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, 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 September 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>
Sept. 30,
1999 December 31,
(Unaudited) 1998
Assets
<S> <C> <C>
Investment in real estate $ 19,721,395 $ 26,617,472
Cash and cash equivalents 4,964,309 645,327
Accounts receivable 519,073 317,050
Financing costs, less accumulated amortization
of $30,003 and $27,000, respectively - 3,003
$ 25,204,777 $ 27,582,852
Liabilities and Partners' Capital
Accounts payable $ 31,084 $ 27,926
Due to affiliates 346,903 54,383
Real estate taxes payable 241,900 305,850
Note payable 2,361,000 2,561,000
2,980,887 2,949,159
Partners' Capital
General Partner (87,195) (63,097)
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,392,800 units outstanding 22,310,985 24,696,690
Subordinated Limited Partner 100 100
22,223,890 24,633,693
$ 25,204,777 $ 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 Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1999 1998 1999 1998
Revenues
<S> <C> <C> <C> <C>
Gain from sale of property $3,493,153 $ - $6,311,322 $ -
Parking lot rental 666,459 682,702 1,910,317 1,830,482
Interest income 25,301 6,586 43,782 19,915
4,184,913 689,288 8,265,421 1,850,397
Expenses
Administrative, including amounts
to related party 30,448 22,151 77,550 70,310
Professional fees 6,322 23,887 16,322 44,778
Management fees to related party 44,713 68,518 149,383 171,486
Interest expense 50,455 63,404 152,705 191,371
Depreciation 37,375 43,083 122,690 129,249
Amortization - 1,500 3,003 4,500
169,313 222,543 521,653 611,694
Net earnings $4,015,600 $ 466,745 $7,743,768 $1,238,703
Net earnings per unit of assignee
and limited partnership interest-basic $ 2.85 $ 0.33 $ 5.50 $ 0.88
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
Realty Parking Properties II L.P.
Statements of Partners' Capital
For the Nine Months Ended September 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 7,666,330 - 77,438 7,743,768
Distributions to partners -
Operations (1,124,860) - (11,363) (1,136,223)
Sales proceeds (8,927,175) - (90,173) (9,017,348)
Balance at September 30, 1999 $ 22,310,985 $ 100 $(87,195) $22,223,890
Balance at December 31, 1997 $ 24,595,207 $ 100 $(64,122) $24,531,185
Net earnings 1,226,316 - 12,387 1,238,703
Distributions to partners (1,072,935) - (10,838) (1,083,773)
Balance at September 30, 1998 $ 24,748,588 $ 100 $(62,573) $24,686,115
</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, 1999 Sept. 30, 1998
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 7,743,768 $ 1,238,703
Adjustments to reconcile net earnings to net cash
provided by operating activities
Gain from sale of property (6,311,322) -
Depreciation 122,690 129,249
Amortization 3,003 4,500
Changes in assets and liabilities
(Increase) decrease in accounts receivable (265,973) 1,747
Increase (decrease) in accounts payable 3,158 (731)
Increase in due to affiliates 292,520 19,050
Net cash provided by operating activities 1,587,844 1,392,518
Cash flows from investing activities -
sales of properties 13,084,709 -
Cash flows from financing activities
Distributions to partners-operations (1,136,223) (1,083,773)
Distributions to partners-sales proceeds (9,017,348) -
Repayment of note payable (200,000) (200,000)
Net cash used in financing activities (10,353,571) (1,283,773)
Net increase in cash and cash equivalents 4,318,982 108,745
Cash and cash equivalents
Beginning of period 645,327 887,200
End of period $ 4,964,309 $ 995,945
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
September 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 September 30, 1999 and December 31, 1998.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
<TABLE>
<CAPTION>
September 30, 1999 December 31, 1998
<S> <C> <C>
Land $15,716,811 $21,857,657
Building 4,839,732 5,583,532
20,556,543 27,441,189
Less: accumulated depreciation (835,148) (823,717)
Total $19,721,395 $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 - Sales of Properties
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
$2,821,979, net of expenses of $586,976.
On July 6, 1999, the Fund sold its eighty percent 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 $2,010,551, net of expenses of $258,291.
On September 10, 1999, the Fund sold its two-thirds interest in the Atlanta,
Georgia property for $3,666,667. The Fund's investment in the property was
$1,901,984, net of accumulated depreciation of $100,285. The capital gain from
the sale totaled $1,478,792, net of expenses of $285,891.
-5-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
September 30, 1999
(Unaudited)
Note 5 - Related Party Transactions
The general partner earned an asset-based management fee for advising the Fund
and managing its investments totaling $44,713 and $68,518 for the three months
ended September 30, 1999 and 1998, respectively, and $149,383 and $171,486 for
the nine months ended September 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 $13,742 for expenses incurred in connection
with the sales of the properties.
Pursuant to the terms of the Leases and Advisory Agreements, Allright
Corporation was paid advisory and termination fees totaling $832,519 in
connection with the sales of the San Francisco and Atlanta properties.
Additionally, pursuant to the terms of the Lease and Consulting Agreements,
Central Parking System was paid similar fees totaling $252,209 in connection
with the sale of the Denver property.
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 (8.25% at September 30,
1999). The principal balance outstanding at September 30, 1999 and December 31,
1998 was $2,361,000 and $2,561,000, 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 $50,455 and $63,404
for the three months ended September 30, 1999 and 1998, respectively, and
$152,705 and $191,371 for the nine months ended September 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 October 27, 1999, the Fund made a sale proceeds distribution from the sale of
the Atlanta property totaling $3,380,776, of which 99% was allocated to assignee
and limited partners. Assignee and limited partners received a sale proceeds
distribution totaling $2.40 per original $25 unit.
Additionally, on October 27, 1999 the Fund distributed the balance of the San
Francisco and Denver sales proceeds, totaling $678,724, which was previously
held back from the July 16, 1999 distribution pending resolution of state tax
withholding issues, of which 99% was allocated to assignee and limited partners.
Assignee and limited partners received an additional sales proceeds distribution
totaling $.49 per original $25 unit.
On November 15, 1999, the Fund intends to make a cash distribution totaling
$281,236 of which 99% will be allocated to assignee and limited partners.
Assignee and limited partners will receive a cash distribution of $.20 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 September 30, 1999, the Fund had a working capital position that
includes cash and cash equivalents of $4,964,309, accounts receivable (net of
real estate taxes payable) of $277,173, and accounts payable and accrued
expenses of $377,987. Cash and cash equivalents decreased $654,389 during the
quarter ended September 30, 1999. This decrease represents the net effect of
$622,030 in cash provided by operating activities, sales proceeds of $8,325,497,
distributions to investors of $9,401,916, and repayment of the note payable of
$200,000.
As discussed below, the Fund made distributions of proceeds from
several property sales. On November 15, 1999, the Fund intends to make a cash
distribution to investors of $281,236 of which 99% will be allocated to assignee
and limited partners. This distribution is comprised of funds provided by
operations through September 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 8.25% at September 30,
1999. The principal balance outstanding at September 30, 1999 and December 31,
1998 was $2,361,000 and $2,561,000, respectively.
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 Sales 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
$2,821,979, net of expenses of $586,976.
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 $2,010,551, net of expenses of $258,291.
On September 10, 1999, the Fund sold its two-thirds interest in the
Atlanta, Georgia property for $3,666,667. The Fund's investment in the property
was $1,901,984, net of accumulated depreciation of $100,285. The capital gain
from the sale totaled $1,478,792, net of expenses of $285,891.
On July 16, 1999, the Fund made two sale proceeds distributions from
the sales of the San Francisco and the Denver 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.
On October 27, 1999, the Fund distributed the balance of the San
Francisco and Denver sales proceeds, totaling $678,725, which was previously
held back from the July 16, 1999 distribution pending resolution of state
withholding tax issues, of which 99% was allocated to assignee and limited
partners. Assignee and limited partners received an additional sales proceeds
distribution totaling $.49 per original $25 unit.
Additionally, on October 27, 1999 the Fund made a sale proceeds
distribution from the sale of the Atlanta property totaling $3,380,776, of which
99% was allocated to assignee and limited partners. Assignee and limited
partners received a sale proceeds distribution totaling $2.40 per original $25
unit.
-7-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 $666,459 and $682,702 during the three
months ended September 30, 1999 and 1998, respectively, and $1,910,317 and
$1,830,482 during the nine months ended September 30, 1999 and 1998,
respectively. The decrease in rents during the three months ended September 30,
1999 is primarily a result of the property sales discussed above.The increase in
rents during the first nine months of 1999 is primarily the result of the
percentage rents earned at eight of the Fund's properties. During the nine
months ended September 30, 1999, the Atlanta, Dallas-Metro, Denver, Nashville,
Phoenix, San Antonio, San Francisco and Tulsa facilities earned percentage rents
totaling $620,879. During the nine months ended September 30, 1998, the Atlanta,
Denver, Nashville, Phoenix and San Francisco facilities earned percentage rents
totaling $462,733. Increases in percentage rents are primarily due to increased
gross receipts earned at the facilities. Additionally, during the nine months
ended September 30, 1999, percentage rents were earned at the Dallas-Metro, San
Antonio and Tulsa lots that were not earned during the same period in 1998.
Expenses totaled $131,938 and $395,960 (net of depreciation and
amortization) for the three and nine months ended September 30, 1999,
respectively, representing decreases, compared to the same periods in 1998, of
$46,022 and $81,985, respectively. The decreases are primarily the net result of
increased administrative expenses, and lower professional, management, and
interest expenses. Administrative costs were higher due to printing and mailing
costs, in addition to time spent on Year 2000 issues. Professional fees
decreased as a result of having fewer properties appraised, due to the recent
sales. Management fees decreased as a result of the sales of the three
properties. In addition, interest expense decreased primarily due to the lower
outstanding principal balance of borrowing throughout 1999 and the lower
interest rate.
Outlook
The Fund continues to receive strong interest in several of its
properties. During the second quarter of 1999, the Fund placed the
Dallas-Metropolitan property under contract. The sale of this property is
tentatively scheduled to close in December. The Fund has received strong
interest from San Diego County regarding the purchase of the San Diego-Union
property. In addition, subsequent to the second quarter, it signed a letter of
intent for the sale of the San Diego-B 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.
-8-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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 has
upgraded 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. All new system upgrades and
reprogramming efforts were substantially completed by October 29, 1999 and
system testing is currently underway. 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 testing and
implementation related to the Year 2000 issue. 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.
The Year 2000 issue is expected to affect the systems of various
entities with which the Fund and the General Partner interact including the
lessee of the Fund's parking properties as well as payors, suppliers and
vendors. The lessee has been queried on its Year 2000 readiness. Management
believes the lessee has addressed its concerns on a timely basis and will
continue to evaluate the lessee's 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 lessee. There can be no assurance,
however, 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:
Form 8-K dated July 6, 1999 described the Fund's sale
of a 106,250 square foot parcel of land in Denver
Colorado.
-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: 11/10/99 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company II, Inc.
General Partner
DATE: 11/10/99 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 4,964,309
<SECURITIES> 0
<RECEIVABLES> 519,073
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,483,382
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 25,204,777
<CURRENT-LIABILITIES> 619,887
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 25,204,777
<SALES> 0
<TOTAL-REVENUES> 8,265,422
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 368,949
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 152,705
<INCOME-PRETAX> 7,743,768
<INCOME-TAX> 0
<INCOME-CONTINUING> 7,743,768
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,743,768
<EPS-BASIC> 5.500
<EPS-DILUTED> 0.000
</TABLE>
