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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, 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 September 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
Item 4. Controls and procedures 11
Part II. Other Information
Item 1. through Item 6. 11
Signatures 12
REALTY PARKING PROPERTIES L.P.
Balance Sheets
September 30,
2002 December 31,
(Unaudited) 2001
------------------- --------------------
Assets
Investment in real estate $ 11,111,701 $ 16,856,095
Properties held for sale 4,099,510 -
Cash and cash equivalents 719,741 834,800
Accounts receivable 263,141 170,620
------------------- --------------------
$ 16,194,093 $ 17,861,515
=================== ====================
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 69,955 $ 160,898
Due to affiliate 34,203 38,357
Real estate taxes payable 146,000 169,000
------------------- --------------------
250,158 368,255
------------------- --------------------
Partners' Capital
General Partner 174 -
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,909,127 units outstanding 15,943,661 17,493,160
Subordinated Limited Partner 100 100
------------------- --------------------
15,943,935 17,493,260
------------------- --------------------
$ 16,194,093 $ 17,861,515
=================== ====================
See accompanying notes to financial statements
1
REALTY PARKING PROPERTIES L.P.
Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2002 2001 2002 2001
--------------------------------------- ----------------------------------------
Revenues
Parking lots $ 210,148 $ 223,104 $ 634,011 $ 725,473
Interest income 4,837 7,070 10,667 29,116
------------------ ------------------- ------------------- --------------------
214,985 230,174 644,678 754,589
------------------ ------------------- ------------------- --------------------
Expenses
Administrative, including amounts
to related party 27,306 22,652 100,208 74,930
Professional fees 5,500 19,968 16,984 30,968
Management fees to related party 3,151 2,723 9,593 11,002
Real estate taxes 20,000 23,272 62,261 90,489
Depreciation 8,980 9,725 26,940 29,805
------------------ ------------------- ------------------- --------------------
64,937 78,340 215,986 237,194
------------------ ------------------- ------------------- --------------------
Income from continuing operations-
before gain on properties, net 150,048 151,834 428,692 517,395
Gain on properties, net - 456,919 - 563,151
------------------ ------------------- ------------------- --------------------
Income from continuing operations 150,048 608,753 428,692 1,080,546
Discontinued operations 593,563 111,796 851,607 348,913
------------------ ------------------- ------------------- --------------------
Net earnings $ 743,611 $ 720,549 $ 1,280,299 $ 1,429,459
================== =================== =================== ====================
Net earnings per unit of assignee and
limited partnership interest-basic
Continuing operations $ 0.08 $ 0.08 $ 0.22 $ 0.27
Discontinued operations 0.31 0.30 0.44 0.47
------------------ ------------------- ------------------- --------------------
Total $ 0.39 $ 0.38 $ 0.66 $ 0.74
================== =================== =================== ====================
See accompanying notes to financial statements
2
REALTY PARKING PROPERTIES L.P.
Statements of Partners' Capital
Nine Months Ended September 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 1,262,489 - 17,810 1,280,299
Distributions to partners -
Operations (864,138) - (17,636) (881,774)
Sale proceeds, net (1,947,850) - - (1,947,850)
------------------ ------------------- ------------------- --------------------
Balance at September 30, 2002 $ 15,943,661 $ 100 $ 174 $ 15,943,935
================== =================== =================== ====================
Balance at December 31, 2000 $ 20,516,000 $ 100 $ - $ 20,516,100
Net earnings 1,407,019 - 22,440 1,429,459
Distributions to partners -
Operations (1,099,661) - (22,440) (1,122,101)
Sales proceeds, net (1,005,236) - - (1,005,236)
------------------ ------------------- ------------------- --------------------
Balance at September 30, 2001 $ 19,818,122 $ 100 $ - $ 19,818,222
================== =================== =================== ====================
See accompanying notes to financial statements
3
REALTY PARKING PROPERTIES L.P.
Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30, September 30,
2002 2001
-------------------------------------
Cash flows from operating activities
Net earnings $ 1,280,299 $ 1,429,459
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 86,838 89,703
Gain on sales of properties, net (389,804) (563,151)
Changes in assets and liabilities
(Increase) decrease in accounts receivable
and real estate taxes payable, net (115,521) 16,519
Decrease in other assets - 21,479
Increase (decrease) in accounts payable
and accrued expenses (90,943) 53,665
Increase (decrease) in due to affiliate (4,154) 16,283
------------------- --------------------
Net cash provided by operating activities 766,715 1,063,957
------------------- --------------------
Cash flows from investing activities-
proceeds from sales of properties, net 1,947,850 1,860,261
------------------- --------------------
Cash flows from financing activities -
distributions to partners (2,829,624) (2,127,337)
------------------- --------------------
Net increase (decrease) in cash and cash equivalents (115,059) 796,881
Cash and cash equivalents
Beginning of period 834,800 833,887
------------------- --------------------
End of period $ 719,741 $ 1,630,768
=================== ====================
See accompanying notes to financial statements
4
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
September 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 September 30, 2002 and December 31, 2001.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
September 30, 2002 December 31, 2001
------------------ -----------------
Land $10,508,594 $14,520,767
Buildings 899,741 3,445,777
Land Improvements 110,104 110,104
-------------- --------------
11,518,439 18,076,648
Less accumulated depreciation 406,738 1,220,553
-------------- --------------
Total $11,111,701 $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
September 30, 2002
(Unaudited)
Note 4 - Discontinued Operations
At September 30, 2002, the Partnership's Houston, Birmingham and Milwaukee
properties were under contracts for sale and were classified as properties 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 these properties and
the Partnership's Nashville property (sold in August 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 Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2002 2001 2002 2001
------------ ------------ ----------- -----------
Revenues $ 229,035 $ 137,204 $ 536,598 $ 436,475
Expenses (25,276) (25,408) (74,795) (87,562)
Gain on sale
of property 389,804 - 389,804 -
------------ ------------ ----------- -----------
$ 593,563 $ 111,796 $ 851,607 $ 348,913
============ ============ =========== ===========
Note 5 - Sales of Properties
On August 6, 2002, the Partnership sold its Nashville, Tennessee property for
$2,000,000. The Partnership's investment in the property was $1,558,046. The
gain from the sale totaled $389,804, net of expenses of $52,150.
On September 24, 2001, the Partnership sold its Reno, Nevada property for
$950,000. The Partnership's investment in the property was $398,110, net of
accumulated depreciation of $12,535 and an impairment loss of $636,545 recorded
in 1999. The gain from the sale totaled $456,919, net of expenses of $94,971.
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 $6,067 and $5,540 (1% of gross
revenues of the properties and other sources of income) during the three months
ended September 30, 2002 and 2001, respectively, and $19,952 and $20,475 during
the nine months ended September 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 $28,136 and $14,613 for the
three months ended September 30, 2002 and 2001, respectively, and $95,156 and
$93,257 for the nine months ended September 30, 2002 and 2001, respectively.
-6-
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
September 30, 2002
(Unaudited)
Note 6 - Related Party Transactions (continued)
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 September 30, 2002, the Advisor earned an Advisory fee totaling
$40,000 from the sale of the Nashville property. As of September 30, 2001, the
Advisor earned Advisory fees totaling $40,000 from the sales of the Dayton,
Rochester and Reno properties.
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 November 14, 2002, the Partnership plans to make a cash distribution totaling
$382,753 of which 98% is allocable to Assignee and Limited Partners. This
distribution is derived from funds provided by operating activities during the
quarter ended September 30, 2002. Assignee and Limited Partners will receive a
cash distribution of approximately $0.20 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 September 30, 2002, the Partnership had a working capital position
that included cash and cash equivalents of $719,741, accounts receivable (net of
real estate taxes payable) of $117,141 and accounts payable and accrued expenses
of $104,158. Cash and cash equivalents decreased $145,302 during the third
quarter of 2002. This decrease represents the net effect of $197,798 in cash
provided by operating activities, $1,947,850 of proceeds from the sale of the
Nashville property, net of the quarterly distribution to investors totaling
$343,100, and the Nashville sale proceeds distribution to investors totaling
$1,947,850.
On August 6, 2002, the Partnership sold its Nashville, Tennessee property for
$2,000,000. The Partnership's investment in the property was $1,558,046. The
gain from the sale totaled $389,804, net of expenses of $52,150.
On November 14, 2002, the Partnership plans to make a cash distribution
totaling $382,753 of which 98% is allocable to Assignee and Limited Partners.
This distribution is derived from funds provided by operating activities during
the quarter ended September 30, 2002. Assignee and Limited Partners will receive
a cash distribution of approximately $0.20 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 properties sold in 2002 or under contracts for
sale at September 30, 2002. The prior year amounts for the properties sold or
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 lease agreements with the Advisor, and the net operating revenue of one
property operated under a management contract. The Partnership leases six 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 four of the
Partnership's properties in 2002 and reflects these same four 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
Parking lot revenue of $210,148 was earned during the three months
ended September 30, 2002, reflecting a decrease of $12,956 from the same period
in 2001. The decrease is a result of property sales during 2001 ($26,659), net
of an increase from the property operated under a management contract ($13,703).
Parking lot revenue of $634,011 was earned during the nine months ended
September 30, 2002, reflecting a decrease of $91,462 from the same period in
2001. The decrease is a result of property sales during 2001 ($107,747), net of
an increase from the property operated under a management contract ($16,285).
Expenses incurred during the three months ended September 30, 2002, net
of depreciation, totaled $55,957 reflecting a decrease of $12,658 from the same
period in 2001. Professional fees decreased because consulting expenses incurred
during 2001 were not incurred during 2002. The decrease is partially offset by
higher administrative costs resulting from additional expenses incurred in
examining property sale possibilities.
Expenses incurred during the nine months ended September 30, 2002, net
of depreciation, totaled $189,046 reflecting a decrease of $18,343 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.
Additionally, professional fees decreased because consulting expenses incurred
during 2001 were not incurred during 2002. The decreases are partially offset by
higher administrative costs resulting from additional expenses incurred in
examining property sale possibilities.
Discontinued Operations
Discontinued operations reflects parking revenue from the Partnership's
properties in Nashville, Houston, Birmingham and Milwaukee, net of expenses that
can be directly attributed to the properties.
Parking lot revenue of $229,035 was earned during the three months
ended September 30, 2002, reflecting an increase of $91,831 over the same period
in 2001. Parking lot revenue of $536,598 was earned during the nine months ended
September 30, 2002, reflecting an increase of $100,123 over the same period in
2001. The 2002 increases are primarily the result of higher percentage rents
earned at three of the properties.
Expenses incurred during the three months ended September 30, 2002, net
of depreciation, totaled $5,310 reflecting a slight decrease of $132 from the
same period in 2001. Expenses incurred during the nine months ended September
30, 2002, net of depreciation, totaled $14,897 reflecting a decrease of $12,767
from the same period in 2001. The decrease is primarily the result of lower
franchise and excise taxes.
-9-
REALTY PARKING PROPERTIES L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Outlook
The Partnership currently has signed contracts for the Houston,
Birmingham and Milwaukee properties; however, there is no assurance that these
properties 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
Item 4. Controls and Procedures
Within the 90-day period prior to the filing of this quarterly report,
an 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 defined in Rule 13a-14 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.
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.
Exhibit 99.3 Certification of Principal Executive Officer Pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 99.4 Certification of Principal Financial Officer Pursuant
to Section 302 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: 11/13/02 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company, Inc.
General Partner
DATE: 11/12/02 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company, Inc.
General Partner
-12-