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, 1999
{ } 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, 1999 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 7-9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 10
Part II. Other Information
Item 1. through Item 6. 10
Signatures 11
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Balance Sheets
<TABLE>
<CAPTION>
June 30,
1999 December 31,
(Unaudited) 1998
Assets
<S> <C> <C>
Investment in real estate $24,591,112 $ 26,617,472
Cash and cash equivalents 5,618,698 645,327
Accounts receivable 369,574 317,050
Financing costs, less accumulated amortization
of $30,003 and $27,000, respectively - 3,003
$30,579,384 $ 27,582,852
Liabilities and Partners' Capital
Accounts payable $ 11,209 $ 27,926
Due to affiliate 91,119 54,383
Real estate taxes payable 305,850 305,850
Note payable 2,561,000 2,561,000
2,969,178 2,949,159
Partners' Capital
General Partner (33,332) (63,097)
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,392,800 units outstanding 27,643,438 24,696,690
Subordinated Limited Partner 100 100
27,610,206 24,633,693
$30,579,384 $ 27,582,852
</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,
1999 1998 1999 1998
Revenues
<S> <C> <C> <C> <C>
Gain from sale of property $2,818,169 $ - $2,818,169 $ -
Parking lot rental 766,987 690,782 1,243,858 1,147,780
Interest income 13,790 6,402 18,481 13,329
3,598,946 697,184 4,080,508 1,161,109
Expenses
Administrative, including amounts
to related party 22,775 23,183 47,102 48,159
Professional fees 4,000 8,362 10,000 20,891
Management fees to related party 52,662 51,507 104,670 102,968
Interest expense 51,674 62,921 102,250 127,967
Depreciation 42,232 43,083 85,315 86,166
Amortization 1,503 1,500 3,003 3,000
174,846 190,556 352,340 389,151
Net earnings $3,424,100 $506,628 $3,728,168 $ 771,958
Net earnings per unit of assignee
and limited partnership interest-basic $ 2.43 $ 0.36 $ 2.65 $ 0.55
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Partners' Capital
For the Six Months Ended June 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
<S> <C> <C> <C> <C>
Balance at December 31, 1998 $24,696,690 $ 100 $ (63,097) $24,633,693
Net earnings 3,690,886 - 37,282 3,728,168
Distributions to partners (744,138) - (7,517) (751,655)
Balance at June 30, 1999 $27,643,438 $ 100 $ (33,332) $27,610,206
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
</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, 1999 June 30, 1998
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 3,728,168 $ 771,958
Adjustments to reconcile net earnings to net cash
provided by operating activities
Gain from sale of property (2,818,169) -
Depreciation 85,315 86,166
Amortization 3,003 3,000
Changes in assets and liabilities
Increase in accounts receivable (52,524) (31,648)
Decrease in accounts payable (16,717) (5,451)
Increase in due to affiliate 36,736 6,202
Net cash provided by operating activities 965,812 830,227
Cash flows from investing activities -
sale of property 4,759,214 -
Cash flows from financing activities
Distributions to partners (751,655) (716,694)
Repayment of note payable - (200,000)
Net cash used in financing activities (751,655) (916,694)
Net increase (decrease) in cash and cash equivalents 4,973,371 (86,467)
Cash and cash equivalents
Beginning of period 645,327 887,200
End of period $ 5,618,698 $ 800,733
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
June 30, 1999
(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
1998 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, 1999 and December 31, 1998.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
<S> <C> <C>
Land $19,915,730 $21,857,657
Building 5,583,532 5,583,532
25,499,262 27,441,189
Less: accumulated depreciation (908,150) (823,717)
Total $24,591,112 $26,617,472
</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 - Sale of Property
On June 9, 1999, the Fund sold its San Francisco, California property for
$5,350,000. The Fund's investment in the property was $1,941,045, net of
accumulated depreciation of $882. The capital gain from the sale totaled
$2,818,169, net of expenses of $590,786.
Note 5 - Related Party Transactions
The general partner earned an asset-based management fee for advising the Fund
and managing its investments totaling $52,662 and $51,507 for the three months
ended June 30, 1999 and 1998, respectively, and $104,670 and $102,968 for the
six months ended June 30, 1999 and 1998, respectively. This fee is equal to
0.75% of the Fund's capital contributions invested in certain properties or fair
values based on updated appraisals for certain other properties. Additionally,
the general partner is reimbursed for certain costs incurred relating to
administrative services for the Fund.
The general partner was reimbursed $7,333 for expenses incurred in connection
with the sale of the San Francisco property.
Pursuant to the terms of the Lease Agreement, Allright Corporation, the Advisor,
was paid advisory and termination fees totaling $562,425 in connection with the
sale of the San Francisco property.
-5-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
June 30, 1999
(Unaudited)
Note 6 - Note payable
The Fund has a $3.5 million line of credit agreement with a bank which expires
in July 2000. Borrowings under the credit agreement bear interest on the
outstanding principal amount at the bank's prime rate (7.75% at June 30, 1999).
The principal balance outstanding at June 30, 1999 and December 31, 1998 was
$2,561,000. 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 $51,674 and $62,921 for the three months ended June 30, 1999 and
1998, respectively, and $102,250 and $127,967 for the six months ended June 30,
1999 and 1998, respectively.
Note 7 - 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 8 - Subsequent Events
On July 6, 1999, the Fund sold its 80% interest in the Denver, Colorado property
for $5,199,200. The Fund's investment in the property was $2,930,358, net of
accumulated depreciation of $10,092. The capital gain from the sale totaled
$2,010,550, net of expenses of $258,292.
On July 16, 1999, the Fund made two sale proceeds distributions from the sales
of the San Francisco, California and the Denver, Colorado properties totaling
$4,430,433 and $4,586,915, respectively, of which 99% was allocated to assignee
and limited partners. Assignee and limited partners received two sale proceeds
distributions totaling $6.41 per original $25 unit.
On August 13, 1999, the Fund intends to make a cash distribution totaling
$384,568 of which 99% was allocated to assignee and limited partners. Assignee
and limited partners will receive a cash distribution of $.27 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, 1999, the Fund had a working capital position that includes
cash and cash equivalents of $5,618,698, accounts receivable (net of real estate
taxes payable) of $63,724, and accounts payable and accrued expenses of
$102,328. Cash and cash equivalents increased $4,970,009 during the quarter
ended June 30, 1999. This increase represents the net effect of $595,363 in cash
provided by operating activities, sales proceed of $4,759,214 and distributions
to investors of $384,568.
As discussed below, the Fund made a distribution of proceeds from the
property sales. On August 13, 1999 the Fund intends to make a cash distribution
to investors of $384,568 of which 99% will be allocated to assignee and limited
partners. This distribution is comprised of funds provided by operations through
June 30, 1999.
The Fund has a $3.5 million line of credit agreement with a bank which
expires in July 2000. Borrowings under the credit agreement bear interest on the
outstanding principal amount at the bank's prime rate of 7.75% at June 30, 1999.
The principal balance outstanding at June 30, 1999 and December 31, 1998 was
$2,561,000.
The Fund currently has no plans to use working capital to perform major
repairs or improvements to any of its properties and no acquisitions of
additional properties are anticipated. It is anticipated that remaining cash and
cash equivalents, current operations and the available line of credit will
provide sufficient capital to satisfy the Fund's liquidity requirements.
Property Sales and Sale Proceeds Distributions
On June 9, 1999, the Fund sold its San Francisco, California property
for $5,350,000. The Fund's investment in the property was $1,941,045, net of
accumulated depreciation of $882. The capital gain from the sale totaled
$2,818,169, net of expenses of $590,786.
On July 6, 1999, the Fund sold its 80% interest in the Denver, Colorado
property for $5,199,200. The Fund's investment in the property was $2,930,358,
net of accumulated depreciation of $10,092. The capital gain from the sale
totaled $2,010,550, net of expenses of $258,292.
On July 16, 1999, the Fund made two sale proceeds distributions from
the sales of the San Francisco, California and the Denver, Colorado properties
totaling $4,430,433 and $4,586,915, respectively, of which 99% was allocated to
assignee and limited partners. Assignee and limited partners received two sale
proceeds distributions totaling $6.41 per original $25 unit. Sales proceeds
totaling $678,725 were not distributed, pending resolution of state withholding
tax issues and pending additional costs of the sales.
Results of Operations
Parking lot rental income includes base rents and percentage rents
earned pursuant to the lease agreements in effect during each period. 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.
Total parking lot rents were $766,987 and $690,782 during the three
months ended June 30, 1999 and 1998, respectively, and $1,243,858 and $1,147,780
during the six months ended June 30, 1999 and 1998, respectively. The increase
in income is primarily the result of the percentage rents earned at six of the
Fund's properties. During the six months ended June 30, 1999, the Atlanta,
Denver, Dallas-Metro, Phoenix, Tulsa and San Francisco facilities earned
percentage rents totaling $333,613. During the six months ended June 30, 1998,
the Atlanta, Denver, Phoenix and San Francisco facilities earned percentage
rents totaling $235,947. Increases in percentage rents are primarily due to
increased gross receipts earned at the facilities.
-7-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations (continued)
Expenses totaled $131,111 and $264,022 (net of depreciation and
amortization) for the three and six months ended June 30, 1999, respectively,
representing decreases compared to the same periods in 1998 of $14,862 and
35,963, respectively. The decreases are primarily the result of lower
professional and interest expenses.
Outlook
During the second quarter of 1999, the Fund placed the
Dallas-Metropolitan and the Atlanta properties under contract. In addition, the
Fund has received strong interest from San Diego County regarding the purchase
of the San Diego-Union property. The sale of each of these properties is
contingent upon each of the buyers conducting certain due diligence. There is no
assurance that the buyers will close on these properties.
During the first quarter, Central Parking Systems, Inc. acquired
Allright Corporation. While Central could decide to operate certain of the
Allright facilities, most will likely continue to be operated by Allright. All
terms and conditions of the parking leases will continue to remain in effect,
whether the facilities are operated by the Allright or Central.
The Fund, in accordance with its original investment strategy,
continues to examine opportunities for disposition of its facilities. While it
has been anticipated that the highest returns would be obtained from selling
properties for development potential, strong returns may also be earned from
selling properties based on their parking economics.
Year 2000
The General Partner is aware of the issues associated with the
programming code in many existing computer systems (the "Year 2000" issue) as
the millennium approaches. The General Partner has conducted a review of its
computer systems to identify hardware and software affected by the Year 2000
issue. This issue affects computer systems having date sensitive programs that
may not properly recognize the Year 2000. Systems that do not properly recognize
such information could generate erroneous data or cause a system to fail
resulting in business interruption.
With respect to its existing computer systems, the General Partner is
upgrading, generally in order to meet the demands of its expanding business. In
the process, the General Partner is taking steps to identify, correct and/or
reprogram and test its existing systems for Year 2000 compliance. It is
anticipated that all new system upgrades or reprogramming efforts will be
completed by September 30, 1999, allowing adequate time for testing. The General
Partner presently believes that with modification to existing software the Year
2000 issue can be mitigated. However, given the complexity of the Year 2000
issues, there can be no assurances that the General Partner will be able to
address the problem without costs and uncertainties that might affect future
financial results of the Fund.
The General Partner has incurred, and expects to incur additional
internal costs as well as other expenses to address the necessary software
upgrades, training, data conversion, testing and implementation related to the
Year 2000 issue. Such costs are being expensed as incurred. The General Partner
does not expect the amounts required to be expensed to have a material effect on
the Fund's financial position or results of operations.
-8-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Year 2000 (continued)
The Year 2000 issue is expected to affect the systems of various
entities with which the Fund and the General Partner interact including the
lessees of the Fund's parking properties as well as payors, suppliers and
vendors. The lessees have been queried on their Year 2000 readiness. Management
believes the lessees are addressing and resolving their concerns on a timely
basis and will continue to evaluate the lessees' Year 2000 readiness and develop
contingency plans as appropriate. To date, Management is not aware of any
significant Year 2000 issue that could materially impact the lessees. However,
there can be no assurance that data produced by systems of other entities, on
which the General Partner's systems rely, will be converted on a timely basis or
that a failure by another entity's systems to be Year 2000 compliant will not
have a material adverse effect on the Fund.
Management believes it has an effective program in place to resolve the
Year 2000 issue, in a timely manner. Contingency plans involve system
enhancement, manual workarounds, and adjusting staffing strategies.
Nevertheless, Management believes that it could continue its normal business
operations if compliance is delayed. The General Partner does not believe that
the Year 2000 issue will materially impact the Fund's results of operations,
liquidity, or capital resources.
-9-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
No significant change in the Fund's market risk has occurred
since December 31, 1998.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities and Use of Proceeds
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: Financial Data Schedule
b) Reports on Form 8-K: None
-10-
<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: 8/10/99 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company II, Inc.
General Partner
DATE: 8/10/99 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company II, Inc.
General Partner
-11-
<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-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> JUN-30-1999
<EXCHANGE-RATE> 1
<CASH> 5,618,698
<SECURITIES> 0
<RECEIVABLES> 369,574
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,988,272
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30,579,384
<CURRENT-LIABILITIES> 408,178
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30,579,384
<SALES> 0
<TOTAL-REVENUES> 4,080,508
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 250,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 102,250
<INCOME-PRETAX> 3,728,168
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,728,168
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,728,168
<EPS-BASIC> 2.650
<EPS-DILUTED> 0.000
</TABLE>
