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 March 31, 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 March 31, 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 7-8
Part II. Other Information
Item 1. through Item 6. 9
Signatures 10
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Balance Sheets
<TABLE>
<CAPTION>
March 31,
1999 December 31,
(Unaudited) 1998
Assets
<S> <C> <C>
Investment in real estate $26,574,389 $ 26,617,472
Cash and cash equivalents 648,689 645,327
Accounts receivable 322,014 317,050
Financing costs, less accumulated amortization
of $28,500 and $27,000, respectively 1,503 3,003
$27,546,595 $ 27,582,852
Liabilities and Partners' Capital
Accounts payable $ 34,574 $ 27,926
Due to affiliate 74,496 54,383
Real estate taxes payable 305,850 305,850
Note payable 2,561,000 2,561,000
2,975,920 2,949,159
Partners' Capital
General Partner (63,727) (63,097)
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,392,800 units outstanding 24,634,302 24,696,690
Subordinated Limited Partner 100 100
24,570,675 24,633,693
$27,546,595 $ 27,582,852
</TABLE>
See accompanying financial statements
1
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
Revenues
<S> <C> <C>
Parking lot rental $ 476,872 $ 456,998
Interest income 4,691 6,927
481,563 463,925
Expenses
Administrative, including amounts to affiliate 24,327 24,976
Professional fees 6,000 12,529
Management fees to affiliate 52,008 51,461
Interest expense 50,576 65,046
Depreciation 43,083 43,083
Amortization 1,500 1,500
177,494 198,595
Net earnings $ 304,069 $ 265,330
Net earnings per unit of assignee and
limited partnership interests-basic $ 0.22 $ 0.19
</TABLE>
See accompanying notes to financial statements
2
<PAGE>
Statements of Partners' Capital
For the Three Months Ended March 31, 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 301,028 - 3,041 304,069
Distribution to partners (363,416) - (3,671) (367,087)
Balance at March 31, 1999 $24,634,302 $ 100 $ (63,727) $24,570,675
Balance at December 31, 1997 $24,595,207 $ 100 $ (64,122) $24,531,185
Net earnings 262,677 - 2,653 265,330
Distribution to partners (346,104) - (3,496) (349,600)
Balance at March 31, 1998 $24,511,780 $ 100 $ (64,965) $24,446,915
</TABLE>
See accompanying notes to financial statements
3
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 199 March 31,
Cash flows from operating activities
<S> <C> <C>
Net earnings $ 304,069 $ 265,330
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 43,083 43,083
Amortization 1,500 1,500
Changes in assets and liabilities
Increase in accounts receivable (4,964) (1,669)
Increase (decrease) in accounts payable 6,648 (4,981)
Increase in due to affiliate 20,113 13,178
Net cash provided by operating activities 370,449 316,441
Cash flows from financing activities -
distribution to partners (367,087) (349,600)
Net increase (decrease) in cash and cash equivalents 3,362 (33,159)
Cash and cash equivalents
Beginning of period 645,327 887,200
End of period $ 648,689 $ 854,041
</TABLE>
See accompanying notes to financial statements
4
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
March 31, 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 March 31, 1999 and December 31, 1998.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
<TABLE>
<CAPTION>
March 31, 1999 December 31, 1998
<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 (866,800) (823,717)
Total $26,574,389 $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 - Related Party Transactions
The general partner earned an asset-based management fee of $52,008 and $51,461
for advising the Fund and managing its investments during the three months ended
March 31, 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 was reimbursed for certain costs incurred relating to administrative
services for the Fund totaling $22,488 and $30,607 during the three months ended
March 31, 1999 and 1998, respectively.
Note 5 - 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 March 31, 1999).
The principal balance outstanding at March 31, 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 $50,576 and $65,046 for the three months ended March 31, 1999
and 1998, respectively.
-5-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Notes to Financial Statements
March 31, 1999
(Unaudited)
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 May 12, 1999, the Fund made a cash distribution totaling $384,568 of which
99% was allocated to assignee and limited partners. Assignee and limited
partners received 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 March 31, 1999, the Fund had a working capital position that
includes cash and cash equivalents of $648,689, accounts receivable (net of real
estate taxes payable) of $16,164, and accounts payable and accrued expenses of
$109,070. Cash and cash equivalents increased $3,362 during the quarter ended
March 31, 1999. This increase represents the net effect of $370,449 in cash
provided by operating activities and distributions to investors of $367,087. 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.
On May 12, 1999, the Fund made a cash distribution to investors of
$384,568 of which 99% was allocated to assignee and limited partners.
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 March 31, 1999).
The principal balance outstanding at March 31, 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.
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 of $476,872 were earned during the first
quarter of 1999, representing a 4% increase over the same period in 1998. The
increase is primarily the result of the percentage rent earned at the Atlanta
facility, due to increased gross receipts earned at the property. During the
three months ended March 31, 1999, the facility earned a percentage rent of
$16,163, representing a $13,294 increase over the percentage rent earned during
1998.
Expenses incurred during the first quarter of 1999 (net of amortization
and depreciation) were $132,911, reflecting a decrease of $21,101 from 1998. The
decrease is primarily the result of lower professional and interest expenses.
Outlook
In April 1998, 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 buyer has waived all contract contingencies and closing is
scheduled to occur on June 9, 1999.
Subsequent to March 31, 1999, the Fund placed the Dallas-Metropolitan,
Atlanta and San Diego-B facilities under contract. 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.
-7-
<PAGE>
REALTY PARKING PROPERTIES II L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Outlook (continued)
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 mid-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.
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's 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.
-8-
<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: 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: 5/12/99 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company II, Inc.
General Partner
DATE: 5/12/99 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 648,689
<SECURITIES> 0
<RECEIVABLES> 322,014
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 972,206
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,546,595
<CURRENT-LIABILITIES> 414,920
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 27,546,595
<SALES> 0
<TOTAL-REVENUES> 481,563
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 126,918
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50,576
<INCOME-PRETAX> 304,069
<INCOME-TAX> 0
<INCOME-CONTINUING> 304,069
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 304,069
<EPS-PRIMARY> 0.220
<EPS-DILUTED> 0.000
</TABLE>
