ITEM 1. BUSINESS.
General. Murray Income Properties II, Ltd. (the "Partnership") was formed December 23, 1985 under the Texas Uniform Limited Partnership Act to acquire recently constructed income-producing shopping centers located in growth markets. As of November 1989, the Partnership became governed by the Texas Revised Limited Partnership Act. The General Partners of the Partnership are Murray Realty Investors IX, Inc., a Texas corporation, and Crozier Partners IX, Ltd., a Texas limited partnership.
In September 1986, the Partnership acquired a 15% interest in Tower Place Joint Venture, which owns Tower Place Festival Shopping Center ("Tower Place"). The remaining 85% interest in the joint venture is owned by Murray Income Properties I, Ltd. ("MIP I"), a publicly-registered real estate limited partnership, the general partners of which are affiliates of the General Partners. The Partnership also acquired Paddock Place Shopping Center ("Paddock Place") on December 17, 1986, Germantown Collection Shopping Center ("Germantown") on February 9, 1988, and 1202 Industrial Place (an office/warehouse facility) on February 26, 1988. All acquisitions were paid for in cash. Paddock Place, Germantown and 1202 Industrial Place were sold during 2000. For a more detailed description of the joint venture interest owned by the Partnership at December 31, 2000, see "Item 2.
ITEM 2. PROPERTIES.
As of December 31, 2000, the Partnership owns a 15% interest in Tower Place Joint Venture which owns the property described below:
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS.
There are no material legal proceedings to which the General Partners or the Partnership is a party or to which any of the Partnership's properties are subject.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth quarter of the year covered by this report through the solicitation of proxies or otherwise.
PART II
ITEM 5.
ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP INTERESTS AND RELATED SECURITY HOLDER MATTERS.
A public market for Interests does not exist and is not likely to develop. Consequently, a Limited Partner may not be able to liquidate its investment in the event of emergency or for any other reason, and Interests may not be readily accepted as collateral for a loan. Further, the transfer of Interests is subject to certain limitations. For a description of such limitations, see Article XIII of the Agreement of Limited Partnership as contained in the Prospectus dated February 20, 1986 filed as a part of Amendment No. 1 to Registrant's Form S-11 Registration Statement (File No. 33-2394) attached hereto as Exhibit 99b.
At December 31, 2000, there were 2,100 record holders, owning an aggregate of 314,687 Interests.
The Partnership made its initial Cash Distribution from Operations following the quarter ended November 30, 1986, the first complete quarter subsequent to the acceptance of subscriptions for the minimum number of Interests offered, and has continued to make distributions after each subsequent quarter. See "Item 6.
ITEM 6. SELECTED FINANCIAL DATA.
[FN]
* Based on Limited Partnership Interests outstanding throughout the year and net earnings or distributions allocated to the Limited Partners.
The above selected financial data should be read in conjunction with the financial statements and related notes appearing in Item 8 of this report.
ITEM 7.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Liquidity and Capital Resources
On March 10, 2000, in a special meeting of the Limited Partners, the Limited Partners approved the proposed sale of the Partnership's properties, the subsequent dissolution and liquidation of the Partnership upon the sale of the Partnership's last property, and an amendment to the Partnership
Agreement to permit the proposed asset sale, dissolution and liquidation on the terms set forth in a proxy statement mailed to the Limited Partners on or about January 14, 2000.
In April 2000, the Partnership's properties were put on the market and the General Partners began actively soliciting offers. In August 2000, a contract was signed for the sale of Paddock Place, in September 2000, a contract was signed for the sale of 1202 Industrial Place, and in October 2000, a contract was signed for the sale of Germantown.
On November 15, 2000, the Partnership sold Paddock Place for a sales price of $9,400,000. After reductions for the collection of the straight line rent receivable of $45,237 and sales costs of $302,813, the sale resulted in net sales proceeds of $9,051,950. The Partnership recorded a gain on sale in the amount of $2,472,139 related to this sale.
On December 1, 2000, the Partnership sold 1202 Industrial Place for a sales price of $4,800,000. After reduction for the collection of the straight line rent receivable of $290,445 and sales costs of $177,679, the sale resulted in net sales proceeds of $4,331,876. The Partnership recorded a gain on sale in the amount of $1,716,867 related to this sale.
On December 13, 2000, the Partnership sold Germantown for a sales price of $9,250,000. After reduction for the collection of the straight line rent receivable of $46,419 and sales costs of $277,308, the sale resulted in net sales proceeds of $8,926,272. The Partnership recorded a gain on sale in the amount of $3,384,263 related to this sale.
If the Partnership is successful in selling its interest in Tower Place Joint Venture, the Partnership will be liquidated and dissolved. Effective March 10, 2000, the Partnership's properties were reported as properties held for sale at the lower of carrying value or fair value less estimated cost to sell. Management of the Partnership expects no loss to result from the sale of properties, and no adjustment was made to account for the reclassification to properties held for sale
As of December 31, 2000, the Partnership had cash and cash equivalents of $10,290,961, which included $10,260,693 invested in money market instruments. Such amounts represent cash generated from operations, sales of properties held for sale, and working capital reserves. The increase in cash and cash equivalents from December 31, 1999 to December 31, 2000 is primarily due to the sale of three of the Partnership's properties.
As of December 31, 2000, the Partnership's only significant asset, other than cash, is its 15% interest in Tower Place Joint Venture, accounted for on the equity method.
During the year ended December 31, 2000, the Partnership made Cash Distributions from Operations totaling $2,779,735 and Cash Distributions from Sales or Refinancings totaling $12,946,668. Subsequent to December 31, 2000 the Partnership made a Cash Distribution from Operations of $362,668 and Cash Distributions from Sales or Refinancings totaling $1,675,152, which related to the three months ended December 31, 2000. The funds distributed were derived from the net cash flow generated from operations of the Partnership's properties, the sale of properties held for sale, and from interest earned, net of administrative expenses, on funds invested in short-term money market instruments and certificates of deposit.
Future liquidity is currently expected to result from cash generated from the operations of the Partnership's remaining property (which could be affected negatively in the event of weakened occupancies and/or rental rates), interest earned on funds invested in short-term money market instruments and ultimately through the sale of the Partnership's final property.
Results of Operations
Rental income decreased $105,668 (3%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999. Rental income increased $133,709 (5%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998. The following information details the rental income generated, bad debt expense incurred, and average occupancy for the years ended December 31, 2000, 1999 and 1998.
Rental income at Paddock Place in Nashville, Tennessee decreased $41,985 (4%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999. During the Partnership's ownership of Paddock Place during 2000, rental income increased, primarily because of higher occupancy. The property was sold on November 15, 2000 thereby reducing the overall income received versus the year ended December 31, 1999. Rental income at Paddock Place decreased $10,939 (1%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998. In 1999, decreases in base rents due to lower average occupancy were offset by increases in percentage rent received from J. Alexander's Restaurant and tenant reimbursements for common area maintenance costs and real estate taxes.
Rental income at Germantown in Germantown (Memphis), Tennessee increased $4,764, (less than 1%), for the year ended December 31, 2000 as compared to the year ended December 31, 1999. During the Partnership's ownership of Germantown during 2000, rental income increased, primarily due to higher rental rates and increases in tenant reimbursements for real estate taxes. The property was sold on December 13, 2000, and, despite being owned by the Partnership for only 11 1/2 months during 2000, still generated higher rental income than for all of the year ended December 31, 1999. Rental income at Germantown increased $46,352 (4%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998. Increases in base rents in 1999 due to higher occupancies and increases in tenant reimbursements for common area maintenance costs were offset by decreases in tenant reimbursements for real estate taxes.
Rental income at 1202 Industrial Place in Grand Prairie (Dallas), Texas decreased $68,447 (10%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999. During the Partnership's ownership of 1202 Industrial Place during 2000, rental income decreased primarily due to a decrease in tenant reimbursements for common area maintenance costs and insurance costs. The property was sold on December 1, 2000, resulting in the overall decrease in rental income received versus the year ended December 31, 1999. Rental income at 1202 Industrial Place increased $98,296 (16%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998, primarily due to higher rental rates on a lease extension with Pierce Leahy, the
warehouse's primary tenant, and an increase in tenant reimbursements for common area maintenance costs, real estate taxes and insurance costs.
"Equity in earnings of joint venture" represents the Partnership's 15% interest in the earnings of Tower Place Joint Venture. Rental income at Tower Place in Pineville (Charlotte), N.C. decreased $603,472 (33%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999, primarily due to lower occupancy and lower tenant reimbursements for common area maintenance costs, real estate taxes, and insurance costs. General Cinema, which occupied 28% of the total leaseable space at Tower Place, terminated its lease on February 14, 2000, after payment of approximately $2,200,000 as consideration for the termination of its lease, which resulted in a gain of $898,562. Pursuant to a new lease with Bally Total Fitness Corporation signed on February 14, 2000, a new Bally Total Fitness facility is being constructed on the site previously occupied by the theater. Bally will begin paying rent on April 10, 2001 and is expected to open for business during the second quarter. In addition to the Bally Total Fitness facility, approximately 6,500 square feet of new retail space is being constructed on the site previously occupied by the theater. Rental income at Tower Place increased $16,465 (1%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998, with increases in rental rates offset by decreases in tenant reimbursements for common area maintenance costs and insurance costs. Tower Place's total operating expenses decreased $56,280 (12%) in 2000 compared to 1999, with decreases in repair and maintenance costs, landscaping costs, property management fees and amortization of deferred leasing costs partially offset by higher legal expenses and leasing and promotion costs. Tower Place's total operating expenses increased $23,988 (6%) in 1999 compared to 1998, with higher repair and maintenance costs, landscaping costs and real estate taxes offset by lower utility costs and security costs. The following information details the rental income generated, bad debt expense incurred, and average occupancy for the years ended December 31, 2000, 1999 and 1998:
The Partnership's share of income from the joint venture increased $129,278 (94%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999 for the reasons stated above. The Partnership's share of income from the joint venture decreased $2,306 (2%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998 for the reasons stated above.
Tower Place averaged 78% occupancy for the year ended December 31, 2000, a 17% decrease from the previous year. In February 2000, a lease was signed with Bally Total Fitness who will occupy 25,728 square feet on the site previously occupied by General Cinema. Construction of the Bally space, along with an additional 6,480 square feet of retail space has been completed and Bally is currently building out the interior of the space. Bally will begin paying rent in April 2001 and is expected to open for business during the second quarter. One tenant who occupied 3,287 square feet vacated its space upon expiration of its lease. This space, along with an adjacent space containing 1,604 square feet, was leased to a new tenant who took occupancy in November 2000. Two new leases totaling 10,650 square feet were signed and both tenants took occupancy in 2000. Two new leases totaling 2,170 square feet were signed and both tenants took occupancy in 2001. During the year, four tenants who occupy a total of 7,420 square feet renewed their leases for three years and one tenant who occupies 2,670 square feet renewed its lease for five years. Building and parking lot repairs were completed and all of the parking lot pole lights were re-lamped. At December 31, 2000 Tower Place was 93% leased.
Prior to March 10, 2000, depreciation was provided over the estimated useful lives of the respective assets using the straight line method. The estimated useful lives of the buildings and improvements ranged from three to twenty-five years. No depreciation was provided on properties held for sale after March 10, 2000, the date on which the Partnership changed the classification of its properties to properties held for sale.
Property operating expenses consisted primarily of utility costs, repair and maintenance costs, leasing and promotion costs, real estate taxes, insurance and property management fees. Total property operating expenses decreased $33,888 (4%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999 primarily due to the sale during the fourth quarter of 2000 of the three properties owned directly by the Partnership. During the Partnership's ownership of Paddock Place during 2000, property operating expenses increased, with increases in repair and maintenance costs and security service costs being offset by lower utilities and legal expenses. Paddock Place was sold on November 15, 2000. During the Partnership's ownership of Germantown during 2000, property operating expenses decreased primarily due to lower repair and maintenance costs. Germantown was sold on December 13, 2000. During the Partnership's ownership of 1202 Industrial Place during 2000, property operating expenses decreased, with lower repair and maintenance costs partially offset by higher real estate taxes. 1202 Industrial Place was sold on December 1, 2000.
Property operating expenses increased $11,876 (2%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998. The increase is due to higher repair and maintenance costs, property management fees, real estate taxes and amortization of leasing costs, offset by lower utility costs, landscaping costs and trash removal costs. Property operating expenses at Paddock Place increased $13,056 (5%), with increases in repair and maintenance costs and amortization of leasing costs being offset by decreases in trash removal costs and security costs. Property operating expenses at Germantown were flat, with increases in real estate taxes and amortization of leasing costs being offset by decreases in utilities costs and repair and maintenance costs. Property operating expenses at 1202 Industrial Place were also flat, with increases in roof repair and maintenance costs being offset by decreases in parking lot and general building repair and maintenance costs.
General and administrative expenses incurred are related to legal and accounting expenses, rent, investor services costs, salaries and benefits and various other costs required for the administration of the Partnership. General and administrative expenses increased $310,772 (98%) for the year ended December 31, 2000 as compared to the year ended December 31, 1999. During 2000, the Partnership accrued $265,000 related to severance benefits to be paid to Partnership employees once their services are no longer required. Also, investor services costs and telephone costs increased due to marketing efforts to sell the Partnership's properties and costs associated with the distribution of a portion of the net sales proceeds from the sale of the three properties directly owned by the Partnership. Also, general and administrative expenses for the year ended December 31, 2000 included $15,329 in franchise tax due to the State of Tennessee pursuant to a state law that became applicable to the Partnership on January 1, 2000.
General and administrative expenses increased $4,744 (2%) for the year ended December 31, 1999 as compared to the year ended December 31, 1998 primarily due to increases in salaries and benefits, travel and entertainment expenses, and seminars and education costs offset by decreases in legal fees, investor services costs and telephone expenses.
The effect of inflation on results of operations for the years ended December 31, 2000, 1999, and 1998 was not significant.
Words or phrases when used in the Form 10-K or other filings with the Securities and Exchange Commission, such as "does not believe" and "believes" or similar expressions, are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
The Partnership's financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, accrued property taxes payable, and security deposits. The carrying amount of these instruments approximate fair value due to the short-term nature of these instruments. Therefore, the Partnership believes it is relatively unaffected by interest rate changes or other market risks.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The following financial statements are filed as part of this report:
INDEPENDENT AUDITORS' REPORT
The Partners Murray Income Properties II, Ltd.:
We have audited the accompanying balance sheets of Murray Income Properties II, Ltd. (a limited partnership) as of December 31, 2000 and 1999, and the related statements of earnings, changes in partners' equity and cash flows for each of the years in the three-year period ended December 31, 2000. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Murray Income Properties II, Ltd. as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States of America.
KPMG LLP
Dallas, Texas February 6, 2001
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
BALANCE SHEETS DECEMBER 31, 2000 AND 1999
See accompanying notes to financial statements.
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
STATEMENTS OF EARNINGS
See accompanying notes to financial statements.
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
See accompanying notes to financial statements.
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
STATEMENTS OF CASH FLOWS
See accompanying notes to financial statements.
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
1. ORGANIZATION AND BASIS OF ACCOUNTING
The Partnership was formed December 23, 1985 by filing a Certificate and Agreement of Limited Partnership with the Secretary of State of the State of Texas. The Partnership Agreement authorized the issuance of up to 500,000 limited partnership interests at a price of $100 each, of which 314,687 limited partnership interests were issued. Proceeds from the sale of limited partnership interests, net of related selling commissions, dealer-manager fees and other offering costs, were recorded as contributed capital.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates.
On March 10, 2000, in a special meeting of the Limited Partners, the Limited Partners approved the proposed sale of the Partnership's properties, including its interest in Tower Place Joint Venture, the subsequent dissolution and liquidation of the Partnership upon the sale of the Partnership's last property, and an amendment to the Partnership Agreement to permit the proposed asset sale, dissolution and liquidation on the terms set forth in a proxy statement mailed to the Limited Partners on or about January 14, 2000. As a result, the Partnership began marketing the properties for sale, sold three properties, and continues to operate until such time as the interest in Tower Place Joint Venture is sold. If the Partnership is successful in selling its interest in Tower Place Joint Venture, the Partnership will be liquidated and dissolved. Effective March 10, 2000, the Partnership's properties were reported as properties held for sale at the lower of carrying value or fair value less estimated cost to sell. Management of the Partnership expects no loss to result from the sale of its properties, and no adjustment was made to account for the reclassification to properties held for sale.
Rental income was recognized as earned under the leases. Accordingly, the Partnership accrued rental income for the full period of occupancy using the straight line method over the related terms. At December 31, 1999, there was $326,341 of accounts receivable related to such accruals. Due to the sale of the properties, no such accounts receivable related to such accruals were recorded at December 31, 2000.
Prior to March 10, 2000, depreciation was provided over the estimated useful lives of the respective assets using the straight line method. The estimated useful lives of the buildings and improvements range from three to twenty-five years. No depreciation was provided on properties held for sale after March 10, 2000, the date on which the Partnership changed the classification of its properties to properties held for sale.
No provision for income taxes has been made as the liabilities for such taxes are those of the individual Partners rather than the Partnership. The Partnership files its tax return on the accrual basis used for Federal income tax purposes. The Partnership owned, operated and sold during 2000 two shopping centers (Germantown and Paddock Place) located in the state of Tennessee. In 1999,
Continued
MURRAY INCOME PROPERTIES II LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
Tennessee passed the "Tax Revision and Reform Act of 1999" that imposes state taxes on limited partnerships doing business within the state. This law is applicable to the Partnership effective January 1, 2000. For the year ended December 31, 2000, the Partnership has recorded state excise tax to the State of Tennessee in the amount of $271,353 and state franchise tax to the State of Tennessee in the amount of $15,329. In the accompanying balance sheet at December 31, 2000, other liabilities include $256,682 in state excise/franchise tax payable to the State of Tennessee. Because both Tennessee shopping centers were sold during the year ended December 31, 2000, the Partnership no longer has operations or assets in that state as of the end of 2000. Therefore, no future state excise/franchise taxes will be due or payable to the State of Tennessee.
Basic earnings and cash distributions per Limited Partnership Interest are based upon the Limited Partnership Interests outstanding during the year and the net earnings and cash distributions allocated to the Limited Partners in accordance with the Partnership Agreement, as amended. Basic earnings per Limited Partnership Interest is based on year-end partnership interests outstanding as there has been no change in partnership interests in any period included in these financial statements. There are no dilutive potential partnership interests and, therefore, there is no difference in basic earnings per Limited Partner Interest and diluted earnings per Limited Partner Interests.
The following schedule reflects the effect of the special allocation of depreciation and gain on sales of properties among the limited partners. There are 178,091 units designated as taxable units and 136,596 units designated as nontaxable units, as defined in the Partnership Agreement. The designation was made at the time of the original issuance of the limited partner units.
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
Certificates of deposit were held at commercial banks and were stated at cost, which approximated market. For purposes of reporting cash flows, the Partnership considered all certificates of deposit and highly liquid debt instruments with original maturities of three months or less to be cash equivalents.
The following information relates to estimated fair values of the Partnership's financial instruments as of December 31, 2000 and 1999. For cash and cash equivalents, certificates of deposit, accounts receivable, accounts payable, accrued property taxes payable, and security deposits, the carrying amounts approximated fair value because of the short maturity of these instruments.
2. PARTNERSHIP AGREEMENT
Pursuant to the terms of the Partnership Agreement, Cash Distributions from Operations ("Operating Distributions") are allocated and paid 7% to the Non-corporate General Partner, 3% to the Corporate General Partner and 90% to the Limited Partners. An amount equal to 5% of Operating Distributions out of the 7% allocated to the Non-corporate General Partner and the entire amount of Operating Distributions allocated to the Corporate General Partner is subordinated to the prior receipt by the Limited Partners of a non-cumulative 7% annual return from either Operating Distributions or Cash Distributions from Sales or Refinancings. Net profits or losses, excluding depreciation and gain or loss from sales or refinancing, are allocated to the General Partners and Limited Partners in the same proportions as the Operating Distributions for the year. All depreciation is allocated to those Limited Partners subject to Federal income taxes. Cash Distributions from the sale or refinancing of a property are allocated as follows:
(a) First, all Cash Distributions from Sales or Refinancings shall be allocated 99% to the Limited Partners and 1% to the Non-corporate General Partner until the Limited Partners have been returned their Original Invested Capital from Cash Distributions from Sales or Refinancings, plus their Preferred Return from Cash Distributions from Operations or Cash Distributions from Sales or Refinancings.
(b) Next, all Cash Distributions from Sales or Refinancings shall be allocated 99% to the General Partners and 1% to the Non-corporate General Partner in an amount equal to any unpaid Cash Distributions from Operations subordinated to the Limited Partners' 7% non-cumulative annual return. Such 99% shall be allocated 62 1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate General Partner.
Continued
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
(c) Next, all Cash Distributions from Sales or Refinancings shall be allocated 1% to the Non-corporate General Partner and 99% to the Limited Partners and the General Partners. Such 99% will be allocated 85% to the Limited Partners and 15% to the General Partners. Such 15% shall be allocated 62 1/2% to the Non-corporate General Partner and 37 1/2% to the Corporate General Partner.
(d) Upon the sale of the last property owned by the Partnership, Cash Distributions from Sales or Refinancings shall be allocated and paid to the Partners in an amount equal to, and in proportion with, their existing capital account balances. Such distributions shall be made only after distribution of all Cash Distributions from Operations and only after all allocations of Partnership income, gain, loss, deduction and credit (including net gain from the sale or other disposition of the properties) have been closed to the Partners' respective capital accounts.
3. PROPERTIES HELD FOR SALE
On November 15, 2000, the Partnership sold Paddock Place Shopping Center, located in Nashville, Tennessee, for a sales price of $9,400,000. After reductions for the collection of the straight line rent receivable of $45,237 and sales costs of $302,813, the sale resulted in net sales proceeds of $9,051,950. The Partnership recorded a gain on sale in the amount of $2,472,139 related to this sale.
On December 1, 2000, the Partnership sold 1202 Industrial Place (an office/warehouse facility), located in Grand Prairie, Texas, for a sales price of $4,800,000. After reductions for the collection of the straight line rent receivable of $290,445 and sales costs of $177,679, the sale resulted in net sales proceeds of $4,331,876. The Partnership recorded a gain on sale in the amount of $1,716,867 related to this sale.
On December 13, 2000, the Partnership sold Germantown Collection Shopping Center, located in Germantown (Memphis), Tennessee, for a sales price of $9,250,000. After reductions for the collection of the straight line rent receivable of $46,419 and sales costs of $277,308, the sale resulted in net sales proceeds of $8,926,272. The Partnership recorded a gain on sale in the amount of $3,384,263 related to this sale.
The Partnership has adopted Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information", which established standards for the way that public business enterprises report information about operating segments in audited financial statements, as well as related disclosures about products and services, geographic areas, and major customers. The Partnership defined each of its shopping centers and its warehouse as operating segments; however, management determined that all of its properties had similar economic characteristics and also met the other criteria which permitted the properties to be aggregated into one reportable segment. Management of the Partnership made decisions about resource allocation and performance assessment based on the same financial information presented throughout these financial statements.
The Partnership had no outstanding receivable balances at December 31, 2000 or 1999 which individually exceeded 5% of the Partnership's total assets.
Continued
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
Rental income from a major customer was approximately $296,000 during year ended December 31, 2000 and approximately $356,000 and $282,000 for the years 1999 and 1998, respectively.
Rental income includes $564,502, $572,487, and $563,986 in 2000, 1999, and 1998, respectively, related to reimbursements from tenants for common area maintenance costs, real estate taxes and insurance costs.
4. INVESTMENT IN JOINT VENTURE
The Partnership owns a 15% interest in Tower Place Joint Venture, a joint venture that owns and operates Tower Place located in Pineville (Charlotte), North Carolina. The Partnership accounts for the joint venture using the equity method. The remaining 85% interest in the joint venture is owned by MIP I. The Tower Place Joint Venture Agreement provides that the Partnership will share profits, losses, and cash distributions according to the Partnership's 15% ownership interest in the joint venture.
Summarized financial information for the joint venture is as follows:
5. TRANSACTIONS WITH AFFILIATES
Murray Realty Investors IX, Inc. ("MRI IX"), the Corporate General Partner, entered into a property management agreement with the Partnership for the management of 1202 Industrial Place, effective January 1, 1996. Pursuant to this agreement, MRI IX earned property management fees in the amount of $17,024, $18,792 and $17,832 during the years ended December 31, 2000, 1999 and 1998, respectively. MRI IX also entered into a property marketing agreement with the Partnership for the leasing of 1202 Industrial Place effective August 4, 1998. Pursuant to this agreement, MRI IX earned leasing commissions in the amount of $197,865 during the year ended December 31, 1998. No such fees were earned during the years ended December 31, 1999 or 2000.
Continued
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
NOTES TO FINANCIAL STATEMENTS
6. RECONCILIATION OF FINANCIAL STATEMENT NET EARNINGS AND PARTNERS' EQUITY TO FEDERAL INCOME TAX BASIS NET EARNINGS AND PARTNERS' EQUITY
Reconciliation of financial statement net earnings to Federal income tax basis net earnings is as follows:
Reconciliation of financial statement partners' equity to Federal income tax basis partners' equity is as follows:
Because many types of transactions are susceptible to varying interpretations under Federal and state income tax laws and regulations, the amounts reported above may be subject to change at a later date upon final determination by the taxing authorities.
7. SELECTED QUARTERLY FINANCIAL DATA, (UNAUDITED)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.
Murray Realty Investors IX, Inc., a Texas corporation, and Crozier Partners IX, Ltd., a Texas limited partnership, are the General Partners of the Partnership. The Limited Partners voting a majority of the interests may, without the consent of the General Partners, remove a General Partner and elect a successor General Partner.
The Partnership Agreement provides that the Partnership will have an Investment Committee consisting initially of three members, appointed by Murray Realty Investors IX, Inc. (the "Corporate General Partner"). A person appointed to the Investment Committee may be removed by the Corporate General Partner, but the Corporate General Partner must name a replacement. The acquisition, sale, financing or refinancing of a Partnership property must be approved by a majority of the members of the Investment Committee. The members of the Investment Committee currently are Messrs. Jack E. Crozier, Mitchell L. Armstrong and W. Brent Buck. Murray Realty Investors IX, Inc. is owned 60% by Mr. Armstrong and 40% by Mr. Buck. The following is a brief description of Jack E. Crozier, a general partner of Crozier Partners IX, Ltd., a General Partner, and the directors and executive officers of the Corporate General Partner:
Crozier Partners IX, Ltd., General Partner
Jack E. Crozier, 72, General Partner. From 1954 through July 1990, Mr. Crozier was affiliated with Murray Financial Corporation and various of its affiliates. From 1977 through 1988, he was President of Murray Financial Corporation, and from 1982 until June 1989, he also served as President of Murray Savings Association, a principal affiliate of Murray Financial Corporation. He served as President or Director of various other subsidiaries of Murray Financial Corporation which were engaged in real estate finance, development and management. He also served as the general partner in a number of publicly registered limited partnerships, and a number of non-registered limited partnerships, all of which had real estate as their principal assets. He is a consultant to several companies.
Murray Realty Investors IX, Inc., Corporate General Partner
The directors and executive officers of Murray Realty Investors IX, Inc. are:
Mitchell L. Armstrong, 50, President and Director. Mr. Armstrong became President of Murray Realty Investors IX, Inc. on November 15, 1989. From September 1984 to November 15, 1989, he was Senior Vice President - Product Development of Murray Realty Investors, Inc. and Murray Property Investors, and Vice President - Tax for Murray Properties Company. From November 1988 to November 15, 1989, he also served as Secretary to these companies. From August 1983 to September 1984, he was Executive Vice President of Dover Realty Investors. From September 1980 to August 1983, he was with Murray Properties Company, in charge of tax planning and reporting. From July 1972 to August 1980, he was with the international accounting firm of Deloitte Haskins and Sells (now Deloitte & Touche). Mr. Armstrong is a Certified Public Accountant and a Certified Financial Planner and holds a Bachelor of Business Administration degree with high honors in Accounting from Texas Tech University. He is a member of the American Institute of Certified Public Accountants and a member of the Institute of Certified Financial Planners.
W. Brent Buck, 45, Executive Vice President and Director. Mr. Buck became Executive Vice President of Murray Realty Investors VIII, Inc., on November 15, 1989. From September 1981 to November 15, 1989, Mr. Buck served in various capacities for Murray Properties Company and certain subsidiaries. His primary responsibilities included property acquisitions and asset management. He was responsible for initially identifying and negotiating the purchase of all
properties in the Partnership. Since their acquisition to the present time, he has continued to oversee the management of all properties of the Partnership. Mr. Buck holds a Master of Business Administration degree in Finance and a Bachelor of Public Administration degree in Urban Administration from the University of Mississippi. He also holds a Texas real estate salesman license and a Mississippi broker's license.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to an amendment to the Partnership Agreement effective November 15, 1989, Murray Income Properties II, Ltd. is reimbursed by Murray Income Properties I, Ltd. for forty-seven percent (47%) of executive compensation incurred in the management of the two partnerships. Murray Income Properties I, Ltd. is a real estate limited partnership, the general partners of which are affiliates of the General Partners. The following table presents Murray Income Properties II, Ltd.'s share of executive compensation.
SUMMARY COMPENSATION TABLE
[FN]
* Offices held in Murray Realty Investors IX, Inc., the Corporate General Partner.
(1) The Partnership provides the named executive officers with certain group life, health, medical and other non-cash benefits generally available to all salaried employees. The amounts shown in this column include the following:
(a) Matching contributions by the Partnership under its SIMPLE-IRA plan which equaled 3% of each employee's covered compensation (salary and term insurance value). During 2000 the Partnership's matching contributions were $2,106 for Mr. Armstrong and $1,562 for Mr. Buck.
(b) Full premium cost of term insurance that will benefit the executive.
The Partnership and Murray Income Properties I, Ltd. entered into severance agreements with Mr. Armstrong and Mr. Buck effective September 16, 1996. Pursuant to these agreements, upon the occurrence of specified events, the Partnership will be obligated for fifty-three (53%) of any benefits paid pursuant to the agreements to either Mr. Armstrong or Mr. Buck. The agreement with Mr. Armstrong provides for a benefit amount equal to the value of the aggregate of one month of his highest monthly salary paid at any time during the twelve months prior to his termination multiplied by fifteen (15), plus the current monthly cost of such health, disability and life benefits (including spousal or similar coverage and coverage for children) which he was receiving or entitled to receive immediately prior to termination multiplied by eighteen (18). The agreement with Mr. Buck provides for a benefit amount equal to the value of the aggregate of one month of his highest monthly salary paid at any time during the twelve months prior to his termination multiplied by twelve (12), plus the current monthly cost of such health, disability and life benefits (including
spousal or similar coverage and coverage for children) which he was receiving or entitled to receive immediately prior to termination multiplied by fourteen (14). As of December 31, 2000, the Partnership has accrued $265,000 related to benefits to be paid to all employees once their services are no longer required, which includes amounts estimated to be paid to Mr. Armstrong and Mr. Buck.
The Partnership has not paid and does not propose to pay any bonuses or deferred compensation, compensation pursuant to retirement or other plans, or other compensation to the officers, directors or partners of the General Partners other than described in the above table or the above paragraph. In addition, there are no restricted stock awards, options or stock appreciation rights, or any other long term incentive payouts.
During the operational and liquidation stages of this Partnership, the General Partners and their affiliates receive various fees and distributions. For information on these types of remuneration, reference is made to the section entitled "Management Compensation" as contained in the Prospectus dated February 20, 1986 filed as a part of Amendment No. 1 to Registrant's Form S-11 Registration Statement (File No. 33-2394) attached hereto as Exhibit 99d. See "Item 13. Certain Relationships and Related Transactions" for information on the fees and other compensation or reimbursements paid to the General Partners or their Affiliates during the year ended December 31, 2000.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
No person (including any "group" as that term is used in Section 13 (d)(3) of the Securities Exchange Act of 1934) is known to the Partnership to be the beneficial owner of more than five percent of the outstanding voting Interests as of December 31, 2000.
The following table presents certain information regarding the number of Interests owned, directly or indirectly, by (i) a general partner of a General Partner and executive officers and directors of a General Partner and (ii) a general partner of a General Partner and executive officers and directors of a General Partner as a group as of December 31, 2000:
[FN]
(1) The total of 377 Interests listed above includes 126 Interests owned beneficially and of record by First Trust Corporation, Trustee for the benefit of Mitchell L. Armstrong IRA; 195 Interests owned by Murray Realty Investors IX, Inc., a corporation in which Mr. Armstrong is an officer, director, and substantial owner; and 56 Interests owned by Crozier Partners IX, Ltd., a partnership in which Mr. Armstrong is a limited partner.
(2) The total of 251 Interests listed above includes 195 Interests owned by Murray Realty Investors IX, Inc., a corporation in which Mr. Buck is an officer, director and substantial owner; and 56 Interests owned by Crozier Partners IX, Ltd., a partnership in which Mr. Buck is a limited partner.
[FN]
(3) The total of 736 Interests listed above included 272 Interests owned by Crozier Partners IX, Ltd., a partnership in which Mr. Crozier is a general partner and 464 Interests owned by Mrs. Irma Crozier as her separate property.
No arrangements are known to the Partnership which may result in a change of control of the Partnership.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
During the year ended December 31, 2000 the Partnership was reimbursed by Murray Income Properties I, Ltd. ("MIP I") for forty-seven percent (47%) of the costs associated with the management of the Partnership and MIP I. MIP I is a publicly-registered real estate limited partnership, the general partners of which are affiliates of the General Partners. The reimbursement has been accounted for as a reduction of general and administrative expenses. Murray Realty Investors IX, Inc. ("MRI IX"), the Corporate General Partner, entered into a property management agreement with the Partnership for the management of 1202 Industrial Place, effective January 1, 1996. Pursuant to this agreement, MRI IX earned property management fees in the amount of $17,024 and $18,792 during the years ended December 31, 2000 and 1999.
PART IV
ITEM 14.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements - See Index to Financial Statements in Item 8 of this Form 10-K
2. Financial Statement Schedules with Independent Auditors' Report Thereon:
(i) Valuation and Qualifying Accounts (Schedule II) - Years ended December 31, 2000, 1999, and 1998.
(ii) Real Estate and Accumulated Depreciation (Schedule III) - December 31, 2000
All other schedules have been omitted because they are not required or the required information is shown in the financial statements or notes thereto.
(b) Reports on Form 8-K filed during the last quarter of the year:
Form 8-K, reporting under item 2, the sale of Paddock Place Shopping Center in Nashville, Tennessee on November 15, 2000, filed with the Securities and Exchange Commission on November 27, 2000. (File No. 0-14105)
Form 8-K, reporting under item 2, the sale of 1202 Industrial Place in Grand Prairie, Texas on December 1, 2000, and the sale of Germantown Shopping Center in Germantown, Tennessee on December 15, 2000, filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
(c) Exhibits:
2a Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on January 13, 2000. (File No. 0-17183)
2b Definitive Soliciting Additional Materials to Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on February 9, 2000. (File No. 0-17183)
2c Definitive Soliciting Additional Materials to Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on February 23, 2000. (File No. 0-17183)
3a Agreement of Limited Partnership of Murray Income Properties II, Ltd.. Reference is made to Exhibit A of the Prospectus dated February 20, 1986 contained in Amendment No. 1 to Partnership's Form S-11 Registration Statements filed with the Securities and Exchange Commission on February 13, 1986. (File No. 33-2294).
3b Amended and Restated Certificate and Agreement of Limited Partnership dated as of November 15, 1989. Reference is made to Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
3c Amended and Restated Certificate and Agreement of Limited Partnership dated as of January 10, 1990. Reference is made to Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
3d Amendment to Amended and Restated Certificate and Agreement of Limited Partnership, dated March 22, 2000. Reference is made to Exhibit 3d to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10a Form of Joint Venture Agreement between the Partnership and Murray Income Properties II, Ltd. Reference is made to Exhibit 10h to Post-Effective Amendment No. l to Partnership's Form S-11 Registration Statements, filed with the Securities and Exchange Commission on July 29, 1989. (File No. 33-2394)
10b Lease Agreement with General Cinema to lease certain premises as described within the Lease Agreement dated July 23, 1985 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10q to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
10c Termination of Lease Agreement with General Cinema Corporation of North Carolina, dated February 11, 2000, terminating the Lease Agreement dated July 23, 1985 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10c to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10d Lease Agreement with Bally Total Fitness Corporation to lease certain premises as described within the Lease Agreement dated February 14, 2000 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10d to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10e Management Agreement with Murray Realty Investors IX, Inc. for management and operation services described in the Management Agreement dated January 1, 1996 at 1202 Industrial Place. Reference is made to Exhibit 10a to the Form 10-Q for the Quarter ended March 31, 1996 filed with the Securities and Exchange Commission on May 13, 1996. (File No. 0-17183)
10f Marketing Agreement with Murray Realty Investors IX, Inc. for leasing services described in the Marketing Agreement dated August 4, 1998 at 1202 Industrial Place. Reference is made to Exhibit 10a to the Form 10-Q for the Quarter ended September 30, 1998 filed with the Securities and Exchange Commission on November 6, 1998. (File No. 0-17183)
10g Data Processing System Use Agreement between Murray Income Properties II, Ltd. and The Mavricc Management Systems, Inc., dated September 1, 1998. Reference is made to Exhibit 10h to the 1998 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 1999. (File No. 0-17183)
10h Management Agreement with CK Charlotte Overhead Limited Partnership for management and operation services described in the Management Agreement dated December 2, 2000 at Tower Place Festival Shopping Center. Filed herewith.
10i Management Agreement with Trammell Crow SE, Inc. for management and operation services described in the Management Agreement dated August 8, 1990 (as extended
pursuant to the Modification to Management Agreement dated December 15, 1999) at Germantown Collection Shopping Center. Reference is made to Exhibit 10i to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10j Management Agreement with Brookside Commercial Services for management and operation services described in the Management Agreement dated March 1, 1991 (as extended pursuant to the Extension of Property Management Agreement dated December 15, 1999 at Paddock Place Shopping Center. Reference is made to Exhibit 10j to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10k Severance Agreements by and among Murray Income Properties I, Ltd. and Murray Income Properties II, Ltd. and Mitchell L. Armstrong dated September 16, 1996. Reference is made to Exhibit 10a to the 1996 3rd Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 1996. (File No. 0-14105)
10l Severance Agreements by and among Murray Income Properties I, Ltd. and Murray Income Properties II, Ltd. and W. Brent Buck dated September 16, 1996. Reference is made to Exhibit 10b to the 1996 3rd Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 1996. (File No. 0-14105)
10m Purchase and Sale Agreement dated effective as of August 14, 2000 by and between the Partnership and Grace Development, Inc. Reference is made to exhibit 10.1 to Form 8-K filed with the Securities and Exchange Commission on November 27, 2000. (File No. 0-14105)
10n Amendment to Purchase and Sale Agreement dated effective as of September 19, 2000 by and between the Partnership and Grace Development, Inc. Reference is made to exhibit 10.2 to Form 8-K filed with the Securities and Exchange Commission on November 27, 2000. (File No. 0-14105)
10o Purchase and Sale Agreement dated effective as of September 25, 2000 by and between the Partnership and Iron Mountain records Management, Inc. Reference is made to exhibit 10.1 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10p Amendment to Purchase and Sale Agreement dated effective as of October 25, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.2 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10q Second Amendment to Purchase and Sale Agreement dated effective as of November 2, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.3 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10r Third Amendment to Purchase and Sale Agreement dated effective as of November 10, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.4 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10s Fourth Amendment to Purchase and Sale Agreement dated effective as of November 17, 2000 by and between the Partnership and Iron Mountain Records Management, Inc.
Reference is made to exhibit 10.5 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10t Purchase and Sale Agreement dated effective October 29, 2000 by and between the Partnership and Phillip H. McNeill, Sr. Reference is made to exhibit 10.6 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10u First Amendment to Purchase and Sale Agreement dated effective as of November 28, 2000 by and between the Partnership and Phillip H. McNeill, Sr. Reference is made to exhibit 10.7 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
99a Glossary, as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.
99c Amendment No. 9 to the Agreement of Limited Partnership contained in the Proxy Statement dated October 11, 1989. Filed herewith.
99d Management Compensation as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.
(d) Financial Statement Schedules with Independent Auditors' Report Thereon:
(i) Valuation and Qualifying Accounts (Schedule II) - Years ended December 31, 2000, 1999, and 1998.
(ii) Real Estate and Accumulated Depreciation (Schedule III) - December 31, 2000.
All other schedules have been omitted because they are not required or the required information is shown in the consolidated financial statements or notes thereto.
INDEPENDENT AUDITORS' REPORT
The Partners Murray Income Properties II, Ltd.:
Under date of February 6, 2001, we reported on the balance sheets of Murray Income Properties II, Ltd. (a limited partnership) as of December 31, 2000 and 1999, and the related statements of earnings, changes in partners' equity, and cash flows for each of the years in the three-year period ended December 31, 2000, as contained in Item 8 of this annual report on Form 10-K. In connection with our audits of the aforementioned financial statements, we also audited the related financial statement schedules as listed in Item 14(a)2 of this annual report on Form 10-K. These financial statement schedules are the responsibility of the Partnership`s management. Our responsibility is to express an opinion on these financial statement schedules based on our audits.
In our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.
KPMG LLP
Dallas, Texas February 6, 2001
Schedule II
MURRAY INCOME PROPERTIES II LTD. (a limited partnership)
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
Deductions are primarily for writeoffs of accounts receivable deemed uncollectible by management.
SCHEDULE III
MURRAY INCOME PROPERTIES II, LTD. (a limited partnership)
REAL ESTATE AND ACCUMULATED DEPRECIATION DECEMBER 31, 2000
[FN] Notes:
(A) The initial cost to the Partnership represents the original purchase price of the properties.
(B) Reconciliation of real estate owned for 2000, 1999 and 1998:
[FN] (C) Reconciliation of accumulated depreciation for 2000, 1999 and 1998:
[FN] (D) The aggregate cost of real estate at December 31, 2000 for Federal income tax purposes is $-0-.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
MURRAY INCOME PROPERTIES II, LTD.
By: Crozier Partners IX, Ltd. a General Partner
Dated: March 27, 2001 By: /s/ Jack E. Crozier ------------------------------- Jack E. Crozier a General Partner
By: Murray Realty Investors IX, Inc. a General Partner
Dated: March 27, 2001 By: /s/ Mitchell Armstrong ------------------------------- Mitchell Armstrong President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Murray Realty Investors IX, Inc. a General Partner
Dated: March 27, 2001 By: /s/ Brent Buck -------------------------------- Brent Buck Executive Vice President Director
Dated: March 27, 2001 By: /s/ Mitchell Armstrong -------------------------------- Mitchell Armstrong Chief Executive Officer Chief Financial Officer Director
INDEX TO EXHIBITS
Document
2a Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on January 13, 2000. (File No. 0-17183)
2b Definitive Soliciting Additional Materials to Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on February 9, 2000. (File No. 0-17183)
2c Definitive Soliciting Additional Materials to Proxy Statement pursuant to Section 14(a) of the Securities Exchange Act of 1934. Reference is made to the Partnership's Schedule 14A, filed with the Securities and Exchange Commission on February 23, 2000. (File No. 0-17183)
3a Agreement of Limited Partnership of Murray Income Properties II, Ltd.. Reference is made to Exhibit A of the Prospectus dated February 20, 1986 contained in Amendment No. 1 to Partnership's Form S-11 Registration Statements filed with the Securities and Exchange Commission on February 13, 1986. (File No. 33-2294).
3b Amended and Restated Certificate and Agreement of Limited Partnership dated as of November 15, 1989. Reference is made to Exhibit 3b to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
3c Amended and Restated Certificate and Agreement of Limited Partnership dated as of January 10, 1990. Reference is made to Exhibit 3c to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
3d Amendment to Amended and Restated Certificate and Agreement of Limited Partnership, dated March 22, 2000. Reference is made to Exhibit 3d to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10a Form of Joint Venture Agreement between the Partnership and Murray Income Properties II, Ltd. Reference is made to Exhibit 10h to Post-Effective Amendment No. l to Partnership's Form S-11 Registration Statements, filed with the Securities and Exchange Commission on July 29, 1989. (File No. 33-2394)
10b Lease Agreement with General Cinema to lease certain premises as described within the Lease Agreement dated July 23, 1985 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10q to the 1989 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 1989. (File No. 0-17183)
10c Termination of Lease Agreement with General Cinema Corporation of North Carolina, dated February 11, 2000, terminating the Lease Agreement dated July 23, 1985 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10c to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10d Lease Agreement with Bally Total Fitness Corporation to lease certain premises as described within the Lease Agreement dated February 14, 2000 at Tower Place Festival Shopping Center. Reference is made to Exhibit 10d to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10e Management Agreement with Murray Realty Investors IX, Inc. for management and operation services described in the Management Agreement dated January 1, 1996 at 1202 Industrial Place. Reference is made to Exhibit 10a to the Form 10-Q for the Quarter ended March 31, 1996 filed with the Securities and Exchange Commission on May 13, 1996. (File No. 0-17183)
10f Marketing Agreement with Murray Realty Investors IX, Inc. for leasing services described in the Marketing Agreement dated August 4, 1998 at 1202 Industrial Place. Reference is made to Exhibit 10a to the Form 10-Q for the Quarter ended September 30, 1998 filed with the Securities and Exchange Commission on November 6, 1998. (File No. 0-17183)
10g Data Processing System Use Agreement between Murray Income Properties II, Ltd. and The Mavricc Management Systems, Inc., dated September 1, 1998. Reference is made to Exhibit 10h to the 1998 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 1999. (File No. 0-17183)
10h Management Agreement with CK Charlotte Overhead Limited Partnership for management and operation services described in the Management Agreement dated December 2, 2000 at Tower Place Festival Shopping Center. Filed herewith.
10i Management Agreement with Trammell Crow SE, Inc. for management and operation services described in the Management Agreement dated August 8, 1990 (as extended pursuant to the Modification to Management Agreement dated December 15, 1999) at Germantown Collection Shopping Center. Reference is made to Exhibit 10i to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10j Management Agreement with Brookside Commercial Services for management and operation services described in the Management Agreement dated March 1, 1991 (as extended pursuant to the Extension of Property Management Agreement dated December 15, 1999 at Paddock Place Shopping Center. Reference is made to Exhibit 10j to the 1999 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2000. (File No. 0-17183)
10k Severance Agreements by and among Murray Income Properties I, Ltd. and Murray Income Properties II, Ltd. and Mitchell L. Armstrong dated September 16, 1996. Reference is made to Exhibit 10a to the 1996 3rd Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 1996. (File No. 0-14105)
10l Severance Agreements by and among Murray Income Properties I, Ltd. and Murray Income Properties II, Ltd. and W. Brent Buck dated September 16, 1996. Reference is made to Exhibit 10b to the 1996 3rd Quarter Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 1996. (File No. 0-14105)
10m Purchase and Sale Agreement dated effective as of August 14, 2000 by and between the Partnership and Grace Development, Inc. Reference is made to exhibit 10.1 to Form 8-K filed with the Securities and Exchange Commission on November 27, 2000. (File No. 0-14105)
10n Amendment to Purchase and Sale Agreement dated effective as of September 19, 2000 by and between the Partnership and Grace Development, Inc. Reference is made to exhibit 10.2 to Form 8-K filed with the Securities and Exchange Commission on November 27, 2000. (File No. 0-14105)
10o Purchase and Sale Agreement dated effective as of September 25, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.1 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10p Amendment to Purchase and Sale Agreement dated effective as of October 25, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.2 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10q Second Amendment to Purchase and Sale Agreement dated effective as of November 2, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.3 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10r Third Amendment to Purchase and Sale Agreement dated effective as of November 10, 2000 by and between the Partnership and Iron Mountain Records Management, Inc. Reference is made to exhibit 10.4 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10s Fourth Amendment to Purchase and Sale Agreement dated effective as of November 17, 2000 by and between the Partnership and Iron Mountain records Management, Inc. Reference is made to exhibit 10.5 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10t Purchase and Sale Agreement dated effective October 29, 2000 by and between the Partnership and Phillip H. McNeill, Sr. Reference is made to exhibit 10.6 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
10u First Amendment to Purchase and Sale Agreement dated effective as of November 28, 2000 by and between the Partnership and Phillip H. McNeill, Sr. Reference is made to exhibit 10.7 to Form 8-K filed with the Securities and Exchange Commission on December 15, 2000. (File No. 0-14105)
99a Glossary, as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.
99b Article XIII of the Agreement of Limited Partnership as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.
99c Amendment No. 9 to the Agreement of Limited Partnership contained in the Proxy Statement dated October 11, 1989. Filed herewith.
99d Management Compensation as contained in the Prospectus dated February 20, 1986 filed as part of Amendment No. 2 to Registrant's Form S-11 Registration Statement (File No. 33-2394). Filed herewith.