FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
(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, 1997
{ } 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, 1997 Commission file number 000-20147
Realty Parking Properties II L.P.
(Exact Name of Registrant as Specified in its Charter)
Delaware 52-1710286
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
225 East Redwood Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
N/A
(Former Name, Former Address, and Former Fiscal Year,
if Changed Since Last Report.)
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>
REALTY PARKING PROPERTIES II L.P.
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statement
Balance Sheets 1
Statements of Operations 2
Statements of Partners' Capital 3
Statements of Cash Flows 4
Notes to Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-8
Part II. Other Information
Item 1. through Item 6. 9
Signatures 10
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
Assets
<S> <C> <C>
Investment in real estate $ 26,832,887 $ 31,457,822
Cash and cash equivalents 991,947 694,405
Other assets
Accounts receivable 304,754 307,582
Financing costs, less accumulated amortization
of $19,500 and $15,000, respectively 10,503 15,003
Organization and start-up costs, less accumulated
amortization of $52,229 and $50,863, respectively - 1,366
315,257 323,951
$ 28,140,091 $ 32,476,178
Liabilities and Partners' Capital
Accounts payable and prepaid rent $ 24,218 $ 123,891
Due to affiliates 152,496 121,206
Real estate taxes payable 304,754 304,754
Note payable 3,061,000 3,061,000
3,542,468 3,610,851
Partners' Capital
General Partner (63,458) (20,782)
Assignee and Limited Partnership
Interests - $25 state value per
unit, 1,392,800 units outstanding 24,660,981 28,886,009
Subordinated Limited Partner 100 100
24,597,623 28,865,327
$ 28,140,091 $ 32,476,178
</TABLE>
See accompanying notes to financial statements
1
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1997 1996 1997 1996
Revenues
<S> <C> <C> <C> <C>
Gain from sale of property $ - $ - $2,708,847 $ -
Parking lot rental 630,323 718,747 2,124,075 1,935,605
Interest income 14,456 3,750 27,882 9,757
644,779 722,497 4,860,804 1,945,362
Expenses
Administrative, due to affiliate 21,491 17,836 65,545 60,100
Professional fees 9,580 5,815 21,081 25,700
Management fees, due to affiliate 52,846 56,435 170,171 178,080
Interest expense 67,937 72,359 213,143 212,794
Depreciation of properties 43,083 43,472 129,666 130,416
Amortization of organization
and start-up costs and financing costs 1,500 4,110 5,866 12,330
196,437 200,027 605,472 619,420
Net earnings $ 448,342 $ 522,470 $4,255,332 $1,325,942
Net earnings per unit of assignee
and limited partnership interest $ 0.32 $ 0.37 $ 3.02 $ 0.94
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
Statements of Partners' Capital
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
<S> <C> <C> <C> <C>
Balance at December 31, 1996 $ 28,886,009 $ 100 $ (20,782) $ 28,865,327
Net earnings 4,212,779 - 42,553 4,255,332
Distributions to partners-operations (1,305,732) - (13,188) (1,318,920)
Distribution to partners-sale proceeds (7,132,075) - (72,041) (7,204,116)
Balance at September 30, 1997 $ 24,660,981 $ 100 $ (63,458) $ 24,597,623
Balance at December 31, 1995 $ 28,865,048 $ 100 $ (20,993) $ 28,844,155
Net earnings 1,312,683 - 13,259 1,325,942
Distributions to partners (1,175,157) - (11,871) (1,187,028)
Balance at September 30, 1996 $ 29,002,574 $ 100 $ (19,605) $ 28,983,069
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
Sept. 30, 1997 Sept. 30, 1996
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 4,255,332 $ 1,325,942
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 129,666 130,416
Amortization 5,866 12,330
Gain from sale of property (2,708,848) -
Changes in assets and liabilities
Decrease in accounts receivable 2,828 5,990
Increase (decrease) in accounts payable and prepaid rent (99,673) 80,414
Increase (decrease) in due to affiliates 31,290 (10,378)
Net cash provided by operating activities 1,616,461 1,544,714
Cash flows from investing activities
Sale of property, net 7,204,117 -
Additions to investment in real estate - (129,304)
Net cash provided by (used in) operating activities 7,204,117 (129,304)
Cash flows from financing activities
Proceeds from note borrowing - 116,000
Distributions to partners (8,523,036) (1,187,028)
Net cash used in financing activities (8,523,036) (1,071,028)
Net increase in cash and cash equivalents 297,542 344,382
Cash and cash equivalents
Beginning of period 694,405 367,930
End of period $ 991,947 $ 712,312
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 1 - The Fund and Basis of Preparation
The accompanying financial statements of Realty Parking Properties II
L.P. (the "Fund") do not include all of the information and note disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles. The unaudited interim financial statements
reflect all adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim periods presented. All such
adjustments are of a normal recurring nature. The unaudited interim financial
information should be read in conjunction with the financial statements
contained in the 1996 Annual Report.
Note 2 - Cash and Cash Equivalents
The Fund considers all highly liquid investments with original
maturities of three months or less to be cash equivalents. Cash and cash
equivalents consist of cash and a money market account and are stated at cost,
which approximates market value at September 30, 1997 and December 31, 1996.
Note 3 - Investment in Real Estate
Investment in real estate is stated at the lower of fair value or cost,
net of accumulated depreciation, and includes all related acquisition costs of
the properties, and is summarized as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
<S> <C> <C>
Land $21,857,657 $26,356,118
Building 5,583,532 5,583,532
27,441,189 31,939,650
Less: accumulated depreciation (608,302) (481,828)
Total $26,832,887 $31,457,822
</TABLE>
Depreciation of the garage structures is computed using the
straight-line method over 31.5 years for property placed in service prior to
January 1, 1994 and 39 years for property placed in service after January 1,
1994.
Note 4 - Related Party Transactions
The general partner earned an asset-based management fee of $52,846 and
$56,435 for advising the Fund and managing its investments during the three
months ended September 30, 1997 and 1996, respectively, and $170,171 and
$178,080 for the nine months ended September 30, 1997 and 1996, respectively.
This fee is equal to 0.75% of the Fund's capital contributions invested in
properties and 0.5% of capital contributions temporarily held awaiting
investment in properties. Additionally, the general partner will be reimbursed
for certain costs incurred relating to administrative services and expenses of
the Fund.
Pursuant to the terms of the Lease Agreement, Central Parking System,
Inc., the Advisor, was paid a termination fee of $283,949 and an advisory fee of
$120,000 in connection with the sale of the Seattle property.
-5-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
September 30, 1997
(Unaudited)
Note 5 - Note payable
On July 18, 1994 the Fund closed on its $5.6 million line of credit
agreement with a bank. The principal balance at September 30, 1997 and December
31, 1996 was $3,061,000 and is due and payable no later than July 17, 1997 under
the original terms of the note. Effective July 17, 1997, the line of credit
agreement was amended to a maximum $3.5 million capacity, the interest rate on
outstanding borrowings was reduced to the bank's prime rate (8.5% at September
30, 1997) and the commitment was extended for an additional three years, until
July 17, 2000. All other terms and the outstanding balance remain the same.
Interest incurred on the outstanding principal balance totaled $67,937
and $72,359 for the three months ended September 30, 1997 and 1996,
respectively, and $213,143 and $212,794 for the nine months ended September 30,
1997 and 1996, respectively.
Note 6 - Net Earnings Per Unit of Assignee and Limited Partnership Interest
Net earnings per unit of assignee and limited partnership interest as
disclosed on the Statements of Operations is based upon 1,392,800 units
outstanding.
Note 7 - Subsequent Event
On November 13, 1997 the Fund will make a cash distribution totaling
$349,600 of which 99% will be allocated to assignee and limited partners. This
distribution is derived from funds provided by operations during the quarter
ended September 30, 1997. Holders of Units will receive a cash distribution of
$.2485 per original $25 unit.
-6-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
Cash and cash equivalents decreased $7,130,300 during the third quarter
of 1997. This decrease represents the net effect of $633,456 in cash provided by
operating activities, payment of an advisory fee from the sale of the Seattle
property of $120,000, a second quarter distribution to investors of $439,640 and
a distribution to investors from the sale of the Seattle property of $7,204,116.
On July 18, 1994, the Fund closed on its $5.6 million line of credit
agreement with a bank. The principal balance at September 30, 1997 and December
31, 1996 was $3,061,000 and is due and payable no later than July 17, 1997,
under the original terms of the note. Effective July 17, 1997, the line of
credit agreement was amended to a maximum $3.5 million capacity, the interest
rate on outstanding borrowings was reduced to the bank's prime rate (8.5% at
September 30, 1997) and the commitment was extended for an additional three
years, until July 17, 2000. All other terms and the outstanding balance remain
the same. Interest incurred on the outstanding principal balance totaled $67,937
and $72,359 for the three months ended September 30, 1997 and 1996,
respectively, and $213,143 and $212,794 for the nine months ended September 30,
1997 and 1996, respectively.
The Fund has substantially completed all major capital improvements
contemplated for its facilities. The Fund's operations and its available line of
credit provide sufficient capital to satisfy the Fund's liquidity requirements.
On November 13, 1997, the Fund will make a distribution to investors of
$349,600 of which 99% will be allocated to holders of assignee and limited
partnership units in accordance with the Partnership Agreement. This
distribution is derived from cash provided by operating activities during the
quarter ended September 30, 1997.
Results of Operations
The Fund leases its facilities to parking operators under terms that
typically include a minimum rent calculated as a percentage of certain
acquisition costs. In addition, lessees are typically obligated to pay
percentage rent, calculated as a percentage of gross parking revenues.
On June 26, 1997, the Fund sold its 66,179 square foot parcel of land
in Seattle, Washington for $8,000,000. The Fund's investment in the property was
$4,495,268, net of accumulated depreciation of $3,195. The capital gain from the
sale totaled $2,708,848, net of expenses of $795,884. The sale of the Seattle
facility will reduce the Fund's annual rental revenues by $313,656, a 15%
decline on 1997 base rentals (excluding the effect of any percentage rents).
Additionally, the Fund's annual management fee expense will be reduced by
approximately $33,700.
Parking lot rental income totaled $630,323 and $718,747 during the
three months ended September 30, 1997 and 1996, respectively. The decrease is
primarily the result of the sale of the Seattle property. Parking lot rental
income totaled $2,124,075 and $1,935,605 during the nine months ended September
30, 1997 and 1996, respectively. The increase is primarily attributable to
increases in percentage rental payments, net of the effect of the sale of the
Seattle property.
During the nine months ended September 30, 1997, percentage rents were
earned at the Atlanta, Dallas- Metro, Nashville, Phoenix and San Francisco
facilities totaling $632,441. During the nine months ended September 30, 1996,
percentage rents were earned at the Atlanta, Nashville, Phoenix, San Antonio,
San Diego-Union and San Francisco facilities totaling $403,484. While the amount
of percentage rent earned at the Atlanta facility in 1997 ($283,908) and 1996
($81,013) is impressive, it is unlikely that this facility will realize
percentage rent in the foreseeable future. The facility's close proximity to the
Olympic Games' Centennial Park permitted it to earn substantial revenues during
the Olympic events. In addition, approximately 150 parking spaces had been
leased for two years to the Atlanta Committee for the Olympic Games (ACOG).
-7-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
Interest income increased during the three and nine months ended
September 30, 1997, when compared to 1996, due to higher average cash balances.
Expenses decreased during the three and nine months ended September 30, 1997,
when compared to 1996, primarily due to lower management fee, professional fees
and a reduction of amortization expense.
The Partnership, in accordance with its original investment strategy,
continues to examine opportunities for disposition of its facilities. While it
was initially anticipated that the highest level returns would be obtained from
property sales to buyers who desired the site for a near term development
project, it is evident that certain properties could be sold to investment
companies or R.E.I.T.S. that concentrate on parking properties generating
current cash flow.
-8-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities
Inapplicable
Item 3. Defaults upon Senior Securities
Inapplicable
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable
Item 5. Other Information
Inapplicable
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: None
b) Reports on Form 8-K: None
-9-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REALTY PARKING PROPERTIES II L.P.
DATE: 11/11/97 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company II, Inc.
General Partner
DATE: 11/11/97 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company II, Inc.
General Partner
-10-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000871014
<NAME> Realty Park
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLAR
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 991,947
<SECURITIES> 0
<RECEIVABLES> 304,754
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,296,701
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,140,091
<CURRENT-LIABILITIES> 481,468
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 28,140,091
<SALES> 0
<TOTAL-REVENUES> 4,860,804
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 392,329
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213,143
<INCOME-PRETAX> 4,255,332
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,255,332
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,255,332
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
