FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 0-10256
SHELTER PROPERTIES II
(Exact name of small business issuer as specified in its charter)
South Carolina 57-0709233
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 ___.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
SHELTER PROPERTIES II
BALANCE SHEET
(Unaudited)
September 30, 1998
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 1,390
Receivables and deposits 480
Restricted escrows 974
Other assets 187
Investment properties:
Land $ 1,814
Buildings and related personal property 23,383
25,197
Less accumulated depreciation (16,748) 8,449
$ 11,480
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 144
Tenant security deposit liabilities 138
Accrued property taxes 314
Other liabilities 212
Mortgage notes payable 8,395
Partners' (Deficit) Capital
General partners' $ (125)
Limited partners' (27,500 units
issued and outstanding) 2,402 2,277
$ 11,480
See Accompanying Notes to Financial Statements
b)
SHELTER PROPERTIES II
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
Revenues:
Rental income $1,401 $1,362 $4,138 $3,976
Other income 82 85 250 243
Total revenues 1,483 1,447 4,388 4,219
Expenses:
Operating 704 699 2,021 2,041
General and administrative 47 48 143 141
Depreciation 253 267 752 771
Interest 195 199 585 600
Property taxes 100 103 315 313
Total expenses 1,299 1,316 3,816 3,866
Loss on disposal of property -- (95) -- (95)
Net income $ 184 $ 36 $ 572 $ 258
Net income allocated
to general partners (1%) $ 2 $ -- $ 6 $ 3
Net income allocated
to limited partners (99%) 182 36 566 255
$ 184 $ 36 $ 572 $ 258
Net income per limited
partnership unit $ 6.62 $ 1.31 $20.58 $ 9.27
Distributions per limited
partnership unit $27.00 $36.00 $54.00 $36.18
See Accompanying Notes to Financial Statements
c)
SHELTER PROPERTIES II
STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners' Partners' Total
Original capital contributions 27,500 $ 2 $27,500 $27,502
Partners' (deficit) capital
at December 31, 1997 27,500 $ (116) $ 3,307 $ 3,191
Distributions to partners -- (15) (1,471) (1,486)
Net income for the nine
months ended September 30, 1998 -- 6 566 572
Partners' (deficit) capital
at September 30, 1998 27,500 $ (125) $ 2,402 $ 2,277
See Accompanying Notes to Financial Statements
d)
SHELTER PROPERTIES II
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
1998 1997
Cash flows from operating activities:
Net income $ 572 $ 258
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 752 771
Amortization of discounts and loan costs 82 81
Loss on disposal of property -- 95
Change in accounts:
Receivables and deposits (122) (96)
Other assets 12 (35)
Accounts payable 94 (109)
Tenant security deposit liabilities 8 (12)
Accrued property taxes 135 88
Other liabilities (6) 22
Net cash provided by operating activities 1,527 1,063
Cash flows from investing activities:
Property improvements and replacements (391) (397)
Net deposits to restricted escrows (33) (29)
Net cash used in investing activities (424) (426)
Cash flows from financing activities:
Payments on mortgage notes payable (206) (191)
Distributions to partners (1,500) (1,005)
Net cash used in financing activities (1,706) (1,196)
Net decrease in cash and cash equivalents (603) (559)
Cash and cash equivalents at beginning of period 1,993 2,223
Cash and cash equivalents at end of period $ 1,390 $ 1,664
Supplemental disclosure of cash flow information:
Cash paid for interest $ 504 $ 519
See Accompanying Notes to Financial Statements
e)
SHELTER PROPERTIES II
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Shelter Properties II (the
"Partnership") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Article 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of Shelter Realty II Corporation (the "Corporate General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
month periods ended September 30, 1998, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1998. For
further information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-KSB for the year ended
December 31, 1997.
Certain reclassifications have been made to the 1997 information to conform to
the 1998 presentation.
NOTE B - RECONCILIATION OF CASH FLOWS
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
used in operations," as defined in the partnership agreement. However, "net
cash used in 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.
Nine Months Ended
September 30,
1998 1997
(in thousands)
Net cash provided by operating activities $1,527 $1,063
Payments on mortgage notes payable (206) (191)
Property improvements and replacements (391) (397)
Change in restricted escrows, net (33) (29)
Changes in reserves for net operating
liabilities (121) 142
Additional reserves (776) (588)
Net cash used in operations $ -- $ --
For the nine months ended September 30, 1998 and 1997, the Corporate General
Partner believed it to be in the best interest of the Partnership to reserve an
additional $776,000 and $588,000, respectively, to fund continuing capital
improvement needs in order for the properties to remain competitive.
NOTE C - 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 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 1998 and 1997 are as follows:
Nine Months Ended
September 30,
1998 1997
(in thousands)
Property management fees (included in operating expenses) $ 217 $ 207
Reimbursement for services of affiliates, including
approximately $2,000 and $12,000 of construction
services reimbursements for the nine months ended
September 30, 1998 and September 30, 1997, respectively
(included in investment properties, general and
administrative, and operating expenses) 91 103
Due to general partners (included in other liabilities) 58 58
During 1983, a liability of approximately $58,000 was incurred to the general
partners for sales commissions earned. Pursuant to the Partnership Agreement,
this liability cannot be paid until certain levels of returns are received by
the limited partners. As of September 30, 1998, the level of return to the
limited partners has not been met.
From January 1, 1997, through August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the Corporate
General Partner, with an 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 which received payments 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
owed by the Partnership.
During July 1998, an affiliate of the Corporate General Partner (the
"Purchaser") commenced a tender offer for limited partnership interests in the
partnership. The Purchaser offered to purchase up to 9,500 of the outstanding
units of limited partnership interest in the Partnership at $450 per Unit, net
to the in seller cash. During the third quarter of 1998, the Purchaser acquired
1,958.5 units representing approximately 7% of the total limited partnership
units, in the Partnership as a result of the aforementioned tender offer.
NOTE D - DISTRIBUTIONS TO PARTNERS
During the nine months ended September 30, 1998, the Partnership paid cash
distributions totaling $1,500,000 with $14,000 of this amount being used to
satisfy a withholding liability at December 31, 1997. The remaining amount of
$1,486,000 included $248,000 from refinancing proceeds from prior years,
$108,000 from sales proceeds from prior years, and $1,130,000 from operations.
During the nine months ended September 30, 1997, the Partnership declared and
paid cash distributions from operations in the amount of $1,005,000.
NOTE E - TRANSFER OF CONTROL; SUBSEQUENT EVENT
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Corporate General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the entity which controls the General
Partner. Also, effective October 1, 1998, IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Corporate General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of three apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1998 and 1997:
Average Occupancy
Property 1998 1997
Parktown Townhouses
Deer Park, Texas 96% 96%
Raintree Apartments
Anderson, South Carolina 93% 92%
Signal Pointe Apartments
Winter Park, Florida 95% 96%
The Partnership realized net income for the nine months ended September 30,
1998, of approximately $572,000 compared to approximately $258,000 for the
corresponding period of 1997. Net income for three months ended September 30,
1998, was approximately $184,000 compared to approximately $36,000 for the three
month period ended September 30, 1997. The increase in net income for the three
and nine months ended September 30, 1998, compared to the corresponding periods
in 1997, is primarily due to an increase in rental revenues and the loss on
disposal of property recognized in 1997. Rental revenues increased primarily as
a result of increases in rental rates at Parktown Townhouses and Signal Pointe
Apartments. The loss on disposal of property resulted from a roof replacement
at Parktown Townhouses during the nine months ended September 30, 1997. The
replacement of the roof resulted in the write-off of the old roof that had not
been fully depreciated at the time of the replacement. Also contributing to the
increase in net income for the nine months ended September 30, 1998, was a
decrease in operating expenses. Operating expenses decreased for the nine
months ended September 30, 1998, primarily as a result of fewer major repairs
and maintenance items associated with Parktown Townhouses as the exterior
rehabilitation project was completed during 1997. Included in operating expense
for the nine months ended September 30, 1998, is approximately $26,000 of major
repairs and maintenance comprised primarily of landscaping, parking lot repairs,
and window coverings. Included in operating expense for the nine months ended
September 30, 1997, is approximately $145,000 of major repairs and maintenance
comprised primarily of gutter repairs, exterior painting, and other exterior
building improvements.
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 guarantee that the Corporate General Partner will be able to sustain this
plan.
At September 30, 1998, the Partnership held cash and cash equivalents of
approximately $1,390,000 compared to approximately $1,664,000 at September 30,
1997. For the nine months ended September 30, 1998, cash and cash equivalents
decreased approximately $603,000, compared to a decrease of approximately
$559,000 for the nine months ended September 30, 1997. Net cash provided by
operating activities increased primarily as a result of an increase in rental
income and a decrease in operating expenses, as previously discussed. Also
contributing to the increase in net cash provided by operating activities was a
decrease in cash used for accounts payables related to the timing of payments.
Net cash used in investing activities in 1998 was comparable with the similar
period in 1997. Net cash used in financing activities increased primarily due
to increased distributions paid to the partners in 1998 as compared to 1997.
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 and to comply with Federal,
State and local legal and regulatory requirements. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
General Partner is currently assessing the need for capital improvements at each
of the Partnership's properties. To the extent that additional capital
improvements are required, the Partnership's distributable cash flow, if any,
may be adversely affected. The mortgage indebtedness of approximately
$8,395,000, net of discount, is amortized over 257 months. In addition, the
mortgage notes require balloon payments on November 15, 2002. The General
Partner will attempt to refinance such indebtedness or sell the properties prior
to such maturity date. If the properties cannot be refinanced or sold for a
sufficient amount, the Partnership will risk losing such properties through
foreclosure. Cash distributions of $1,486,000 were paid during the nine months
ended September 30, 1998. During the third quarter of 1997, the Partnership
paid a cash distribution from operations in the amount of $1,005,000. The
Partnership's distribution policy will be reviewed on a quarterly basis. Future
cash distributions will depend on the levels of cash generated from operations,
refinancings, property sales and the availability of cash reserves. There can
be no assurance, however, that the Partnership will generate sufficient funds
from operations to permit further distributions to its partners in 1998 or
subsequent periods.
Transfer of Control; Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Corporate General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the entity which controls the General
Partner. Also, effective October 1, 1998, IPT and AIMCO entered into an
Agreement and plan of Merger pursuant to which IPT is to be merged with and into
AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires the
approval of the holders of a majority of the outstanding IPT Shares. AIMCO has
agreed to vote all of the IPT Shares owned by it in favor of the IPT Merger and
has granted an irrevocable limited proxy to unaffiliated representatives of IPT
to vote the IPT Shares acquired by AIMCO and its subsidiaries in favor of the
IPT Merger. As a result of AIMCO's ownership and its agreement, the vote of no
other holder of IPT is required to approve the merger. The Corporate General
Partner does not believe that this transaction will have a material effect on
the affairs and operations of the Partnership.
Year 2000
General Description of the Year 2000 Issue and the Nature and Effects of the
Year 2000 on Information Technology (IT) and Non-IT Systems
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Partnership is
dependent upon the Corporate General Partner and its affiliates for management
and administrative services ("Managing Agent"). Any computer programs or
hardware that have date-sensitive software or embedded chips may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result
in a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.
Status of Progress in Becoming Year 2000 Compliant
The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems. Assessments are continuing in regards to embedded systems in operating
equipment. The Managing Agent anticipates having all phases complete by June 1,
1999.
In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with, the Partnership has certain operating equipment,
primarily at the property sites, which needed to be evaluated for Year 2000
compliance. The focus of the Corporate General Partner was to the security
systems, elevators, heating-ventilation-air-conditioning systems, telephone
systems and switches, and sprinkler systems. The Corporate General Partner is
currently engaged in the identification of all non-compliant operational
systems, and is in the process of estimating the costs associated with any
potential modifications or replacements needed to such systems in order for them
to be Year 2000 compliant. It is not expected that such costs would have a
material adverse affect upon the operations of the Partnership.
Risk Associated with the Year 2000
The Corporate General Partner believes that the Managing Agent has an effective
program in place to resolve the Year 2000 issue in a timely manner and has
appropriate contingency plans in place for critical applications that could
affect the Partnership's operations. To date, the Corporate General Partner is
not aware of any external agent with a Year 2000 issue that would materially
impact the Partnership's results of operations, liquidity or capital resources.
However, the Corporate General Partner has no means of ensuring that external
agents will be Year 2000 compliant. The Corporate General Partner does not
believe that the inability of external agents to complete their Year 2000
resolution process in a timely manner will have a material impact on the
financial position or results of operations of the Partnership. However, the
effect of non-compliance by external agents is not readily determinable.
Other
Certain items discussed in this quarterly 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 quarterly 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Corporate General Partner and several of their affiliated
partnerships and corporate entities. The complaint purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at the time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates, as well as a recently
announced agreement between Insignia and Apartment Investment and Management
Company. The complaint seeks monetary damages and equitable relief, including
judicial dissolution of the Partnership. On June 25, 1998, the Corporate General
Partner filed a motion seeking dismissal of the action. In lieu of responding
to the motion, the plaintiffs have filed an amended complaint. The Corporate
General Partner has filed demurrers to the amended complaint, which are
scheduled to be heard on January 8, 1999. The Corporate General Partner
believes the action to be without merit, and intends to vigorously defend it.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint entitled Everest Properties LLC. v.
Insignia Financial Group, Inc. in the Superior Court of the State of California,
County of Los Angeles. The action involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). The complaint names as defendants Insignia, several Insignia
Affiliates alleged to be managing partners of the defendant limited
partnerships, the Partnership and the Corporate General Partner. Plaintiffs
allege that they have requested from, but have been denied by each of the
Subject Partnerships, lists of their respective limited partners for the purpose
of making tender offers to purchase up to 4.9% of the limited partner units of
each of the Subject Partnerships. The complaint also alleges that certain of
the defendants made tender offers to purchase limited partner units in many of
the Subject Partnerships, with the alleged result that plaintiffs have been
deprived of the benefits they would have realized from ownership of the
additional units. The plaintiffs assert eleven causes of action, including
breach of contract, unfair business practices, and violations of the partnership
statutes of the states in which the Subject Partnerships are organized.
Plaintiffs seek compensatory, punitive and treble damages. The Corporate General
Partner filed an answer to the complaint on September 15, 1998. The Corporate
General Partner believes the claims to be without merit and intends to defend
the action vigorously.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The Corporate General Partner believes 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 6. 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:
None filed during the quarter ended September 30, 1998.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SHELTER PROPERTIES II
By: Shelter Realty II Corporation
Its Corporate General Partner
By: /s/Patrick Foye
Patrick Foye
Executive Vice President
By: /s/Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
(Duly Authorized Officer)
Date: November 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Shelter Properties II 1998 Third Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000319723
<NAME> SHELTER PROPERTIES II
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,390
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 25,197
<DEPRECIATION> 16,748
<TOTAL-ASSETS> 11,480
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 8,395
0
0
<COMMON> 0
<OTHER-SE> 2,277
<TOTAL-LIABILITY-AND-EQUITY> 11,480
<SALES> 0
<TOTAL-REVENUES> 4,388
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,816
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 585
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 572
<EPS-PRIMARY> 20.58<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
