for
the three months ended March 31, 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. During the three-month
periods ended March 31, 1999 and 1998,
the Partnership incurred approximately
$11,500 and $53,000, 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 three months ended
March 31, 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 has
accepted a bid from an unaffiliated
third party to purchase the property,
and the parties are currently negotiating
the terms of a purchase and sale agreement.
The limited partners of GCGA have 30 days
in which they can match the third party
offer to buy the property. However, 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 March 31,
1999, occupancy of the office space at
the property increased to 100% as an
agency of the government of the
Commonwealth of Massachusetts (the
"Agency") began occupying 18% of the
space in January 1999 under a five-year
lease. The lease of the Government
Services Administration ("GSA"), which
occupies the remaining 82% of the office
space and a portion of the property's
retail space, expires no earlier than
August 1, 2003. The lease with Kinney
Systems, Inc. for all of the property's
parking lot space also expires in 2003.
The remainder of the retail space,
which is not a significant portion
of the overall space, remains
substantially vacant.
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
The GSA lease requires GCGA to fund tenant
improvements of up to $2,580,000 and
leasing commissions of up to $1,409,000.
GSA is required to repay GCGA for tenant
improvement costs that GCGA pays over
$1,280,000 (plus interest at 8%) in
monthly installments over five years.
The maximum amount of the Partnership's
share of these tenant-related
expenditures (42%) is
approximately $1,675,000 (of which
$546,000 would be repaid by GSA, as
described above). The Partnership has
paid approximately $1,576,000 of such
expenditures through March 31, 1999 (of
which $630,000 was paid during the first
quarter of 1999).
During the three months ended March 31,
1999, the Partnership also contributed
approximately $197,000 to GCGA for the
Partnership's share of the costs needed to
substantially complete the tenant
improvements and fund the leasing
commissions relating to Agency lease. The
Partnership's share of GCGA's total
tenant-related capital expenditures
relating to the Agency lease
approximated $245,000.
The Partnership and Dean Witter Realty
Yield Plus, L.P., an affiliate,
(collectively, the "New GP") became the
general partners of GCGA on October 21,
1997. 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 all of the garage's space to
determine what additional repairs are
required to safely operate the garage.
During the first quarter of 1999, the
engineering firm issued its preliminary
report to GCGA, and the New GP hired a
second engineering firm to review the
first firm's work for reasonableness and
completeness. Once
the engineers' reports are final, the New
GP will put out the recommended repair
work to contractors for bids. Based on
the initial report, the New GP believes
that the cost of such repairs could be
significant. If
<PAGE>
DEAN WITTER REALTY YIELD PLUS II, L.P.
the prospective buyer of the One
Congress Street property agrees to
acquire the property "as is", the repair
costs could be funded by reducing the
sale price of the property. To the
extent that GCGA is required to fund
the repair costs itself, GCGA will
require the Partnership to fund its 42%
share of such costs.
During the quarter ended March 31,
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 first quarter of 1999, the
Partnership's contributions to GCGA and
the Partnership's costs of operations
exceeded its distributions from GCGA. This
deficiency was funded from Partnership cash
reserves.
The Partnership did not pay any cash
distributions during the three
months ended March 31, 1999.
Generally, future cash distributions will
be paid from proceeds received from the
sale of the One Congress Street property
and cash reserves.
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 three months ended March
31, 1999 compared to 1998 are primarily
attributable to the following:
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.
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: May 14, 1999 By:
/s/E. Davisson
Hardman, Jr.
E. Davisson
Hardman, Jr.
President
Date: May 14, 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 March 31, 1999
Exhibit Index
<CAPTION>
Exhibit No.
Description
27 Financial
<S> <C>
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
unclassified. For full information, refer to the accompanying unaudited
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,684,078
<SECURITIES> 0
<RECEIVABLES> 9,424
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,371,005<F1>
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 16,293,573<F2>
<TOTAL-LIABILITY-AND-EQUITY> 16,371,005<F3>
<SALES> 0
<TOTAL-REVENUES> 401,616<F4>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 22,971<F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 378,645
<INCOME-TAX> 0
<INCOME-CONTINUING> 378,645
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 378,645
<EPS-PRIMARY> 1.97<F6>
<EPS-DILUTED> 0
<FN>
<F1>In addition to cash and receivables, total assets include an investment in
unconsolidated partnership of $14,677,503.
<F2>Represents partners' capital.
<F3>Liabilities include accounts payable and other liabilities of $77,432.
<F4>Total revenue includes equity in earnings of unconsolidated partnership of
$368,306 and other revenue of $33,310.
<F5>Other expenses cosist of general and administrative expenses.
<F6>Represent net income per Unit of limited partnership interest.
</FN>
</TABLE>
