UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2004
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to __________
Commission File Number: 0-11909
REALMARK PROPERTY INVESTORS LIMITED PARTNERSHIP - II
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(Exact name of registrant as specified in its charter)
Delaware 16-1212761
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(State of organization) (IRS Employer Identification No.)
2350 North Forest Road, Suite 12A, Getzville, New York 14068
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(Address of principal executive offices)
(716) 636-0280
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(Registrant's telephone number)
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 Exchange Act). Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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Condensed Balance Sheets
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(Unaudited)
March 31, December 31,
2004 2003
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Assets
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Cost of property and equipment, all held for sale $ 4,752,245 4,743,805
Less accumulated depreciation 2,531,480 2,531,480
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2,220,765 2,212,325
Cash and equivalents 182,354 225,551
Other assets 214,656 207,016
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Total assets $ 2,617,775 2,644,892
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Liabilities and Partners' Equity
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Mortgage loan payable - 14,418
Accounts payable and accrued expenses 58,897 42,761
Other liabilities 67,658 88,330
Equity in losses of unconsolidated joint ventures
in excess of investment 1,029,636 1,046,561
Partners' equity 1,461,584 1,452,822
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Total liabilities and partners' equity $ 2,617,775 2,644,892
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Condensed Statements of Operations
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(Unaudited)
Three months ended March 31,
-----------------------------------
2004 2003
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Rental income $ 209,194 212,416
Other income 3,871 5,301
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Total income 213,065 217,717
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Property operating costs 147,642 140,834
Administrative expense - affiliates 32,816 34,448
Other administrative expense 40,678 42,452
Interest 92 1,450
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Total expenses 221,228 219,184
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Loss before equity in earnings of joint venture (8,163) (1,467)
Equity in earnings of joint venture 16,925 40,141
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Net income $ 8,762 38,674
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Net income per limited partnership unit $ .85 3.75
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Weighted average limited partnership units outstanding 10,000 10,000
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Condensed Statements of Cash Flows
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(Unaudited)
Three months ended March 31,
------------------------------------
2004 2003
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Cash provided (used) by:
Operating activities:
Net income $ 8,762 38,674
Adjustments:
Equity in earnings of joint ventures (16,925) (40,141)
Other, principally changes in other assets and liabilities (12,176) (40,925)
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Net cash used by operating activities (20,339) (42,392)
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Investing activities:
Additions to property and equipment (8,440) (6,190)
Distributions from joint venture - 43,000
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Net cash provided (used) by investing activities (8,440) 36,810
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Financing activities - principal payments on mortgage loans (14,418) (12,937)
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Net decrease in cash and equivalents (43,197) (18,519)
Cash and equivalents at beginning of period 225,551 235,302
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Cash and equivalents at end of period $ 182,354 216,783
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Notes to Financial Statements
Three months ended March 31, 2004 and 2003
(Unaudited)
Organization
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Realmark Property Investors Limited Partnership - II (the Partnership), a
Delaware Limited Partnership was formed on March 25, 1982, to invest in a
diversified portfolio of income producing real estate investments. The general
partners are Realmark Properties, Inc. (the corporate general partner) and
Joseph M. Jayson (the individual general partner). Joseph M. Jayson is the sole
stockholder of J.M. Jayson & Company Inc. Realmark Properties, Inc. is a
wholly-owned subsidiary of J.M. Jayson & Company, Inc. Under the partnership
agreement, the general partners and their affiliates receive compensation for
services rendered and reimbursement for expenses incurred on behalf of the
Partnership.
Basis of Presentation
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The accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the instructions to Form 10-Q. Accordingly, they do not include all
of the information and notes required by accounting principles generally
accepted in the United States of America for complete financial statements. The
balance sheet at December 31, 2003 has been derived from the audited financial
statements at that date. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation, have been included. The Partnership's significant accounting
policies are set forth in its December 31, 2003 Form 10-K. The interim financial
statements should be read in conjunction with the financial statements included
therein. The interim results should not be considered indicative of the annual
results.
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Property and Equipment
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At March 31, 2004, the Partnership owned and operated an office complex in
Michigan (Northwind Office Park), and was a partner in two joint ventures. It
has a 50% interest in Research Triangle Industrial Park Joint Venture with the
other 50% owned by Realmark Property Investors Limited Partnership - VI A (RPILP
- - VI A), an entity affiliated through common general partners. It also has a 50%
interest in Research Triangle Land Joint Venture.
All of the Partnership and venture properties are being actively marketed for
sale and therefore, are not being depreciated. Depreciation expense not recorded
during the three month period ended March 31, 2004 and 2003 was approximately
$45,000.
Investment in Research Triangle Industrial Park Joint Venture
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The Venture owns and operates the Research Triangle Industrial Park West, an
office/warehouse facility located in Durham County, North Carolina. Summary
financial information of the Venture follows:
Balance Sheet Information
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March 31, December 31,
2004 2003
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Net property, held for sale $ 1,697,152 1,684,255
Cash and equivalents 3,343 26,667
Escrow deposits 707,094 871,080
Other assets 253,450 245,242
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Total assets $ 2,661,039 2,827,244
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Liabilities:
Mortgage loan payable 5,034,084 5,060,888
Accounts payable and accrued expenses 113,762 288,337
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5,147,846 5,349,225
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Partners' deficit:
The Partnership (1,143,988) (1,161,575)
RPILP - VI A (1,342,819) (1,360,406)
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(2,486,807) (2,521,981)
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Total liabilities and partners' deficit $ 2,661,039 2,827,244
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Operating Information
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Three months ended March 31,
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2004 2003
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Rental income $ 199,500 199,500
Other 46,450 47,944
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Total income 245,950 247,444
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Property operating costs 90,830 42,096
Interest 105,234 106,293
Administrative 14,712 17,379
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Total expenses 210,776 165,768
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Net income $ 35,174 81,676
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Allocation of net income:
The Partnership 17,587 40,838
RPILP - VI A 17,587 40,838
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$ 35,174 81,676
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Current Accounting Pronouncements
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In January 2003, the Financial Accounting Standards Board (FASB) issued
Financial Interpretation (FIN) No. 46, "Consolidation of Variable Interest
Entities." In December 2003, the FASB reissued FIN No. 46R with certain
modifications and clarifications. This pronouncement became effective for the
Partnership on March 31, 2004 and did not have any effect on its financial
statements.
PART I - Item 2. Management's Discussion and Analysis of Financial Condition
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and Results of Operations
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Liquidity and Capital Resources
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Effective January 1, 2001, management began formally marketing all remaining
properties in the Partnership for sale. The Partnership continues to maintain a
cash position adequate to fund capital improvements and to make scheduled debt
payments. Cash decreased approximately $43,000 during the first three months of
2004. The Partnership made no distributions to limited partners in the first
quarter of 2004. In accordance with the settlement of the lawsuit (Part II, Item
1), it is anticipated that with the sale of the remaining property and joint
ventures, the Partnership may be in a position to make distributions to the
limited partners.
Results of Operations
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As compared to the first three months of 2003, the Partnership's income,
excluding equity in earnings from joint ventures, decreased approximately $6,700
from a net loss of $1,467 in 2003 to a net loss of $8,163 in 2004.
Rental income decreased approximately 2% as compared to the first three months
of 2003, due to a decrease in occupancy at Northwind Office Park (Northwind).
Other income decreased by approximately $1,400 in 2004.
Total expenses increased approximately $2,000. Property operations increased
approximately $7,000, primarily due to an increase in utilities. Other
administrative expense decreased approximately $2,000 due to decreased legal and
professional fees. Administrative expense to affiliates decreased approximately
$1,600. Interest expense decreased approximately $1,400 as a result of the
mortgage loan being paid off in February 2004.
PART I - Item 3. Quantitative and Qualitative Disclosures About Market Risk
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The Partnership invests only in short term money market instruments, in amounts
in excess of daily working cash requirements. The rates of earnings on those
investments increase or decrease in line with the general movement of interest
rates.
PART I - Item 4. Controls and Procedures
-----------------------
Disclosure Controls and Procedures: The Partnership's management, with the
participation of the Partnership's Individual General Partner and Principal
Financial Officer, has evaluated the effectiveness of the Partnership's
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disclosure controls and procedures (as such term is defined in Rule 13a-15(e)
under the Securities Exchange Act of 1934, as amended) as of the end of the
period covered by this report. Based upon such evaluation, the Partnership's
Individual General Partner and Principal Financial Officer have concluded that,
as of the end of such period, the Partnership's disclosure controls and
procedures are effective.
Internal Control Over Financial Reporting: There have been no significant
changes in the Partnership's internal control over financial reporting (as
defined in Rule 13a-15(f) under the Securities and Exchange Act of 1934, as
amended) during the fiscal quarter to which this report relates that have
materially affected, or are reasonably likely to materially affect, the
Partnership's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
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As previously reported, the Partnership, as a nominal defendant, the General
Partners of the Partnership and of affiliated public partnerships (the "Realmark
Partnerships") and the officers and directors of the Corporate General Partner,
as defendants, had been involved in a class action litigation in New York State
court. The Partnership's settlement of this litigation is described in its
Annual Report on Form 10-K for the year ended December 31, 2003.
Item 6. Exhibits and Reports on Form 8-K
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(a) Exhibits
31. Certification Pursuant to Rule 13a-14(a), as Adopted 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.
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SIGNATURES
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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.
REALMARK PROPERTY INVESTORS LIMITED PARTNERHIP - II
May 17, 2004 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
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