<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 JUNE 30, 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 JUNE 30, 1998
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets, June 30, 1998 and December 31, 1997 ...........1
Statements of Operations,
Six and Three Months Ended, June 30, 1998 and 1997 .......2
Statement of Partners' Equity
Six Months Ended June 30, 1998 ...........................3
Statements of Cash Flows,
Six Months Ended June 30, 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
JUNE 30, 1998 AND DECEMBER 31, 1997
ASSETS
<TABLE>
<CAPTION>
1998
(Unaudited) 1997
----------- -----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS (Note 2) $ 4,071,092 $ 3,493,251
CASH AND CASH EQUIVALENTS (Note 1) 1,256,208 1,602,717
----------- -----------
TOTAL ASSETS $ 5,327,300 $ 5,095,968
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accounts payable $ 166,688 $ 98,954
----------- -----------
COMMITMENTS AND CONTINGENCIES (Notes 3 and 4)
PARTNERS' EQUITY (DEFICIENCY):
General partners (166,489) (168,125)
Limited partners 5,327,101 5,165,139
----------- -----------
5,160,612 4,997,014
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 5,327,300 $ 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
SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Six months Three months Six months Three months
ended ended ended ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME $ 38,262 $ 19,065 $ 40,692 $ 20,215
--------- --------- --------- ---------
OPERATING EXPENSES:
Legal and accounting 123,417 98,966 51,306 27,031
Management fees - general partner (Note 3) 198,840 99,420 198,840 99,420
Administrative (Notes 2 and 3) 145,890 93,673 38,657 21,753
--------- --------- --------- ---------
Total operating expenses 468,147 292,059 288,803 148,204
--------- --------- --------- ---------
LOSS FROM OPERATIONS (429,885) (272,994) (248,111) (127,989)
DISTRIBUTIONS FROM LIMITED
PARTNERSHIPS RECOGNIZED AS
INCOME (Note 2) 157,683 24,663 63,453 25,512
EQUITY IN INCOME OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) 435,800 217,900 536,000 268,000
--------- --------- --------- ---------
NET INCOME (LOSS) $ 163,598 $ (30,431) 351,342 $ 165,523
========= ========= ========= =========
NET INCOME (LOSS) PER LIMITED PARTNERSHIP
INTEREST (Note 1) $ 15 $ (3) 33 $ 15
========= ========= ========= =========
</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 SIX MONTHS ENDED JUNE 30, 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 six months
ended June 30, 1998 1,636 161,962 163,598
---------- ---------- ----------
EQUITY (DEFICIENCY),
June 30, 1998 $ (166,489) $5,327,101 $5,160,612
========== ========== ==========
</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 SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 163,598 $ 351,342
Adjustments to reconcile net income to net cash
used in operating activities:
Equity in income of limited partnerships
and amortization of acquisition costs (435,800) (536,000)
Decrease in accounts payable 67,734 (26,391)
----------- -----------
Net cash used in operating activities (204,468) (211,049)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital contributions (173,900) --
Distributions recognized as a return from limited partnerships
recognized as return of capital 31,859 188,405
----------- -----------
Net cash (used in) provided by investing activities (142,041) 188,405
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (346,509) (22,644)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,602,717 1,821,955
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,256,208 $ 1,799,311
=========== ===========
</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
JUNE 30, 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 June 30, 1998 and the results of operations for the six and three
months then ended and changes in cash flows for the six 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)
JUNE 30, 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)
JUNE 30, 1998
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in limited partnerships
for the six months ended June 30, 1998:
<TABLE>
<S> <C>
Balance, beginning of period $3,493,251
Capital contributions 173,900
Amortization of acquisition costs (4,200)
Cash distribution recognized as return of capital (31,859)
Equity in income of limited partnerships 440,000
----------
Balance, end of period $4,071,092
==========
</TABLE>
The difference between the investment per the accompanying balance
sheets at June 30, 1998 and December 31, 1997, and the deficiency per
the unaudited combined estimated statements of operations 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.
The following are unaudited combined estimated statements of operations
for the six and three months ended June 30, 1998 and 1997 for the
limited partnerships in which the Partnership has investments:
<TABLE>
<CAPTION>
Six months Three months Six months Three months
ended ended ended ended
June 30, 1998 June 30, 1998 June 30, 1997 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Rental and other $11,556,000 $5,778,000 $11,490,000 $5,745,000
----------- ---------- ----------- ----------
EXPENSES
Depreciation 1,588,000 794,000 1,646,000 823,000
Interest 3,254,000 1,627,000 3,670,000 1,835,000
Operating 6,472,000 3,236,000 5,658,000 2,829,000
----------- ---------- ----------- ----------
11,314,000 5,657,000 10,974,000 5,487,000
----------- ---------- ----------- ----------
NET INCOME $ 242,000 $ 121,000 $ 516,000 $ 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 recently adopted law and policy, HUD has determined not to
renew housing assistance payments contracts ("HAP Contracts") on
their 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
7
<PAGE> 10
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1998
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
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 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 the properties in which the limited partnerships
have invested that are subject to HUD mortgages and which may be sold
to the REIT as set forth below. The Partnership has incurred expenses
in connection with this review by various third party professionals,
including accounting, legal, valuation, structural review and
engineering costs, which amounted to approximately $244,000 through
June 30, 1998, including approximately $106,000 for the six months
ended June 30, 1998, which are included in general and administrative
expenses.
A real estate investment trust ("REIT") organized by affiliates 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 partnership 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 partnership 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 June 30, 1998, the REIT had completed
buy-out negotiations with a majority of the general partners of the
local limited partnerships.
A consent solicitation statement will 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
proposed transaction.
8
<PAGE> 11
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 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 six months
ended June 30, 1998 and 1997, the fee was $198,840.
The Partnership reimburses NAPICO for certain expenses. The
reimbursement paid to NAPICO was approximately $17,597 and $16,000
for the six months ended June 30, 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)
JUNE 30, 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 recently adopted law and policy, HUD has determined not to renew
housing assistance payments contracts ("HAP Contracts") on their
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 loan. There can be no assurance that the
Partnership will be permitted to restructure its mortgage indebtedness
pursuant
10
<PAGE> 13
REAL ESTATE ASSOCIATES LIMITED II
(A CALIFORNIA LIMITED PARTNERSHIP)
JUNE 30, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
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 the properties in which the limited partnerships
have invested that are subject to HUD mortgages and which may be sold
to the REIT as set forth below. The Partnership has incurred expenses
in connection with this review by various third party professionals,
including accounting, legal, valuation, structural review and
engineering costs, which amounted to approximately $244,000 through
June 30, 1998, including approximately $106,000 for the six months
ended June 30, 1998, which are included in general and administrative
expenses.
A real estate investment trust ("REIT") organized by affiliates 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 partnership 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 partnership 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 June 30,
1998, the REIT had completed buy-out negotiations with a majority of
the general partners of the local limited partnerships.
A consent solicitation statement will 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
proposed 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)
JUNE 30, 1998
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Joseph Alizio v. Peter Perpignano, New Haven Plaza Associates, et al.,
Index No. 1776/94, Supreme Court, Nassau County. This action was
commenced by Joseph Alizio, a limited partner in New Haven Plaza
Associates ("New Haven Plaza"), alleging seven causes of action.
Plaintiff sought to recover his pro rata share of $280,000,
representing a portion of the purchase price of the partnership
interest purchased by Real Estate Associates Limited II ("REAL II"), as
well as an accounting. By notice of motion, dated May 9, 1996,
defendants Perpignano, New Haven Plaza, Macagnone, REAL II, National
Partnership Investments Corp. and National Partnership Investments
Associates moved to dismiss the first through fourth, sixth and seventh
causes of action. By Memorandum Decision and Order, dated September 24,
1996, the Court granted the motion. Thereafter, appeals were taken,
other motions made and on December 22, 1997, the Appellate Division,
Second Department, affirmed the dismissal of the first through fourth,
sixth and seventh causes of action. The fifth cause of action is still
pending in which plaintiff seeks his pro rata share of a $75,000
consultant's fee paid to defendant Perpignano by Real II and its
general partners.
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)
JUNE 30, 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: 8/14/98
---------------------------------
/s/ CHARLES H. BOXENBAUM
---------------------------------
Charles H. Boxenbaum
Chief Executive Officer
Date: 8/14/98
---------------------------------
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,256,208
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,481,389
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,327,300
<CURRENT-LIABILITIES> 166,688
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 5,160,612
<TOTAL-LIABILITY-AND-EQUITY> 5,327,300
<SALES> 0
<TOTAL-REVENUES> 631,745
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 468,147
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 163,598
<INCOME-TAX> 0
<INCOME-CONTINUING> 163,598
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 163,598
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
