FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1994
OR
[ ] 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, 1994 Commission file number 0-18494
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. II
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1436174
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1201-3RD AVENUE, SUITE 2200, SEATTLE, WASHINGTON 98101
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number, including area code)206-624-8100
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
Part I, Item 1: Balance Sheets (unaudited)
Sept. 30, Dec. 31,
1994 1993
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Assets:
Cash and short-term investments $ 489,373 $ 621,073
Storage centers, net 24,986,172 25,355,084
Other assets 201,581 133,076
Amortizable assets 200,220 212,688
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Total assets $25,877,346 $26,321,921
=========== ===========
Liabilities and Partners' Equity (Deficit):
Liabilities
Accounts payable and other accrued
expenses $ 297,062 $ 277,612
Line of Credit 1,250,000
Notes payable 2,955,095 1,755,313
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Total liabilities $ 3,252,157 $ 3,282,925
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Partners' equity (deficit)
Limited partners 22,773,542 23,166,657
General partner (148,353) (127,661)
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Total Partners' Equity (Deficit) 22,625,189 23,038,996
----------- -----------
Total Liabilities and Partners'
Equity (Deficit) $25,877,346 $26,321,921
=========== ===========
Part I, Item 1: Statements of Earnings (unaudited)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
1994 1993 1994 1993
Revenues
Rental $1,055,311 $ 951,634 $3,004,481 $2,687,146
Interest Income 5,968 284 14,076 2,266
---------- ---------- ---------- ----------
Total Revenues $1,061,279 $ 951,918 $3,018,557 $2,689,412
---------- ---------- ---------- ----------
Expenses
Operating and
administrative 240,335 246,218 726,112 681,943
Property management fees 63,326 57,103 180,393 161,232
Depreciation 207,617 208,210 623,722 607,927
Real estate taxes 83,595 74,515 253,765 226,366
Interest 58,776 45,011 177,941 117,992
Amortization 16,413 19,645 50,489 58,935
----------- ---------- ---------- ----------
Total Expenses $ 670,062 $ 650,702 $2,012,422 $1,854,395
---------- ---------- ---------- ----------
Earnings $ 391,217 $ 301,216 $1,006,135 $ 835,017
========== ========== ========== ==========
Earnings per unit of limited
partnership interest $ 3.23 $ 2.49 $ 8.30 $ 6.89
========== ========== ========== ==========
Distributions per unit
of limited partnership
interest $ 3.91 $ 3.91 $ 11.72 $ 11.72
========== ========== ========== ==========
Part I, Item 1: Statements of Cash Flows (unaudited)
Nine Months Ended Sept. 30,
--------------------------
1994 1993
------------ ------------
Operating activities:
Earnings $ 1,006,135 $ 835,017
Adjustments to reconcile earnings to net
cash provided by operating activities:
Depreciation and amortization 674,211 666,862
Changes in operating accounts:
Other assets (68,505) (42,307)
Accounts payable and other
accrued expenses 19,450 (84,843)
----------- -----------
Net cash provided by operating activities 1,631,291 1,374,729
----------- -----------
Investing activities:
Construction of and improvements
to storage centers (254,810) (119,355)
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Financing activities:
Decrease in due to affiliate (143,567)
Payment of loan costs (38,021)
Payments on notes payable (50,218) (28,562)
Distributions to partners (1,419,942) (1,419,942)
---------- -----------
Net cash used in financing activities (1,508,181) (1,592,071)
---------- -----------
Decrease in cash and short-term investments (131,700) (336,697)
Cash and short-term investments at
beginning of year 621,073 364,542
---------- -----------
Cash and short-term investments at
end of period $ 489,373 $ 27,845
=========== ===========
Supplemental disclosures of cash flow information
Cash paid during period for interest $ 177,941 $ 117,992
=========== ===========
Supplemental disclosures of non-cash investing activities
Liabilities incurred in connection with
the construction of storage centers $ --- $ 675,000
=========== ===========
Part I, Item 1: Notes to Financial Statements
Note A -- Financial Statements Preparation:
The interim financial statements are unaudited but reflect all
adjustments that are, in the opinion of management, necessary to a fair
statement of the results for the interim periods presented. These
adjustments consist primarily of normal recurring accruals. The interim
financial statements should be read in conjunction with the audited
financial statements contained in the 1993 Annual Report. The results of
operations for interim periods will not necessarily be indicative of the
operating results for the fiscal year.
Distributions and earnings per unit of limited partnership interest
are based on the total amounts distributed and allocated to limited
partners divided by the number of units outstanding during the period
(115,110 for the three and nine months ended September 30, 1994 and 1993).
Note B -- Note Payable:
During the second quarter, the Partnership converted their $1,250,000
line of credit into a seven-year adjustable rate mortgage. The new note
payable, currently bears interest at 7.125% and payments will be based on
a twenty-year amortization schedule, the interest rate changed August 1,
1994 and will change nine months thereafter. The LIBOR index plus 2.75%
is the basis for the note payable's interest rate.
Note C -- Line of Credit:
During the second quarter, the Partnership secured a $1,500,000 line
of credit for the Chesapeake expansion project with a commercial bank,
bearing interest at prime plus half a percentage point, maturing February
1995. As of September 30, 1994 there were no draws on the line of
credit. The line of credit will be replaced by permanent financing upon
completion of the Chesapeake expansion project.
Part I, Item 1: Management's Discussion & Analysis
Operating Results: Revenues increased 11% in the third quarter of
1994 to $1,061,279 from $951,918 for the corresponding quarter of 1993.
The increase resulted primarily from rate increases and continued stable
occupancies. Newport News North contributed $30,000 in increased
revenues, while the majority of remaining stores also had significant
gains. Rental rates increased to $8.16 per square foot for the third
quarter of 1994 compared to $7.80 per square foot for the same quarter of
1993, while occupancies increased to 93% for the quarter compared to 91%
for the same quarter of 1993.
Total expenses rose 3% for the quarter compared to 1993. The
majority of this increase was due to interest expense and real estate
taxes. Interest expense increased 31% from last year's third quarter due
to the Partnership drawing $1,250,000 on their line of credit during 1993
to fund the expansion at Newport News North and replenish cash reserves.
Real estate taxes increased 12% due to higher property assessments at
T.C. Jester, Newport News North and Kennydale. Recently the Partnership
won an appeal for Kennydale's 1993 and 1994's assessed value, which will
be reflected in 1994's fourth quarter.
Investing and Financing Activities: The Partnership invested
$42,000 in storage centers for security improvements at Orange and
Sterling Heights and building work at Bellefield. Capital investments
planned for the remaining quarter of 1994 total $17,000 for equipment and
roof work at Orange. These improvements are important to maintaining the
value of your investment as well as its ability to generate revenue.
During the quarter, the Partnership also purchased 2.2 acres of land
for $166,000 for the Chesapeake expansion. This project entails the
construction of two one-story buildings as well as RV parking. It will
add 25,000 square feet of storage space which will bring this store up to
57,000 square feet. The total project is expected to cost $1,500,000
which will be funded through a new line of credit.
Cash Distributions: Earnings continue to improve and the
Partnership has maintained a healthy cash position. This has enabled us
to raise cash distributions for the third quarter of 1994 to a 6.50%
annualized rate of return compared to 6.25% last quarter.
SIGNATURE
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.
IDS/SHURGARD INCOME GROWTH PARTNERS, L.P. II
Date: November 14, 1994 By: HARRELL BECK
Harrell Beck
Chief Financial Officer and Authorized Signatory
Shurgard General Partner, Inc.
General Partner