<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended MARCH 31, 1998
Commission File Number 0-09782
REAL ESTATE ASSOCIATES LIMITED II
(A California Limited Partnership)
I.R.S. Employer Identification No. 95-3547609
9090 WILSHIRE BLVD., SUITE 201,
BEVERLY HILLS, CALIF. 90211
Registrant's Telephone Number,
Including Area Code (310) 278-2191
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve 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 [X] No [ ]
<PAGE> 2
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Balance Sheets, March 31, 1998 and December 31, 1997 .................. 1
Statements of Operations,
Three Months Ended, March 31, 1998 and 1997 ....................... 2
Statement of Partners' Equity
Three Months Ended March 31, 1998 ................................. 3
Statements of Cash Flows,
Three Months Ended March 31, 1998 and 1997 ........................ 4
Notes to Financial Statements ......................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...............................10
PART II. OTHER INFORMATION
Item 1: Legal Proceedings ....................................................12
Item 6: Exhibits and Reports and Form 8-K ....................................12
Signatures ....................................................................13
</TABLE>
<PAGE> 3
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
MARCH 31, 1998 AND DECEMBER 31, 1997
ASSETS
<TABLE>
<CAPTION>
1998 1997
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 3,679,292 $ 3,493,251
CASH AND CASH EQUIVALENTS (Note 1) 1,605,235 1,602,717
----------- -----------
TOTAL ASSETS $ 5,284,527 $ 5,095,968
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable $ 93,484 $ 98,954
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (166,185) (168,125)
Limited partners 5,357,228 5,165,139
----------- -----------
5,191,043 4,997,014
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 5,284,527 $ 5,095,968
=========== ===========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 4
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
INTEREST INCOME $ 19,197 $ 20,477
--------- ---------
OPERATING EXPENSES:
Legal and accounting 24,450 24,273
Management fees - general partner (Note 3) 99,420 99,420
Administrative (Note 3) 52,218 16,906
--------- ---------
Total operating expenses 176,088 140,599
--------- ---------
LOSS FROM OPERATIONS (156,891) (120,122)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 133,020 37,941
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) 217,900 268,000
--------- ---------
NET INCOME $ 194,029 $ 185,819
========= =========
NET INCOME PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ 18 $ 17
========= =========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 5
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
---------- ---------- ----------
<S> <C> <C> <C>
PARTNERSHIP INTERESTS 10,693
==========
EQUITY (DEFICIENCY),
January 1, 1998 $ (168,125) $5,165,139 $4,997,014
Net income for the three months
ended March 31, 1998 1,940 192,089 194,029
---------- ---------- ----------
EQUITY (DEFICIENCY),
March 31, 1998 $ (166,185) $5,357,228 $5,191,043
========== ========== ==========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 6
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 194,029 $ 185,819
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in income of limited partnerships
and amortization of acquisition costs (217,900) (268,000)
Decrease in accounts payable (5,470) (27,640)
----------- -----------
Net cash used in operating activities (29,341) (109,821)
CASH FLOWS FROM INVESTING ACTIVITIES:
Distributions from limited partnerships
recognized as return of capital 31,859 9,677
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,518 (100,144)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,602,717 1,821,955
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,605,235 $ 1,721,811
=========== ===========
</TABLE>
The accompanying notes are integral part of these financial statements.
<PAGE> 7
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL
The information contained in the following notes to the financial
statements is condensed from that which would appear in the annual audited
financial statements; accordingly, the financial statements included
herein should be reviewed in conjunction with the financial statements and
related notes thereto contained in the annual report for the year ended
December 31, 1997 prepared by Real Estate Associates Limited II (the
"Partnership"). Accounting measurements at interim dates inherently
involve greater reliance on estimates than at year end. The results of
operations for the interim period presented are not necessarily indicative
of the results for the entire year.
In the opinion of the Partnership, the accompanying unaudited financial
statements contain all adjustments (consisting primarily of normal
recurring accruals) necessary to present fairly the financial position as
of March 31, 1998 and the results of operations and changes in cash flows
for the three months then ended.
The general partners have a 1 percent interest in profits and losses of
the Partnership. The limited partners have the remaining 99 percent
interest which is allocated in proportion to their respective individual
investments. National Partnership Investments Corp. (NAPICO) is the
corporate general partner of the Partnership. NAPICO is a wholly owned
subsidiary of Casden Investment Corporation, which is wholly owned by Alan
I. Casden.
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 INVESTMENT IN LIMITED PARTNERSHIPS
The investment in limited partnerships is accounted for on the equity
method. Acquisition fees, selection fees 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.
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 the periods presented.
5
<PAGE> 8
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and bank certificates of deposit
with an original maturity of three months or less. The Partnership has its
cash and cash equivalents are in excess of the FDIC insurance limit.
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.
IMPAIRMENT OF LONG-LIVED ASSETS
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable. If
the sum of the expected future cash flows is less than the carrying amount
of the assets, the Partnership recognizes an impairment loss.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership has limited partnership interests in 21 limited
partnerships. The limited partnerships own residential rental projects
consisting of 2,430 apartment units. The mortgage loans of these projects
are insured by the United States Department of Housing and Urban
Development ("HUD") or state 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.
Distributions from the limited partnerships are accounted for as a return
of capital until the investment balance is reduced to zero or to a
negative amount equal to further capital contributions required.
Subsequent distributions received are recognized as income.
6
<PAGE> 9
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in limited partnerships for
the three months ended March 31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Balance, beginning of period $ 3,493,251
Amortization of acquisition costs (2,100)
Cash distribution recognized as return of capital (31,859)
Equity in income of limited partnerships 220,000
-----------
Balance, end of period $ 3,679,292
===========
</TABLE>
The following are unaudited combined estimated statements of operations
for the three months ended March 31, 1998 and 1997 for the limited
partnerships in which the Partnership has investments:
<TABLE>
<CAPTION>
Three months Three months
ended ended
March 31, 1998 March 31, 1997
---------- ----------
<S> <C> <C>
REVENUES
Rental and other $5,778,000 $5,745,000
---------- ----------
EXPENSES
Depreciation 794,000 823,000
Interest 1,627,000 1,835,000
Operating 3,236,000 2,829,000
---------- ----------
5,657,000 5,487,000
---------- ----------
NET INCOME $ 121,000 $ 258,000
========== ==========
</TABLE>
NAPICO, or one of its affiliates, is the general partner and property
management agent for certain of the limited partnerships included above.
Under recent adopted law and policy, HUD has determined not to renew
housing assistance payments contracts ("HAP Contracts") on a long term
basis on the existing terms. In connection with renewals of the HAP
Contracts under such new law and policy, the amount of rental assistance
payments under renewed HAP Contracts will be based on market rentals
instead of above market rentals, which was generally the case under
existing HAP Contracts. As a result, existing HAP Contracts that are
renewed in the future on projects insured by the Federal Housing
Administration of HUD ("FHA") will not provide sufficient cash flow to
permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. In order to address the reduction in
payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997
("MAHRAA"), which was adopted in October 1997, provides for the
restructuring of mortgage loans insured by the FHA with respect to
properties subject to HAP Contracts that have been
7
<PAGE> 10
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
renewed under the new policy. The restructured loans will be held by the
current lender or another lender. Under MAHRAA, an FHA-insured mortgage
loan can be restructured to reduce the annual debt service on such loan.
There can be no assurance that the Partnership will be permitted to
restructure its mortgage indebtedness pursuant to the new HUD rules
implementing MAHRAA or that the Partnership would choose to restructure
such mortgage indebtedness if it were eligible to participate in the
MAHRAA program. It should be noted that there are uncertainties as to
the economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA. Accordingly, the General
Partners are unable to predict with certainty their impact on the
Partnership's future cash flow.
As a result of the foregoing, the Partnership is undergoing an extensive
review of properties for disposition to the REIT as set forth below,
refinancing or re-engineering alternatives for the properties in which
the limited partnerships have invested and are subject to HUD mortgage
and rental subsidy programs. The Partnership has incurred expenses in
connection with this review by various third party professionals,
including accounting, legal, valuation, structural and engineering
costs, which amounted to approximately $177,000 as of March 31, 1998,
including approximately $40,000 for the three months ended March 31,
1998.
A real estate investment trust ("REIT") organized by an affiliate of
NAPICO has advised the Partnership that it intends to make a proposal to
purchase from the Partnership certain of the limited partnership
interests held for investment by the Partnership.
The REIT proposes to purchase such limited partner interests for cash,
which it plans to raise in connection with a private placement of its
equity securities. The purchase is subject to, among other things, (i)
consummation of such private placement by the REIT; (ii) the purchase of
the general partner interests in the local limited partnerships by the
REIT; (iii) the approval of HUD and certain state housing finance
agencies; (iv) the consent of the limited partners to the sale of the
local limited partnership interests held for investment by REAL II; and
(v) the consummation of a minimum number of purchase transactions with
other NAPICO affiliated partnerships. As of March 31, 1998, the REIT had
completed buy-out negotiations with a majority of the general partners
of the local limited partnerships.
A proxy is contemplated to be sent to the limited partners setting forth
the terms and conditions of the purchase of the limited partners'
interests held for investment by the Partnership, together with certain
amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the transaction.
8
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1998
NOTE 3 - MANAGEMENT FEE 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 are defined as the costs of acquiring
project interests, including the proportionate amount of the mortgage
loans related to the Partnership's interests in the capital accounts of
the respective partnerships. For the three months ended March 31, 1998
and 1997, the fee was $99,420.
The Partnership reimburses NAPICO for certain expenses. The
reimbursement paid to NAPICO was approximately $8,798 and $7,827 for the
three months ended March 31, 1998 and 1997, respectively, and is
included in administrative expenses.
NOTE 4 - CONTINGENCIES
The corporate general partner is involved in various lawsuits arising
from transactions in the ordinary course of business. In addition, the
Partnership is involved in a lawsuit. In the opinion of management and
the corporate general partner, the claims will not result in any
material liability to the Partnership.
The Partnership has assessed the potential impact of the Year 2000
computer systems issue on its operations. The Partnership believes that
no significant actions are required to be taken by the Partnership to
address the issue and that the impact of the Year 2000 computer systems
issue will not materially affect the Partnership's future operating
results or financial condition.
NOTE 5 - 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.
9
<PAGE> 12
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Partnership's primary sources of funds include interest income earned
from investing available cash and distributions from limited partnerships
in which the Partnership has invested.
RESULTS OF OPERATIONS
Partnership revenues consist primarily of interest income earned on
certificates of deposit and other temporary investment of funds not
required for investment in local partnerships.
Operating expenses consist primarily of recurring general and
administrative expenses and professional fees for services rendered to the
Partnership. In addition, an annual Partnership management fee in an
amount equal to .4 percent of invested assets is payable to the corporate
general partner.
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 in accordance
with the equity accounting method.
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.
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 these funds earning interest income as reflected in the
statements of operations. These investments can be converted to cash to
meet obligations as they arise.
Under recent adopted law and policy, HUD has determined not to renew
housing assistance payments contracts ("HAP Contracts") on a long term
basis on the existing terms. In connection with renewals of the HAP
Contracts under such new law and policy, the amount of rental assistance
payments under renewed HAP Contracts will be based on market rentals
instead of above market rentals, which was generally the case under
existing HAP Contracts. As a result, existing HAP Contracts that are
renewed in the future on projects insured by the Federal Housing
Administration of HUD ("FHA") will not provide sufficient cash flow to
permit owners of properties to meet the debt service requirements of these
existing FHA-insured mortgages. In order to address the reduction in
payments under HAP Contracts as a result of this new policy, the
Multi-family Assisted Housing Reform and Affordability Act of 1997
("MAHRAA"), which was adopted in October 1997, provides for the
restructuring of mortgage loans insured by the FHA with respect to
properties subject to HAP Contracts that have been renewed under the new
policy. The restructured loans will be held by the current lender or
another lender. Under MAHRAA, an FHA-insured mortgage loan can be
restructured to reduce the annual debt service on such
10
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
loan. There can be no assurance that the Partnership will be permitted to
restructure its mortgage indebtedness pursuant to the new HUD rules
implementing MAHRAA or that the Partnership would choose to restructure
such mortgage indebtedness if it were eligible to participate in the
MAHRAA program. It should be noted that there are uncertainties as to the
economic impact on the Partnership of the combination of the reduced
payments under the HAP Contracts and the restructuring of the existing
FHA-insured mortgage loans under MAHRAA. Accordingly, the General Partners
are unable to predict with certainty their impact on the Partnership's
future cash flow.
As a result of the foregoing, the Partnership is undergoing an extensive
review of properties for disposition to the REIT as set forth below,
refinancing or re-engineering alternatives for the properties in which the
limited partnerships have invested and are subject to HUD mortgage and
rental subsidy programs. The Partnership has incurred expenses in
connection with this review by various third party professionals,
including accounting, legal, valuation, structural and engineering costs,
which amounted to approximately $177,000 as of March 31, 1998, including
approximately $40,000 in general and administrative expense for the
three months ended March 31, 1998.
A real estate investment trust ("REIT") organized by an affiliate of
NAPICO has advised the Partnership that it intends to make a proposal to
purchase from the Partnership certain of the limited partnership interests
held for investment by the Partnership.
The REIT proposes to purchase such limited partner interests for cash,
which it plans to raise in connection with a private placement of its
equity securities. The purchase is subject to, among other things, (i)
consummation of such private placement by the REIT; (ii) the purchase of
the general partner interests in the local limited partnerships by the
REIT; (iii) the approval of HUD and certain state housing finance
agencies; (iv) the consent of the limited partners to the sale of the
local limited partnership interests held for investment by REAL II; and
(v) the consummation of a minimum number of purchase transactions with
other NAPICO affiliated partnerships. As of March 31, 1998, the REIT had
completed buy-out negotiations with a majority of the general partners of
the local limited partnerships.
A proxy is contemplated to be sent to the limited partners setting forth
the terms and conditions of the purchase of the limited partners'
interests held for investment by the Partnership, together with certain
amendments to the Partnership Agreement and other disclosures of various
conflicts of interest in connection with the transaction.
The Partnership has assessed the potential impact of the Year 2000
computer systems issue on its operations. The Partnership believes that no
significant actions are required to be taken by the Partnership to address
the issue and that the impact of the Year 2000 computer systems issue will
not materially affect the Partnership's future operating results or
financial condition.
11
<PAGE> 14
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1998
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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 New Haven Local 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. Documents were refiled and all
cases were dismissed in February of 1997, with exception of one accounting
issue. REAL II is now waiting for a decision on the final matter from the
appellate court.
The corporate general partner is involved in various lawsuits. None of
these are related to the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits are required per the provision of Item 7 of regulation
S-K.
12
<PAGE> 15
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
MARCH 31, 1998
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.
REAL ESTATE ASSOCIATES LIMITED II
(a California limited partnership)
By: National Partnership Investments
Corp., General Partner
/s/ BRUCE NELSON
----------------------------------------
Bruce Nelson
President
Date: May 18, 1998
--------------
/s/ CHARLES H. BOXENBAUM
----------------------------------------
Charles H. Boxenbaum
Chief Executive Officer
Date: May 18, 1998
--------------
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,605,235
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,605,235
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,284,527
<CURRENT-LIABILITIES> 93,484
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,191,043
<TOTAL-LIABILITY-AND-EQUITY> 5,284,527
<SALES> 0
<TOTAL-REVENUES> 370,117
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 176,088
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 194,029
<INCOME-TAX> 0
<INCOME-CONTINUING> 194,029
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 194,029
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
