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, 2002
{ } 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, 2002 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______
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 11
Part II. Other Information
Item 1. through Item 6. 11
Signatures 12
REALTY PARKING PROPERTIES L.P.
Balance Sheets
June 30,
2002 December 31,
(Unaudited) 2001
------------------ -------------------
Assets
Investment in real estate $ 15,240,158 $ 16,856,095
Property held for sale 1,558,045 -
Cash and cash equivalents 865,043 834,800
Accounts receivable 182,620 170,620
------------------ -------------------
$ 17,845,866 $ 17,861,515
================== ===================
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 149,257 $ 160,898
Due to affiliate 36,335 38,357
Real estate taxes payable 169,000 169,000
------------------ -------------------
354,592 368,255
------------------ -------------------
Partners' Capital (Deficit)
General Partner (40) -
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,909,127 units outstanding 17,491,214 17,493,160
Subordinated Limited Partner 100 100
------------------ -------------------
17,491,274 17,493,260
------------------ -------------------
$ 17,845,866 $ 17,861,515
================== ===================
See accompanying notes to financial statements
1
REALTY PARKING PROPERTIES L.P.
Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
--------------------------------------- ---------------------------------------
Revenues
Parking lots $ 388,088 $ 409,341 $ 679,454 $ 749,667
Interest income 2,830 9,972 5,830 22,045
------------------- ------------------ ------------------ -------------------
390,918 419,313 685,284 771,712
------------------- ------------------ ------------------ -------------------
Expenses
Administrative, including amounts
to related party 37,129 19,687 72,902 52,277
Professional fees 5,984 5,500 11,484 11,000
Management fees to related party 6,918 6,978 12,988 13,796
Real estate taxes 22,261 31,667 42,261 67,217
Depreciation 28,946 30,006 57,892 60,012
------------------- ------------------ ------------------ -------------------
101,238 93,838 197,527 204,302
------------------- ------------------ ------------------ -------------------
Income from continuing operations 289,680 325,475 487,757 567,410
Gain on properties, net - 132,767 - 106,232
Discontinued operations - income from
operations of a property held for sale 24,474 22,782 48,931 35,267
------------------- ------------------ ------------------ -------------------
Net earnings $ 314,154 $ 481,024 $ 536,688 $ 708,909
=================== ================== ================== ===================
Net earnings per unit of assignee and
limited partnership interest-basic
Continuing operations $ 0.15 $ 0.17 $ 0.25 $ 0.29
Gain on properties, net - 0.06 - 0.05
Discontinued operations 0.01 0.01 0.03 0.02
------------------- ------------------ ------------------ -------------------
$ 0.16 $ 0.24 $ 0.28 $ 0.36
=================== ================== ================== ===================
See accompanying notes to financial statements
2
REALTY PARKING PROPERTIES L.P.
Statements of Partners' Capital
Six Months Ended June 30, 2002 and 2001
(Unaudited)
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
----------------------------------------------------------------------------------
Balance at December 31, 2001 $ 17,493,160 $ 100 $ - $ 17,493,260
Net earnings 525,954 - 10,734 536,688
Distributions to partners-operations (527,900) - (10,774) (538,674)
------------------- ------------------ ------------------ -------------------
Balance at June 30, 2002 $ 17,491,214 $ 100 $ (40) $ 17,491,274
=================== ================== ================== ===================
Balance at December 31, 2000 $ 20,516,000 $ 100 $ - $ 20,516,100
Net earnings 694,034 - 14,875 708,909
Distributions to partners -
Operations (728,963) - (14,875) (743,838)
Sale proceeds, net (472,469) - - (472,469)
------------------- ------------------ ------------------ -------------------
Balance at June 30, 2001 $ 20,008,602 $ 100 $ - $ 20,008,702
=================== ================== ================== ===================
See accompanying notes to financial statements
3
REALTY PARKING PROPERTIES L.P.
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30, June 30,
2002 2001
-------------------------------------
Cash flows from operating activities
Net earnings $ 536,688 $ 708,909
Adjustments to reconcile net earnings to net cash
provided by operating activities
Gain on properties, net - (106,232)
Depreciation 57,892 60,012
Changes in assets and liabilities
Increase in accounts receivable
and real estate taxes payable, net (12,000) (42,503)
Decrease in other assets - 21,479
Decrease in accounts payable
and accrued expenses (11,641) (11,933)
Increase (decrease) in due to affiliates (2,022) 5,689
------------------ -------------------
Net cash provided by operating activities 568,917 635,421
------------------ -------------------
Cash flows from investing activities -
proceeds from sales of properties, net - 1,005,232
------------------ -------------------
Cash flows from financing activities -
distributions to partners (538,674) (1,216,307)
------------------ -------------------
Net increase in cash and cash equivalents 30,243 424,346
Cash and cash equivalents
Beginning of period 834,800 833,887
------------------ -------------------
End of period $ 865,043 $ 1,258,233
================== ===================
See accompanying notes to financial statements
4
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
June 30, 2002
(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 2001 have been reclassified to conform to the presentation for
2002. The unaudited interim financial information should be read in conjunction
with the financial statements contained in the 2001 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, 2002 and December 31, 2001.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
June 30, 2002 December 31, 2001
Land $12,962,722 $14,520,767
Buildings 3,445,777 3,445,777
Land Improvements 110,104 110,104
----------- -----------
16,518,603 18,076,648
Less accumulated depreciation 1,278,445 1,220,553
----------- -----------
Total $15,240,158 $16,856,095
=========== ===========
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, 2002
(Unaudited)
Note 4 - Properties Held for Sale
At June 30, 2002, the Partnership's Nashville 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," the
results of operations of the property are reported in discontinued operations
for all periods presented in the statements of operations. Income from
operations of property held for sale is summarized as follows:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
---------------- ---------------- ---------------- --------------
Revenues $ 25,986 $ 25,986 $ 51,972 $ 51,972
Expenses 1,512 3,204 3,041 16,705
---------------- ---------------- ---------------- --------------
$ 24,474 $ 22,782 $ 48,931 $ 35,267
================ ================ ================ ==============
Note 5 - Sales of Properties
On June 1, 2001, the Partnership sold its Rochester, New York property for
$550,000. The Partnership's investment in the property was $400,000, net of an
impairment loss of $734,175 recorded in 1999. The gain from the sale totaled
$132,767, net of expenses of $17,233.
On March 1, 2001, the Partnership sold its Dayton, Ohio property for $500,000.
The Partnership's investment in the property was $499,000, net of accumulated
depreciation of $9,458 and an impairment loss of $679,959 recorded in 1999. The
loss from the sale totaled $26,535, net of expenses of $27,535.
Note 6 - Related Party Transactions
The General Partner earned a management fee of $7,358 and $7,557 (1% of gross
revenues of the properties and other sources of income) during the three months
ended June 30, 2002 and 2001, respectively, and $13,885 and $14,935 during the
six months ended June 30, 2002 and 2001, 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 $29,800 and $24,963 for the three months ended June
30, 2002 and 2001, respectively, and $67,020 and $63,685 for the six months
ended June 30, 2002 and 2001, 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, 2001, the Advisor earned Advisory fees totaling $21,000
from the sales of the Dayton and Rochester properties.
6
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
June 30, 2002
(Unaudited)
Note 7 - 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 8 - Subsequent Events
On August 6, 2002, the Partnership sold the Nashville, Tennessee property for
$2,000,000. The Partnership's investment in the property was $1,558,045. The
gain on sale and the sale proceeds (net of expenses) will be reported and
distributed to investors during the third quarter of 2002.
On August 12, 2002, the Partnership plans to make a cash distribution totaling
$343,100 of which 98% is allocable to Assignee and Limited Partners. This
distribution will be derived from funds provided by operating activities during
the quarter ended June 30, 2002. Assignee and Limited Partners will receive a
cash distribution of approximately $0.18 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 was fully invested in parking properties as it entered
2002 and currently has no plans to use working capital to perform major repairs
or improvements to any of its properties. The Partnership has sufficient cash
and cash equivalents to satisfy its liquidity requirements for 2002.
At June 30, 2002, the Partnership had a working capital position that
included cash and cash equivalents of $865,043, accounts receivable (net of real
estate taxes payable) of $13,620 and accounts payable and accrued expenses of
$185,592. Cash and cash equivalents increased $89,032 during the second quarter
of 2002. This increase represents the net effect of $340,512 in cash provided by
operating activities and the quarterly distribution to investors totaling
$251,480.
On August 12, 2002, the Partnership plans to make a cash distribution
totaling $343,100 of which 98% is allocable to Assignee and Limited Partners.
This distribution will be derived from funds provided by operating activities
during the quarter ended June 30, 2002. Assignee and Limited Partners will
receive a cash distribution of approximately $0.18 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 a property under a contract for sale at June
30, 2002. The prior year amounts for the property classified as held for sale
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 seven lease agreements with the Advisor, and the net operating revenue of one
property operated under a management contract. The Partnership leases seven of
its properties to the Advisor under terms that include a minimum rent calculated
as a percentage of certain acquisition costs. The Advisor is also obligated to
pay percentage rent, calculated as a percentage of gross parking revenues in
excess of a base amount. Additionally, one property is managed by a parking
operator under the terms of a management contract with the Partnership. Under
the terms of the 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 on one property operated under the terms of a lease
agreement and the property operated under a management contract.
Continuing Operations
Income from continuing operations includes results from seven of the
Partnership's properties in 2002 and reflects these same seven properties and
the four properties sold in 2001. Expenses not directly identifiable with a
specific property held for sale are reflected in continuing operations.
8
REALTY PARKING PROPERTIES L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Continuing Operations - continued
Total parking lot revenue of $388,088 was earned during the second
quarter of 2002, reflecting a decrease of $21,253 from the same period in 2001.
The decrease is a result of property sales during 2001 ($37,369), net of an
increase from the property operated under a management contract ($7,824) and an
increase in percentage rent earned at one of the properties during 2002
($8,292).
Total parking lot revenue of $679,454 was earned during the six months
ended June 30, 2002, reflecting a decrease of $70,213 from the same period in
2001. The decrease is a result of property sales during 2001 ($81,088), net of
an increase from the property operated under a management contract ($2,583) and
an increase in percentage rent earned at one of the properties during 2002
($8,292).
Expenses incurred during the three months ended June 30, 2002, net of
depreciation, totaled $72,292 reflecting an increase of $8,460 over the same
period in 2001. The increase is primarily due to higher administrative costs
resulting from additional expenses incurred in examining property sale
possibilities. The increase is partly offset by lower real estate tax expenses
incurred in 2002, as a result of properties sold during 2001.
Expenses incurred during the six months ended June 30, 2002, net of
depreciation, totaled $139,635 reflecting a decrease of $4,655 from the same
period in 2001. The decrease is primarily the result of lower real estate tax
expenses incurred in 2002, as a result of properties sold during 2001. The
decrease in expense is partly offset by higher administrative costs in 2002
resulting from additional expenses incurred in examining property sale
possibilities.
Discontinued Operations - Income from Operating Property Held for Sale
Discontinued operations - income from operating property held for sale
reflects parking revenue from the Partnership's property in Nashville, Tennessee
and expenses that can be directly attributed to the property.
Parking lot revenue of $25,986 and $51,972 for the three and six months
ended June 30, 2002, respectively, was unchanged from the same periods in 2001.
Expenses incurred during the three months ended June 30, 2002 totaled
$1,512 reflecting a slight decrease of $1,692 from the same period in 2001.
Expenses incurred during the six months ended June 30, 2002 totaled $3,041
reflecting a decrease of $13,644 from the same period in 2001. The decrease is
primarily the result of lower franchise and excise taxes.
Sale
On August 6, 2002, the Partnership sold the Nashville, Tennessee
property for $2,000,000. The Partnership's investment in the property was
$1,558,045. The gain on sale and the sale proceeds (net of expenses) will be
reported and distributed to investors during the third quarter of 2002.
9
REALTY PARKING PROPERTIES L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Outlook
The Partnership currently has a signed contract for the Houston
property. The buyer of the Houston property is performing its due diligence and
there is no assurance that the property will be sold.
There has been significant interest from various buyers throughout the
country in the Partnership's remaining properties. While the Partnership's
original investment strategy had anticipated that the highest returns might be
obtained by selling properties at a price reflective of their development
potential, strong returns can also be earned from selling properties based on
their parking economics.
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.
10
REALTY PARKING PROPERTIES L.P.
PART I. FINANCIAL INFORMATION
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Inapplicable
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 99.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.2 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: None
11
REALTY PARKING PROPERTIES 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 L.P.
DATE: 8/6/02 By: /s/ John M.Prugh
John M. Prugh
President and Director
Realty Parking Company, Inc.
General Partner
DATE: 8/6/02 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company, Inc.
General Partner
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