FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-10256
SHELTER PROPERTIES II LIMITED PARTNERSHIP
(Name of small business issuer in its charter)
South Carolina 57-0709233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interest
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $5,684,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership's
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. Market value
information for the Registrant's partnership interests is not available. Should
a trading market develop for these interests, it is the General Partner's belief
that the aggregate market value of the partnership interests would not exceed
$25,000,000.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Shelter Properties II Limited Partnership (the "Registrant" or the
"Partnership") is engaged in the business of acquiring, operating and holding
real properties for investment. The Registrant was organized as a limited
partnership under the laws of the State of South Carolina pursuant to a
Certificate and Agreement of Limited Partnership filed October 10, 1980. The
general partner responsible for management of the Partnership's business is
Shelter Realty II Corporation, a South Carolina corporation (the "Corporate
General Partner"). The only other general partner of the Partnership, N. Barton
Tuck, Jr. (the "Individual General Partner"), is effectively prohibited by the
Partnership's Partnership Agreement (the "Partnership Agreement") from
participating in the management of the Partnership. The Corporate General
Partner, a wholly-owned subsidiary of Insignia Properties Trust, is an affiliate
of Insignia Financial Group, Inc. ("Insignia").
Commencing February 2, 1981, the Registrant offered through E. F. Hutton &
Company Inc. ("Hutton") up to 27,400 Units of Limited Partnership Interest (the
"Units") at $1,000 per Unit with a minimum purchase of 5 Units ($5,000), or 1.5
Units ($1,500) for an Individual Retirement Account. An additional 100 Units
were purchased by the Corporate General Partner. Limited partners are not
required to make any additional capital contributions.
The Units were registered under the Securities Act of 1933 via Registration
Statement No. 2-69507 (the "Registration Statement"). Reference is made to the
Prospectus of Registrant dated February 2, 1981 (the "Prospectus") contained in
said Registration Statement, which is incorporated herein by reference thereto.
The offering terminated on April 30, 1981. Upon termination of the offering,
the Registrant had accepted subscriptions for 27,500 Units, including 100 Units
purchased by the Corporate General Partner, for an aggregate of $27,500,000. By
June 30, 1981, the Registrant had invested or committed for investment
approximately $21,000,000 of such proceeds in five existing apartment
properties, thereby completing its acquisition program at the approximate
expenditure level estimated in the Prospectus. Prior to December 31, 1997, the
Partnership sold one property and lost one property to the lender through
foreclosure.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
A further description of the Partnership's business is included in Management's
Discussion and Analysis or Plan of Operation included in "Item 6" of this Form
10-KSB.
The Registrant has no employees. Management and administrative services are
performed by the Corporate General Partner and by Insignia Residential Group,
L.P., an affiliate of Insignia, the ultimate parent company of the Corporate
General Partner. Pursuant to a management agreement between them, Insignia
Residential Group, L.P. provides property management services to the Registrant.
The real estate business in which the Partnership is engaged is highly
competitive, and the Partnership is not a significant factor in this industry.
The Registrant's property is subject to competition from similar properties in
the vicinity in which the property is located. In addition, various limited
partnerships have been formed by the General Partners and/or their affiliates to
engage in business which may be competitive with the Registrant.
ITEM 2. DESCRIPTION OF PROPERTIES:
The following table sets forth the Registrant's investments in properties:
Date of
Property Purchase Type of Ownership Use
Parktown Townhouses 03/01/81 Fee ownership, subject Apartment
Deer Park, Texas to first and second 309 units
mortgages.
Raintree Apartments 04/30/81 Fee ownership, subject Apartment
Anderson, South Carolina to first and second 176 units
mortgages.
Signal Pointe Apartments 06/30/81 Fee ownership, subject Apartment
Winter Park, Florida to first and second 368 units
mortgages.
SCHEDULE OF PROPERTIES:
(dollar amounts in thousands)
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Parktown Townhouses $ 9,493 $ 6,097 5-35 S/L $ 2,927
Raintree Apartments 4,047 2,648 5-38 S/L 527
Signal Pointe Apartments 11,266 7,251 5-37 S/L 1,809
Totals $24,806 $15,996 $ 5,263
See "Note A" to the financial statements in "Item 7" for a description of the
Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance at Stated Balance
December 31, Interest Period Maturity Due at
Property 1997 Rate Amortized Date Maturity
Parktown Townhouses
1st mortgage $ 3,116 7.60% (1) 11/15/02 $2,552
2nd mortgage 109 7.60% (1) 11/15/02 109
Raintree Apartments
1st mortgage 1,383 7.60% (1) 11/15/02 1,133
2nd mortgage 48 7.60% (1) 11/15/02 48
Signal Pointe Apartments
1st mortgage 4,131 7.60% (1) 11/15/02 3,383
2nd mortgage 145 7.60% (1) 11/15/02 145
$ 8,932
Less unamortized
mortgage discounts (383)
Total $ 8,549
(1) The principal balance is being amortized over 257 months with a balloon
payment due November 15, 2002.
The Partnership exercised interest rate buy-down options for the three
properties when the debt was refinanced in 1992, reducing the stated rate from
8.76% to 7.60%. The fee for the interest rate reduction amounted to
approximately $700,000 and is being amortized as a loan discount using the
interest method over the life of the loans. The discount is reflected as a
reduction of the mortgage notes payable and increases the effective rate of the
debt to 8.76%. The mortgage notes payable are nonrecourse and are secured by
pledge of the respective apartment properties and by pledge of revenues from the
respective apartment properties. Certain of the notes require prepayment
penalties if repaid prior to maturity.
Average annual rental rates per unit and occupancy for 1997 and 1996 for each
property were:
Average Annual Average
Rental Rates Occupancy
Property 1997 1996 1997 1996
Parktown Townhouses $7,722 $7,361 95% 95%
Raintree Apartments 5,734 5,602 91% 94%
Signal Pointe Apartments 6,200 5,958 96% 95%
Occupancy at Raintree Apartments decreased as a result of new construction in
the Anderson, South Carolina market and an increase in new home purchases by
prospective tenants.
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other residential apartment complexes in the area. The
Corporate General Partner believes that all of the properties are adequately
insured. The multi-family residential properties' lease terms are for one year
or less. No residential tenant leases 10% or more of the available rental space.
Real estate taxes and rates in 1997 for each property were:
1997 1997
Billing Rate
(in thousands)
Parktown Townhouses $ 179 3.02%
Raintree Apartments 74 3.84%
Signal Pointe Apartments 147 1.79%
ITEM 3. LEGAL PROCEEDINGS
The Registrant is unaware of any pending or outstanding litigation that is not
of a routine nature. The Corporate General Partner of the Registrant believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the fiscal year ended December 31, 1997, no matter was submitted to a
vote of Unit holders through the solicitation of proxies or otherwise.
PART II
ITEM 5. MARKET FOR PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of December 31, 1997, there was minimal trading of the Units in the secondary
market. As of December 31, 1997, there were 1,780 holders of record owning an
aggregate of 27,500 Units of which Insignia Properties, L.P., an affiliate of
Insignia, owned 9,118 units. No public trading market has developed for the
Units, and it is not anticipated that such a market will develop in the future.
Cash distributions to the limited partners of $500,000 ($18.18 per unit),
attributable to prior years debt refinancing proceeds, were declared and paid
during the year ended December 31, 1996. Cash distributions of approximately
$995,000 to the Limited Partners ($36.18 per unit) and $10,000 to the General
Partners, attributable to operations, were declared and paid during the year
ended December 31, 1997. The Partnership made a distribution to the partners of
$750,000 subsequent to December 31, 1997, of which $356,000 is attributable to
prior year's sale and refinancing proceeds and $394,000 is attributable to
operations. Future cash distributions will depend on the levels of cash
generated from operations, refinancings, property sales and cash reserves. In
addition, certain of the Partnership's mortgage notes require that reserves
("Reserve Account") be maintained for repairs, replacements and expenses of the
Partnership. As of December 31, 1997, the Reserve Account was fully funded,
however if it becomes necessary to draw upon these reserves, distributions may
also be restricted by the requirement to deposit net operating income (as
defined in the mortgage note) into the Reserve Account as disclosed in "Item 7",
"Note A" of the financial statements in.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the financial statements contained
in "Item 7" and other items contained elsewhere in this report.
Results of Operations
The Partnership realized net income of approximately $428,000 for the year
ended December 31, 1997, compared to net income of approximately $258,000 for
the year ended December 31, 1996. The increase in net income is attributable to
an increase in rental revenues. There was also a decrease in operating expenses
and depreciation expense; however, these decreases were slightly offset by a
loss on disposal of property.
Rental revenues increased as a result of increased rental rates at all of the
Partnership's investment properties. Occupancy remained stable at Parktown
Townhouses and Signal Pointe Apartments; however, a decrease in occupancy at
Raintree Apartments, partially offset the overall increase in rental revenues.
Operating expenses decreased primarily as a result of fewer improvement projects
at all of the Partnership's investment properties during 1997. At Parktown
Townhouses, an exterior rehabilitation project to improve the property's
appearance was started and substantially completed in 1996. This project was
completed during 1997. This rehabilitation project included gutter repairs,
exterior painting and landscaping. Additionally, Raintree Apartments and Signal
Pointe Apartments, incurred expenses during 1996 relating to projects to improve
the interior buildings and landscaping. Because these projects were completed
during 1996, there were no additional related expenditures during 1997.
Depreciation expense decreased due to certain assets becoming fully depreciated
at the Partnership's investment properties. Offsetting the decreases in
operating expenses and depreciation expense was a loss on disposal of property
along with increases in advertising and rental expenses. The loss on disposal
of property resulted from the replacement of roofs and the related write-off of
the old roofs that had not been fully depreciated at the time of replacement.
Advertising and rental expenses increased primarily as a result of an increase
in rental concessions given in 1997 to the tenants of Raintree Apartments to
encourage an increase in the occupancy rate.
Included in operating expenses for the year ended December 31, 1997 is
approximately $165,000 of major repairs and maintenance comprised primarily of
exterior painting, exterior building repairs, parking lot repairs and gutter
repairs. Included in operating expenses for 1996 was approximately $255,000 of
major repairs and maintenance comprised primarily of major landscaping, gutter
repairs, exterior building repairs, parking lot repairs and exterior painting.
The Corporate General Partner relies on the annual appraisals performed by
outside appraisers for the estimated value of the Partnership's properties.
There are three recognized approaches or techniques available to the appraiser.
When applicable, these approaches are used to process the data considered
significant to each to arrive at separate value indications. In all instances,
the experience of the appraiser, coupled with his objective judgment, plays a
major role in arriving at the conclusions of the indicated value from which the
final estimate of value is made. The three approaches commonly used are the cost
approach, the sales comparison approach, and the income approach. The cost
approach is often not considered to be reliable due to the lack of land sales
and the significant amount of depreciation and, therefore, is often not
presented. Upon receipt of the appraisals, any property which was stated on the
books of the Partnership above the estimated value given in the appraisal was
written down to the estimated value given by the appraiser. The appraiser
assumes a stabilized occupancy at the time of the appraisal and, therefore, any
impairment of value was considered to be permanent by the Corporate General
Partner. For the years ended December 31, 1997 and 1996, no adjustments for
impairment of value were necessary.
As part of the ongoing business plan of the Partnership, the Corporate General
Partner monitors the rental market environment at each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels, and protecting the Partnership from increases in
expense. As part of this plan, the Corporate General Partner attempts to
protect the Partnership from the burden of inflation-related increases in
expenses by increasing rents and maintaining a high overall occupancy level.
However, due to changing market conditions, which can result in the use of
rental concessions and rental reductions to offset softening market conditions,
there is no assurance that the Corporate General Partner will be able to sustain
this plan.
Liquidity and Capital Resources
At December 31, 1997, the Partnership held cash and cash equivalents of
approximately $1,993,000 compared to approximately $2,222,000 at December 31,
1996. For the year ended December 31, 1997, cash and cash equivalents decreased
approximately $229,000 compared to a decrease of approximately $47,000 for the
year ended December 31, 1996. Net cash provided by operating activities
increased primarily as a result of an increase in net income as previously
discussed. Also contributing to the increase in net cash provided by operating
activities was a decrease in receivables and deposits and an increase in other
liabilities, attributable to the timing of receipts and payments. Net cash used
in investing activities decreased primarily due to a reduction in property
improvements and replacements. Net cash used in financing activities increased
due to an increase in distributions to the partners.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $8,549,000, net of discount, is amortized
over 257 months as previously disclosed in "Item 2. Description of Properties."
In addition, the mortgage notes require balloon payments on November 15, 2002,
at which time the individual properties will either be sold or refinanced. Cash
distributions of $500,000 were paid during the year ended December 31, 1996.
During the year ended December 31, 1997, distributions totaling approximately
$1,005,000 were paid. The Partnership made a distribution to the partners of
$750,000 subsequent to December 31, 1997. Future cash distributions will depend
on the levels of net cash generated from operations, refinancings, property
sales and cash reserves.
Year 2000
The Partnership is dependent upon the Corporate General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The Corporate General Partner believes that with
modifications to existing software and conversions to new software, the Year
2000 Issue will not pose significant operational problems for its computer
systems. However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Issue could have a material impact on the
operations of the Partnership.
Other
Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this annual report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ITEM 7. FINANCIAL STATEMENTS
SHELTER PROPERTIES II LIMITED PARTNERSHIP
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheet--December 31, 1997
Statements of Operations--Years ended December 31, 1997 and 1996
Statements of Changes in Partners' Capital (Deficit)--Years ended
December 31, 1997 and 1996
Statements of Cash Flows--Years ended December 31, 1997 and 1996
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Shelter Properties II Limited Partnership
We have audited the accompanying balance sheet of Shelter Properties II
Limited Partnership at December 31, 1997, and the related statements of
operations, changes in partners' capital (deficit) and cash flows for each of
the two years in the period ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by the Partnership's management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Shelter Properties II
Limited Partnership at December 31, 1997, and the results of its operations
and its cash flows for each of the two years in the period ended December 31,
1997, in conformity with generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
January 23, 1998,
except for Note F, as to which the date is
March 17, 1998
SHELTER PROPERTIES II LIMITED PARTNERSHIP
BALANCE SHEET
December 31, 1997
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 1,993
Receivables and deposits 358
Restricted escrows 941
Other assets 229
Investment properties: (Note B & E)
Land $ 1,814
Buildings and related personal property 22,992
24,806
Less accumulated depreciation (15,996) 8,810
$ 12,331
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 50
Tenant security deposits 130
Accrued taxes 179
Other liabilities 232
Mortgage notes payable (Note B) 8,549
Partners' Capital (Deficit)
General partners $ (116)
Limited partners (27,500 units
issued and outstanding) 3,307 3,191
$ 12,331
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES II LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1997 1996
Revenues:
Rental income $ 5,361 $ 5,139
Other income 323 370
Total revenues 5,684 5,509
Expenses:
Operating 2,732 2,783
General and administrative 193 176
Depreciation 1,033 1,087
Interest 798 813
Property taxes 405 392
Loss on disposal of property 95 --
Total expenses 5,256 5,251
Net income $ 428 $ 258
Net income allocated to general
partners (1%) $ 4 $ 3
Net income allocated to limited
partners (99%) 424 255
$ 428 $ 258
Net income per limited partnership unit $ 15.41 $ 9.27
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES II LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 27,500 $ 2 $27,500 $27,502
Partners' capital (deficit) at
December 31, 1995 27,500 $ (113) $ 4,123 $ 4,010
Partners' distributions paid -- -- (500) (500)
Net income for the year ended
December 31, 1996 -- 3 255 258
Partners' capital (deficit) at
December 31, 1996 27,500 (110) 3,878 3,768
Distributions to Partners -- (10) (995) (1,005)
Net income for the year ended
December 31, 1997 -- 4 424 428
Partners' capital (deficit) at
December 31, 1997 27,500 $ (116) $ 3,307 $ 3,191
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES II LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1997 1996
Cash flows from operating activities:
Net income $ 428 $ 258
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 1,033 1,087
Amortization of discounts and loan costs 108 105
Loss on disposal of property 95 --
Change in accounts:
Receivables and deposits 45 (18)
Other assets (25) (2)
Accounts payable (107) (51)
Tenant security deposits (19) (4)
Accrued taxes (43) 61
Other liabilities 42 (138)
Net cash provided by operating activities 1,557 1,298
Cash flows from investing activities:
Property improvements and replacements (485) (620)
Deposits to restricted escrows, net of withdrawals (39) 14
Net cash used in investing activities (524) (606)
Cash flows from financing activities:
Payments on mortgage notes payable (257) (239)
Distributions to partners (1,005) (500)
Net cash used in financing activities (1,262) (739)
Net decrease in cash and cash equivalents (229) (47)
Cash and cash equivalents at beginning of period 2,222 2,269
Cash and cash equivalents at end of period $ 1,993 $ 2,222
Supplemental disclosure of cash flow information:
Cash paid for interest $ 690 $ 710
See Accompanying Notes to Financial Statements
SHELTER PROPERTIES II LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization: Shelter Properties II Limited Partnership (the "Partnership')
was organized as a limited partnership under the laws of the State of South
Carolina pursuant to a Certificate and Agreement of Limited Partnership filed
October 10, 1980. The general partner responsible for management of the
Partnership's business is Shelter Realty II Corporation, a South Carolina
corporation (the "Corporate General Partner"). The only other general partner
of the Partnership, N. Barton Tuck, Jr. (the "Individual General Partner"), is
effectively prohibited by the Partnership's partnership agreement (the
"Partnership Agreement") from participating in the management of the
Partnership. The Corporate General Partner, a wholly-owned subsidiary of
Insignia Properties Trust, is an affiliate of Insignia Financial Group, Inc.
("Insignia"). The directors and officers of the Corporate General Partner also
serve as executive officers of Insignia. The Partnership Agreement terminates
December 31, 2020. The Partnership commenced operations on March 1, 1981, and
completed its acquisition of apartment properties on June 30, 1981. The
Partnership operates three apartment properties located in the South and
Southwest. At December 31, 1997, affiliates of Insignia own 9,118 units of the
Partnership.
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 amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Cash Distributions: Cash distributions by the Partnership are
allocated between general and limited partners in accordance with the provisions
of the Partnership Agreement. The Partnership Agreement provides that net cash
from operations means revenue received less operating expenses paid, adjusted
for certain specified items which primarily include mortgage payments on debt,
property improvements and replacements not previously reserved, and the effects
of other adjustments to reserves. In the following notes to financial
statements, whenever "net cash from (used by) operations" is used, it has the
aforementioned meaning. The following is a reconciliation of the subtotal on
the accompanying statements of cash flows captioned "net cash provided by
operating activities" to "net cash from operations", as defined in the
Partnership Agreement. However, "net cash from operations" should not be
considered an alternative to net income as an indicator of the Partnership's
operating performance or to cash flows as a measure of liquidity.
1997 1996
(in thousands)
Net cash provided by operating activities $ 1,557 $ 1,298
Property improvements and replacements (485) (620)
Payments on mortgage notes payable (257) (239)
Changes in reserves for net operating
liabilities 107 152
Change in restricted escrows, net (39) 14
Additional reserves (489) (605)
Net cash from operations $ 394 $ --
In 1997 and 1996, the Corporate General Partner believed it to be in the best
interest of the Partnership to reserve an additional $489,000 and $605,000,
respectively, to fund continuing capital improvement needs in order for the
properties to remain competitive.
Distributions made from reserves no longer considered necessary by the general
partners are considered to be additional net cash from operations for allocation
purposes. During the year ended December 31, 1996, the Corporate General
Partner made a distribution of $500,000 from cash attributable to prior years
debt refinancing proceeds. During the year ended December 31, 1997, the
Corporate General Partner made a distribution of $1,005,000 from operations.
The Partnership made a distribution to the partners of $750,000 subsequent to
December 31, 1997.
The Partnership Agreement provides that 99% of distributions of net cash from
operations are allocated to the limited partners until they receive net cash
from operations for such fiscal year equal to 7% of their adjusted capital
values (as defined in the Partnership Agreement), at which point the general
partners will be allocated all net cash from operations until they have received
distributions equal to 10% of the aggregate net cash from operations distributed
to partners for such fiscal year. Thereafter, the general partners will be
allocated 10% of any distributions of remaining net cash from operations for
such fiscal year.
All distributions of distributable net proceeds (as defined in the Partnership
Agreement) from property dispositions and refinancings will be allocated to the
limited partners until each limited partner has received an amount equal to a
cumulative 7% per annum of the average of the limited partners' adjusted capital
value, less any prior distributions of net cash from operations and
distributable net proceeds, and has also received an amount equal to the limited
partners' adjusted capital value. Thereafter, the general partners receive 1%
of the selling prices of properties sold where they acted as a broker, and then
the limited partners will be allocated 85% of any remaining distributions of
distributable net proceeds and the general partners will receive 15%.
Undistributed Net Proceeds from Refinancing: At December 31, 1997, net proceeds
from refinancings of approximately $248,000 remained undistributed. Also, at
December 31, 1997, undistributed sales proceeds from a prior year sale of an
apartment property amounted to approximately $166,000, of which $58,000 is
payable to the general partners for related sales commissions when certain
levels of return are received by the limited partners. Subsequent to December
31, 1997, net proceeds from refinancings of approximately $248,000 and
approximately $108,000 of prior sales proceeds were distributed to the limited
partners.
Allocation of Profits, Gains and Losses: Profits, gains and losses of the
Partnership are allocated between general and limited partners in accordance
with the provisions of the Partnership Agreement.
For any fiscal year, to the extent that profits, not including gains from
property dispositions, do not exceed distributions of net cash from operations,
such profits are allocated in the same manner as such distributions. In any
fiscal year in which profits, not including gains from property disposition,
exceed distributions of net cash from operations, such excess is treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and is allocated together with, and in the same manner as, that portion
of gain described in the second sentence of the following paragraph.
Any gain from property dispositions attributable to the excess, if any, of the
indebtedness relating to a property immediately prior to the disposition of such
property over the Partnership's adjusted basis in the property shall be
allocated to each partner having a negative capital account balance, to the
extent of such negative balance. The balance of any gain shall be treated on a
cumulative basis as if it constituted an equivalent amount of distributable net
proceeds and shall be allocated to the general partners to the extent that
general partners would have received distributable net proceeds in connection
therewith; the balance shall be allocated to the limited partners. However, the
interest of the general partners will be equal to at least 1% of each gain at
all times during the existence of the Partnership.
All losses, including losses attributable to property dispositions, are
allocated 99% to the limited partners and 1% to the general partners.
Accordingly, net income (losses) as shown in the statements of operations and
changes in partners' capital (deficit) for 1997 and 1996 were allocated 99% to
the limited partners and 1% to the general partners. Net income per limited
partnership unit for 1997 and 1996 was computed as 99% of net income divided by
27,500 weighted average units outstanding.
Other Reserves: The general partners may designate a portion of cash generated
from operations as "other reserves" in determining net cash from operations.
Per the Partnership Agreement, the general partners designated as other reserves
an amount equal to the net liabilities related to the operations of apartment
properties during the current fiscal year that are expected to require the use
of cash during the next fiscal year. The increase in other reserves during
1997 and 1996 was $107,000 and $152,000, respectively, which amounts were
determined by considering changes in the balances of receivables and deposits,
other assets, accounts payable, tenant security deposits, accrued taxes and
other liabilities. At this time, the Corporate General Partner expects to
continue to adjust other reserves based on the net change in the aforementioned
account balances.
Reserve Account: In connection with the refinancing in 1992, a general Reserve
Account was established with the refinancing proceeds for each mortgaged
property. These funds were established to cover necessary repairs and
replacements of existing improvements, debt service, out of pocket expenses
incurred for ordinary and necessary administrative tasks, and payment of real
property taxes and insurance premiums. The Partnership is required to deposit
net operating income (as defined in the mortgage note) from each refinanced
property to the respective reserve account until the accounts equal $1,000 per
apartment unit or $853,000 in total. The balance at December 31, 1997, is
approximately $920,000, which includes interest earned on these funds.
Escrows for Taxes: These escrows, totaling $206,000 at December 31, 1997, and
included in receivables and deposits, are held by the Partnership and are
designated for the payment of real estate taxes.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984, and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of
the Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
additions over 27 1/2 years and (2) personal property additions over 7 years.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was approximately $62,000
and $51,000 for the years ended December 31, 1997 and 1996, respectively.
Loan Costs: Loan costs of approximately $393,000, less accumulated amortization
of approximately $200,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Cash and cash equivalents: Cash and cash equivalents include cash on hand and
in banks and certificates of deposit with original maturities of less than 90
days. At certain times, the amount of cash deposited at a bank may exceed the
limit on insured deposits.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In
addition, the Corporate General Partner's policy is to offer rental concessions
during particularly slow months or in response to heavy competition from other
similar complexes in the area. Concessions are charged to expense as incurred.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged the unit and is current on rental payments.
Investment Properties: Investment properties are stated at cost. Acquisition
fees are capitalized as a cost of real estate. The Partnership records
impairment losses on long-lived assets used in operations when events and
circumstances indicate that the assets might be impaired and the undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets. For the years ended December 31, 1997 and 1996, no
adjustments for impairment of value were necessary.
Reclassifications: Certain reclassifications have been made to the 1996
information to conform to the 1997 presentation.
Fair Value: The Partnership believes that the carrying amount of its financial
instruments (except for long term debt) approximates their fair value due to the
short term maturity of these instruments. The fair value of the Partnership's
long term debt, after discounting the scheduled loan payments at an estimated
borrowing rate currently available to the Partnership, approximates its carrying
balance.
NOTE B - MORTGAGE NOTES PAYABLE
(dollar amounts in thousands)
The principle terms of mortgage notes payables are as follows:
Principal Monthly Principal
Balance at Payment Stated Balance
December 31, Including Interest Maturity Due at
Property 1997 Interest Rate Date Maturity
Parktown Townhouses
1st mortgage $3,116 $ 28 7.60% 11/15/02 $2,552
2nd mortgage 109 1 7.60% 11/15/02 109
Raintree Apartments
1st mortgage 1,383 12 7.60% 11/15/02 1,133
2nd mortgage 48 --(a) 7.60% 11/15/02 48
Signal Pointe Apartments
1st mortgage 4,131 37 7.60% 11/15/02 3,383
2nd mortgage 145 1 7.60% 11/15/02 145
8,932 $ 79
Less unamortized
present value discounts (383)
Total $8,549
(a) Monthly interest only payments are less than $1,000.
The Partnership exercised interest rate buy-down options for the three
properties when the debt was refinanced in 1992, reducing the stated rate from
8.76% to 7.60%. The fee for the interest rate reduction amounted to
approximately $700,000 and is being amortized as a loan discount using the
interest method over the life of the loans. The discount is reflected as a
reduction of the mortgage notes payable and increases the effective rate of the
debt to 8.76%.
The mortgage notes payable are nonrecourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. Certain of the notes require prepayment penalties if
repaid prior to maturity.
Scheduled principal payments of mortgage notes payable subsequent to
December 31, 1997 are as follows:
1998 $ 278
1999 300
2000 323
2001 349
2002 7,682
$ 8,932
NOTE C - INCOME TAXES
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in
the income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (dollar amounts in thousands, except per unit data):
1997 1996
Net income as reported $ 428 $ 258
Add (deduct)
Amortization of present
value discounts (2) (5)
Depreciation differences 671 78
Change in prepaid rental 37 (37)
Other 15 (56)
Loss on disposition of property 95 --
Federal taxable income $1,244 $ 238
Federal taxable income
per limited partnership unit $44.78 $ 8.57
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities as of December 31, 1997:
Net assets as reported $ 3,191
Buildings and land 2,848
Accumulated depreciation (6,395)
Syndication fees 3,111
Other 134
Net assets - tax basis $ 2,889
NOTE D - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. The Partnership Agreement provides for certain payments
to affiliates for services and as reimbursement of certain expenses incurred by
affiliates on behalf of the Partnership. Balances and other transactions with
affiliates of the Corporate General Partner in 1997 and 1996 are as follows:
1997 1996
(in thousands)
Property management fees (included in
operating expenses) $ 278 $ 269
Reimbursement for services of affiliates
(included in investment properties,
general administrative, and operating
expenses) 137 123
Due to general partners 58 58
Included in reimbursements for services of affiliates is approximately $9,000
and $12,000 of reimbursements for construction oversight costs in 1997 and 1996,
respectively.
From January 1, 1996, through August 31, 1997, the Partnership insured its
properties under a master policy through an agency and insurer unaffiliated with
the Corporate General Partner. An affiliate of the Corporate General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the master
policy. The agent assumed the financial obligations to the affiliate of the
Corporate General Partner who receives payment on these obligations from the
agent. The amount of the Partnership's insurance premiums that accrued to the
benefit of the affiliate of the Corporate General Partner by virtue of the
agent's obligations was not significant.
On September 26, 1997, an affiliate of the Corporate General Partner purchased
Lehman Brothers' Class "D" subordinated bonds of SASCO 1992-M1. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Parktown Townhouses, Raintree Apartments, and Signal Pointe Apartments
owned by the Partnership.
NOTE E - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Property Encumbrances Land Property Acquisition
(in thousands)
Parktown Townhouses
Deer Park, TX $ 3,225 $ 1,095 $ 5,329 $ 3,069
Raintree Apartments
Anderson, SC 1,431 184 3,184 679
Signal Pointe Apartments
Winter Park, FL 4,276 536 8,062 2,668
Totals $ 8,932 $ 1,815 $16,575 $ 6,416
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1997
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Property Land Property Total Depreciation Construction Acquired Life-Years
(amounts in thousands)
<C> <C> <C> <C> <C> <C> <C>
Parktown Townhouses $ 1,095 $ 8,398 $ 9,493 $ 6,097 1969 03/01/81 5-35
Raintree Apartments 184 3,863 4,047 2,648 1972-1974 04/30/81 5-38
Signal Pointe 535 10,731 11,266 7,251 1970 06/30/81 5-37
Apartments
Totals $ 1,814 $ 22,992 $24,806 $15,996
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation" (in thousands):
Years Ended December 31,
1997 1996
Investment Properties
Balance at beginning of year $ 24,496 $ 23,876
Property improvements 485 620
Disposals of property (175) --
Balance at End of Year $ 24,806 $ 24,496
Accumulated Depreciation
Balance at beginning of year $ 15,043 $ 13,956
Additions charged to expense 1,033 1,087
Disposals of property (80) --
Balance at End of Year $ 15,996 $ 15,043
The aggregate cost of the real estate for Federal income tax purposes is
approximately $27,653,000 and $27,168,000 at December 31, 1997 and 1996,
respectively. The accumulated depreciation taken for Federal income tax
purposes is approximately $22,390,000 and $22,027,000 at December 31, 1997 and
1996, respectively.
NOTE F - SUBSEQUENT EVENT
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 8.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 9.DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS, COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The Registrant has no officers or directors. The Individual and Corporate
General Partners are as follows:
Individual General Partner - N. Barton Tuck, Jr., age 59, is the Individual
General Partner of the Registrant. Mr. Tuck is Chairman of GolfSouth
Management, Inc. Until August 1990, he served as Chairman and Chief Executive
Officer of U.S. Shelter Corporation ("Shelter"), the former parent of AmReal
Corporation (parent of the Corporate General Partner of the Partnership). For
six years prior to 1966, Mr. Tuck was employed in Greenville, South Carolina by
the certified public accounting firm of S.D. Leidesdorf & Company. From 1966 to
1970, he was a registered representative with the investment banking firm of
Harris Upham & Co., Inc. in Greenville, South Carolina. Since 1970, Mr. Tuck
has been engaged in arranging equity investments for individuals and
partnerships. Mr. Tuck is a graduate of the University of North Carolina. Mr.
Tuck has delegated to the Corporate General Partner all of his authority, as a
general partner of the Partnership, to manage and control the Partnership and
its business and affairs.
Corporate General Partner - The names and ages of, as well as the positions and
offices held by, the executive officers and directors of Shelter Realty II
Corporation are set forth below. There are no family relationships between or
among any officers or directors.
Name Age Position
William H. Jarrard, Jr. 51 President and Director
Ronald Uretta 41 Vice President and Treasurer
Martha L. Long 38 Controller
Robert D. Long, Jr. 30 Vice President
Daniel M. LeBey 32 Vice President and Secretary
Kelley M. Buechler 40 Assistant Secretary
William H. Jarrard, Jr. has been President and Director of the Corporate General
Partner since August 1994. He has acted as Senior Vice President of Insignia
Properties Trust ("IPT"), parent of the Corporate General Partner, since May
1997. Mr. Jarrard previously acted as Managing Director - Partnership
Administration of Insignia From January 1991 through September 1997 and served
as Managing Director - Partnership Administration and Asset Management of
Insignia from July 1994 until January 1996.
Ronald Uretta has been Vice President and Treasurer of the Corporate General
Partner since August 1994 and Insignia's Treasurer since January 1992. Since
August 1996, he has also served as Insignia's Chief Operating Officer. He has
also served as Insignia's Secretary from January 1992 to June 1996 and as
Insignia's Chief Financial Officer from January 1992 to August 1996.
Martha L. Long has been Controller of the Corporate General Partner since
December 1996 and Senior Vice President - Finance and Controller of Insignia
since January 1997. In June 1994, Ms. Long joined Insignia as its Controller,
and was promoted to Senior Vice President - Finance in January 1997. Prior to
that time, she was Senior Vice President and Controller of the First Savings
Bank, in Greenville, SC.
Robert D. Long, Jr. has been Vice President of the Corporate General Partner
since January 1998. Mr. Long joined Metropolitan Asset Enhancement, L.P.
("MAE'), an affiliate of Insignia, in September 1993. Since 1994 he has acted
as Vice President and Chief Accounting Officer of the MAE subsidiaries. Mr.
Long was an accountant for Insignia until joining MAE in 1993. Prior to joining
Insignia, Mr. Long was an auditor for the State of Tennessee and was associated
with the accounting firm of Harsman Lewis and Associates.
Daniel M. LeBey has been Vice President and Secretary of the Corporate General
Partner since January 29, 1998 and Insignia's Assistant Secretary since April
30, 1997. Since July 1996 he has also served as Insignia's Associate General
Counsel. From September 1992 until June 1996, Mr. LeBey was an attorney with
the law firm of Alston & Bird LLP, Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the Corporate General Partner
since June 1996 and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
the Individual General Partner or any officer or director of the Corporate
General Partner. The Partnership has no plan, nor does the Partnership
presently propose a plan, which will result in any remuneration being paid to
any officer or director upon termination of employment. However, certain fees
and other payments have been made to the Partnership's Corporate General Partner
and its affiliates, as described in "Item 12. Certain Relationships and Related
Transactions".
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted below, no person was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1997.
Number
Group/Entity of Units Percentage
Insignia Properties LP 9,118 33.16%
Insignia Properties, L.P. is an affiliate of Insignia.
No director or officer of the Corporate General Partner owns any Units. The
Corporate General Partner owns 100 Units as required by the terms of the
Partnership Agreement.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the Corporate General
Partner and its affiliates for the management and administration of all
partnership activities. On March 17, 1998, Insignia entered into an agreement
to merge its national residential property management operations, and its
controlling interest in Insignia Properties Trust, with Apartment Investment
and Management Company ("AIMCO"), a publicly traded real estate investment
trust. The closing, which is anticipated to happen in the third quarter of
1998, is subject to customary conditions, including government approvals and
the approval of Insignia's shareholders. If the closing occurs, AIMCO will
then control the General Partner of the Partnership. The Partnership Agreement
provides for certain payments to affiliates for services and as reimbursement of
certain expenses incurred by affiliates on behalf of the Partnership. Balances
and other transactions with affiliates of the Corporate General Partner in 1997
and 1996 are as follows:
1997 1996
(in thousands)
Property management fees $ 278 $ 269
Reimbursement for services of affiliates 137 123
Due to general partners 58 58
Included in reimbursements for services of affiliates is approximately $9,000
and $12,000 of reimbursements for construction oversight costs in 1997 and 1996,
respectively.
From January 1, 1996, through August 31, 1997, the Partnership insured its
properties under a master policy through an agency and insurer unaffiliated with
the Corporate General Partner. An affiliate of the Corporate General Partner
acquired, in the acquisition of a business, certain financial obligations from
an insurance agency which was later acquired by the agent who placed the master
policy. The agent assumed the financial obligations to the affiliate of the
Corporate General Partner who receives payment on these obligations from the
agent. The amount of the Partnership's insurance premiums that accrued to the
benefit of the affiliate of the Corporate General Partner by virtue of the
agent's obligations was not significant.
On September 26, 1997, an affiliate of the Corporate General Partner purchased
Lehman Brothers' Class "D" subordinated bonds of SASCO 1992-M1. These bonds are
secured by 55 multi-family apartment mortgage loan pairs held in Trust,
including Parktown Townhouses, Raintree Apartments, and Signal Pointe Apartments
owned by the Partnership.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of fiscal year 1997:
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES II LIMITED PARTNERSHIP
By: Shelter Realty II Corporation
Corporate General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard
President and Director
Date: March 25, 1998
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/William H. Jarrard, Jr. Date: March 25, 1998
William H. Jarrard, Jr.
President and Director
/s/Ronald Uretta Date: March 25, 1998
Ronald Uretta
Vice President and Treasurer
EXHIBIT INDEX
Exhibit
3 See Exhibit 4(a)
4 (a) Amended and Restated Certificate and Agreement of Limited Partnership
[included as Exhibit A to the Prospectus of Registrant dated February
2, 1981 contained in Amendment No. 1 to Registration Statement No. 2-
69507, of Registrant filed February 2, 1981 (the "Prospectus") and
incorporated herein by reference].
(b) Subscription Agreements and Signature Pages [Filed with Amendment No.
1 of Registration Statement No. 2-69507, of Registrant and
incorporated herein by reference].
(c) Promissory Note and Deed of Trust between Joe A. McDermott, Inc. and
the Mischer Corporation and New York Life Insurance Company. General
Warranty Deed between Parktown Realty, N.V and Shelter Properties II
to acquire Parktown Apartments.*
(d) Mortgage Note and Mortgage Deed between Mutual Benefit Life Insurance
Company and Foxcroft Investors, Limited. Purchase Money Note and
Purchase Money Mortgage and Security Agreement between Foxcroft
Investors, Limited and Shelter Properties II to acquire Squire One
Apartments.*
*Filed as Exhibit 4(c) and 4(e), respectively, to Form 10-K of
Registrant for year ended December 31, 1987 and incorporated herein by
reference.
(e) Mortgage Note between William C. Dailey and Fidelity Federal Savings
and Loan Association and Promissory Note between William C. Dailey and
The Prudential Insurance Company (filed as Exhibit 12(E) to Amendment
No. 1 to Registration Statement No. 2-69507 of Registrant filed
January, 1981 and incorporated herein by reference). Modification and
Assumption of Mortgage between American Federal Savings and Loan
Association and Shelter Properties II to acquire Raintree Apartments
(filed as Exhibit 4(e) to Form 10-K of Registrant for year ended
December 31, 1988 and incorporated herein by reference).
10(i) Contracts related to acquisition or disposition of properties.
(a) Purchase Agreement dated December 31, 1980, between Hubris, Inc. and
U.S. Shelter Corporation to purchase Parktown Townhouse.**
(b) Purchase Agreement dated January 5, 1981, between Twin City
Apartments, Inc. and U.S. Shelter Corporation to purchase The Village
Apartments.**
(c) Purchase Agreement dated January 2, 1981 between Carolina Housing
Partners and U.S. Shelter Corporation to purchase Raintree
Apartments.**
**Filed as Exhibits 12(b), 12(c) and 12(d), respectively, to Amendment
No. 1 of Registration Statement, No. 2-69507, of Registrant filed
February 2, 1981 and incorporated herein by reference.
(d) Purchase Agreement dated May 28, 1981 between Foxcroft Investors,
Limited and Shelter Properties II to purchase Squire One Apartments.
[Filed with Form 8-K of Registrant dated June 8, 1981 and incorporated
herein by reference.]
(e) Sales Agreement dated December 30, 1983 between Shelter Properties II
and Security Investors, Ltd.-II to sell Cambridge Station Apartments.
[Filed with Form 10-K of Registrant for year ended December 31, 1983
and incorporated herein by reference.]
(ii) Form of Management Agreement with U.S. Shelter Corporation subsequently
assigned to Shelter Management Group, L.P. (now known as Insignia
Management Group, L.P.) [filed with Amendment No. 1 to Registration
Statement, No. 2-69507, of Registrant] and incorporated herein by
reference.
(iii) Contracts related to refinancing of debt:
(a) First Mortgage and Security Agreements dated October 28, 1992 between
Shelter Properties II Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
(b) Second Mortgage and Security Agreements dated October 28, 1992 between
Shelter Properties II Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
(c) First Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties II Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
(d) Second Assignments of Leases and Rents dated October 28, 1992 between
Shelter Properties II Limited Partnership and Joseph Philip Forte
(Trustee) and First Commonwealth Realty Credit Corporation, a Virginia
Corporation, securing the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
(e) First Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties II Limited Partnership and First Commonwealth Realty Credit
Corporation, relating to the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
(f) Second Deeds of Trust Notes dated October 28, 1992 between Shelter
Properties II Limited Partnership and First Commonwealth Realty Credit
Corporation, relating to the following properties: Raintree,
Parktown/Center Court, and Squire One. ***
***Filed as Exhibits 10(iii) (a) through (f), respectively, of form
10KSB of Registrant for the year ended December 31, 1992 and
incorporated herein by reference.
27 Financial Data Schedule
99 Prospectus of Registrant dated February 2, 1981 [included in Registration
Statement No. 2-69507, of Registrant] and incorporated herein by reference.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Shelter
Properties II Limited Partnership 1997 year-end 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000319723
<NAME> SHELTER PROPERTIES II LIMITED PARTNERSHIP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 1,993
<SECURITIES> 0
<RECEIVABLES> 358
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 24,806
<DEPRECIATION> 15,996
<TOTAL-ASSETS> 12,331
<CURRENT-LIABILITIES> 0<F2>
<BONDS> 8,549
0
0
<COMMON> 0
<OTHER-SE> 3,191
<TOTAL-LIABILITY-AND-EQUITY> 12,331
<SALES> 0
<TOTAL-REVENUES> 5,684
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,256
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 798
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 428
<EPS-PRIMARY> 15.41<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
