FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For Quarter Ended September 30, 1995 Commission file number 0-18494
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. II
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1436174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201-3RD AVENUE, SUITE 2200, SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)206-624-8100
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>
PART I ITEM I FINANCIAL STATEMENTS
<TABLE>
BALANCE SHEETS
<CAPTION>
Sept 30, December 31,
Unaudited 1995 1994
------------- ------------
<S> <C> <C>
Assets:
Cash and cash equivalents $ 331,658 $ 384,867
Storage centers, net 25,083,816 25,126,512
Other assets 159,062 174,768
Amortizable assets 126,701 179,874
------------- ------------
Total Assets $ 25,701,237 $25,866,021
============= ============
Liabilities and Partners' Equity (Deficit):
Liabilities
Accounts payable and other accrued expenses $ 323,147 $ 287,165
Construction payable 173,572
Line of credit 470,000
Notes payable 2,887,501 2,938,331
------------- ------------
Total Liabilities 3,680,648 3,399,068
------------- ------------
Partners' equity (deficit)
Limited partners 22,199,170 22,623,217
General partner (178,581) (156,264)
------------- ------------
Total Partners' Equity (Deficit) 22,020,589 22,466,953
------------- ------------
Total Liabilities and Partners'
Equity (Deficit) $ 25,701,237 $25,866,021
============= ============
</TABLE>
<TABLE>
STATEMENTS OF EARNINGS
<CAPTION>
Three Months Ended Sept 30,Nine Months Ended Sept 30,
--------------------------------------- -----------
Unaudited 1995 1994 1995 1994
----------------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenues:
Rental $1,132,784 $1,055,311 $3,197,443 $3,004,481
Interest income 2,950 5,968 6,723 14,076
----------- ----------- ----------- ----------
Total Revenues 1,135,734 1,061,279 3,204,166 3,018,557
----------- ----------- ----------- ----------
Expenses:
Operating and administrative 261,521 240,335 821,512 726,112
Property management fees 67,927 63,326 191,806 180,393
Depreciation 219,527 207,617 634,693 623,722
Real estate taxes 87,410 83,595 267,968 253,765
Interest 69,118 58,776 204,640 177,941
Amortization 17,724 16,413 53,173 50,489
----------- ----------- ----------- ----------
Total Expenses 723,227 670,062 2,173,792 2,012,422
----------- ----------- ----------- ----------
Earnings $ 412,507 $ 391,217 $ 1,030,374 1,006,135
=========== =========== =========== ==========
Earnings per unit of limited
partnership interest $ 3.40 $ 3.23 $ 8.50 $ 8.30
=========== =========== =========== ==========
Distributions per unit of limited
partnership interest $ 4.06 $ 3.91 $ 12.19 $ 11.72
=========== =========== =========== ==========
</TABLE>
<TABLE>
STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended Sept 30,
---------------------------
Unaudited 1995 1994
------------- -------------
<S> <C> <C>
Operating activities:
Earnings $ 1,030,374 $ 1,006,135
Adjustments to reconcile earnings to net cash
provided by operating activities:
Depreciation and amortization 687,866 674,211
Changes in operating accounts:
Other assets 15,706 (68,505)
Accounts payable and other accrued expenses 35,982 19,450
------------- ------------
Net cash provided by operating activities 1,769,928 1,631,291
------------- ------------
Investing activities:
Construction of and improvements to storage centers (765,569) (254,810)
------------ -------------
Financing activities:
Payment of loan costs (38,021)
Proceeds from line of credit 470,000
Payments on notes payable (50,830) (50,218)
Distributions to partners (1,476,738) (1,419,942)
------------- ------------
Net cash used in financing activities (1,057,568) (1,508,181)
------------- ------------
Decrease in cash and cash equivalents (53,209) (131,700)
Cash and cash equivalents at beginning of year 384,867 621,073
------------- ------------
Cash and cash equivalents at end of period $ 331,658 $ 489,373
============= ============
Supplemental disclosures of cash flow information:
Cash paid during period for interest $ 204,640 $ 177,941
============= ============
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Note A -- Financial Statements Preparation
The interim financial statements are unaudited but reflect all
adjustments that are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented.
These adjustments consist primarily of normal recurring accruals. The
interim financial statements should be read in conjunction with the
audited financial statements contained in the 1994 Annual Report. The
results of operations for interim periods will not necessarily be
indicative of the operating results for the fiscal year.
Distributions and earnings per unit of limited partnership
interest are based on the total amounts distributed and allocated to
limited partners divided by the number of units outstanding during the
period (115,110 for the three and nine months ended September 30, 1995 and
1994).
Note B _- Line of Credit
As of May 1, 1995, the Partnership converted the $1,500,000 line of
credit to an $850,000 non-revolving line of credit with an interest
rate of prime plus one half, maturing May 1, 1997. During the
quarter, the Partnership drew $55,000 on the line of credit in order
to fund the Chesapeake buildout. The available balance on this line
of credit is $380,000. The Partnership plans to pay off
this line of credit from operating cashflow over the next two years.
PART 1, ITEM 2 MANAGEMENTS' DISCUSSION AND ANALYSIS
Operating Results - The Partnership's rental revenues and earnings for
the third quarter increased $77,000 and $21,300, respectively over the same
quarter last year. The rental revenue increase resulted primarily from a
7% increase in the average rental rate per square foot. Although the
average occupancy for the Partnership decreased from 93% at September 30,
1994 to 90% at September 30, 1995, this decrease reflects the increased space
available due to the expansion at the Chesapeake storage center, which opened
April 1, 1995. The Orange, Sterling, and Chesapeake storage centers
contributed the largest revenue gains in your Partnership of $14,500,
$15,000 and $17,600 respectively.
Total expenses rose 8% for the third quarter of 1995 compared to the
same quarter in 1994. Operating and administrative expenses increased 8%
primarily due to 1) the increase in postage and supply costs, 2) increased
payout in tenant claims and foreclosure expenses and 3) the increase in
utility expenses at the Chesapeake storage center due to the new expansion.
Additionally, interest rates rose from 7.125% at September 30, 1994 to 8.5%
at September 30, 1995 on a commercial bank note totaling approximately
$1,215,000. This caused a $10,300 increase in interest expense from the
third quarter of 1994 to the third quarter of 1995.
Investing Activities - During late 1994 and 1995 the Partnership invested
approximately $1,200,000 to expand the Chesapeake storage center. This
project entailed the construction of two, one-story buildings totaling
approximately 26,000 square feet of storage space, as well as the addition of
2,400 square feet of RV parking. The expansion opened the beginning of April
and is currently 74% occupied.
Additionally, capital improvements year-to-date for the remaining storage
centers totaled $56,000 which included pavement work at the Sterling Heights
and Bellefield storage centers as well as security upgrades at the Orange
storage center. Planned improvements for the fourth quarter total
approximately $13,000. These improvements are important to maintaining the
value of your investment as well as its ability to generate revenue.
Financing Activities - As of May 1, 1995, the Partnership converted
the $1,500,000 line of credit to an $850,000 non-revolving line of
credit with an interest rate of prime plus one half, maturing May 1,
1997. During the quarter, the Partnership drew $55,000 on the line
of credit in order to fund the Chesapeake buildout. The Partnership
plans to pay off this line of credit from operating cashflow over the
next two years.
SIGNATURE
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.
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. II
Date: November 13, 1995 By: HARRELL BECK
--------------------------------------
Harrell Beck
Treasurer and Authorized Signatory
Shurgard General Partner, Inc.
General Partner
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 331,658
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 29,857,868
<DEPRECIATION> 4,488,289
<TOTAL-ASSETS> 25,701,237
<CURRENT-LIABILITIES> 793,147
<BONDS> 2,887,501
<COMMON> 0
0
0
<OTHER-SE> 22,020,589
<TOTAL-LIABILITY-AND-EQUITY> 25,701,237
<SALES> 0
<TOTAL-REVENUES> 3,204,166
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,969,152
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 204,640
<INCOME-PRETAX> 1,030,374
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,030,374
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,030,374
<EPS-PRIMARY> 8.50
<EPS-DILUTED> 8.50
</TABLE>
