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 June 30, 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 35B, 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)
June 30, December 31,
2004 2003
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Assets
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Property and equipment, all held for sale $ 4,756,725 4,743,805
Less accumulated depreciation 2,531,480 2,531,480
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2,225,245 2,212,325
Cash and equivalents 194,194 225,551
Other assets 252,345 207,016
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Total assets $ 2,671,784 2,644,892
=============== ===============
Liabilities and Partners' Equity
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Mortgage loan payable -- 14,418
Accounts payable and accrued expenses 110,023 42,761
Other liabilities 69,811 88,330
Equity in losses of unconsolidated joint
ventures in excess of investment 1,004,207 1,046,561
Partners' equity 1,487,743 1,452,822
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Total liabilities and partners' equity $ 2,671,784 2,644,892
=============== ===============
Condensed Statements of Operations
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(Unaudited)
Three months ended June 30, Six months ended June 30,
----------------------------- --------------------------
2004 2003 2004 2003
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Rental income $218,046 215,657 427,240 428,073
Other income 1,383 7,294 5,254 12,595
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Total income 219,429 222,951 432,494 440,668
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Property operating costs 163,184 140,552 310,826 281,386
Administrative expense - affiliates 29,015 30,570 61,831 65,018
Other administrative expense 26,500 28,052 67,178 70,504
Interest -- 1,141 92 2,591
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Total expenses 218,699 200,315 439,927 419,499
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Income (loss) before equity in earnings of
joint ventures 730 22,636 (7,433) 21,169
Equity in earnings of joint ventures 25,429 24,515 42,354 64,656
-------- -------- -------- --------
Net income $ 26,159 47,151 34,921 85,825
======== ======== ======== ========
Net income per limited partnership unit $ 2.54 4.57 3.39 8.33
======== ======== ======== ========
Weighted average limited partnership units
outstanding 10,000 10,000 10,000 10,000
======== ======== ======== ========
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Condensed Statements of Cash Flows
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(Unaudited)
Six months ended June 30,
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2004 2003
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Cash provided by (used in):
Operating activities:
Net income $ 34,921 85,825
Adjustments:
Equity in earnings of joint ventures (42,354) (64,656)
Other, principally changes in other assets and liabilities 3,414 (36,302)
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Net cash used in operating activities (4,019) (15,133)
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Investing activities:
Additions to property and equipment (12,920) (25,598)
Distributions from joint venture -- 52,000
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Net cash provided by (used in) investing activities (12,920) 26,402
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Financing activities - principal payments on mortgage loans (14,418) (27,415)
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Net decrease in cash and equivalents (31,357) (16,146)
Cash and equivalents at beginning of period 225,551 235,302
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Cash and equivalents at end of period $ 194,194 219,156
========= =========
Notes to Financial Statements
Six months ended June 30, 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
- ----------------------
At June 30, 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 and six month periods ended June 30, 2004 and 2003 was
approximately $46,000 and $92,000, respectively.
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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June 30, December 31,
2004 2003
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Assets:
Net property, held for sale $ 1,697,152 1,684,255
Cash and equivalents 31,343 26,667
Escrow deposits 745,764 871,080
Other assets 199,225 245,242
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Total assets $ 2,673,484 2,827,244
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Liabilities:
Mortgage loan payable 5,007,843 5,060,888
Accounts payable and accrued expenses 104,238 288,337
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Total liabilities 5,112,081 5,349,225
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Partners' deficit:
The Partnership (1,119,883) (1,161,575)
RPILP - VI A (1,318,714) (1,360,406)
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Total partners' deficit (2,438,597) (2,521,981)
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Total liabilities and partners' deficit $ 2,673,484 2,827,244
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Operating Information
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Three months ended June 30, Six months ended June 30,
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2004 2003 2004 2003
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Rental income $199,500 199,500 399,000 399,000
Other 46,062 50,773 92,512 98,717
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Total income 245,562 250,273 491,512 497,717
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Property operating costs 55,784 73,900 146,614 115,996
Interest 105,675 106,856 210,909 213,149
Administrative 35,893 19,093 50,605 36,472
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Total expenses 197,352 199,849 408,128 365,617
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Net income $ 48,210 50,424 83,384 132,100
======== ======== ======== ========
Allocation of net income:
The Partnership 24,105 25,212 41,692 66,050
RPILP - VI A 24,105 25,212 41,692 66,050
-------- -------- -------- --------
$ 48,210 50,424 83,384 132,100
======== ======== ======== ========
Current Accounting Pronouncements
- ---------------------------------
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.
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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. Cash decreased
approximately $31,000 during the first six months of 2004. The Partnership made
no distributions to limited partners in the first six months 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 six months of 2003, the Partnership's income, excluding
equity in earnings from joint ventures, decreased approximately $28,000 from net
income of $21,169 in 2003 to a net loss of $7,433 in 2004.
Rental income remained relatively unchanged as compared to the first six months
of 2003. Other income decreased by approximately $7,000 in 2004.
Total expenses increased approximately $20,500. Property operations increased
approximately $29,000 due primarily to an increase in utilities and landscaping.
Other administrative expense, decreased approximately $3,000 due to decreased
legal and professional fees. Administrative expense to affiliates decreased
approximately $3,000 due to a decrease in management expenses. Interest expense
decreased approximately $2,500 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's cash equivalents are short-term, interest-bearing bank
accounts. The mortgage loan on the Partnership's property is fixed rate and,
therefore, is not subject to market risk.
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
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.
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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
August 16, 2004 /s/ Joseph M. Jayson
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Date Joseph M. Jayson,
Individual General Partner and
Principal Financial Officer
8