10-Q 1 de-yieldplusii_10q.txt QUARTERLY REPORT 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 period ended September 30, 2000 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: 0-18149 DEAN WITTER REALTY YIELD PLUS II, L.P. -------------------------------------- (Exact name of registrant as specified in governing instrument) Delaware 13-3469111 ----------------------- --------------------------------- (State of organization) (IRS Employer Identification No.) 2 World Trade Center, New York, NY 10048 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 392-2974 -------------- Former name, former address and former fiscal year, if changed since last report: not applicable 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 No X ------- --------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements DEAN WITTER REALTY YIELD PLUS II, L.P. BALANCE SHEETS September 30, December 31, 2000 1999 ------------------------------------------------------------------------------ ASSETS Cash and cash equivalents $2,954,075 $1,377,357 Investment in unconsolidated partnership 1,340,283 14,311,690 Other assets 2,795 19,207 ------------------------------------------------------------------------------ $4,297,153 $15,708,254 ============================================================================== LIABILITIES AND PARTNERS' CAPITAL Accounts payable and other liabilities $ 78,437 $ 66,874 ------------------------------------------------------------------------------ Partners' capital: General partners 3,447,884 3,416,870 Limited partners ($500 per Unit, 173,164 ------------------------------------------------------------------------------ Units issued) 770,832 12,224,510 Total partners' capital 4,218,716 15,641,380 ------------------------------------------------------------------------------ $4,297,153 $15,708,254 ============================================================================== See accompanying notes to financial statements. DEAN WITTER REALTY YIELD PLUS II, L.P. INCOME STATEMENTS Three and nine months ended September 30, 2000 and 1999

DEAN WITTER REALTY YIELD PLUS II, L.P. STATEMENT OF PARTNERS' CAPITAL Nine months ended September 30, 2000

See accompanying notes to financial statements. DEAN WITTER REALTY YIELD PLUS II, L.P. STATEMENTS OF CASH FLOWS Nine months ended September 30, 2000 and 1999

DEAN WITTER REALTY YIELD PLUS II, L.P. Notes to Financial Statements 1. The Partnership Dean Witter Realty Yield Plus II, L.P. (the "Partnership") is a limited partnership organized under the laws of the State of Delaware in 1988. The Managing General Partner of the Partnership is Dean Witter Realty Yield Plus II Inc., which is wholly-owned by Dean Witter Realty Inc. ("Realty"). The Partnership's last remaining property investment was its 42% share of the general partnership interest in the GCGA Limited Partnership ("GCGA"), the partnership which owned the One Congress Street office building and garage complex. As discussed in Note 2, the One Congress Street property was sold on August 31, 2000, and this sale has effectuated the dissolution of the Partnership. Accordingly, the Partnership is in the process of winding up its affairs, and it plans to distribute the balance of the Partnership's cash reserves and terminate by December 31, 2000. However, there can be no assurance that the Partnership can be terminated by such date. The Partnership's interest in GCGA was accounted for on the equity method. The Partnership's records are maintained on the accrual basis of accounting for financial and tax reporting purposes. Net income per Unit amounts were calculated by dividing net income allocated to Limited Partners, in accordance with the Partnership Agreement, by the weighted average number of Units outstanding. In the opinion of management, the accompanying financial statements, which have not been audited, include all adjustments necessary to present fairly the results for the interim periods. Except for the gain on the sale of the One Congress Street property included in equity in earnings of unconsolidated partnership in 2000, such adjustments consists only of normal recurring accruals. DEAN WITTER REALTY YIELD PLUS II, L.P. Notes to Financial Statements These financial statements should be read in conjunction with the annual financial statements and notes thereto included in the Partnership's annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 1999. Operating results of interim periods may not be indicative of the operating results for the entire year. 2. Investment in Unconsolidated Partnership Pursuant to a Purchase and Sale Agreement dated as of June 14, 2000, as amended, a nominee trust (the "Trust") acting for GCGA, the sole beneficiary of the Trust, sold the land and building which comprise the One Congress Street property on August 31, 2000 to One Congress Street JV LLC (the "Purchaser"), an unaffiliated third party, for a negotiated sale price of $118.5 million. Dean Witter Realty Yield Plus L.P.("YP"), an affiliated public partnership, owned the remaining 58% share of the general partnership interest in GCGA. GCGA also had an outstanding participating second mortgage loan (the "Loan") payable to the Partnership (42%) and YP (58%). The purchase price was paid in cash at closing. At closing, approximately $37.8 million of the sale proceeds were used to settle GCGA's first mortgage loan, $1.3 million was used to fund all tenant improvements that GCGA incurred in renting out the remaining vacant space at the property prior to the sale and $1.8 million was used to fund the remaining agreed upon repairs to the property's garage area (collectively, the "Sale Proceeds Reductions"). The cash GCGA received at closing, net of the Sale Proceeds Reductions and closing costs, was approximately $75.9 million; GCGA paid this amount to the Partnership and YP in settlement of the Loan. Accordingly, on August 31, 2000, the Partnership received approximately $31.9 million representing its 42% share of the net sale proceeds GCGA received at closing. DEAN WITTER REALTY YIELD PLUS II, L.P. Notes to Financial Statements On September 28, 2000, the Partnership paid, 100% to Limited Partners, a cash distribution of approximately $31.2 million ($180 per Unit) from the One Congress Street property sale proceeds it received. The Partnership retained a portion of the sale proceeds to cover any contingencies that may arise pursuant to the sale and, if required, pay administrative expenses and liabilities that may arise during 2000 while the Partnership winds up its affairs. Any sale proceeds remaining, subsequent to the payment of any contingencies, will be distributed to Limited Partners only. The Partnership's share of GCGA's gain on sale of the One Congress Street property was approximately $19.4 million, such gain was allocated 100% to the Limited Partners. Summarized statements of operations of GCGA are as follows:

On June 30, 2000, GCGA reclassified its interest in the One Congress Street property as real estate held for sale. Accordingly, since DEAN WITTER REALTY YIELD PLUS II, L.P. Notes to Financial Statements July 1, 2000, GCGA has not recorded depreciation expense on the building and related improvements. The balance of the Loan at the date of closing of the sale was approximately $90.3 million. Since GCGA only received net sale proceeds of $75.9 million and has only $3.2 million of additional assets at September 30, 2000, GCGA will not be able to repay the Loan in full. As a result, the Partnership and YP have jointly forgiven the unpaid Loan balance (approximately $11.2 million; the Partnership's share of this balance is $4.7 million). The Partnership did not recognize interest income and a loss on extinguishment of debt on its share of the Loan; instead, the Partnership recognized its share of GCGA's earnings exclusive of all Loan activity. 3. Related Party Transactions Realty performs administrative functions, processes investor transactions and prepares tax information for the Partnership. For the nine-month periods ended September 30, 2000 and 1999, the Partnership incurred approximately $25,000 and $26,000, respectively, for these services. These amounts are included in general and administrative expenses. DEAN WITTER REALTY YIELD PLUS II, L.P. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Liquidity and Capital Resources The Partnership's 42% share of the general partnership interest in the partnership ("GCGA") which owned the One Congress Street property was the Partnership's sole property interest. As discussed in Note 2 to the Financial Statements, the property was sold to an unaffiliated third party on August 31, 2000. The Partnership Agreement provides that the Partnership shall terminate upon the sale of the Partnership's last investment, and that dissolution shall be effective on the day on which the event arises giving rise to the dissolution. Accordingly, the Partnership dissolved pursuant to the terms of its Partnership Agreement, effective August 31, 2000, the date on which the One Congress Street property was sold. By December 31, 2000, the Partnership plans to wind up its affairs, distribute its remaining cash reserves and terminate its existence by filing a certificate of cancellation in the office of the Delaware Secretary of State. There can be no assurance that the Partnership will terminate by December 31, 2000. As discussed in Note 2 to the Financial Statements, on September 28, 2000, the Partnership paid, to Limited Partners only, a distribution of sale proceeds of $180.00 per Unit. The Partnership retained a portion of the One Congress Street sale proceeds it received to cover any contingencies that may arise during 2000 while the Partnership winds up its affairs. As of the date of closing of the sale of the One Congress Street property, the Partnership had commitments to fund approximately $533,000 for its share of tenant improvements and leasing commissions at the property. This amount was deducted from the Partnership's share of the sale proceeds it received at closing. GCGA continues to be responsible for completing the repair work it begain relating to the parking garage area of the One Congress Street property. The Partnership's share of the costs incurred up to the closing date of the sale was approximately $454,000. Also, an additional $1.2 million was deducted from GCGA's sale proceeds and placed in escrow to ensure that GCGA would complete and pay for all the required repair work; the Partnership's share of such escrow deposit was $495,000. The Managing General Partner expects that all of the escrow deposit will be needed to fund the remaining repair work which is expected to be completed in 2001. During the periods the Partnership owned its interest in the One Congress Street property, the property generated positive cash flow from operations, except for the Partnership's share of the above-mentioned repair costs. During the three and nine months ended September 30, 2000, the Partnership's contributions to GCGA (to fund its share of repair costs and tenant improvements at the property) exceeded its cash provided by operating activities and the distributions it received from GCGA (excluding its share of the One Congress Street sale proceeds). This deficit was funded from the Partnership's cash reserves. Except as discussed above and in the financial statements, the Managing General Partner is not aware of any trends or events, commitments or uncertainties that may have a material impact on liquidity. Operations Fluctuations in the Partnership's operating results for the three- and nine- month periods ended September 30, 2000 compared to 1999 are primarily attributable to the following: The increases in equity in earnings of joint venture in 2000 are primarily due to the Partnership's share of the gain on the August 2000 sale of the One Congress Street property (approximately $19.4 million). This gain was partially offset by the Partnership's share of the above-mentioned repair costs (approximately $950,000 and $720,000 for the nine and three months ended September 30, 2000, respectively) at the property in 2000. Interest and other income was greater in 2000 primarily due to interest earned on the proceeds from the One Congress Street sale before such proceeds were distributed to the Limited Partners in September 2000. There were no other individually significant factors which caused changes in revenues or expenses in 2000 compared to 1999. Inflation Inflation has been consistently low during the periods presented in the financial statements and, as a result, has not had a significant effect on the operations of the Partnership or its property interest. DEAN WITTER REALTY YIELD PLUS II, L.P. PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. a) Exhibits. An exhibit index has been filed as part of this Report on Page E1. b) Reports on Form 8-K. i) Report on Form 8-K dated August 4, 2000 disclosing the contract to sell the One Congress Street property and the Partnership's plan to pay, to Limited Partners only, a cash distribution of sale proceeds. ii) Reports on Form 8-K dated August 31, 2000 disclosing the _sale of the One Congress Street property. DEAN WITTER REALTY YIELD PLUS II, L.P. SIGNATURES 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. DEAN WITTER REALTY YIELD PLUS II, L.P. By: Dean Witter Realty Yield Plus II Inc. Managing General Partner Date: November 14 2000 By: /s/ E. Davisson Hardman, Jr. ------------------------------ E. Davisson Hardman, Jr. President Date: November 14 2000 By: /s/ Raymond E. Koch ----------------------------- Raymond E. Koch Principal Financial and Accounting Officer DEAN WITTER REALTY YIELD PLUS II, L.P. Quarter Ended September 30, 2000 Exhibit Index Exhibit No. Description ----------- ----------- 27 Financial Data Schedule

DEAN WITTER REALTY YIELD PLUS II LP 10-Q