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 June 30, 1998
{ } 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 June 30, 1998 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
<TABLE>
<CAPTION>
June 30,
1998 December 31,
Unaudited 1997
Assets
<S> <C> <C>
Investment in real estate $26,703,638 $ 26,789,804
Cash and cash equivalents 800,733 887,200
Accounts receivable 314,760 283,112
Financing costs, less accumulated amortization
of $24,000 and $21,000, respectively 6,003 9,003
$27,825,134 $ 27,969,119
Liabilities and Partners' Capital
Accounts payable $ 19,481 $ 24,932
Due to affiliate 75,092 68,890
Real estate taxes payable 283,112 283,112
Note payable 2,861,000 3,061,000
3,238,685 3,437,934
Partners' Capital
General Partner (63,569) (64,122)
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,392,800 units outstanding 24,649,918 24,595,207
Subordinated Limited Partner 100 100
24,586,449 24,531,185
$27,825,134 $ 27,969,119
</TABLE>
See accompanying notes to financial statements
1
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Revenues
<S> <C> <C> <C> <C>
Gain from sale of property $ - $2,708,848 $ - $2,708,848
Parking lot rental 690,782 685,559 1,147,780 1,493,752
Interest income 6,402 9,313 13,329 13,425
697,184 3,403,720 1,161,109 4,216,025
Expenses
Administrative, due to affiliate 23,183 20,083 48,159 44,054
Professional fees 8,362 7,166 20,891 11,500
Management fees, due to affiliate 51,507 59,065 102,968 117,325
Interest expense 62,921 73,634 127,967 145,206
Depreciation 43,083 43,083 86,166 86,583
Amortization 1,500 1,500 3,000 4,365
190,556 204,531 389,151 409,033
Net earnings $506,628 $3,199,189 $ 771,958 $3,806,992
Net earnings per unit of assignee
and limited partnership interest-basic $ 0.36 $ 2.27 $ 0.55 $ 2.71
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
Statements of Partners' Capital
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
<S> <C> <C> <C> <C>
Balance at December 31, 1997 $24,595,207 $ 100 $ (64,122) $24,531,185
Net earnings 764,238 - 7,720 771,958
Distributions to partners (709,527) - (7,167) (716,694)
Balance at June 30, 1998 $24,649,918 $ 100 $ (63,569) $24,586,449
Balance at December 31, 1996 $28,886,009 $ 100 $ (20,782) $28,865,327
Net earnings 3,768,922 - 38,070 3,806,992
Distributions to partners (870,488) - (8,792) (879,280)
Balance at June 30, 1997 $31,784,443 $ 100 $ 8,496 $31,793,039
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1998 June 30, 199
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 771,958 $ 3,806,992
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 86,166 86,583
Amortization 3,000 4,365
Gain from sale of property - (2,708,848)
Changes in assets and liabilities
Increase in accounts receivable (31,648) (87,847)
Decrease in accounts payable (5,451) (80,421)
Increase (decrease) in due to affiliates 6,202 (37,820)
Net cash provided by operating activities 830,227 983,004
Cash flows from investing activities -
sale of property, net - 7,324,118
Cash flows from financing activities
Distributions to partners (716,694) (879,280)
Repayment of note payable (200,000) -
Net cash used in financing activities (916,694) (879,280)
Net increase (decrease) in cash and cash equivalents (86,467) 7,427,842
Cash and cash equivalents
Beginning of period 887,200 694,405
End of period $ 800,733 $ 8,122,247
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
June 30, 1998
(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
1997 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 June 30, 1998 and December 31, 1997.
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>
June 30, 1998 December 31, 1997
<S> <C> <C>
Land $21,857,657 $21,857,657
Building 5,583,532 5,583,532
27,441,189 27,441,189
Less: accumulated depreciation (737,551) (651,385)
Total $26,703,638 $26,789,804
</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 $51,507 and $59,065
for advising the Fund and managing its investments during the three months ended
June 30, 1998 and 1997, respectively, and $102,968 and $117,325 during the six
months ended June 30, 1998 and 1997, 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.
Note 5 - Note payable
On July 18, 1994 the Fund closed on its $5.6 million line of credit agreement
with a bank. Borrowings under the credit agreement bear interest on the
outstanding principal amount at the bank's prime rate plus 1% per annum.
Effective July 18, 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 June 30, 1998) and the commitment was extended
-5-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
June 30, 1998
(Unaudited)
Note 5 - Note payable (continued)
for an additional three years, until July 18, 2000. The principal balance at
June 30, 1998 and December 31, 1997 was $2,861,000 and $3,061,000, respectively.
The collateral security provision of the loan agreement provides for the
assignment of the Fund's rights as a lessor to its interest in the parking lot
leases, contracts and income. Interest paid on the outstanding principal balance
totaled $62,921 and $73,634 for the three months ended June 30, 1998 and 1997,
respectively, and $127,967 and $145,206 for the six months ended June 30, 1998
and 1997, 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 August 13, 1998, the Fund made a cash distribution totaling $367,094 of which
99% was allocated to assignee and limited partners. This distribution was
derived from funds provided by operating activities. Assignee and limited
partners received a cash distribution of $.26 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
At June 30, 1998, the Fund had a working capital position that included
cash and cash equivalents of $800,733 and accounts payable of $94,573. Cash and
cash equivalents decreased $53,308 during the second quarter of 1998. This
decrease represents the net effect of $513,786 in cash provided by operating
activities, distributions to investors of $367,094 and a $200,000 repayment of
the note payable.
On July 18, 1994, the Fund closed on its $5.6 million line of credit
agreement with a bank. Borrowings under the credit agreement bear interest on
the outstanding principal amount at the bank's prime rate plus 1% per annum.
Effective July 18, 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 June 30, 1998) and the commitment was extended
for an additional three years, until July 18, 2000. The principal balance at
June 30, 1998 and December 31, 1997 was $2,861,000 and $3,061,000, 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 August 13, 1998, the Fund made a distribution to investors of
$367,094 of which 99% was allocated to holders of assignee and limited
partnership units in accordance with the Partnership Agreement. This
distribution was derived from funds provided by operating activities.
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.
The gain from the sale of the Seattle property totaled $2,708,848 at June
30, 1997. There have been no property sales in 1998.
Parking lot rental income totaled $690,782 and $685,559 during the
three months ended June 30, 1998 and 1997, respectively, and $1,147,780 and
$1,493,752 during the six months ended June 30, 1998 and 1997, respectively. The
decrease in income for the six months ended June 30, 1998, is primarily the
result of two activities. The sale of the Seattle property decreased base rental
income by $152,476, and the unusually high percentage rent earned at the Atlanta
facility in 1997, as discussed below, was not duplicated in 1998.
During the six months ended June 30, 1998 percentage rents earned at
the Atlanta, Denver, Phoenix and San Francisco facilities totaled $235,947.
During the six months ended June 30, 1997 percentage rents earned at the
Atlanta, Dallas-Metro, Phoenix and San Francisco facilities totaled $454,410.
The percentage rent earned at the Atlanta facility in 1997 ($283,908) is largely
attributable to an increase in parking lot revenues brought about by the 1996
Olympic Games. The facility's close proximity to the Olympic Games' Centennial
Park permitted it to earn substantial revenues before and during the Olympic
events. The percentage rent earned at the Atlanta facility in 1998, of $1,669,
is more indicative of the recurring percentage rent amount that may be earned at
this facility.
Expenses, net of depreciation and amortization, decreased $13,975 and
$18,100 during the three and six months ended June 30, 1998, when compared to
1997. The change is primarily due to the sale of the Seattle property which has
reduced management fees, and the reduction of the interest due on the note
payable.
-7-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
In April, the Fund signed a contract for the sale of its San Francisco
Property. The prospective buyer is interested in the site for future
development. The sale of the property is contingent upon the buyer receiving
certain development approvals. There is no assurance that the buyer will receive
all of the development approvals. However, if the sale occurs, it is likely to
take place during the first quarter of 1999.
The Fund in accordance with its original investment strategy, continues
to examine opportunities for disposition of its facilities. While it was
originally anticipated that the highest returns would be obtained from property
sales to buyers who desired sites for near-term development, management now
believes that certain properties could be sold at substantial gains based on
their parking economics.
-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: 8/10/98 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company II, Inc.
General Partner
DATE: 8/10/98 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company II, Inc.
General Partner
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with legend, if applicable)
</LEGEND>
<CIK> 0000871014
<NAME> Realty Parking Properties II L.P.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 800,733
<SECURITIES> 0
<RECEIVABLES> 314,760
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,115,493
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,825,134
<CURRENT-LIABILITIES> 377,685
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 27,825,134
<SALES> 0
<TOTAL-REVENUES> 1,161,109
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 261,184
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 127,967
<INCOME-PRETAX> 771,958
<INCOME-TAX> 0
<INCOME-CONTINUING> 771,958
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 771,958
<EPS-PRIMARY> 0.000
<EPS-DILUTED> 0.000
</TABLE>
