10-Q 1 rpfiling10q63003.txt REALTY PARKING PROPERTIES L.P. 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, 2003 { } 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, 2003 Commission file number 0-17616 Realty Parking Properties L.P. (Exact Name of Registrant as Specified in its Charter) Delaware 52-1591575 (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______ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes No X REALTY PARKING PROPERTIES L.P. INDEX Page No. Part I. Financial Information Item 1. Financial Statements Balance Sheets 1 Statements of Operations 2 Statements of Partners' Capital 3 Statements of Cash Flows 4 Notes to Financial Statements 5-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 10 Item 4. Controls and procedures 10 Part II. Other Information Item 1. through Item 6. 11-14 Signatures 15 REALTY PARKING PROPERTIES L.P. Balance Sheets

See accompanying notes to financial statements 1 REALTY PARKING PROPERTIES L.P. Statements of Operations (Unaudited)

See accompanying notes to financial statements 2 REALTY PARKING PROPERTIES L.P. Statements of Partners' Capital Six Months Ended June 30, 2003 and 2002 (Unaudited)

See accompanying notes to financial statements 3 REALTY PARKING PROPERTIES L.P. Statements of Cash Flows (Unaudited)

See accompanying notes to financial statements 4 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements June 30, 2003 (Unaudited) Note 1 - The Partnership and Basis of Preparation The accompanying financial statements of Realty Parking Properties L.P. (the "Partnership") do not include all of the information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The unaudited interim financial statements reflect all adjustments, which are, in the opinion of management, necessary for a fair statement of financial position, operating results and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. Certain amounts in the statements of operations for 2002 have been reclassified to conform to the presentation for 2003. The unaudited interim financial information should be read in conjunction with the financial statements contained in the 2002 Annual Report. Note 2 - Cash and Cash Equivalents The Partnership considers all short-term investments with maturities of three months or less at dates of purchase as cash equivalents. Cash and cash equivalents consist of cash and money market accounts and are stated at cost, which approximated market value at June 30, 2003 and December 31, 2002. Note 3 - Investment in Real Estate Investment in real estate is summarized as follows: June 30, 2003 December 31, 2002 Land $5,608,135 $10,508,593 Buildings 899,741 899,741 Land Improvements 110,104 110,104 6,617,980 11,518,438 Less accumulated depreciation 433,677 415,717 Total $6,184,303 $11,102,721 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. 5 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements June 30, 2003 (Unaudited) Note 4 - Discontinued Operations At June 30, 2003, the Partnership's Miami property was under contract for sale and was classified as property held for sale in the balance sheet. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which was effective on January 1, 2002 with respect to the Partnership, the results of operations of this property, and the Birmingham and Milwaukee properties which were sold on April 15, 2003, and the two properties which were sold during 2002 are reported in discontinued operations for all periods presented in the statements of operations. Income from discontinued operations is summarized as follows: Three Months Ended Six Months Ended June 30, June 30, June 30, June 30, 2003 2002 2003 2002 -------------- ----------- ------------- ----------- Revenues $ 150,360 $ 279,815 $ 297,969 $ 477,876 Expenses (1,289) (26,358) (3,972) (52,083) Gain on sales of properties, net 3,769,433 - 3,769,433 - -------------- ----------- ------------- ----------- $ 3,918,504 $ 253,457 $ 4,063,430 $ 425,793 ============== =========== ============= =========== On April 15, 2003, the Partnership sold its Birmingham, Alabama property for $1,900,000. The Partnership's investment in the property was $875,726, net of accumulated depreciation of $313,877. The gain from the sale totaled $807,060, net of expenses of $217,214. On April 15, 2003, the Partnership sold its Milwaukee property for $5,000,000. The Partnership's investment in the property was $1,796,395, net of accumulated depreciation of $606,743. The gain from the sale totaled $2,962,373, net of expenses of $241,232. Note 5 - Related Party Transactions The General Partner earned property management fees of $3,320 and $7,358 (1% of the gross revenues of the properties and other sources of income) during the three months ended June 30, 2003 and 2002, respectively, and $7,831 and $13,885 during the six months ended June 30, 2003 and 2002, respectively (portions of which have been recorded in discontinued operations). The General Partner was reimbursed for certain costs incurred relating to administrative and professional services of the Partnership totaling $28,799 and $29,800 for the three months ended June 30, 2003 and 2002, respectively, and $52,869 and $67,020 for the six months ended June 30, 2003 and 2002, respectively. Pursuant to an Investment Advisory Agreement, Central Parking System (the "Advisor") earns a fee upon disposition of a property equal to 2% of the contract price for the sale of a property. Such fee is earned for services rendered to advise the General Partner on the timing and pricing of a property sale. As of June 30, 2003, the Advisor earned Advisory fees totaling $138,000 from the sales of the Birmingham and Milwaukee properties. Additionally, the Advisor earned lease termination fees totaling $190,946 at June 30, 2003 from the sales of the two properties. 6 REALTY PARKING PROPERTIES L.P. Notes to Financial Statements June 30, 2003 (Unaudited) Note 6 - Net Earnings Per Unit of Assignee and Limited Partnership Interest Net earnings per unit of assignee and limited partnership interest is disclosed on the statements of operations and is based upon 1,909,127 units outstanding. Note 7 - Subsequent Event On August 18, 2003, the Partnership plans to make a cash distribution totaling $233,557 of which 98% is allocable to Assignee and Limited Partners. This distribution is derived from funds provided by operating activities during the quarter ended June 30, 2003. Assignee and Limited Partners will receive a cash distribution of approximately $0.12 per unit. 7 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Partnership currently has no plans to use working capital to perform major repairs or improvements to any of its properties. At June 30, 2003, the Partnership had a working capital position that included cash and cash equivalents of $1,029,258, accounts receivable (net of real estate taxes payable) of $13,950 and accounts payable and accrued expenses of $438,921. Cash and cash equivalents increased $433,664 during the second quarter of 2003. The increase represents the net effect of $628,391 in cash provided by operating activities, $6,441,554 in sales proceeds, net of the distributions to investors totaling $6,636,281. On April 15, 2003, the Partnership sold the Birmingham, Alabama property for $1,900,000 and the Milwaukee, Wisconsin property for $5,000,000. On June 6, 2003, the Partnership distributed the sales proceeds totaling $6,441,554, of which 100% was allocated to Assignee and Limited Partners. Holders of Units received a cash distribution of approximately $3.37 per Unit. On August 18, 2003, the Partnership plans to make a cash distribution totaling $233,557 of which 98% is allocable to Assignee and Limited Partners. This distribution is derived from funds provided by operating activities during the quarter ended June 30, 2003. Assignee and Limited Partners will receive a cash distribution of approximately $0.12 per unit. Results of Operations In accordance with the provisions of Statement of Financial Accounting Standards No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" (SFAS No. 144), the statements of operations present income from continuing operations and from discontinued operations. Discontinued operations include the operating results of the property under contract for sale at June 30, 2003, the two properties which were sold on April 15, 2003 and the two properties which were sold during 2002. The prior year amounts for the properties sold or under contract for sale in 2003 have been reclassified to discontinued operations as required by SFAS No. 144. The following discussion and analysis of the results of operations conforms to this presentation in the statements of operations. Parking lot revenue includes base and percentage rents earned pursuant to lease agreements with the Advisor, and the net operating revenue of one property operated under a management contract. At June 30, 2003, the Partnership leases three of its four remaining properties to the Advisor under terms that include a minimum rent calculated as a percentage of certain acquisition costs. In addition, the Advisor is obligated to pay percentage rent, calculated as a percentage of gross parking revenues in excess of a base amount. The fourth property is managed by a parking operator in accordance with a separate management contract. Under the terms of a management contract, the operator forwards the property's net operating revenue to the Partnership. The Partnership is responsible for the payment of real estate taxes for that property. 8 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Continuing Operations Income from continuing operations includes results from the Partnership's properties classified as investment in real estate on the balance sheet. Expenses not directly identifiable with a specific property sold or held for sale are reflected in continuing operations. Parking lot revenue of $128,277 was earned during the three months ended June 30, 2003, reflecting a decrease of $5,982 from the same period in 2002. Parking lot revenue of $245,055 was earned during the six months ended June 30, 2003, reflecting a decrease of $8,495 from the same period in 2002. The decreases are the result of reduced rental income earned at the property operated pursuant to a management contract. Expenses incurred during the three months ended June 30, 2003, net of depreciation, totaled $52,096 reflecting a decrease of $15,316 from the same period in 2002. Expenses incurred during the six months ended June 30, 2003, net of depreciation, totaled $121,135 reflecting a decrease of $9,390 from the same period in 2002. The decreases are the result of lower administrative expenses, as a result of property sales. Discontinued Operations Discontinued operations reflect parking revenue from the Partnership's property in Miami (held for sale at June 30, 2003), the properties in Birmingham and Milwaukee (sold on April 15, 2003) and the Nashville and Houston properties (sold during 2002), net of expenses that can be directly attributed to the properties. On April 15, 2003, the Partnership sold its Birmingham, Alabama property for $1,900,000. The Partnership's investment in the property was $875,726, net of accumulated depreciation of $313,877. The gain from the sale totaled $807,060, net of expenses of $217,214. On April 15, 2003, the Partnership sold its Milwaukee property for $5,000,000. The Partnership's investment in the property was $1,796,395, net of accumulated depreciation of $606,743. The gain from the sale totaled $2,962,373, net of expenses of $241,232. Parking lot revenue of $150,360 was earned during the three months ended June 30, 2003, reflecting a decrease of $129,455 from the same period in 2002. Parking lot revenue of $297,969 was earned during the six months ended June 30, 2003, reflecting a decrease of $179,907 from the same period in 2002. The decreases are the result of the 2003 and 2002 property sales. Expenses incurred during the three months ended June 30, 2003 totaled $1,289 reflecting a decrease of $5,103 from the same period in 2002 (excluding depreciation of $19,966 in 2002). Expenses incurred during the six months ended June 30, 2003 totaled $3,972 reflecting a decrease of $8,179 from the same period in 2002 (excluding depreciation of $39,932 in 2002). The decrease is the result of lower management fees and franchise taxes as a result of the 2003 and 2002 property sales. 9 REALTY PARKING PROPERTIES L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Outlook Three of the Partnership's four remaining properties are subject to contracts of sale. The prospective buyers of the Little Rock and the Los Angeles properties are in their due diligence periods and there are no assurances that the contracts will result in sales. The prospective buyer of the Miami property has completed its due diligence and we anticipate the sale to close by the end of September. The Kansas City property is currently listed with a real estate broker and is being marketing for sale. Critical Accounting Policies Critical accounting policies are those that are both important to the presentation of financial condition and results of operations and require management's most difficult, complex or subjective judgments. The Partnership's critical accounting policy relates to the evaluation of impairment of long-lived assets. If events or changes in circumstances indicate that the carrying value of a property to be held and used may be impaired, a recoverability analysis is performed based on estimated undiscounted cash flows to be generated from the property in the future. If the analysis indicates that the carrying value is not recoverable from future cash flows, the property is written down to its estimated fair value and an impairment loss is recognized. If the Partnership decides to sell a property, it evaluates the recoverability of the carrying amount of the assets. If the evaluation indicates that the carrying value is not recoverable from estimated net sales proceeds, the property is written down to estimated fair value less costs to sell and an impairment loss is recognized. The estimates of cash flows and fair values of the properties are based on current market conditions and consider matters such as each of the parking properties' parking rates, operating expenses and/or the terms of a net lease with a parking operator, recent sales data for comparable properties and, where applicable, contracts or the results of negotiations with purchasers or prospective purchasers. These estimates are subject to revision as market conditions, and the Partnership's assessment of them, change. PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk Inapplicable Item 4. Controls and Procedures Evaluation was performed under the supervision and with the participation of the Partnership's management, including the Chief Executive Officer and Chief Financial Officer of the General Partner, of the effectiveness of the design and operation of disclosure controls and procedures, as of June 30, 2003, as defined in Rule 13a-15 of the rules promulgated under the Securities and Exchange Act of 1934, as amended. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the design and operation of these disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. 10 REALTY PARKING PROPERTIES L.P. 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 Exhibit 31.1 Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 31.2 Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Exhibit 32 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. b. Reports on Form 8-K: Form 8-K dated April 15, 2003 described the Partnership's sales of its properties in Birmingham, Alabama and Milwaukee, Wisconsin. 11 Exhibit 31.1 REALTY PARKING PROPERTIES L.P. Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, John M. Prugh, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Realty Parking Properties L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/12/03 By: /s/ John M. Prugh John M. Prugh Chief Executive Officer Realty Parking Company, Inc. General Partner -12- Exhibit 31.2 REALTY PARKING PROPERTIES L.P. Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Timothy M. Gisriel, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Realty Parking Properties L.P.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures [as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)] for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: 8/12/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Chief Financial Officer Realty Parking Company, Inc. General Partner -13- Exhibit 32 REALTY PARKING PROPERTIES L.P. CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the filing of Realty Parking Properties L.P.'s (the "Partnership") Quarterly Report on Form 10-Q for the period ending June 30, 2003 with the Securities and Exchange Commission on the date hereof (the "Report"), We certify, pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. Date: 8/12/03 By: /s/ John M. Prugh John M. Prugh Chief Executive Officer Realty Parking Company, Inc. General Partner Date: 8/12/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Chief Financial Officer Realty Parking Company, Inc. General Partner -14- REALTY PARKING PROPERTIES L.P. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REALTY PARKING PROPERTIES L.P. DATE: 8/8/03 By: /s/ John M. Prugh John M. Prugh President and Director Realty Parking Company, Inc. General Partner DATE: 8/8/03 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Treasurer Realty Parking Company, Inc. General Partner 15

REALTY PARKING PROPERTIES LP 10-Q