<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1995
Commission File Number
2-66171
REAL ESTATE ASSOCIATES LIMITED II
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 95-3547609
9090 WILSHIRE BLVD., SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed with the Commission by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding twelve months (or 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 X No_______________
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS:
Real Estate Associates Limited II ("REAL II" or the "Partnership") is a limited
partnership which was formed under the laws of the State of California on
December 4, 1979. On March 17, 1980, REAL II offered 3,000 units consisting of
6,000 Limited Partnership Interests and Warrants to purchase a maximum of 6,000
Additional Limited Partnership Interests through a public offering managed by
Lehman Brothers Inc.
The general partners of REAL II are National Partnership Investments Corp.
("NAPICO"), a California Corporation (the "Corporate General Partner") and
Coast Housing Investment Associates ("CHIA"). CHIA is a California limited
partnership and consists of Messrs. Nicholas G. Ciriello, an unrelated
individual, as general partner and Charles H. Boxenbaum as limited partner.
The business of REAL II is conducted primarily by its general partners as REAL
II has no employees of its own.
Casden Investment Corporation ("CIC") owns 100 percent of NAPICO's stock. The
current members of NAPICO's Board of Directors are Charles H. Boxenbaum, Bruce
E. Nelson, Alan I. Casden, Henry C. Casden and Brian Goldberg.
REAL II holds limited partnership interests in twenty-one local limited
partnerships as of December 31, 1995. Each of the local partnerships own a low
income housing project which is subsidized and/or has a mortgage note payable
to or insured by agencies of the federal or local government.
In order to stimulate private investment in low income housing, the federal
government and certain state and local agencies have provided significant
ownership incentives, including among others, interest subsidies, rent
supplements, and mortgage insurance, with the intent of reducing certain market
risks and providing investors with certain tax benefits, plus limited cash
distributions and the possibility of long-term capital gains. There remain,
however, significant risks. The long-term nature of investments in government
assisted housing limits the ability of REAL II to vary its portfolio in
response to changing economic, financial and investment conditions. Such
investments are also subject to changes in local economic circumstances and
housing patterns, as well as rising operating costs, vacancies, rent collection
difficulties, energy shortages and other factors which have an impact on real
estate values. These projects also require greater management expertise and
may have higher operating expenses than conventional housing projects.
The partnerships in which REAL II has invested were, at least initially,
organized by private developers who acquired the sites, or options thereon, and
applied for applicable mortgage insurance and subsidies. REAL II became the
principal limited partner in these local limited partnerships pursuant to
arm's-length negotiations with these developers, or others, who act as general
partners. As a limited partner, REAL II's liability for obligations of the
local limited partnership is limited to its investment. The local general
partner of the local limited partnership retains responsibility for developing,
constructing, maintaining, operating and managing the Project. Under certain
circumstances, REAL II has the right to replace the general partner of the
local limited partnerships.
Although each of the partnerships in which REAL II has invested owns a project
which must compete in the market place for tenants, interest subsidies and rent
supplements from governmental agencies make it possible to offer these dwelling
units to eligible "low income" tenants at a cost significantly below the market
rate for comparable conventionally financed dwelling units in the area.
<PAGE> 3
During 1995, the projects in which REAL II had invested were substantially
rented. The following is a schedule of the status as of December 31, 1995, of
the projects owned by local limited partnerships in which REAL II is a limited
partner.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL II HAS AN INVESTMENT
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- --------------- -------- -------------
<S> <C> <C> <C> <C>
Azalea Court 48 4/19 45 94%
Theodore, AL
Berger Apts. 144 144/0 144 100%
New Haven, CT
Biltmore 231 231/0 224 97%
Dayton, OH
Branford Elderly 38 38/0 38 100%
Branford, CT
Castlewood Apts. 96 96/0 93 97%
Davenport, IA
Cherrywood Apts. 40 40/0 40 100%
Twin Falls, ID
Clearfield Manor 40 40/0 39 98%
Clearfield, KY
Crystal Springs 28 0/28 28 100%
Crystal Springs, MS
East Farm Vlg. 240 240/0 240 100%
East Haven, CT
Grant Park and 188 188/0 188 100%
Ormewood Park
Atlanta, GA
Lakeside Apts. 48 48/0 48 100%
Mishawaka, IN
Landmark Towers 40 40/0 40 100%
Nampa, ID
</TABLE>
<PAGE> 4
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL II HAS AN INVESTMENT
DECEMBER 31, 1995
(CONTINUED)
<TABLE>
<CAPTION>
Units Authorized
For Rental
Assistance Under
Section 8 or
Other Rent
No. of Supplement Units Percentage of
Name & Location Units Program Occupied Total Units
- --------------- ----- ---------------- -------- -------------
<S> <C> <C> <C> <C>
Magnolia State 60 0/38 57 95%
Gulfport, MS
New Haven Plaza 344 344/0 341 99%
Far Rockaway, NY
Pennbrook Apts. 108 108/0 98 91%
Owosso, MI
Redfern Grove Apts. 72 72/0 72 100%
E. Providence, RI
Saturn Apts. 38 38/0 37 97%
Idaho Falls, ID
Sugar River Mills 162 162/0 161 99%
Claremont, NH
Valebrook 151 151/0 148 98%
Lawrence, MA
Westward Ho Apts. 290 289/0 270 93%
Phoenix, AZ
Willow Wick Apts. 24 0/5 19 79%
Centre, AL
----- -------- ----- ---
TOTALS 2,430 2,273/90 2,370 98%
===== ======== ===== ===
</TABLE>
<PAGE> 5
ITEM 2. PROPERTIES:
Through its investments in local limited partnerships, REAL II holds interests
in real estate properties. See Item 1 and Schedule XI for information
pertaining to these properties.
ITEM 3. LEGAL PROCEEDINGS:
As of December 31, 1995, REAL II's Corporate General Partner was a plaintiff or
defendant in several lawsuits. In addition, REAL II is involved in the
following lawsuits. In the opinion of management and the Corporate General
Partner, the claims will not result in any material liability to the
Partnership.
Joseph Alizio v. Peter Perpignano, New Haven Plaza Associates, Real Estate
Associates Limited II, National Partnership Investments Corp. and National
Partnership Associates, Supreme Court of the State of New York, County of
Nassau, Case No. 1776-94. On January 21, 1994, the Plaintiff filed a lawsuit
seeking to dissolve the Partnership, alleging that he was denied his pro rata
share of the capital contribution, management fees, consultants fees and
profits. REAL II filed a motion to dismiss the complaint which motion was
granted on November 10, 1994. The case was appealed and argued on February 9,
1996. REAL II is now waiting for a decision on the matter from the appellate
court.
Manuel Rivera v. New Haven Plaza Associates, and Tort Security of New York,
Inc. Supreme Court of the State of New York, County of Queens, Index No.
007421/94. On April 11, 1994, the Plaintiff filed a lawsuit alleging he was
assaulted and shot while he was visiting the property. According to the
on-site manager and security report, the Plaintiff was not on the subject
property when he was assaulted and shot. The Plaintiff is seeking judgment for
damages in the amount of $5,000,000. The case was turned over to Crumb &
Forester, the insurance agency, and subsequently sent to counsel for the
insurer.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED
SECURITY HOLDER MATTERS:
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by Lehman Brothers Inc. It is not
anticipated that any public market will develop for the purchase and sale of
any Partnership interest. Limited Partnership Interests may be transferred
only if certain requirements are satisfied. At December 31, 1995 there were
1,676 registered holders of units in REAL II. No distributions have been made
from the inception of the Partnership to December 31, 1995. The Partnership
has invested in certain government assisted projects under programs which in
many instances restrict the cash return available to project owners. The
Partnership was not designed to provide cash distributions to investors in
circumstances other than refinancing or disposition of its investments in
limited partnerships.
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year ended December 31,
-------------------------------------------------------------------------------
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Loss from Partnership
Operations $ (474,179) $ (492,294) $ (508,753) $ (514,946) $ (603,910)
Distributions from
Limited Partnerships
Recognized as Income 172,189 796,658 270,938 263,586 316,483
Equity in Income of
Limited Partnerships
and amortization of
acquisition costs 1,172,891 734,711 532,359 389,465 282,206
----------- ---------- ---------- ---------- ----------
Net Income (Loss) $ 870,901 $1,039,075 $ 294,544 $ 138,105 $ (5,221)
=========== ========== ========== ========== ==========
Net Income (Loss) per Limited
Partnership Interest $ 81 $ 96 $ 27 $ 13 $ (1)
=========== ========== ========== ========== ==========
Total Assets $ 3,821,884 $2,917,236 $1,873,009 $1,585,971 $1,642,778
=========== ========== ========== ========== ==========
Investments in Limited
Partnerships $ 1,959,173 $1,135,982 $1,407,989 $1,006,583 $ 800,201
=========== ========== ========== ========== ==========
Capital Contributions Payable
to Investee Limited
Partnerships $ - $ - $ - $ - $ 202,392
=========== ========== ========== ========== ==========
</TABLE>
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS:
LIQUIDITY
The Partnership's primary sources of funds include interest income on money
market investments and certificates of deposit and distributions from local
partnerships in which the Partnership has invested. It is not expected that
any of the local limited partnerships in which the Partnership has invested
will generate cash flow sufficient to provide for distributions to the
Partnership's limited partners in any material amount.
CAPITAL RESOURCES
REAL II received $13,365,000 in subscriptions for units of Limited Partnership
Interests (at $5,000 per unit) during the period March 17, 1979 to September
15, 1980, pursuant to a registration statement on Form S-11. As of December
31, 1981 REAL II had received an additional $13,365,000 in subscriptions
pursuant to the exercise of warrants and the sale of Additional Limited
Partnership Interests.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its partners as
discussed in Item 1. It is anticipated that the local limited partnerships in
which REAL II has invested could produce tax losses for as long as 20 years.
The Partnership will seek to defer income taxes from sale by not selling any
projects or project interests within 10 years, except to qualified tenant
cooperatives, or when proceeds of the sale would supply sufficient cash to
enable the partners to pay applicable taxes.
Tax benefits will decline over time as the advantages of accelerated
depreciation are greatest in the earlier years, as deductions for interest
expense decrease as mortgage principal is amortized, and as the Tax Reform Act
of 1986 limits the deductions available.
The Partnership accounts for its investments in the local limited partnerships
on the equity method, thereby adjusting its investment balance by its
proportionate share of the income or loss of the local limited partnerships.
Losses incurred after the limited partnership investment account is reduced to
zero are not recognized.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent
distributions received are recognized as income.
In 1994, the Partnership refinanced two mortgages of two properties (Cherrywood
and Saturn) in a limited partnership (Cherrywood Associates) with a combination
of taxable and tax exempt bonds issued by the Idaho Housing Agency. Proceeds
from the refinancing were utilized to retire existing mortgages of $790,300 and
$756,500, respectively. The Partnership received excess cash proceeds of
approximately $1,618,000 from the refinancing. The limited partnership will now
have two new mortgage amounts of $1,654,000 and $1,759,300, for a term of 16
years at the taxable rate of 9.125 percent and a tax exempt rate of 7.3
percent.
Except for certificates of deposit and money market funds, the Partnership's
investments are entirely interests in other limited partnerships owning
government assisted projects. Available cash is invested in short-term
investments and cash equivalents, earning interest income as reflected in the
statements of operations. These short-term investments and cash equivalents
can be converted to cash to meet obligations as they arise. The Partnership
intends to continue investing available funds in this manner.
<PAGE> 8
A recurring Partnership expense is the management fee. The fee is payable
monthly to the Corporate General Partner of the Partnership and is calculated
as a percentage of the Partnership's invested assets. The management fee is
paid to the Corporate General Partner for its continuing management of
Partnership affairs.
Operating expenses, other than management fees of the Partnership, consist
substantially of professional fees for services rendered to the Partnership.
The Partnership, as a Limited Partner in the local limited partnerships in
which it has invested, is subject to the risks incident to the construction,
management, and ownership of improved real estate. The Partnership investments
are also subject to adverse general economic conditions, and, accordingly, the
status of the national economy, including substantial unemployment and
concurrent inflation, which could increase vacancy levels, rental payment
defaults, and operating expenses, which in turn, could substantially increase
the risk of operating losses for the projects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE:
Not applicable.
<PAGE> 9
REAL ESTATE ASSOCIATES LIMITED II
(A California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND INDEPENDENT PUBLIC ACCOUNTANTS' REPORT
DECEMBER 31, 1995
<PAGE> 10
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Real Estate Associates Limited II
(A California limited partnership)
We have audited the accompanying balance sheets of Real Estate Associates
Limited II (a California limited partnership) as of December 31, 1995 and 1994,
and the related statements of operations, partners' equity (deficiency) and
cash flows for each of the three years in the period ended December 31, 1995.
Our audits also included the financial statement schedules listed in the index
on item 14. These financial statements and financial statement schedules are
the responsibility of the management of the Partnership. Our responsibility is
to express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 33 percent and 39 percent
of total assets as of December 31, 1995 and 1994, respectively, and the equity
in income of these limited partnerships represents 59 percent, 51 percent and
14 percent of the total net income of the Partnership for the years ended
December 31, 1995, 1994 and 1993, respectively, and represent a substantial
portion of the investee information in Note 2 and the financial statement
schedules. The financial statements of these limited partnerships are audited
by other auditors. Their reports have been furnished to us and our opinion,
insofar as it relates to the amounts included for these limited partnerships,
is based solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 our audits and the reports of other
auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the financial position of Real Estate Associates Limited 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, based on our audits and the reports of other auditors, 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.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 29, 1996
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $1,959,173 $1,135,982
CASH AND CASH EQUIVALENTS (Note 1) 1,862,711 1,781,254
---------- ----------
TOTAL ASSETS $3,821,884 $2,917,236
========== ==========
LIABILITIES AND PARTNERS' DEFICIENCY
LIABILITIES:
Accounts payable $ 42,386 $ 8,639
---------- ----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (180,300) (189,009)
Limited partners 3,959,798 3,097,606
---------- ----------
3,779,498 2,908,597
---------- ----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $3,821,884 $2,917,236
========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
---------- ----------- ----------
<S> <C> <C> <C>
INTEREST INCOME $ 79,206 $ 29,192 $ 25,800
---------- ---------- ----------
OPERATING EXPENSES:
Legal and accounting 92,141 65,923 77,112
Management fees - general partner (Note 3) 397,680 397,680 397,680
Administrative (Note 3) 63,564 57,883 59,761
---------- ---------- ----------
Total operating expenses 553,385 521,486 534,553
LOSS FROM OPERATIONS (474,179) (492,294) (508,753)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 172,189 796,658 270,938
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) 1,172,891 734,711 532,359
---------- ---------- ----------
NET INCOME $ 870,901 $1,039,075 $ 294,544
========== ========== ==========
NET INCOME PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ 81 $ 96 $ 27
========== ========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
--------- ---------- ----------
<S> <C> <C> <C>
EQUITY (DEFICIENCY),
January 1, 1993 $(202,345) $1,777,323 $1,574,978
Net income for 1993 2,945 291,599 294,544
--------- ---------- ----------
EQUITY (DEFICIENCY),
December 31, 1993 (199,400) 2,068,922 1,869,522
Net income for 1994 10,391 1,028,684 1,039,075
--------- ---------- ----------
EQUITY (DEFICIENCY),
December 31, 1994 (189,009) 3,097,606 2,908,597
Net income for 1995 8,709 862,192 870,901
--------- ---------- ----------
EQUITY (DEFICIENCY),
December 31, 1995 $(180,300) $3,959,798 $3,779,498
========= ========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 14
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
1995 1994 1993
----------- ---------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 870,901 $1,039,075 $ 294,544
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Equity in income of limited partnerships
and amortization of acquisition costs (1,172,891) (734,711) (532,359)
Increase (decrease) in accounts payable 33,747 5,152 (7,506)
----------- ---------- ---------
Net cash provided by (used in)
operating activities (268,243) 309,516 (245,321)
----------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnerships
recognized as return of capital 349,700 1,006,718 130,953
----------- ---------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 81,457 1,316,234 (114,368)
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR 1,781,254 465,020 579,388
----------- ---------- ---------
CASH AND CASH EQUIVALENTS,
END OF YEAR $ 1,862,711 $1,781,254 $ 465,020
=========== ========== =========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 15
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Real Estate Associates Limited II (the Partnership) was formed
under the California Limited Partnership Act on December 4,
1979. The Partnership was formed to invest in other limited
partnerships which own and operate primarily federal, state or
local government-assisted housing projects. The general
partners are Coast Housing Investment Associates (CHIA), a
limited partnership, and National Partnership Investments
Corp. (NAPICO), the corporate general partner. Casden
Investment Corporation owns 100 percent of NAPICO's stock.
The limited partner of CHIA is an officer of NAPICO.
The Partnership offered 3,000 units and issued 2,673 units of
limited partner interests through a public offering. Each
unit was comprised of two limited partner interests and a
warrant granting an investor the right to purchase two
additional limited partner interests. An additional 5,346
interests were issued from the exercise of the warrants and
the sale of interests associated with warrants not exercised.
The general partners have a 1 percent interest in the profits
and losses of the Partnership. The limited partners have the
remaining 99 percent interest in proportion to their
respective investments.
The Partnership shall be dissolved only upon the expiration of
52 complete calendar years (December 31, 2031) from the date
of the formation of the Partnership or the occurrence of
various other events as specified in the terms of the
Partnership agreement.
Upon total or partial liquidation of the Partnership or the
disposition or partial disposition of a project or project
interest and distribution of the proceeds, the general
partners will be entitled to a liquidation fee as stipulated
in the Partnership agreement. The limited partners will have
a priority return equal to their invested capital attributable
to the project(s) or project interest(s) sold and shall
receive from the sale of the project(s) or project interest(s)
an amount sufficient to pay state and federal income taxes, if
any, calculated at the maximum rate then in effect. The
general partners' liquidation fee may accrue but shall not be
paid until the limited partners have received distributions
equal to 100 percent of their capital contributions.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles 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 reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
Method of Accounting for Investments in Limited Partnerships
The investments in limited partnerships are accounted for on
the equity method. Acquisition, selection and other costs
related to the acquisition of the projects were capitalized as
part of the investment account and are being amortized on a
straight line basis over the estimated lives of the underlying
assets, which is generally 30 years.
5
<PAGE> 16
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Net Income Per Limited Partnership Interest
Net income per limited partnership interest was computed by dividing
the limited partners' share of net income by the number of limited
partnership interests outstanding during the year. The number of
limited partnership interests was 10,693 for all years presented.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and bank certificates of
deposit with an original maturity date of three months or less.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 21 limited
partnerships. The partnerships own residential low income rental
projects consisting of 2,430 apartment units. The mortgage loans of
these projects are payable to or insured by various governmental
agencies.
The Partnership, as a limited partner, is entitled to between 85
percent and 99 percent of the profits and losses of the limited
partnerships.
Equity in losses of limited partnerships is recognized in the
financial statements until the limited partnership investment account
is reduced to a zero balance. Losses incurred after the limited
partnership investment account is reduced to zero are not recognized.
The cumulative amount of the unrecognized equity in losses of certain
limited partnerships was approximately $11,407,000 and $10,857,000 as
of December 31, 1995 and 1994, respectively.
Distributions from limited partnerships are accounted for as a return
of capital until the investment balance is reduced to zero.
Subsequent distributions received are recognized as income.
In 1994, the Partnership refinanced two mortgages of two properties
(Cherrywood and Saturn) in a limited partnership (Cherrywood
Associates) with a combination of taxable and tax exempt bonds issued
by the Idaho Housing Agency. Proceeds from the refinancing were
utilized to retire existing mortgages of $790,300 and $756,500,
respectively. The Partnership received excess cash proceeds of
approximately $1,618,000 from the refinancing, of which $689,000 has
been included in income and the balance is a return of capital. The
limited partnership will now have two new mortgage amounts of
$1,654,000 and $1,759,300, for a term of 16 years at the taxable rate
of 9.125 percent and a tax exempt rate of 7.3 percent.
6
<PAGE> 17
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in limited partnerships
and reconciliation to the limited partnership accounts:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Investment balance, beginning of year $ 1,135,982 $ 1,407,989
Cash distributions recognized as a return of capital (349,700) (1,006,718)
Equity in income of limited partnerships 1,181,154 744,078
Amortization of capitalized acquisition costs and fees (8,263) (9,367)
----------- -----------
Investment balance, end of year $ 1,959,173 $ 1,135,982
=========== ===========
</TABLE>
The difference between the investment per the accompanying balance
sheets at December 31, 1995 and 1994, and the deficiency per the
limited partnerships' combined financial statements is due primarily
to cumulative unrecognized equity in losses of certain limited
partnerships, costs capitalized to the investment account and
cumulative distributions recognized as income.
Selected financial information from combining the financial statements
of the limited partnerships at December 31, 1995 and 1994 and for each
of three years in the period ended December 31, 1995 is as follows:
Balance Sheets
<TABLE>
<CAPTION>
1995 1994
-------- --------
(in thousands)
<S> <C> <C>
Land and buildings, net $ 53,090 $ 55,232
======== ========
Total assets $ 68,101 $ 69,603
======== ========
Mortgages payable $ 83,189 $ 84,270
======== ========
Total liabilities $ 85,970 $ 87,163
======== ========
Deficiency of Real Estate Associates
Limited II $(13,833) $(13,943)
======== ========
Deficiency of other partners $ (4,036) $ (3,617)
========= =========
</TABLE>
7
<PAGE> 18
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total revenue $22,855 $22,405 $22,252
======= ======= =======
Interest expense $ 6,660 $ 6,682 $ 7,018
======= ======= =======
Depreciation $ 3,215 $ 3,227 $ 3,243
======= ======= =======
Total expenses $22,085 $21,887 $22,115
======= ======= =======
Net income (loss) $ 770 $ 518 $ 137
======= ======= =======
Net income allocable
to the Partnership $ 631 $ 430 $ 109
======= ======= ========
</TABLE>
An affiliate of NAPICO is the general partner in three of the limited
partnerships included above, and another affiliate receives property
management fees of approximately 5% of their revenue. The affiliate
received property management fees of $311,822, $316,558 and $310,101
in 1995, 1994 and 1993, respectively. The following sets forth the
significant data for these partnerships, reflected in the accompanying
financial statements using the equity method of accounting:
<TABLE>
<CAPTION>
1995 1994 1993
-------- ------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $ 12,488 $ 13,136 $ 12,977
======== ======== ========
Total liabilities $ 17,278 $ 17,533 $ 17,697
======== ======== ========
Deficiency of Real Estate Associates Limited II $ (3,312) $ (3,276) $ (3,540)
======== ======== ========
Deficiency of other partners $ (1,478) $ (1,121) $ (1,180)
======== ======== ========
Total revenue $ 5,174 $ 5,244 $ 5,022
======== ======== ========
Net income (loss) $ 380 $ 310 $ (92)
======== ======== ========
</TABLE>
3. FEES AND EXPENSES DUE TO GENERAL PARTNER
Under the terms of the Restated Certificate and Agreement of Limited
Partners, the Partnership is liable to NAPICO for an annual management
fee equal to .4 percent of the original invested assets of the limited
partnerships. Invested assets is defined as the costs of acquiring
project interests, including the
8
<PAGE> 19
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
3. FEES AND EXPENSES DUE TO GENERAL PARTNER (CONTINUED)
proportionate amount of the mortgage loans related to the
Partnership's interest in the capital accounts of the respective
partnerships.
The Partnership reimburses NAPICO for certain expenses. The
reimbursement to NAPICO was $29,892, $28,804 and $28,629 in 1995, 1994
and 1993, respectively, and is included in operating expenses.
4. CONTINGENCIES
The corporate general partner of the Partnership is a plaintiff in
various lawsuits and has also been named a defendant in other lawsuits
arising from transactions in the ordinary course of business. In
addition, the Partnership is involved in several lawsuits.
In the opinion of management and the corporate general partner, the
claims will not result in any material liability to the Partnership.
5. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of
the individual partners. The major differences in tax and financial
reporting result from the use of different bases and depreciation
methods for the properties held by the limited partnerships.
Differences in tax and financial losses also arise as losses are not
recognized for financial reporting purposes when the investment
balance has been reduced to zero.
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair
value information about financial instruments. The carrying amount of
assets and liabilities reported on the balance sheets that require
such disclosure approximates fair value due to their short-term
maturity.
7. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the income of
limited partnerships on a quarterly basis, using estimated financial
information furnished by the various local operating general partners.
The equity in income of limited partnerships reflected in the
accompanying annual financial statements is based primarily upon
audited financial statements of the investee limited partnerships.
The increase, approximately $632,000, between the estimated nine-month
equity in income and the actual 1995 year end equity in income has
been recorded in the fourth quarter.
9
<PAGE> 20
SCHEDULE
REAL ESTATE ASSOCIATES LIMITED II
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1995
-------------------------------------------------------------------------
Cash Equity
Balance Capital Distri- in Balance
January Contri- butions Income December
Limited Partnerships 1, 1995 butions Received (Loss) 31, 1995
- -------------------- ------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Azalea Court Apartments $ $ $ $ $
Berger Apartments 248,914 90,296 339,210
Biltmore
Branford Elderly Housing 271,292 21,640 292,932
Castlewood Apartments
Cherrywood Apartments - (46,063) 46,063
Clearfield Manor
Crystal Springs
East Farm Village
Grant Park/Ormewood Park
Lakeside Apartments
Landmark Towers
Magnolia State Apts.
New Haven Plaza (276,720) 366,345 89,625
Pennbrook Apartments
Redfern Grove Apartments 198,944 129,180 328,124
Saturn Apartments
Sugar River Mills
Valebrook 416,832 (26,917) 519,367 909,282
Westward Ho Apartments
Willow Wick Apartments
---------- ----------- ----------- ---------- ----------
$1,135,982 $ - $ (349,700) $1,172,891 $1,959,173
========== =========== =========== ========== ==========
</TABLE>
<PAGE> 21
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED II
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1994
-------------------------------------------------------------------------
Cash Equity
Balance Capital Distri- in Balance
January Contri- butions Income December
Limited Partnerships 1, 1994 butions Received (Loss) 31, 1994
- -------------------- ------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Azalea Court Apartments $ $ $ $ $
Berger Apartments 174,941 (21,197) 95,170 248,914
Biltmore
Branford Elderly Housing 246,993 24,299 271,292
Castlewood Apartments
Cherrywood Apartments 835,160 (929,221) 94,061 -
Clearfield Manor
Crystal Springs
East Farm Village
Grant Park/Ormewood Park
Lakeside Apartments
Landmark Towers
Magnolia State Apts.
New Haven Plaza
Pennbrook Apartments
Redfern Grove Apartments 150,895 (29,383) 77,432 198,944
Saturn Apartments
Sugar River Mills
Valebrook (26,917) 443,749 416,832
Westward Ho Apartments
Willow Wick Apartments
---------- ----------- ----------- ---------- ----------
$1,407,989 $ - $(1,006,718) $ 734,711 $1,135,982
========== =========== =========== ========== ==========
</TABLE>
<PAGE> 22
SCHEDULE
(CONTINUED)
REAL ESTATE ASSOCIATES LIMITED II
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
<TABLE>
<CAPTION>
Year Ended December 31, 1993
-----------------------------------------------------------------------
Cash Equity
Balance Capital Distri- in Balance
January Contri- butions Income December
Limited Partnerships 1, 1993 butions Received (Loss) 31, 1993
- -------------------- ------- ------- -------- ------ --------
<S> <C> <C> <C> <C> <C>
Azalea Court Apartments $ $ $ $ $
Berger Apartments 144,130 (21,197) 52,008 174,941
Biltmore
Branford Elderly Housing 248,466 (5,568) 4,095 246,993
Castlewood Apartments
Cherrywood Apartments 497,938 (11,508) 348,730 835,160
Clearfield Manor
Crystal Springs
East Farm Village
Grant Park/Ormewood Park
Lakeside Apartments
Landmark Towers (12,392) 12,392
Magnolia State Apts.
New Haven Plaza (65,198) 65,198
Pennbrook Apartments
Redfern Grove Apartments 116,049 (15,090) 49,936 150,895
Saturn Apartments
Sugar River Mills
Valebrook
Westward Ho Apartments
Willow Wick Apartments
---------- ----------- --------- ---------- ----------
$1,006,583 $ - $(130,953) $ 532,359 $1,407,989
========== =========== ========= ========== ==========
</TABLE>
<PAGE> 23
SCHEDULE
(Continued)
REAL ESTATE ASSOCIATES LIMITED II
INVESTMENTS IN, EQUITY IN EARNINGS OF AND DIVIDENDS
RECEIVED FROM AFFILIATES AND OTHER PERSONS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
NOTES: 1. Equity in losses represents the Partnership's allocable
share of the net loss from the limited partnerships for the
year. Equity in losses of the limited partnerships will be
recognized until the investment balance is reduced to zero
or a negative balance equal to further commitments by the
Partnership.
2. Cash distributions from the limited partnerships are
treated as a return on the investment and reduce the
investment balance until such time as the investment is
reduced to zero or a negative balance equal to further
commitments by the Partnership. Distributions
subsequently received will be recognized as income.
<PAGE> 24
SCHEDULE III
REAL ESTATE ASSOCIATES LIMITED II
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS
IN WHICH REAL II HAS INVESTMENTS
DECEMBER 31, 1993
<TABLE>
<CAPTION>
Buildings, Furnishings
& Equipment-Initial
Cost to Partnership
Number Outstanding and Amount Carried
of Mortgage at Close of Accumulated Construction
Partnership/Location Units Loan Land Period Total Depreciation Period
-------------------- ------ ----------- ---------- ------------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Azalea Court Apts. 48 $ 1,011,997 $ 62,500 $ 1,230,200 $ 1,292,700 $ 688,961 10/80-3/81
Theodore, AL
Berger Apartments 144 4,780,866 156,386 7,385,893 7,542,279 3,745,844 2/80-1/81
New Haven, Connecticut
Branford Elderly Hsng. 38 1,087,441 138,000 1,526,440 1,664,440 494,095 6/80-4/81
Branford, Connecticut
Castlewood Apartments 96 3,075,788 270,422 3,177,727 3,448,149 2,028,968 10/80-9/81
Davenport, Iowa
Cherrywood/Saturn Apartments 78 3,317,365 146,186 2,426,463 2,572,649 1,655,628 9/79-4/80
Twin Falls/Idaho Falls, Idaho
Clearfield Manor 40 1,116,371 50,000 1,262,553 1,312,553 760,310 10/80-10/81
Clearfield, KY
Crystal Springs Apts. 28 635,367 35,835 768,457 804,292 510,194 7/80-3/81
Crystal Springs, MS
East Farm Village 240 9,343,769 291,416 12,823,050 13,114,466 6,284,286 9/79-8/81
East Haven, Connecticut
Grant Park/Ormewood Park 188 4,739,463 299,193 6,107,533 6,406,726 3,044,548 3/80-2/81
Atlanta, Georgia
Lakeside Apartments 48 1,745,000 115,366 1,546,477 1,661,843 1,484,826 10/80-6/81
Mishawaka, IN
Landmark Towers 40 1,021,510 38,700 1,511,107 1,549,807 1,239,600 4/79-10/80
Nampa, Idaho
Magnolia State Apts. 60 1,224,344 57,165 1,524,094 1,581,259 825,199 3/80-8/80
Gulfport, MS
New Haven Plaza 344 10,684,120 1,250,000 12,597,416 13,847,416 7,774,377 12/78-2/81
Far Rockaway, New York
Pennbrook Apartments 108 2,998,585 64,256 3,376,911 3,441,167 1,665,425 7/80-6/81
Owasso, Michigan
Redfern Grove Apts. 72 1,907,949 216,022 2,708,523 2,924,545 1,503,775 7/80-7/81
E. Providence, RI
Sugar River Mills 162 7,482,935 225,828 9,174,762 9,400,590 3,983,328 2/81-4/82
Claremon, NH
The Biltmore 231 9,850,768 754,973 11,317,049 12,072,022 4,067,885 9/80-9/81
Dayton, Ohio
Valebrook Assoc. 151 4,111,487 88,886 6,204,784 6,293,670 5,133,530 2/79-7/80
Lawrence, Massachusetts
Westward Ho Apartments 290 12,620,416 1,040,000 14,878,201 15,918,201 7,077,288 4/80-12/81
Phoenix, Arizona
Willow Wick Apts. 24 432,988 21,675 616,007 637,682 428,824 9/80-5/81
Centre, AL
----- ----------- ---------- ------------ ------------ -----------
TOTAL 2,430 $83,188,529 $5,322,809 $102,163,647 $107,486,456 $54,396,891
===== =========== ========== ============ ============ ===========
</TABLE>
<PAGE> 25
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED II
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS IN
WHICH REAL II HAS INVESTMENTS
DECEMBER 31, 1995
NOTES: 1. Each local limited partnership has developed, owns and
operates the housing project. Substantially all project costs,
including construction period interest expense, were
capitalized by the limited partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the projects. The estimated
composite useful lives of the buildings are generally from
25 to 40 years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings
And
Land Equipment Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance at January 1, 1993 $ 5,297,787 $100,162,827 $105,460,614
Net additions during 1993 5,222 416,375 421,597
------------ ------------ ------------
Balance at December 31, 1993 5,303,009 100,579,202 105,882,211
Net additions during 1994 (14,700) 681,287 666,587
------------ ------------ ------------
Balance at December 31, 1994 5,288,309 101,260,489 106,548,798
Net additions during 1995 34,500 903,158 937,658
------------ ------------ ------------
Balance at December 31, 1995 $ 5,322,809 $102,163,647 $107,486,456
============ ============ ============
</TABLE>
<PAGE> 26
SCHEDULE III
(Continued)
REAL ESTATE ASSOCIATES LIMITED II
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL LIMITED PARTNERSHIPS IN
WHICH REAL II HAS INVESTMENTS
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Buildings,
Furnishings
And
Equipment
------------
<S> <C>
Accumulated Depreciation:
- -------------------------
Balance at January 1, 1993 $ 44,982,303
Net additions during 1993 3,185,832
------------
Balance at December 31, 1993 48,168,135
Net additions during 1994 3,148,337
------------
Balance at December 31, 1994 51,316,472
Net additions during 1995 3,080,419
------------
Balance at December 31, 1995 $ 54,396,891
============
</TABLE>
<PAGE> 27
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
REAL ESTATE ASSOCIATES LIMITED II (the "Partnership") has no directors or
executive officers of its own.
National Partnership Investment Corp. ("NAPICO" or "the Managing General
Partner") is a wholly-owned subsidiary of Casden Investment Corporation, an
affiliate of The Casden Company. The following biographical information is
presented for the directors and executive officers of NAPICO with principal
responsibility for the Partnership's affairs.
CHARLES H. BOXENBAUM, 66, Chairman of the Board of Directors and Chief
Executive Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was
a real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate
Association, National Institute of Real Estate Brokers, Appraisal Institute,
various mortgage banking seminars, and the North American Property Forum held
in London, England. In 1963, he was the winner of the Snyder Award, the
highest annual award offered by the National Association of Real Estate Boards
for Best Exchange. He is one of the founders and a past director of the First
Los Angeles Bank, organized in November 1974. Mr. Boxenbaum was a member of
the Board of Directors of the National Housing Council. Mr. Boxenbaum received
his Bachelor of Arts degree from the University of Chicago.
BRUCE E. NELSON, 44, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved
in the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles. Mr. Nelson received his
Bachelor of Arts degree from the University of Wisconsin and is a graduate of
the University of Colorado School of Law. He is a member of the State Bar of
California and is a licensed real estate broker in California and Texas.
ALAN I. CASDEN, 50, Chairman of The Casden Company, an affiliate of Casden
Properties (formerly CoastFed Properties), a director and member of the audit
committee of NAPICO, and chairman of the Executive Committee of NAPICO.
Mr. Casden is Chairman of the Board, Chief Executive Officer and sole
shareholder of The Casden Company and Casden Investment Company. Prior to
that, he was the president and chairman of Mayer Group, Inc., which he joined
in 1975. He is also chairman of Mayer Management, Inc., a real estate
management firm. Mr. Casden has been involved in approximately $3 billion of
real estate financings and sales and has been responsible for the development
and construction of more than 12,000 apartment units and 5,000 single-family
homes and condominiums.
<PAGE> 28
Mr. Casden is a member of the American Institute of Certified Public
Accountants and of the California Society of Certified Public Accountants. Mr.
Casden is a member of the advisory board of the National Multi-Family Housing
Conference, the Multi-Family Housing Council, and the President's Council of
the California Building Industry Association. He also serves on the advisory
board to the School of Accounting of the University of Southern California. He
holds a Bachelor of Science degree and a Masters in Business Administration
degree from the University of Southern California.
HENRY C. CASDEN, 52, President, Chief Operating Officer and Secretary of The
Casden Company and a director and secretary of NAPICO.
Mr. Casden has been President and Chief Operating Officer of The Casden
Company, as well as a director of NAPICO since February 1988. He became
secretary of both companies in late 1994. From 1982 to 1988, Mr. Casden was of
counsel and a partner in the Los Angeles law firm of Troy, Casden & Gould.
From 1978 to 1981, he was of counsel and a partner in the Los Angeles law firm
of Loeb & Loeb. From 1972 to 1978, Mr. Casden was a member of the Beverly
Hills law firm of Fink & Casden, Professional Corporation.
Mr. Casden received his Bachelor of Arts degree from the University of
California at Los Angeles, and is a graduate of the University of San Diego Law
School. Mr. Casden is a member of the State Bar of California and has numerous
professional affiliations.
BRIAN D. GOLDBERG, 32, Chief Financial Officer of The Casden Company and a
director of NAPICO.
Mr. Goldberg joined The Casden Company in 1990 as Vice President of Finance and
became Chief Financial Officer in March 1991. Prior to joining The Casden
Company, Mr. Goldberg was with Arthur Andersen & Co., an international public
accounting firm, from August 1985 until July 1990 in their Los Angeles office.
He received his bachelor of science degree in Accounting from the University of
Denver. Mr. Goldberg is a member of the American Institute of Certified Public
Accountants and the California Society of Certified Public Accountants.
SHAWN HORWITZ, 36, Executive Vice President and Chief Financial Officer.
Mr. Horwitz joined NAPICO in 1990 and is responsible for the financial affairs
of NAPICO and the limited partnerships sponsored by NAPICO. Prior to joining
NAPICO, Mr. Horwitz was President for approximately one year of Star Sub Shops,
Inc., a corporation engaged in the business of selling fast food franchises,
was an audit manager in the real estate industry group for Altschuler, Melvin &
Glasser for six years, and was an auditor with Arthur Young & Co. for 3 years.
Mr. Horwitz received his Bachelor of Commerce degree in accounting from Rhodes
University in South Africa and is a member of the Illinois Society of Certified
Public Accountants, the American Institute of Certified Public Accountants and
the South African Institute of Chartered Accountants.
BOB SCHAFER, 54, Vice President and Corporate Controller.
Mr. Schafer joined NAPICO in 1984 and is the Corporate Controller responsible
for the financial reporting function of the Company. Prior to this, he was a
Group and Division Controller at Bergen Brunswig for over eight years,
Controller at a Flintkote subsidiary for over four years, and Assistant
Controller at an electronics subsidiary of General Electric for two years.
Mr. Schafer is a member of the California Society of Certified Public
Accountants. He holds a Bachelor of Science degree in accounting from Woodbury
University, Los Angeles.
<PAGE> 29
PATRICIA W. TOY, 66, Senior Vice President - Communications and Assistant
Secretary
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 35, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr.
Walther worked in the San Francisco law firm of Browne and Kahn which
specialized in construction litigation. Mr. Walther received his Bachelor of
Arts Degree in Political Science from the University of California, Santa
Barbara and is a graduate of the University of California, Davis, School of
Law. He is a member of the State Bar of Hawaii.
<PAGE> 30
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS:
Real Estate Associates Limited II has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to pay the Corporate General Partner
an annual management fee. The annual management fee is approximately equal to
.4% of the invested assets, including the Partnership's allocable share of the
mortgages related to real estate properties held by local limited partnerships.
The fee is earned beginning in the month the Partnership makes its initial
contribution to the limited partnership. In addition, the Partnership
reimburses the Corporate General Partner for certain expenses.
An affiliate of the Corporate General Partner is responsible for the on-site
property management for certain properties owned by the limited partnerships in
which the Partnership has invested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The general partners own all of the outstanding general partnership
interests of REAL II; no person is known to own beneficially in
excess of 5% of the outstanding Limited Partnership Interests.
(b) At December 31, 1995, security ownership of management is as listed:
<TABLE>
<CAPTION>
Percentage of
Outstanding
Amount and Limited
Name of Nature of Partnership
Title of Class Owner Beneficial Owner Interests
- -------------- ------- ---------------- ------------
<S> <C> <C> <C>
Limited Charles H. Boxenbaum $ 30,000 *
Partnership 780 Latimer Road
Interest Santa Monica, CA 90402
Initial
Limited Patricia W. Toy 4,550 *
Partnership 1782 Westridge Road
Interest Los Angeles, CA 90049
</TABLE>
* Cumulative Limited Partnership Interest owned by corporate officers is less
than 1% of outstanding Limited Partnership Interests.
<PAGE> 31
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors, or employees of its own. All of
its affairs are managed by the Corporate General Partner, National Partnership
Investments Corp. The transactions with the Corporate General Partner are
primarily in the form of fees paid by the Partnership to the general partner
for services rendered to the Partnership, as discussed in Item 11 and in the
notes to the accompanying financial statements.
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, EXHIBITS AND REPORTS ON FORM
8-K:
FINANCIAL STATEMENTS
Reports of Independent Public Accountants.
Balance Sheets as of December 31, 1995 and 1994.
Statements of Operations for the years ended December 31, 1995, 1994 and 1993.
Statements of Partners' Equity (Deficiency) for the years ended December 31,
1995, 1994 and 1993.
Statements of Cash Flows for the years ended December 31, 1995, 1994 and 1993.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO REAL ESTATE ASSOCIATES LIMITED II AND TO THE LIMITED PARTNERSHIPS
IN WHICH REAL ESTATE ASSOCIATES LIMITED II HAS INVESTMENTS:
Schedule - Investments in Limited Partnerships, December 31, 1995, 1994 and
1993.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1995.
The remaining schedules are omitted because the required information is
included in the financial statements and notes thereto, or they are not
applicable or not required.
EXHIBITS
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11
#266171 incorporated herein by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of
Limited Partnership dated December 4, 1979, and the twenty-one
contracts representing the Partnership investment in Local Limited
Partnerships as previously filed at the Securities and Exchange
Commission, File #266171, which is hereby incorporated by reference.
(13) Annual report to security holders: Pages ___ to ___.
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,862,711
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,862,711
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,821,884
<CURRENT-LIABILITIES> 42,386
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3,779,498
<TOTAL-LIABILITY-AND-EQUITY> 3,821,884
<SALES> 0
<TOTAL-REVENUES> 1,424,286
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 553,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 870,901
<INCOME-TAX> 0
<INCOME-CONTINUING> 870,901
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 870,901
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
