10-Q 1 rp2filing10q901.txt REALTY PARKING II 10-Q FOR QUARTER ENDING 9/30/01 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, 2001 { } 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, 2001 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_____ REALTY PARKING PROPERTIES II 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 5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Item 3. Quantitative and Qualitative Disclosures About Market Risk 8 Part II. Other Information Item 1. through Item 6. 8 Signatures 9 REALTY PARKING PROPERTIES II L.P. Balance Sheets

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

See accompanying notes to financial statements 2 REALTY PARKING PROPERTIES II L.P. Statements of Partners' Capital Nine Months Ended September 30, 2001 and 2000 (Unaudited)

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

See accompanying notes to financial statements 4 REALTY PARKING PROPERTIES II L.P. Notes to Financial Statements September 30, 2001 (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 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 to 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. The unaudited interim financial information should be read in conjunction with the financial statements contained in the 2000 Annual Report. Note 2 - Cash and Cash Equivalents The Fund 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 a money market account and are stated at cost, which approximates market value at September 30, 2001 and December 31, 2000. Note 3 - Investment in Real Estate Investment in real estate is summarized as follows: September 30, 2001 December 31, 2000 Land $ 12,711,555 $ 12,711,555 Building 1,432,655 1,432,655 ------------ ------------ 14,144,210 14,144,210 Less accumulated depreciation 468,798 422,193 ------------ ------------ Total $ 13,675,412 $ 13,722,017 ============ ============ 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 - Deposit On May 16, 2000, the Fund entered into a one-year land option agreement for the sale of its San Diego-Union, California property for $5,320,000. The original agreement expired in May 2001 and an option to extend was exercised for an additional three-month period. The buyer exercised its option to proceed with the purchase of the property and the option consideration, totaling $75,000, will be credited against the purchase price at closing, which is expected to occur in the fourth quarter 2001. Note 5 - Sales of Properties On January 31, 2000, the Fund sold its Dallas-Metro, Texas property for $7,000,000. The Fund's investment in the property was $3,673,210, net of accumulated depreciation of $512,472. The capital gain from the sale totaled $3,013,752, net of expenses of $313,038. On May 15, 2000, the Fund sold its San Diego-B, California property for $4,328,000. The Fund's investment in the property was $2,226,652. The capital gain from the sale totaled $1,870,024, net of expenses of $231,324. -5- Note 6 - Related Party Transactions The General Partner earned an asset-based management fee of $25,931 and $25,769 for advising the Fund and managing its investments during the three months ended September 30, 2001 and 2000, respectively, and $78,006 and $84,551 during the nine months ended September 30, 2001 and 2000, 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 $20,709 and $23,784 during the three months ended September 30, 2001, respectively, and $72,012 and $91,538 during the nine months ended September 30, 2001 and 2000, respectively. Note 7 - Note payable In July 2000, the Fund's line of credit agreement with a bank was amended to reduce the bank's commitment from $3,500,000 to $736,000, the principal balance outstanding at that time. The amended line of credit expired in July 2001. The collateral security provision of the loan agreement provided for the assignment of the Fund's rights as lessor to its interest in the parking lot leases, contracts and income. The principal balance outstanding at December 31, 2000 was $636,000. The Fund made various principal payments throughout 2001, and in July 2001 the final principal payment totaling $336,000 was made, paying off the line of credit. The interest rate on outstanding borrowings was the bank's prime rate. Interest expense totaled $695 and $17,868 during the three months ended September 30, 2001 and 2000, respectively, and $18,616 and $96,935 during the nine months ended September 30, 2001 and 2000, respectively. Note 8 - 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 9 - Subsequent Events On November 15, 2001, the Fund will make a cash distribution totaling $254,637, of which 99% is allocable to Assignee and Limited Partners. This distribution is derived from funds provided by operating activities for the quarter ended September 30, 2001. Holders of Units will receive a cash distribution of approximately $0.18 per Unit. -6- REALTY PARKING PROPERTIES II L.P. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources The Fund acquired twelve Properties through 1994 and has sold six of the Properties through September 30, 2001. The Fund does not contemplate making any major improvements to its properties during 2001. At September 30, 2001, the Fund had a working capital position that includes cash and cash equivalents of $233,834, accounts receivable (net of real estate taxes payable) of $201,247, and accounts payable and accrued expenses of $92,050. Cash and cash equivalents decreased $227,640 during the quarter ended September 30, 2001. This decrease represents the net effect of $317,866 in cash provided by operating activities, a quarterly cash distribution to investors of $209,506, and repayment of the note payable of $336,000. The Fund has sufficient liquidity to satisfy its anticipated operating expenditures. On November 15, 2001, the Fund will make a cash distribution totaling $254,637, of which 99% is allocable to Assignee and Limited Partners. Assignee and Limited Partners will receive a cash distribution of approximately $.18 per unit. In July 2000, the Fund's line of credit agreement with a bank was amended to reduce the bank's commitment from $3,500,000 to $736,000, the principal balance outstanding at that time. The amended line of credit expired in July 2001. The collateral security provision of the loan agreement provided for the assignment of the Fund's rights as lessor to its interest in the parking lot leases, contracts and income. The principal balance at December 31, 2000 was $636,000. The Fund made various principal payments throughout 2001, and in July 2001 the final principal payment totaling $336,000 was made, paying off the line of credit. Results of Operations Parking lot rental income includes base rents and percentage rents earned pursuant to lease agreements in effect during each period. The Fund leases its facilities to Central Parking System (the "Advisor") under terms that typically include a minimum rent calculated as a percentage of certain acquisition costs. In addition, the Advisor is typically obligated to pay percentage rent, calculated as a percentage of gross parking revenues. Total parking lots rents of $425,831 were earned during the third quarter of 2001, reflecting a $7,957 decrease from the same period in 2000, due to a lower percentage rent earned at one of the property's. Total parking lots rents of $1,042,366 were earned during the nine months ended September 30, 2001, reflecting a $135,293 decrease from the same period in 2000. The decreases in parking lot rents are primarily the result of the sales of two properties during 2000 and lower percentage rent earned at two of the properties during 2001. Interest income totaling $1,888 was earned during the third quarter of 2001, reflecting a $12,584 decrease from the same period in 2000. Interest income totaling $11,361 was earned during the nine months ended September 30, 2001, reflecting a $70,719 decrease from the same period in 2000. The decreases in interest income are primarily the result of higher cash and cash equivalents balances from sales of two properties during 2000, in addition to lower interest rates earned during 2001. Expenses incurred during the three and nine months ended September 30, 2001, net of depreciation, totaled $73,082 and $249,225 respectively, reflecting decreases of $2,388 and $27,400 from the same periods in 2000. The decreases are primarily due to lower management fees as a result of the two properties that were sold during 2000. In addition, interest expense decreased due to the lower balance on the note payable. These reductions in expenses, however, were partially offset by franchise and excise taxes imposed by the State of Tennessee on the Fund's property in Nashville. Outlook On May 16, 2000, the Fund entered into a one-year land option agreement for the sale of its San Diego-Union, California property for $5,320,000. The original agreement expired in May 2001 and an option to extend was exercised for an additional three-month period. The buyer exercised its option to proceed with the purchase of the property and the option consideration, totaling $75,000, will be credited against the purchase price at closing. The closing is expected to occur during the fourth quarter 2001, however, there is no assurance that the property will be sold. -7- REALTY PARKING PROPERTIES II L.P. PART I. FINANCIAL INFORMATION Item 3. Quantitative and Qualitative Disclosures About Market Risk The Fund repaid its outstanding borrowings under its line of credit in July 2001 and has no exposure to market risk from loan borrowing costs. 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 None. -8- 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: 11/9/01 By: /s/ John M. Prugh John M. Prugh President and Director Realty Parking Company II, Inc. General Partner DATE: 11/9/01 By: /s/ Timothy M. Gisriel Timothy M. Gisriel Treasurer Realty Parking Company II, Inc. General Partner -9-

REALTY PARKING PROPERTIES II LP 10-Q