SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT
[X] Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 (Fee Required)
For the Fiscal year ended December 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 (No Fee Required)
For the transition period from __________ to ___________
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 (I.R.S. Employer
Incorporation or Organization) Identification Number)
6210 Campbell Road, Suite 140, Dallas, Texas 75248
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including area code (214) 38O-8OOO
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained, to the best of
Registrants knowledge in definitive proxy or information to
statements incorporated by reference in Part III of the Form 10-k
or any Amendment to this Form 10-k._____
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 9O days. Yes X . No ___.
Documents Incorporated By Reference
The Prospectus dated July 3, 1973.
PART I
Item I. Business
(a) General Development of Business: Capital Resources Real Estate
Partnership II (the "Partnership" or the "Registrant"), a
limited partnership formed under the laws of Illinois in 1972,
owns and operates the following apartment community:
Brookhollow Apartments, Tulsa, Oklahoma
(b) Financial Information about Industry Segments: Registrant's
business is the ownership and operation of certain real estate
assets. See (a) above.
(c) Narrative Description of Business:
(1) Registrant is the owner of the equity
interest in one multiple unit apartment community,
name and location of which is set forth above. Its
business is the rental and operation of the
apartment community.
(i) Renting residential apartments in the
community is the principal product/service of
Registrant. On site property management promotes the
renting of the Brookhollow Apartments (the
"Property") to residents of the Tulsa, Oklahoma
area.
(ii) Not applicable. No new product or
service is in development.
(iii) Not applicable. No raw materials are
essential to the Registrant's business.
(iv) The Registrant does not hold any patents,
trademarks, licenses, franchises or concessions.
(v) Registrant's business is not seasonal.
(vi) Not applicable. Inventory, right to return
merchandise and extended payment terms are not part of
Registrant's business.
(vii) Not applicable. The Registrant does
not depend upon any single tenant or a very few tenants.
(viii) Not applicable. Due to the nature of
Registrant's business, there is no backlog of orders.
(ix) The Registrant is not subject to renegotiation
of profits or termination of contracts at the election of
the Government.
(x) Brookhollow Apartments competes with many
apartment complexes in the Tulsa, Oklahoma area. As of
December 31, 1995, Brookhollow rentals were comparable to
rentals for competitive projects in the Tulsa area.
Item 1. Business, Continued
(xi) Registrant does not anticipate that
compliance with federal, state or local provisions
which have been enacted or adopted regulating the
discharge of materials into the environment or
otherwise relating to the protection of the
environment will have any material adverse effect
upon its capital expenditures, cash flows, earnings
or competitive position.
(xii) Registrant is a limited partnership.
The business of the limited partnership is managed
by Univesco, Inc. a Texas corporation ("Univesco").
The General Partner is CRREP, Inc. Registrant has no
employees. Univesco, Inc., a Texas corporation
wholly owned by Robert J. Werra, manages the
Registrant's property.
(d) Financial Information about Foreign and Domestic Operations
and Export Sales: Registrant has no foreign operations or export
sales.
Competition and Other Factors
The majority of the Property's leases are of six to twelve month
terms. Accordingly, operating income is highly susceptible to
varying market conditions. Occupancy and street rents are driven by
general market conditions which include job creation, new
construction of single and multi-family projects, and demolition
and other reduction in net supply of apartment units.
Rents and occupancies have generally been increasing in recent
years due to the generally positive relationship between apartment
unit supply and demand in the Partnership's markets. However, the
properties are subject to substantial competition from similar and
often newer properties in the vicinity in which they are located.
In addition, operating expenses and capitalized expenditures have
increased as units are updated and made more competitive in the
market place. (See Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations).
Item 2. Properties
At December 31, 1995 the Partnership owned Brookhollow Apartments,
a 112 unit apartment community located on 7.49 acres of land in
Tulsa Oklahoma. The Partnership purchased a fee simple interest in
Brookhollow Apartments on May 1, 1973.
For information regarding the encumbrances to which the properties
are subject and the status of the related mortgage loans, see "
Management`s Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" contained
in Item 7 hereof and Note 3 to Consolidated Financial Statements
and Schedule Index contained in Item 8.
Occupancy Rates
Per Cent
1991 1992 1993 1994 1995
Brookhollow 78.0 86.9 93.2 83.6 89.8
Item 3. Legal Proceedings
The Registrant is not engaged in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Unit Holders
No matters were submitted to a vote of the unit holders of the
Partnership during the fourth quarter of 1995.
PART II
Item 5. Market for the Registrant's Units and Related Unit Matters
The Partnership's outstanding securities are in the form of Limited
Partnership Interests ("Interests"). As of December 31, 1995 there
were 471 holders of 5005 Interests. A public market for trading
Interests has not developed and none is expected to develop.
The General Partner continues to review the Partnership's ability
to make distributions on a quarter by quarter basis. The
Partnership has not made distributions to the limited partners in
the past two years and no such distributions are anticipated in the
immediate future due to required debt service payments of the
Partnership.
An analysis of taxable income or (loss) allocated, and cash
distributed to Investors per $1,000 unit is as follows:
YEARS INCOME GAIN LOSS CASH DISTRIBUTED
1973 $528
1974 $32 $156
1975 $276
1976 $184
1977 $143
1978 $720 $120 $314
1979 $46
1980 $5
1981 $33 $61
1982 $1 $100
1983 $11
1984 $133 $28 $650
1985 $6 $134 $6 $200
1986 $39 $723 $39 $500
1987 $6
1988 $8 $1,100 $8 $500
1989 $16
1990 $4
1991 $1
1992 $1
1993 $20 $112
1994 $20 $27
1995 $16
Item 6. Selected Financial Data
The following table sets forth selected financial data regarding the
Partnership's results of operations and financial positions as of
the dates indicated. This information should be read in conjunction
with Management's Discussion and Analysis of Financial Condition
and Results of Operations contained in item 7 hereof and
Consolidated Financial Statements and notes thereto contained in
item 8 (in thousands except unit amounts).
1995 1994 1993 1992 1991
Limited Partner Units 5,005 5,005 5,005 5,005 5,005
Outstanding
Statements of Operation
Total Revenues $414 $413 $465 $480 $347
Net Income (Loss) (160) (128) 70 116 8
Income (Loss) per Limited (30) (24) 13 20 1
Partnership Unit
Gross Rentable Income per
Rentable Sq. Ft. 3.63 3.62 4.16 3.77 3.05
Cash Distributions to 0 0 112 18 20
Limited Partner
Balance Sheet
Real Estate, net 623 617 652 681 704
Total Assets 792 830 891 806 872
Mortgages Payable 1,338 1,357 1,375 740 795
Partners' Deficit (849) (689) (562) (6) (22)
Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations
This discussion should be read in conjunction with Item 6- Selected
Financial Data and Item 8 - Financial Statements and Supplemental
Information.
Results of Operations: 1995 VERSUS 1994 -
Revenue from Property Operations increased $1,431 or 0.3% as
compared to 1994, principally due to an increase in rents and
occupancy in the apartment rental markets in Tulsa, Oklahoma.
Other income for 1995 decreased $4,217 or a 26.1% decrease
primarily due to reduction of interest income due to reduction in
the Capital Replacement Reserve funds which were utilized to make
capital improvements during 1995.
Property operating expenses for 1995 increased $33,282 or 6.2%.
Payroll increases were primarily the result of cost of living
increases and additional use of contract labor. Repair and
maintenance expenses increased primarily due to mandated repairs
and reserves imposed by covenants in refinancing loan documents and
in bringing additional units on line. Interest Expense decreased
due to normal amortization of the loan balance. Depreciation and
amortization expense increased $2,175 over 1995. The increase is
partially due to $47,898 in improvements, principally appliances
and other improvements to apartment units. Management fees are
paid to an affiliated entity and represent approximately 5% of
gross revenues from operations (see Note 4 to Consolidated
Financial Statements contained in Item 8). The following table
illustrates the increases or (decreases):
Interest ($2,439)
General and administrative 451
Payroll 14,091
Repairs and maintenance 17,457
Utilities 2,182
Real estate taxes (708)
Depreciation and amortization 2,175
Management fee 73
-------
Total Increase (Decrease) in $33,282
Operating Expenses
Results of Operations: 1994 VERSUS 1993 -
Revenue from Property Operations decreased $4,576 or 1.1% as
compared to 1993, principally due to a decrease in rents and
occupancy resulting from a softening in the apartment rental
markets in Tulsa, Oklahoma.
Other income for 1994 decreased $47,265 or a 74.5% decrease
primarily due to the recognition of income on forfeited earnest
money deposits in 1993.
Property operating expenses for 1994 increased $146,378 or 37%.
Payroll increases were primarily the result of cost of living
increases and additional use of contract labor. Repair and
maintenance expenses increased primarily due to mandated repairs
and reserves imposed by covenants in refinancing loan documents and
in bringing additional units on line. General and Administrative
expenses increased in 1994 due primarily to increased legal fees
due to an attempted sale and the refinancing of the property.
Interest Expense increased by $43,388 due primarily to increases in
advances from related parties, (see Note 4, to Consolidated
Financial Statements contained in Item 8.) Depreciation and
amortization expense increased $4,903 over 1993. The increase is
partially due to $5,681 in improvements, principally appliances and
other improvements to apartment units. Property management fees are
paid to an affiliated entity and represents approximately 5% of
gross revenues from operations (see Note 4 to Consolidated
Financial Statements contained in Item 8). The following table
illustrates the increases or (decreases):
Interest $ 43,388
General and Administrative 21,109
Payroll 7,067
Maintenance and Repairs 63,339
Utilities 6,288
Real Estate Taxes 792
Depreciation and Amortization 4,903
Management Fee (508)
--------
Total Increase (Decrease)in Operating Expenses $ 146,378
---------
Liquidity and Capital Resources
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 December 31, 1995, the Partnership had $37,448 in cash and
cash equivalents as compared to $10,217 as of December 31, 1994.
The net increase in cash of $27,231 is principally due to funds
provided by Univesco totaling $140,890 during 1995 offset by
capital expenditures and negative cash flow from operations.
The property is encumbered by a non-recourse mortgage as of
December 31, 1995. 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. See Note 3 to Consolidated Financial
Statements contained in Item 8 for information regarding loan
maturities and required principal payments.
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.
The Partnership has incurred negative cash flows from operations
and has a capital deficiency at December 31, 1995. 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.
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(AN ILLINOIS LIMITED PARTNERSHIP)
ITEM 8 - FINANCIAL STATEMENTS AND SCHEDULE INDEX
- ---------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 11-12
BALANCE SHEETS 13
STATEMENTS OF OPERATIONS 14
STATEMENTS OF PARTNERS' DEFICIT 15
STATEMENTS OF CASH FLOWS 16
NOTES TO FINANCIAL STATEMENTS 17-20
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION 21-22
INDEPENDENT AUDITORS' REPORT
To the General Partner and Limited Partners of
Capital Resources Real Estate Partnership II
Dallas, Texas
We have audited the accompanying balance sheets of Capital
Resources Real Estate Partnership II (an Illinois limited
partnership) (the "Partnership") as of December 31, 1995 and 1994,
and the related statements of operations, partners' deficit and
cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial
statement schedule listed in the index at Item 14(a)(2). These
financial statements and financial statement schedule are the
responsibility of the Partnership's management. Our responsibility
is to express an opinion on the financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. 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, such financial statements present fairly, in all
material respects, the financial position of Capital Resources Real
Estate Partnership II as of December 31, 1995 and 1994, and the
results of its operations and its cash flows for each of the three
years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion,
such financial statement schedule, when considered in relation to
the basic financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
The accompanying financial statements have been prepared assuming
the Partnership will continue as a going concern. As discussed in
Note 7 to the financial statements, conditions exist which raise
substantial doubt about the Partnership's ability to continue as a
going concern unless it is able to generate sufficient cash flows
to meet its obligations and sustain its operations. Management's
plans in regard to these matters are also described in Note 7. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As discussed in Note 1, during 1995, the Partnership adopted
Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of."
DELOITTE & TOUCHE LLP
Dallas, Texas
February 22, 1996
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(An Illinois Limited Partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
- ----------------------------------------------------------------------------
ASSETS 1995 1994
INVESTMENT IN REAL ESTATE, AT COST (Note 3):
Land $ 137,971 $ 137,971
Buildings and improvements 841,116 793,218
--------- --------
979,087 931,189
Less accumulated depreciation (356,243) (313,890)
---------- --------
622,844 617,299
CASH AND CASH EQUIVALENTS 37,448 10,217
ESCROW DEPOSITS 21,440 11,752
CAPITAL REPLACEMENT RESERVE (Note 3) 3,357 70,590
LIQUIDITY RESERVE (Note 3) 23,570 23,342
OTHER ASSETS, NET OF ACCUMULATED AMORTIZATION
OF $21,497 AND $11,450 IN 1995 AND 1994,
RESPECTIVELY 83,713 97,085
--------- ---------
TOTAL $ 792,372 $ 830,285
========= =========
LIABILITIES AND PARTNERS' DEFICIT
MORTGAGE PAYABLE (Note 3) $ 1,338,356 $ 1,357,422
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 23,235 36,638
DISTRIBUTIONS PAYABLE 37,190 25,940
SECURITY DEPOSITS 13,822 11,082
ACCRUED INTEREST PAYABLE 9,090 9,839
AMOUNTS DUE TO AFFILIATES (Note 4) 219,647 78,757
--------- ---------
1,641,340 1,519,678
COMMITMENTS AND CONTINGENCIES (Note 7)
PARTNERS' DEFICIT (848,968) (689,393)
---------- ----------
TOTAL $ 792,372 $ 830,285
========== ==========
See notes to financial statements.
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(An Illinois Limited Partnership)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- ---------------------------------------------------------------------------
1995 1994 1993
INCOME:
Rentals $ 402,127 $ 396,479 $ 401,055
Other 11,964 16,181 63,446
--------- --------- ---------
Total income 414,091 412,660 464,501
OPERATING EXPENSES:
Repairs and maintenance 152,859 135,402 72,063
Payroll 99,633 85,542 78,475
General and administrative 66,550 66,091 44,990
General and administrative to
affiliate 5,088 5,096 5,088
Utilities 49,804 47,622 41,334
Real estate taxes 17,457 18,165 17,373
Interest 109,178 111,617 68,229
Depreciation and amortization 52,400 50,225 45,322
Management fees (Note 4) 20,697 20,624 21,132
-------- -------- --------
Total operating expenses 573,666 540,384 394,006
-------- -------- --------
INCOME (LOSS) (Note 5) $(159,575) $(127,724) $ 70,495
========== ========= =========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT $ (30.29) $ (24.24) $ 13.38
======== ======== ========
LIMITED PARTNERSHIP UNITS OUTSTANDING 5,005 5,005 5,005
======== ======== ========
See notes to financial statements.
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(An Illinois Limited Partnership)
STATEMENTS OF PARTNERS' DEFICIT
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- ----------------------------------------------------------------------------
General Limited
Partner Partners Total
BALANCE, JANUARY 1, 1993 $ (168,320) $ 161,782 $ (6,538)
Distributions (62,563) (563,063) (625,626)
Net income 3,525 66,970 70,495
--------- -------- --------
BALANCE, DECEMBER 31, 1993 (227,358) (334,311) (561,669)
Net loss (6,386) (121,338) (127,724)
---------- --------- --------
BALANCE, DECEMBER 31, 1994 (233,744) (455,649) (689,393)
Net loss (7,979) (151,596) (159,575)
---------- --------- --------
BALANCE, DECEMBER 31, 1995 $ (241,723) $ (607,245) $ (848,968)
=========== ========== ==========
See notes to financial statements.
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(An Illinois Limited Partnership)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- ----------------------------------------------------------------------------
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (159,575) $ (127,724) $ 70,495
Adjustments to reconcile net
income (loss) to cash provided
by operations:
Depreciation and amortization 52,400 50,225 45,322
Change in assets and liabilities:
Escrow deposits (9,688) (7,005) 24,160
Other assets 3,325 (1,881) 4,448
Accrued interest payable (749) (5,414) 9,932
Security deposits 2,740 (5,339) 641
Accounts payable and accrued
expenses (13,403) 16,831 (6,024)
Distributions payable 11,250 3,740
-------- -------- -------
45,875 51,157 78,479
-------- -------- -------
Net cash provided by (used
in) operating activities
(113,700) (76,567) 148,974
--------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in real estate (47,898) (5,680) (14,440)
Capital replacement reserve 67,233 (22,090) (48,500)
-------- ------- -------
Net cash provided by (used
in) investing activities 19,335 (27,770) (62,940)
-------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions (625,626)
Proceeds from refinancing 1,375,000
Payments on mortgages payable (19,066) (17,578) (740,283)
Refinancing costs (100,468)
Liquidity reserve (228) (942) (22,400)
Amounts due to affiliates 140,890 74,647 1,075
-------- --------- --------
Net cash provided by (used
in) financing activities 121,596 56,127 (112,702)
-------- --------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 27,231 (48,210) (26,668)
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 10,217 58,427 85,095
------- ------- -------
CASH AND CASH EQUIVALENTS, END OF
YEAR $ 37,448 $ 10,217 $ 58,427
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the year for $ 109,927 $ 117,031 $ 58,297
interest ========= ========= ========
See notes to financial statements.
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(AN ILLINOIS LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
- -----------------------------------------------------------------------------
1.SUMMARY OF ACCOUNTING POLICIES
Basis of Accounting - Capital Resources Real Estate
Partnership II (an Illinois limited partnership) (the
"Partnership") maintains its books and prepares its income tax
returns using the accrual income tax basis of accounting. Memo
adjustments have been made in preparing the accompanying
financial statements in accordance with generally accepted
accounting principles (see Note 5). The financial statements
include only those assets, liabilities and results of operations
which relate to the business of the Partnership. The financial
statements do not include any assets, liabilities, revenues or
expenses attributable to the partners' individual activities.
Property and Equipment - Buildings and improvements are
depreciated primarily using the straight-line method over the
estimated useful lives of the assets which are five years for
improvements and 25 years for buildings. The Partnership has
adopted Statement of Financial Accounting Standards No. 121
("SFAS"), "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to Be Disposed Of." Accordingly,
Partnership management routinely reviews its investments for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. The
adoption of SFAS No. 121 did not have a material effect on the
financial statements of the Partnership.
Income Taxes - No provision has been made for income taxes since
these taxes are the responsibility of the individual partners.
For tax purposes, the basis of the Partnership's assets is
approximately $1,426,187 at December 31, 1995.
Revenue Recognition - Rentals - The Partnership has leased
substantially all of its investment in real estate (apartment
buildings) under operating leases for periods generally less than
one year.
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Partnership considers all highly liquid investments
with a remaining maturity at the date of purchase of three months
or less to be cash equivalents.
Refinancing Costs - Costs or fees incurred to obtain mortgage
financing for the Partnership are included in other assets and
are amortized over the respective lives of the mortgages on the
straight-line basis, which approximates the interest method.
Use of Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of certain assets, liabilities, revenues and expenses as
of and for the reporting periods. Actual results may differ from
such estimates.
Reclassifications - Certain previous-year balances have been
reclassified to conform to current-year presentations.
2.PARTNERSHIP
General - The Partnership was formed on December 29, 1972, under
the Illinois Uniform Limited Partnership Act, for the purpose of
acquiring, maintaining, developing, operating and selling
buildings and improvements. The Partnership operates an
apartment property located in Tulsa, Oklahoma. The Partnership
will be terminated by January 31, 2023, although this date can be
extended if certain events occur.
CRREP, Inc. is the corporate general partner. Robert J. Werra is
the individual general partner. Under the terms of the
partnership agreement, 5,005 units were authorized, issued and
outstanding during the three years ended December 31, 1995, 1994
and 1993, and no additional units will be offered.
Allocation of Net Income (Loss) and Cash - Under the terms of the
partnership agreement, the general partner will be allocated 5%
of the net income or loss of the Partnership, and all limited
partners will be allocated 95% of the net income or loss of the
Partnership in proportion to their respective participating
percentages. Gains or losses on sale of properties will be
allocated 10% to the general partner and 90% to the limited
partners. In the event proceeds from the sale of the property
are not distributed to the general partner, the entire gain on
such sale will be allocated to the limited partners.
Net cash receipts as defined in the partnership agreement are
allocated 5% to the general partner and 95% to all the limited
partners. Such 5% distribution shall be considered as full
compensation to the general partner for his services in
connection with managing and supervising the Partnership.
Sales proceeds shall be allocated first to the limited partners
to the extent of their capital contributions and 10% simple
interest on the average capital invested and, thereafter, 10% to
the general partner and 90% to the limited partners.
3.MORTGAGE PAYABLE
In November 1993, the Partnership refinanced its mortgage payable
with a $1,375,000 note payable bearing interest at a rate of
8.15% which is payable in monthly principal and interest
installments of $10,749 through December 2003, at which time a
lump-sum payment of approximately $1,118,000 is due.
The mortgage payable is collateralized by the investment in real
estate.
Annual principal payments as of December 31, 1995, are as
follows:
1996 $ 20,819
1997 22,581
1998 24,491
1999 26,564
2000 28,811
Thereafter 1,215,090
In conjunction with its mortgage payable, the Partnership is
required to fund a liquidity reserve and a capital replacement
reserve. Both reserves are refundable to the Partnership.
4.RELATED PARTY TRANSACTIONS
The Partnership has an agreement with Univesco, Inc., a related
entity ("Univesco"), for the management of its projects under
which Univesco receives 4% (5% prior to November 15, 1993) of the
gross revenues from operations as a property management fee.
Also, beginning November 15, 1993, Univesco receives a
partnership fee equal to 1% of the gross revenues from operations
to be paid from Excess Property Income as defined in the
agreement with the lender. Of the management fees recorded by
the Partnership in 1995, $16,558 relates to property management
fees and $4,139 relates to partnership fees. Additionally, the
Partnership has been advanced funds from Univesco to pay
operating expenses. These advances are included in amounts due
to affiliates and presently are non-interest-bearing.
The partnership agreement specifies certain fees to be paid to
the general partner or his designee. The following fees were
paid to the general partner or his designee during 1995, 1994 and
1993:
1995 1994 1993
Management fees $20,697 $20,624 $21,132
Administrative services 5,088 5,096 5,088
5.RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED)
If the accompanying financial statements had been prepared in
accordance with the accrual income tax basis of accounting,
rather than generally accepted accounting principles, excess of
expenses over revenues for 1995 would have been as follows:
Net loss per accompanying financial statements $(159,575)
Add GAAP basis depreciation using straight-line method 42,353
Deduct tax basis depreciation using ACRS (56,929)
---------
Excess expenses over revenues, accrual income tax basis $(174,151)
=========
6. ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosures
about Fair Value of Financial Instruments," requires disclosure
of the estimated fair values of certain financial instruments.
The estimated fair value amounts have been determined using
available market information or other appropriate valuation
methodologies that require considerable judgment in interpreting
market data and developing estimates. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts
that the Partnership could realize in a current market exchange.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair
value amounts.
The fair value of financial instruments that are short-term or
reprice frequently and have a history of negligible credit losses
is considered to approximate their carrying value. These include
cash and cash equivalents, short-term receivables, accounts
payable and other liabilities. Real estate and other assets
consist of nonfinancial instruments, which are excluded from the
scope of SFAS No. 107.
Management has reviewed the carrying values of its mortgages and
notes payable in connection with interest rates currently
available to the Partnership for borrowings with similar
characteristics and maturities and has determined that its
estimated fair value would approximate its carrying value as of
December 31, 1995.
As of December 31, 1995, the fair value information presented
herein is based on pertinent information available to management.
Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such
amounts have not been comprehensively revalued for purposes of
these financial statements since that date, and therefore,
current estimates of fair value may differ significantly from the
amounts presented herein.
7. CONTINGENCIES
The accompanying financial statements have been prepared assuming
the Partnership will continue as a going concern. However, the
Partnership has incurred losses and has negative cash flows from
operations and has a capital deficiency at December 31, 1995.
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. The financial statements do not include
any adjustments relating to the recoverability of recorded assets
or the amounts and satisfaction of liabilities that might be
necessary should the Partnership be unable to continue in its
present form. Management intends to continue operating the
Partnership in its present form; however, there is no assurance
that the Partnership will be able to generate sufficient cash
flows to meet its obligations, and the ultimate outcome of this
matter cannot be determined at this time.
<PAGE>
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(An Illinois Limited Partnership)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
- ---------------------------------------------------------------------------
Initial Cost to Partnership
----------------------------------------------------
Total Cost
Encum- Buildings & Subsequent
Description brances Land Improvements to Acquisition
112 rental units contained
in 26 two story buildings
of frame masonry construc-
tion located in Tulsa,
Oklahoma (b) $137,971 $608,692 $232,424
======== ======== ========
(Continuation of above schedule below)
Gross Amounts at Which Life
Carried at Close of Year on which
- -------------------------------- Accumulated Depre-
Improve- Depr- Date of Date ciation
Land ments Total ciation Construction Acquired Is Computed
(c)(d) (c)
$137,971 $841,116 $979,087 $356,243 Complete at 12/86 (a)
======== ======== ======== ======== date acquired
See notes to Schedule III.
<PAGE>
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
(AN ILLINOIS LIMITED PARTNERSHIP)
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
DECEMBER 31, 1995
NOTES TO SCHEDULE III:
(a) See Note 1 to financial statements outlining depreciation methods and
lives.
(b) See description of mortgage payable in Note 3 to the financial
statements.
(c) Reconciliation of investment in real estate and accumulated
depreciation for the years ended December 31, 1995, 1994 and 1993:
Investment Accumulated
in Real Estate Depreciation
BALANCE,JANUARY 1, 1993 $911,069 $229,793
Additions during the year:
Improvements 14,440
Depreciation expense 43,919
-------- --------
BALANCE,DECEMBER 31, 1993 925,509 273,712
Additions during the year:
Improvements 5,680
Depreciation expense 40,178
-------- --------
BALANCE,DECEMBER 31, 1994 931,189 313,890
Additions during the year:
Improvements 47,898
Depreciation expense 42,353
-------- --------
BALANCE,DECEMBER 31,1995 $979,087 $356,243
======== ========
(d) Aggregate cost of real estate for federal income tax purposes is
$2,058,065. The difference between the cost of real estate for financial
statement purposes and federal income tax purposes is primarily
attributable to a basis difference caused by the sale and reacquisition of
the property in an earlier year.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
The Registrant has not been involved in any disagreements on accounting and
financial disclosure.
PART III
Item 1O. Directors and Executive Officer of the Partnership
Amrecorp Realty Inc., formerly American Republic Realty Corporation
resigned from the Partnership in February, 1991 as the Corporate General
Partner. The Partnership itself has no officers or directors. CRREP, Inc. a
Texas corporation, wholly owned by Robert J. Werra was appointed General
Partner in October, 1993.
Robert J. Werra, 54, President. Mr. Werra joined Loewi & Co.,
Incorporated ("Loewi") in 1967 as a Registered Representative. In 1971, he
formed the Loewi real estate department, and was responsible for its first
sales of privately placed real estate programs. Loewi Realty was
incorporated in 1974, as a wholly owned subsidiary of Loewi & Co., with Mr.
Werra as President. In 198O, Mr. Werra, along with three other individuals,
formed Amrecorp Inc. to purchase the stock of Loewi Real Estate Inc., and
Loewi Realty. In 1991 Univesco, Inc. became the management agent for the
Partnership. Limited Partners have no right to participate in management of
the Partnership.
Item 11. Management Remuneration and Transactions
As stated above, the Partnership has no officers or directors. Pursuant
to the terms of the Limited Partnership Agreement, the General Partner
receives 1% of Partnership income and loss and up to 15% of Net Proceeds
received from sale or refinancing of Partnership properties (after return of
Limited Partner capital contributions and payment of a 6% Current
Distribution Preference thereon).
The Partnership Agreement allows for a management fee of five percent
(5%) of the gross income from operations. In connection with the new loan
obtained from Lexington Mortgage Company, Univesco, Inc. entered into a
management agreement that pays Univesco, Inc. four percent (4%) of the
monthly gross income from operations. The Partnership's obligation to pay an
additional one percent (1%) of the monthly gross income from operations
shall be paid by the Partnership from Excess Property Income, as that term
is defined in the Loan Agreement between Lexington Mortgage Company and the
Partnership dated November 12, 1993. The Partnership is also permitted to
engage in various transactions involving affiliates of the General Partner
as described under the caption "Compensation and Fees" at pages 3-5,
"Management" at pages 36-38 and "Allocation of Net Income and Losses and
Cash Distributions" at pages 29-30 of the Prospectus as supplemented,
incorporated in the Form S-11 Registration Statement which was filed with
the Securities and Exchange Commission and made effective on May 2, 1973.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) The following limited partnerships, through their affiliated
general partners, may be deemed, to beneficially own an aggregate
of 1167 interests, which represents approximately 23.34% of the
total outstanding interests.
Number of
Interests
Name and Address Beneficially
Title of Class of Beneficial Owner Owned % Class
- -------------- ------------------- ------------- ----------
Interest in Limited Liquidity Fund XII 145 2.9O%
Partnership Liquidity Fund XIII 243 4.86%
($1,OOO per Interest) Liquidity Fund XIV 25 O.5O%
Liquidity Fund XV 15 O.3O%
Liquidity Fund XVI 23 O.46%
Liquidity Fund High Yield
Institutional Investors 79 1.58%
Liquidity Fund Income
Growth 87 637 12.74%
19OO Powell Street
Suite 73O
Emeryville, CA 946O8
(b) The following table sets forth as of December 31, 1995 the
number of Interests in the Registrant, the only class of
securities outstanding, beneficially owned by the General Partner.
None.
Item 13. Certain Relationships and Related Transactions
Effective February 1, 1991, Univesco, Inc. assumed total property
management responsibilities of the partnership property. Total
compensation paid to the managing agent was $25,785 in 1995. See
Note 4 to the Registrant's financial statements included in Item 8
hereof.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) (1) See accompanying financial statements index.
(2) Additional financial information required to be furnished:
Schedule III - Real Estate and Accumulated Depreciation
All other schedules are omitted because they are
inapplicable or the equivalent information is included in the
financial statements or notes thereto.
(3) Exhibits: None
(b) There were no reports on Form 8-K filed in the fourth quarter
of the fiscal year.
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.
CAPITAL RESOURCES REAL ESTATE
PARTNERSHIP II
CRREP, INC., General Partner
April 10, 1996 By: Robert J. Werra /s/
---------------------------
Robert J. Werra, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE DECEMBER 31, 1995 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 37,448
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 979,087
<DEPRECIATION> 356,243
<TOTAL-ASSETS> 792,372
<CURRENT-LIABILITIES> 0
<BONDS> 1,338,356
0
0
<COMMON> 0
<OTHER-SE> (848,968)
<TOTAL-LIABILITY-AND-EQUITY> 792,372
<SALES> 0
<TOTAL-REVENUES> 402,127
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 464,488
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 109,178
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (159,575)
<EPS-PRIMARY> (30.29)
<EPS-DILUTED> 0
</TABLE>
