2
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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended March 31, 1996 Commission file number 2-47115
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(Exact name of registrant as specified in its charter)
ILLINOIS 36-6503795
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification
Number)
6210 Campbell Road Suite 140
Dallas, Texas 75248
(Address of principal executive offices)
Registrant's telephone number, including area code: (214)
380-8000.
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: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
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TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed
herewith:
Consolidated Balance Sheet as of March 31, 1996
and December 31, 1995 Page 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 and 1995 Page 4
Consolidated Statements of Cash Flows for the
Nine Months Ended March 31, 1996 and 1995 Page 5
Notes to Consolidated Financial Statement Page 6
Item 2. Results of Operations and Management's
Discussion and Analysis of Financial Condition Page 7
Liquidity and Capital Resources Page 8
Other information Page 9
Signatures Page 10
The statements, insofar as they relate to the period
subsequent to December 31, 1995, are Unaudited.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
(Unaudited)
ASSETS
Real Estate assets, at cost $137,971 $137,971
Land 841,116 841,116
Buildings and improvements 979,087 979,087
Less: Accumulated depreciation (368,243) (356,243)
Real Estate, net 610,844 622,844
Cash including cash investments 2,324 37,448
Escrow deposits 32,933 21,440
Capital replacement reserve 0 3,357
Liquidity reserve 23,570 23,570
Other assets 82,666 83,713
TOTAL ASSETS $752,337 $792,372
LIABILITIES AND PARTNERS' EQUITY:
LIABILITES
Mortgage and notes payable $1,333,309 $1,338,356
Payable to Affiliates 200,630 219,647
Distributions payable 37,190 37,190
Real estate taxes payable 4,500 0
Security deposits 13,511 13,822
Interest payable 0 9,090
Accounts payable & accrued expenses 27,170 23,235
Total liabilities 1,616,310 1,641,340
PARTNERS CAPITAL (DEFICIT)
Limited Partners (621,500) (607,245)
General Partner (242,473) (241,723)
Total Partners Capital (Deficit) (863,973) (848,968)
TOTAL LIABILITES AND PARTNER DEFICIT $752,337 $792,372
See notes to Condensed Consolidated Financial Statements
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CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months
Ended
March 31,
REVENUES 1996 1995
Rental income $113,820 $95,277
Other property 3,116 1,811
Total revenues 116,936 97,088
EXPENSES
Salaries & wages 19,186 20,055
Maintenance & repairs 23,425 38,004
Utilities 15,122 11,180
Real estate taxes 4,500 5,100
General administrative 13,715 12,844
Contract services 5,652 2,547
Insurance 2,784 2,885
Interest 27,201 27,595
Depreciation and amortization 14,512 16,711
Property management fees (a) 5,844 4,849
Total expenses 131,941 141,770
NET INCOME (LOSS) ($15,005) ($44,682)
NET INCOME PER SHARE $ (1.36) $ (4.06)
See Notes to Condensed Consolidated Financial Statements
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CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
Condensed Consolidated Statement of Cash Flows
Three
Months
Ended
March
31,
1996 1995
CASH FLOWS FROM OPERATING ACITIVTY
Net income (loss) ($15,005) ($44,682)
Adjustments to reconcile net income (loss) to
net cash
provided by operating activities:
Depreciation and amortization 12,000 12,500
Net Effect of changes in operating accounts
Escrow deposits (11,493) (29,938)
Capital Replacement Reserve 3,357 20,047
Accrued real estate taxes 4,500 5,100
Security deposits (311) 1,208
Accounts payable 3,935 (22,830)
Other assets 1,047 14,483
(1,970) (44,112)
CASH FLOWS FROM INVESTING ACTIVITES
Repayment of Interest Payable (9,090)
Repayment of mortgage notes payable (5,047) (4,654)
Proceeds from amounts due affiliates 0 41,015
Repayment of amounts due affiliates (19,017) 0
Net cash used for investing activities (33,154) 36,361
NET INCREASE (DECREASE) IN CASH AND CASH (35,124) (7,751)
EQUVILENTS
CASH AND CASH EQUIVELNTS, BEGINNING OF PERIOD 37,448 10,217
CASH AND CASH EQUIVELNTS, END OF PERIOD $2,324 $2,466
See Notes to Condensed Consolidated Financial Statements
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although
the Partnership believes that the disclosures are adequate
to make the information presented not misleading. It is
suggested that these condensed financial statements be read
in conjunction with the financial statements and notes
thereto included in the Partnership's latest annual report
on Form 10-K.
<PAGE>
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
Results of Operations
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
Revenue from property operations increased $ 19,848 or
20.44 %, for the first quarter of 1996, as compared to the
1995 first quarter. Rental income increased by $18,543 or
19.46% due to increases in occupancy and market rents.
Other income increased by $1,305 or 72.06% due primarily to
vending machine income .
The following table illustrates the components:
Increase (Decrease)
Rental income 18,543
Other income 1,305
19,848
Property operating expenses decreased $9,829 or 6.93%, for
the first quarter of 1996, as compared to the same period in
1995.
Maintenance and repairs decreased by $14,579 or 38.36%
due to substantial repairs and upgrades to apartment units
completed in the first quarter of 1995
Utilities increased by $3,942 or 35.26% due to rate and
occupancy increases.
Contract services increased $3,105 or 121.91% due to
increased ground and landscaping maintenance costs.
Property management fees increased by $995 or 20.52%,
proportionate to the increase in property income.
The following table illustrates the components by
category,:.
Increase
(Decrease)
Salaries & wages (869)
Maintenance & repairs (14,579)
Utilities 3,942
Real estate taxes (600)
General administrative 871
Contract services 3,105
Insurance (101)
Interest (394)
Depreciation and amortization (2,199)
Property management fees (a) 995
Net Increase (Decrease) (9,829)
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LIQUIDITY AND CAPITAL RESOURCES
The partnership reacquired the Brookhollow Apartments
through a foreclosure sale on December 16, 1986. The
property was recorded at its net realizable value, $746,663,
which determined to be the mortgage receivable balance of
$2,152,500 plus costs of repossession of $14,167, less
deferred gain on sale of $1,420,004.
In February, 1991, Amrecorp Realty Inc., resigned as
the Managing General Partner of the Partnership. As was
communicated to all limited partners, this step was taken in
order to minimize any effect that Amrecorp's financial
difficulties might have on the partnership. Management of
the Partnership's assets is performed by Univesco, Inc., a
Texas corporation, Robert J. Werra, President.
The operations of the Brookhollow Apartments stabilized
during 1993. The property had an operating profit for 1993.
An attempt was made to sell the property prior to March,
1993. The proposed sales price was $1,695,000. The purchaser
was not able to close the purchase and forfeited the $50,000
of its earnest money deposit. It's the General Partners
intention to continue operating the Brookhollow Apartments
while considering offers to purchase the property.
On November 12, 1993 the Partnership refinanced the
property's secured debt with a 8.15% ten year, mortgage from
Lexington Mortgage Company. The loan proceeds were provided
through a Real Estate Mortgage Investment Contract sponsored
by Donaldson, Lufkin & Jenrette. The $1,375,000 mortgage
loan provides for monthly payments of principal and interest
of $10,749 based on an amortization period of 300 months
with a final payment of approximately $1,118.000 due in
December, 2003. The loan proceeds were used to pay off the
old loan balance of $740,283, which include a discount of
$40,775 from the old lender negotiated for early payment .
The partnership agreement was amended by vote of the limited
partners to include the appointment of a new corporate
General Partner, CRREP, Inc., a Texas corporation wholly
owned by Robert J. Werra. In conjunction with the 1993
refinancing, the Partnership was required to liquidity
reserve and a capital replacement reserve which had balances
of $48,500 and $22,400, respectively, as of Dec ember 31,
1993. Each of these reserves is refundable to the
Partnership.
While it is the General Partners primary intention to
operate and manage the existing real estate investment, the
General Partner also continually evaluates this investment
in light of current economic conditions and trends to
determine if this assets should be considered for disposal.
At this time, there is no plan to dispose of Brookhollow
Apartments.
As of March 31, 1996, the Partnership had $2,324 in cash and
cash equivalents as compared to $37,448 as of December 31,
1995. The net decrease in cash of $35,124 is principally due
to operating cash flow deficits, increases in the escrow
balance, and reduction of mortgage debt and amounts due
affiliates.
The property is encumbered by a non-recourse mortgage as of
March 31, 1996. The note which bears interest at 8.15% has
required principal payments of $20,819, $22,581, $24,491,
$26,564 and $28,811 for each of the years ending December
31, 1995 through 2000, respectively.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding balloon mortgage
payments), improvements and capital expenditures will be
funded by net cash from operations. The primary source of
capital to fund future Partnership acquisitions and balloon
mortgage payments will be proceeds from the sale, financing
or refinancing of the Property.
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The Partnership has incurred negative cash flows from
operations and has a capital deficiency at March 31, 1996.
The limited and general partners have no further obligations
to infuse additional capital into the Partnership.
Accordingly, the Partnership's ability to fund operating
expenses and debt service requirements, which is necessary
to permit the realization of assets and satisfaction of
liabilities in the ordinary course of business, is
uncertain. Management intends to operate the Partnership in
its present form; however, there can be no assurance that
the Partnership will be able to generate sufficient cash
flows to meet its obligations.
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Part II
Other Information
Item 1. Legal Proceedings
The Registrant is not engaged in any material legal
proceedings other than ordinary and routine litigation
incidental to the business.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K as of September 30, 1995.
<PAGE>
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.
CAPITAL RESOURCES REAL ESTATE
PARTNERSHIP II an Illinois limited
partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date April 9, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1996 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000017294
<NAME> CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,324
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<PP&E> 979,087
<DEPRECIATION> 368,243
<TOTAL-ASSETS> 752,337
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<BONDS> 1,333,309
0
0
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<OTHER-SE> (863,973)
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<TOTAL-REVENUES> 113,820
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<OTHER-EXPENSES> 104,740
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<INTEREST-EXPENSE> 27,201
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<NET-INCOME> (15,005)
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