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, 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 March 31, 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 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 9
Item 4. Controls and procedures 9
Part II. Other Information
Item 1. through Item 6. 10-14
Signatures 15
REALTY PARKING PROPERTIES L.P.
Balance Sheets
March 31,
2003 December 31,
(Unaudited) 2002
------------------- --------------------
Assets
Investment in real estate $ 11,093,741 $ 11,102,721
Properties held for sale 2,672,121 2,672,121
Cash and cash equivalents 595,594 687,402
Accounts receivable 173,000 169,231
------------------- --------------------
$ 14,534,456 $ 14,631,475
=================== ====================
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 55,056 $ 64,427
Due to affiliates 28,581 30,347
Real estate taxes payable 119,500 119,500
------------------- --------------------
203,137 214,274
------------------- --------------------
Partners' Capital
General Partner (1,718) -
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,909,127 units outstanding 14,332,937 14,417,101
Subordinated Limited Partner 100 100
------------------- --------------------
14,331,319 14,417,201
------------------- --------------------
$ 14,534,456 $ 14,631,475
=================== ====================
See accompanying notes to financial statements
1
REALTY PARKING PROPERTIES L.P.
Statements of Operations
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
----------------------------------------
Revenues
Parking lots $ 201,934 $ 204,447
Interest income 2,072 3,000
------------------- --------------------
204,006 207,447
------------------- --------------------
Expenses
Administrative, including amounts
to related party 39,210 35,773
Professional fees 6,500 5,500
Management fees to related party 2,957 3,074
Real estate taxes 21,500 20,000
Depreciation 8,980 8,980
------------------- --------------------
79,147 73,327
------------------- --------------------
Income from continuing operations 124,859 134,120
Discontinued operations 60,898 88,414
------------------- --------------------
Net earnings $ 185,757 $ 222,534
=================== ====================
Net earnings per unit of assignee and
limited partnership interest-basic
Continuing operations $ 0.07 $ 0.07
Discontinued operations 0.03 0.04
------------------- --------------------
Total $ 0.10 $ 0.11
=================== ====================
See accompanying notes to financial statements
2
REALTY PARKING PROPERTIES L.P.
Statements of Partners' Capital
Three Months Ended March 31, 2003 and 2002
(Unaudited)
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
----------------------------------------------------------------------------------
Balance at December 31, 2002 $ 14,417,101 $ 100 $ - $ 14,417,201
Net earnings 182,042 - 3,715 185,757
Distribution to partners-operations (266,206) - (5,433) (271,639)
------------------ ------------------- ------------------- --------------------
Balance at March 31, 2003 $ 14,332,937 $ 100 $ (1,718) $ 14,331,319
================== =================== =================== ====================
Balance at December 31, 2001 $ 17,493,160 $ 100 $ - $ 17,493,260
Net earnings 218,083 - 4,451 222,534
Distribution to partners-operations (281,450) - (5,744) (287,194)
------------------ ------------------- ------------------- --------------------
Balance at March 31, 2002 $ 17,429,793 $ 100 $ (1,293) $ 17,428,600
================== =================== =================== ====================
See accompanying notes to financial statements
3
REALTY PARKING PROPERTIES L.P.
Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31, March 31,
2003 2002
-------------------------------------
Cash flows from operating activities
Net earnings $ 185,757 $ 222,534
Adjustments to reconcile net earnings to net cash
provided by operating activities
Depreciation 8,980 28,946
Changes in assets and liabilities
Increase in accounts receivable and
real estate taxes payable, net (3,769) (18,261)
Decrease in accounts payable and
accrued expenses (9,371) (10,204)
Increase (decrease) in due to affiliates (1,766) 5,390
------------------- --------------------
Net cash provided by operating activities 179,831 228,405
------------------- --------------------
Cash flows from financing activities -
distribution to partners (271,639) (287,194)
------------------- --------------------
Net decrease in cash and cash equivalents (91,808) (58,789)
Cash and cash equivalents
Beginning of period 687,402 834,800
------------------- --------------------
End of period $ 595,594 $ 776,011
=================== ====================
See accompanying notes to financial statements
4
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
March 31, 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 March 31, 2003 and December 31, 2002.
Note 3 - Investment in Real Estate
Investment in real estate is summarized as follows:
March 31, 2003 December 31, 2002
Land $10,508,593 $10,508,593
Buildings 899,741 899,741
Land Improvements 110,104 110,104
11,518,438 11,518,438
Less accumulated depreciation 424,697 415,717
Total $ 11,093,741 $ 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
March 31, 2003
(Unaudited)
Note 4 - Discontinued Operations
At March 31, 2003, the Partnership's 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, 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
March 31, March 31,
2003 2002
----------------- -----------------
Revenues $ 62,452 $ 112,905
Expenses (1,554) (24,491)
----------------- -----------------
$ 60,898 $ 88,414
================= =================
Note 5 - Related Party Transactions
The General Partner earned property management fees of $4,511 and $6,527 (1% of
the gross revenues of the properties and other sources of income) during the
three months ended March 31, 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 $24,070 and $37,220 for the three months ended March
31, 2003 and 2002, respectively.
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 Events
On April 15, 2003, the Partnership sold its 276-car garage, located in
Birmingham, Alabama for $1,900,000. The Partnership's investment in the property
was $875,726, net of accumulated depreciation of $313,877.
On April 15, 2003, the Partnership sold its 451-car garage, located in
Milwaukee, Wisconsin for $5,000,000. The Partnership's investment in the
property was $1,796,395, net of accumulated depreciation of $606,743.
On May 15, 2003, the Partnership plans to make a cash distribution totaling
$194,737 of which 98% is allocable to Assignee and Limited Partners. This
distribution is derived from funds provided by operating activities during the
quarter ended March 31, 2003. Assignee and Limited Partners will receive a cash
distribution of approximately $0.10 per unit.
6
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 March 31, 2003, the Partnership had a working capital position that
included cash and cash equivalents of $595,594, accounts receivable (net of real
estate taxes payable) of $42,000 and accounts payable and accrued expenses of
$83,637. Cash and cash equivalents decreased $91,808 during the first quarter of
2003. This decrease represents the net effect of $179,831 in cash provided by
operating activities, net of the quarterly distribution to investors totaling
$271,639.
On May 15, 2003, the Partnership plans to make a cash distribution
totaling $194,737 of which 98% is allocable to Assignee and Limited Partners.
This distribution is derived from funds provided by operating activities during
the quarter ended March 31, 2003. Assignee and Limited Partners will receive a
cash distribution of approximately $0.10 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 under contracts for sale at March
31, 2003, and the two properties which were sold during 2002. The prior year
amounts for these properties 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 March 31, 2003, the
Partnership leases five of its six 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 sixth 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.
7
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 held for sale
are reflected in continuing operations.
Parking lot revenue of $201,934 was earned during the three months
ended March 31, 2003, reflecting a decrease of $2,513 from the same period in
2002. The decrease is a result of reduced rental income earned at the property
operated pursuant to a management contract.
Expenses incurred during the three months ended March 15, 2003, net of
depreciation, totaled $70,167 reflecting an increase of $5,820 over the same
period in 2002.
Discontinued Operations
Discontinued operations reflect parking revenue from the Partnership's
properties in Birmingham and Milwaukee (held for sale at March 31, 2003) and the
Nashville and Houston properties (sold during 2002), net of expenses that can be
directly attributed to the properties.
Parking lot revenue of $62,452 was earned during the three months ended
March 31, 2003, reflecting a decrease of $50,453 from the same period in 2002.
The decrease is a result of the 2002 property sales.
Expenses incurred during the three months ended March 31, 2003, net of
depreciation, totaled $1,554 reflecting a decrease of $2,971 from the same
period in 2002. The decrease is the result of lower management fees and
franchise taxes.
Outlook
On April 15, 2003, the Partnership sold its 276-car garage, located in
Birmingham, Alabama for $1,900,000. The Partnership's investment in the property
was $875,726, net of accumulated depreciation of $313,877.
On April 15, 2003, the Partnership sold its 451-car garage, located in
Milwaukee, Wisconsin for $5,000,000. The Partnership's investment in the
property was $1,796,395, net of accumulated depreciation of $606,743.
The Partnership will distribute the Birmingham and Milwaukee sales
proceeds to investors after all sales expenses are known.
The Partnership's four remaining properties are currently being
marketed for sale with local brokers and there has been significant interest
from various buyers throughout the country in the 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.
8
REALTY PARKING PROPERTIES L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
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
Within the 90-day period prior to the filing of this 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.
9
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 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.
10
Exhibit 99.1
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") Report on Form 10-Q for the period ended March 31, 2003 with the
Securities and Exchange Commission on the date hereof (the "Report"), I, John M.
Prugh, the Chief Executive Officer of Realty Parking Company, Inc., General
Partner of the Partnership, 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.
By: /s/John M. Prugh
John M. Prugh
Chief Executive Officer
Realty Parking Company, Inc.
General Partner
May 12, 2003
11
Exhibit 99.2
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") Report on Form 10-Q for the period ended March 31, 2003 with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Timothy
M. Gisriel, the Chief Financial Officer of Realty Parking Company, Inc., General
Partner of the Partnership, 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 result of
operations of the Partnership.
By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Realty Parking Company, Inc.
General Partner
May 12, 2003
12
Exhibit 99.3
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 report 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 issuer as of,
and for, the periods presented in this report;
4. The issuer's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the issuer, 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 issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this report
(the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
5. The issuer's other certifying officer and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record, process,
summarize and report financial data and have identified for the issuer's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal controls; and
6. The issuer's other certifying officer and I have indicated in this
report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: 5/12/03 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Realty Parking Company, Inc.
General Partner
-13-
Exhibit 99.4
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 report 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 issuer as of,
and for, the periods presented in this report;
4. The issuer's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the issuer and have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the issuer, 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 issuer's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this report
(the "Evaluation Date"); and
c) presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures based on our evaluation as of the Evaluation
Date;
5. The issuer's other certifying officer and I have disclosed, based on our
most recent evaluation, to the issuer's auditors and the audit committee of
issuer's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record, process,
summarize and report financial data and have identified for the issuer's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal controls; and
6. The issuer's other certifying officer and I have indicated in this
report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date
of our most recent evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
Date: 5/12/03 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: 5/12/03 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company, Inc.
General Partner
DATE: 5/12/03 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company, Inc.
General Partner
-15-