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, 2004
{ } 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, 2004 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)
300 East Lombard Street, Baltimore, Maryland 21202
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (410) 727-4083
(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 7-8
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 8
Item 4. Controls and procedures 8
Part II. Other Information
Item 1. through Item 6. 9-12
Signatures 13
REALTY PARKING PROPERTIES L.P.
Balance Sheets
June 30,
2004 December 31,
(Unaudited) 2003
-------------------- -------------------
Assets
Property held for sale $ 743,083 $ 793,083
Cash and cash equivalents 505,947 551,224
Other assets 12,098 21,880
-------------------- -------------------
$ 1,261,128 $ 1,366,187
==================== ===================
Liabilities and Partners' Capital
Liabilities
Accounts payable and accrued expenses $ 16,111 $ 52,124
Due to affiliate 17,958 26,958
-------------------- -------------------
34,069 79,082
-------------------- -------------------
Partners' Capital
General Partner (1,201) -
Assignee and Limited Partnership
Interests - $25 stated value per
unit, 1,909,127 units outstanding 1,228,160 1,287,005
Subordinated Limited Partner 100 100
-------------------- -------------------
1,227,059 1,287,105
-------------------- -------------------
$ 1,261,128 $ 1,366,187
==================== ===================
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,
2004 2003 2004 2003
---------------------------- ----------------------------
Revenues
Interest income $ 283 $ 8,305 $ 1,067 $ 10,377
------------- ------------- ------------ --------------
Expenses
Administrative, including amounts
to related party 15,315 22,565 35,660 61,776
Professional fees 800 6,000 7,300 12,500
------------- ------------- ------------ --------------
16,115 28,565 42,960 74,276
------------- ------------- ------------ --------------
Loss from continuing operations (15,832) (20,260) (41,893) (63,899)
Discontinued operations (34,101) 4,014,270 (18,153) 4,243,666
------------- ------------- ------------ --------------
Net earnings (loss) $ (49,933) $ 3,994,010 $ (60,046) $ 4,179,767
============= ============= ============ ==============
Net earnings (loss) per unit of assignee
and limited partnership interest-basic
Continuing operations $ (0.01) $ (0.01) $ (0.02) $ (0.03)
Discontinued operations (0.02) 2.10 (0.01) 2.22
------------- ------------- ------------ -------------
Total $ (0.03) $ 2.09 $ (0.03) $ 2.19
============= ============= ============ ==============
See accompanying notes to financial statements
2
REALTY PARKING PROPERTIES L.P.
Statements of Partners' Capital
Six Months Ended June 30, 2004 and 2003
(Unaudited)
Assignee
and Limited Subordinated
Partnership Limited General
Interests Partner Partner Total
--------------------------------------------------------------
Balance at December 31, 2003 $ 1,287,005 $ 100 $ - $ 1,287,105
Net loss (58,845) - (1,201) (60,046)
-------------- ------------ -------------- ---------------
Balance at June 30, 2004 $ 1,228,160 $ 100 $ (1,201) $ 1,227,059
============== ============ ============== ===============
Balance at December 31, 2002 $ 14,417,101 $ 100 $ - $ 14,417,201
Net earnings 4,170,439 - 9,328 4,179,767
Distributions to partners
Operations (457,038) - (9,328) (466,366)
Sales proceeds (6,441,554) - - (6,441,554)
-------------- ------------ -------------- ---------------
Balance at June 30, 2003 $ 11,688,948 $ 100 $ - $ 11,689,048
============== ============ ============== ===============
See accompanying notes to financial statements
3
REALTY PARKING PROPERTIES L.P.
Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30, June 30,
2004 2003
--------------------------------------
Cash flows from operating activities
Net earnings (loss) $ (60,046) $ 4,179,767
Adjustments to reconcile net earnings (loss) to net
cash provided by (used in) operating activities
Gain on properties, net - (3,769,433)
Impairment loss 50,000 -
Depreciation - 17,960
Changes in assets and liabilities
Decrease in accounts receivable
and real estate taxes payable, net - 35,781
Decrease in other assets 9,782 -
Decrease in accounts payable and
accrued expenses (36,013) (4,310)
Increase (decrease) in due to affiliate (9,000) 348,457
-------------------- -------------------
Net cash provided by (used in) operating activities (45,277) 808,222
-------------------- -------------------
Cash flows from investing activities -
proceeds from sales of properties, net - 6,441,554
-------------------- -------------------
Cash flows from financing activities -
distributions to partners - (6,907,920)
-------------------- -------------------
Net increase (decrease) in cash and cash equivalents (45,277) 341,856
Cash and cash equivalents
Beginning of period 551,224 687,402
-------------------- -------------------
End of period $ 505,947 $ 1,029,258
==================== ===================
See accompanying notes to financial statements
4
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
June 30, 2004
(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. The unaudited interim financial information
should be read in conjunction with the financial statements contained in the
2003 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, 2004 and December 31, 2003.
Note 3 - Property Held for Sale and Discontinued Operations
At June 30, 2004 and December 31, 2003, the Partnership classified its remaining
property in Kansas City as held for sale in the balance sheet, as noted below.
In accordance with the provisions of SFAS No. 144, the results of operations of
this property and the five properties sold during 2003 are reported in
discontinued operations. Income from discontinued operations is summarized as
follows:
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2004 2003 2004 2003
----------- ------------- ------------ -------------
Revenues $ 27,500 $ 278,637 $ 55,000 $ 543,024
Expenses (11,601) (33,800) (23,153) (68,791)
Impairment loss (50,000) - (50,000) -
Gain on sales of
properties, net - 3,769,433 - 3,769,433
----------- ------------- ------------ -------------
$ (34,101) $ 4,014,270 $ (18,153) $ 4,243,666
=========== ============= ============ =============
The Partnership's Kansas City property is subject to a contract of sale. The
prospective buyer has completed its due diligence and $50,000 of non refundable
earnest money is being held by the escrow agent. The closing should occur during
the third quarter of 2004, however, there is no assurance that the contract will
result in a sale. The Partnership's investment in the property is $743,083, net
of accumulated depreciation of $385,796 and impairment losses totaling $956,500
($906,500 recorded in the second half of 2003 and $50,000 recorded in the second
quarter of 2004). The impairment losses were recorded to reflect the fair value
of the property less estimated expenses associated with the sale under the terms
of the contract at that time.
5
REALTY PARKING PROPERTIES L.P.
Notes to Financial Statements
June 30, 2004
(Unaudited)
Note 3 - Property Held for Sale and Discontinued Operations (continued)
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 4 - Related Party Transactions
The General Partner earned property management fees of $661 and $3,320 (1% of
the gross revenues of the properties and other sources of income) during the
three months ended June 30, 2004 and 2003, respectively, and $1,273 and $7,831
during the six months ended June 30, 2004 and 2003, respectively (which were
recorded in discontinued operations). The General Partner was reimbursed for
certain costs incurred relating to administrative and professional services of
the Partnership totaling $17,297 and $28,799 for the three months ended June 30,
2004 and 2003, respectively, and $39,836 and $52,869 for the six months ended
June 30, 2004 and 2003, 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.
Note 5 - Net Earnings (Loss) Per Unit of Assignee and Limited Partnership
Interest
Net earnings (loss) per unit of assignee and limited partnership interest is
disclosed on the statements of operations and is based upon 1,909,127 units
outstanding.
6
REALTY PARKING PROPERTIES L.P.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At June 30, 2004, the Partnership had a working capital position that
included cash of $505,947, and accounts payable and accrued expenses of $34,069.
Cash and cash equivalents decreased $17,952 during the second quarter of 2004,
as a result of operating activities.
The Partnership has suspended distributions pending the sale of its
final property in Kansas City. A final liquidating distribution will be made
upon completion of its sale.
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 Kansas City property held for sale at June
30, 2004, and the five properties sold in 2003. 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.
Continuing Operations
Continuing operations includes interest earned on cash and cash
equivalents and administrative expenses and professional fees not directly
identifiable with a specific property sold or held for sale.
Expenses incurred during the three and six months ended June 30, 2004
totaled $16,115 and $42,960 reflecting decreases of $12,450 and $31,316 from the
same periods in 2003, respectively. The decreases are the result of lower
administrative expenses, as a result of the five property sales in 2003.
Discontinued Operations
Discontinued operations reflect parking revenue from the Partnership's
Kansas City property held for sale at June 30, 2004 and the five properties sold
in 2003.
Parking lot revenue of $27,500 and $55,000 was earned during the three
and six months ended June 30, 2004, reflecting decreases of $251,137 and
$488,024 from the same periods in 2003, respectively. The decreases are the
result of the five property sales in 2003.
Expenses incurred during the three and six months ended June 30, 2004
totaled $11,601 and $23,153 reflecting decreases of $22,199 and $45,638 from the
same periods in 2003, respectively. The decreases are the result of the five
property sales in 2003.
The Partnership's Kansas City property is subject to a contract of
sale. The prospective buyer has completed its due diligence and $50,000 of non
refundable earnest money is being held by the escrow agent. The closing should
occur during the third quarter of 2004, however, there is no assurance that the
contract will result in a sale. The Partnership's investment in the property is
$743,083, net of accumulated depreciation of $385,796 and impairment losses
totaling $956,500 ($906,500 recorded in the second half of 2003 and $50,000
recorded in the second quarter of 2004). The impairment losses were recorded to
reflect the fair value of the property less estimated expenses associated with
the sale under the terms of the contract at that time.
7
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
An evaluation was performed under the supervision of management,
including the Chief Executive Officer and Chief Financial Officer of
the General Partner, of the effectiveness as of June 30, 2004 of the
design and operation of disclosure controls and procedures 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 of the General Partner
concluded that the design and operation of these disclosure controls
and procedures were effective. No changes in the Partnership's
internal control over financial reporting occurred during the last
fiscal quarter that have materially affected, or are reasonably likely
to materially affect, the Partnership's internal control over
financial reporting.
8
REALTY PARKING PROPERTIES L.P.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Inapplicable
Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of
Equity Securities
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
(31.1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(31.2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
(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:
None
9
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: 08/06/04 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Realty Parking Company, Inc.
General Partner
10
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: 08/06/04 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Realty Parking Company, Inc.
General Partner
11
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, 2004
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: 08/06/04 By: /s/ John M. Prugh
John M. Prugh
Chief Executive Officer
Realty Parking Company, Inc.
General Partner
Date: 08/06/04 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Chief Financial Officer
Realty Parking Company, Inc.
General Partner
12
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: 08/06/04 By: /s/ John M. Prugh
John M. Prugh
President and Director
Realty Parking Company, Inc.
General Partner
DATE: 08/06/04 By: /s/ Timothy M. Gisriel
Timothy M. Gisriel
Treasurer
Realty Parking Company, Inc.
General Partner
13