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, 1997 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: (972) 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
<PAGE>
TABLE OF CONTENTS
Item 1. Financial Statements
- -------
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of March 31, 1997 and
December 31, 1996 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1997and 1996 Page 4
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1997 and 1996 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, 1996, 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,
1997 1996
---------- ------------
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $137,971 $137,971
Buildings and improvements 859,008 859,008
-------- ---------
996,979 996,979
Less: Accumulated depreciation (419,174) (404,574)
577,805 592,405
Cash including cash investments 0 0
Escrow deposits 38,736 27,603
Capital replacement reserve 0 2,210
Liquidity reserve 24,689 24,689
Other assets 65,764 74,556
-------- --------
TOTAL ASSETS $706,994 $721,463
======== ========
LIABILITIES AND PARTNERS' EQUITY:
LIABILITES
Mortgage and notes payable $1,312,204 $1,317,678
Payable to Affiliates 301,573 269,634
Distributions payable 37,190 37,190
Real estate taxes payable 5,193 0
Security deposits 14,241 11,940
Interest payable 8,949 8,949
Accounts payable & accrued expenses 16,169 33,728
--------- --------
Total liabilities 1,695,519 1,679,119
--------- ---------
PARTNERS CAPITAL (DEFICIT)
Limited Partners (739,825) (710,499)
General Partner (248,700) (247,157)
---------- -----------
Total Partners Capital (Deficit) (988,525) (957,656)
----------- -----------
TOTAL LIABILITES AND PARTNER DEFICIT $706,994 $721,463
========== ==========
See notes to Condensed Consolidated Financial Statements
<PAGE>
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
--------------------
REVENUES 1997 1996
Rental income $109,859 $113,820
Other property 7,408 3,116
---------- ---------
Total revenues 117,267 116,936
EXPENSES
Salaries & wages 22,123 19,186
Maintenance & repairs 36,735 23,425
Utilites 15,974 15,122
Real estate taxes 4,800 4,500
General administrative 11,106 13,715
Contract services 4,763 5,652
Insurance 2,892 2,784
Interest 26,774 27,201
Depreciation and amortization 17,112 14,512
Property management fees (a) 5,857 5,844
-------- --------
Total expenses 148,136 131,941
NET INCOME (LOSS) ($30,869) ($15,005)
========== ==========
NET INCOME PER SHARE $ (2.81) $ (1.36)
========== ===========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
CAPITAL RESOURCES REAL ESTATE PARTNERSHIP II
Condensed Consolidated Statement of Cash Flows
Three Months Ended
March 31,
-------------------
1997 1996
-------- --------
CASH FLOWS FROM OPERATING ACITIVTY
Net income (loss) ($30,869) ($15,005)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 14,600 12,000
Net Effect of changes in operating accounts
Escrow deposits (11,133) (11,493)
Capital Replacement Reserve 2,210 3,357
Accrued real estate taxes 5,193 4,500
Security deposits 2,301 (311)
Accounts payable (17,559) 3,935
Other assets 8,792 1,047
-------- -------
Net cash provided by (used for) (26,465) (1,970)
operating activities -------- -------
CASH FLOWS FROM INVESTING ACTIVITES
Repayment of Interest Payable 0 (9,090)
Repayment of mortgage notes payable (5,474) (5,047)
Proceeds from amounts due affilates 31,939 (19,017)
Repayment of amounts due affiliates 0 0
-------- ----------
Net cash used for investing activites 26,465 (33,154)
------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUVILENTS 0 (35,124)
CASH AND CASH EQUIVELNTS, BEGINNING OF PERIOD $0 37,448
-------- ----------
CASH AND CASH EQUIVELNTS, END OF PERIOD $0 $2,324
========== ===========
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
- ------------------------------------
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
Revenue from property operations increased $ 331 or .28 %, for the first
quarter of 1997, as compared to the 1996 first quarter. Rental income
decreased by $3,961 or 3.48% due to decreases in occupancy and market rents.
Other income increased by $4,292 or 137.74% due primarily to vending
machine income. The following table illustrates the components:
Increase
(Decrease)
----------------
Rental income (3,961)
Other property 4,292
-----------------
Net Increase (Decrease) 331
===================
Property operating expenses decreased $16,195 or 12.27%, for the first
quarter of 1997, as compared to the same period in 1996. Maintenance and
repairs increased by $13,310 or 56.82% due to substantial repairs and
upgrades to apartment units completed in the first quarter of 1996.
Salary and wages increased $2,937 or 15.31% due to wage increases and
additional hires to replace contract labor.
The following table illustrates the components by category,
Increase
(Decrease)
-----------------------
Salaries & wages 2,937
Maintenance & repairs 13,310
Utilities 852
Real estate taxes 300
General administrative (2,609)
Contract services (889)
Insurance 108
Interest (427)
Depreciation and amortization 2,600
Property management fees (a) 13
-------------
Net Increase (Decrease) 16,195
=============
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Brookhollow Apartments was sold on May 6, 1997 for $1,700,000
including the assumption of the underlying debt. The partnership owns
no other assets and will be terminated following the dissolution and
liquidation process. 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 includes 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 establish a
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 these assets should be considered for disposal.
At this time, there is no plan to dispose of Brookhollow
Apartments.
As of March 31, 1997, the Partnership had $0 in cash and
cash equivalents as compared to $0 as of December 31, 1996.
The property is encumbered by a non-recourse mortgage as of
March 31, 1997. The remaining principal balance of
$1,310,403.48 was assumed by the buyer in the sale of
Brookhollow Apartments.
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 March 31, 1996.
The limited and general partners have no further obligations
to infuse additional capital into the Partnership.
<PAGE>
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
March 31, 1997.
<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 May 7, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1997 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-31-1997
<PERIOD-END> MAR-31-1997
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<PP&E> 996,979
<DEPRECIATION> 419,174
<TOTAL-ASSETS> 706,994
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<BONDS> 1,312,204
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<TOTAL-LIABILITY-AND-EQUITY> 706,994
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<OTHER-EXPENSES> 121,362
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<NET-INCOME> (30,869)
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