SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
For the year ended December 31, 1995 Commission File
Number 0-11063
WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Maryland 04-2742158
(State of organization) (I.R.S. Employer I.D. No.)
One International Place, Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (617) 330-8600
--------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Units of Limited Partnership Interest
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10- K or any amendment to
this Form 10-K. [ X ]
No market for the Limited Partnership Units exists and therefore,
a market value for such Units cannot be determined.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
Part of the
Form 10-K
I, III The Prospectus of the Registrant dated January
29, 1982, as supplemented on March 5, 1982, June 21,
1982 and August 27, 1982 (the "Prospectus")
PART I
Item 1. Business.
Development.
Winthrop Residential Associates II ("WRA II"), was originally organized
under the Uniform Limited Partnership Act of the State of Maryland on October
21, 1981, for the purpose of investing, as a limited partner, in other limited
partnerships which would develop, manage, own, operate and otherwise deal with
apartment complexes, the financing of which are assisted by federal, state or
local government agencies ("Local Limited Partnerships") pursuant to programs
which do not significantly restrict distributions to owners or the rates of
return on investments in such properties. On June 23, 1983, WRA II elected to
comply with and be governed by the Maryland Revised Uniform Limited Partnership
Act (the "Act") and filed its Agreement and Certificate of Limited Partnership
(the "Partnership Agreement") with the Maryland State Department of Assessments
and Taxation. In accordance with and upon filing its Certificate of Limited
Partnership pursuant to the Act, WRA II changed its name to Winthrop Residential
Associates II, A Limited Partnership (the "Partnership").
The general partners of the Partnership are One Winthrop Properties,
Inc., a Massachusetts corporation ("One Winthrop"), and Linnaeus-Hawthorne
Associates Limited Partnership ("Linnaeus- Hawthorne"). One Winthrop is a
wholly-owned subsidiary of First Winthrop Corporation ("First Winthrop"), which
in turn is wholly-owned by Winthrop Financial Associates, A Limited Partnership
("WFA"), a Maryland public limited partnership. One Winthrop is the
Partnership's managing general partner. See "Change in Control."
The Partnership was initially capitalized with contributions totaling
$2,000 from its two General Partners and with contributions of $5,000 from each
of the two Initial Limited Partners.
In late 1981, the Partnership filed a Registration Statement on Form
S-11 with the Securities and Exchange Commission with respect to a public
offering of 25,000 Units of limited partnership interest ("Units") at a purchase
price of $1,000 per
<PAGE>
Unit (an aggregate of $25,000,000). The Registration Statement was declared
effective on January 29, 1982. The offering terminated on November 17, 1982, at
which time 25,000 Units, representing capital contributions from Investor
Limited Partners of $25,000,000, had been subscribed for. Capital contributions,
net of selling commissions, sales and registration costs, were utilized to
purchase interests in 10 Local Limited Partnerships and temporary short term
investments.
Description of Business.
The only business of the Partnership is investing as a limited partner
in Local Limited Partnerships that own, operate and otherwise deal with
apartment complexes with financing insured by the U.S. Department of Housing and
Urban Development ("HUD"). The Partnership's investment objectives and policies
are described at pages 23-29 of its Prospectus dated January 29, 1982 (the
"Prospectus") under the caption "Investment Objectives and Policies," which
description is attached hereto as an exhibit and incorporated herein by this
reference. The Prospectus was previously filed with the Commission pursuant to
Rule 424(b).
Initially, the Partnership acquired equity interests ranging from 52.8%
to 99% in ten Local Limited Partnerships, owning 12 properties, for an aggregate
investment, including capitalizable and noncapitalizable fees and expenses, of
approximately $21,669,334. One of the Partnership's properties was sold in 1986.
The Partnership has invested in Local Limited Partnerships which own
properties located in diverse markets with respect to both the amount and nature
of competition affecting the properties. Some of the rental markets first became
overbuilt during the mid-1980's. Supply of apartments available for rent began
to exceed demand and consumers became very price sensitive.
In order to attract tenants, certain properties were required to maintain
rental rates rather than increase them to meet increasing costs. As a result,
these properties were forced to defer maintenance and replacements which were
necessary to attract tenants, thus exacerbating the competitive forces at work
in these markets. The following table sets forth information regarding the 11
properties owned by the nine Local Limited Partnerships in which the Partnership
continues to hold an interest.
<TABLE>
Mortgage
Principal Mortgage Amorti-
Date of No. of Equity Amount Interest zation
Property Purchase Units Payments(1) Mortgage(2) Rate
Period(3)
<S> <C> <C> <C> <C> <C> <C>
Whisper Lake
Apartments(9)
Orlando, FL 2/24/82 400 $ 3,632,500 $ 12,640,000 9-3/4% 40 years
Sanford Landing
Apartments (5)
Sanford, FL 4/06/82 264 2,160,000 7,825,500 9-3/4% 40 years
Honeywood
Apartments
Roanoke, VA 1/05/83 300 1,750,000 6,734,600 7-1/2% 40 years
Brookside
Apartments
Sylacauga, AL 4/20/82 80 435,000 1,572,500 7-1/2% 40 years
Westbury Springs
Apartments
Gwinnett Co, GA 5/27/82 150 1,345,000 4,798,900 7-1/2% 40 years
Southwest Parkway
Apartments(4)(6)(7)
Wichita Falls,TX 6/22/82 200 1,285,060 4,943,000 9-3/4% 40 years
Wedgewood Creek
Apartments
Gurnee, IL 6/24/82 198 2,595,000 9,787,400 7-1/2% 40 years
Mountain Vista I
and Mountain Vista
II(8)(10)
Albuquerque, NM 10/28/82 220 1,513,108 4,584,000 7-1/2% 38 years
Cibola Village
Apartments(10)
Albuquerque, NM 10/28/82 128 842,757 2,246,300 7-1/2% 37 years
Crofton Village
Apartments
Crofton, MD 10/04/82 258 1,288,731 7,405,232 7-1/2% 38 years
----- ---------- ------------
2,198 $16,847,156 $62,537,432
</TABLE>
(1) Equity Payments do not include fees paid to Winthrop Financial Co., Inc.
("Winthrop Financial"), an affiliate of the General Partners, for services
rendered to local general partners. Equity payments plus the fees paid to
Winthrop Financial by the local general partners constitute the Partnership's
capital contributions to or investment in Local Limited Partnerships.
(2) Represents the mortgage amount or mortgage commitment as of the time the
Partnership acquired its interest in the Local Limited Partnership.
(3) Represents the full term or the remaining term of the mortgage, as the case
may be, at the time the Partnership acquired its interest in the Local Limited
Partnership.
(4) This Local Limited Partnership's mortgage is held by HUD.
(5) A work-out agreement with HUD for this Local Limited Partnership was agreed
to in April 1995.
(6) This Local Limited Partnership is in default on its mortgage.
(7) This property is managed by Winthrop Management, an affiliate of WFA.
(8) Casa La Mesa Apartments and Sunburst Apartments have combined to form
Mountain Vista I and Mountain Vista II.
(9) This Local Limited Partnership was in default on its mortgage until October
1992 when the debt was restructured.
(10) Mountain Vista I, Mountain Vista II and Cibola Village are all owned by the
same Local Limited Partnership.
Descriptions of the properties and the terms upon which the equity
interests were acquired by the Partnership are set forth under the captions
"Investment in Local Limited Partnerships" at pages 1-11 of the Supplement to
the Prospectus dated March 5,
<PAGE>
1982; at pages 1-22 of the Supplement to the Prospectus dated June 21, 1982; and
at pages 1-48 of the Supplement to the Prospectus dated August 27, 1982, all of
which descriptions are attached hereto as an exhibit and incorporated herein by
this reference. The three Supplements to the Prospectus were filed with the
Commission pursuant to Rule 424(c) and as Post-Effective Amendments Nos. 1, 2,
and 3, respectively, to the Partnership's Registration Statement on Form S-11
(Registration No. 2-74784). See also "Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operations," and "Item 8,
Financial Statements and Supplementary Data, Note 4" for additional information
concerning the properties.
Defaults
The Partnership holds limited partnership interests in Local Limited
Partnerships which own apartment properties, all of which were originally
financed with HUD-insured first mortgages. If a Local Limited Partnership
defaults on a HUD-insured mortgage, the mortgagee can assign the defaulted
mortgage to HUD and recover the principal owed on its first mortgage from HUD.
HUD, in its discretion, may then either (i) negotiate a workout agreement with
the Local Limited Partnership, (ii) sell the mortgage, or (iii) pursue its right
to transfer the ownership of the property from the Local Limited Partnership to
HUD through a foreclosure action. The objective of a workout agreement between
an owner and HUD is to secure HUD's sanction of a plan which, over time, will
cure any mortgage delinquencies. While a workout agreement is effective and its
terms are being met, HUD agrees not to pursue any remedies available to it as a
result of the default.
The Partnership holds ownership interests in one Local Limited Partnership
which is in default on its mortgage obligation. The Local Limited Partnership,
Southwest Parkway, is attempting to secure a workout agreement with HUD.
In April 1995, the Local Limited Partnership owning Sanford Landing
negotiated a workout agreement with HUD pursuant to which the interest rate on
the debt was reduced so that the debt service payments are at a serviceable
level based on the property's current cash flow. In addition, a portion of the
mortgage was reassigned to the original mortgagee. The remaining balance
continues to be held by HUD.
<PAGE>
In March 1987, the Local Limited Partnership owning Southwest Parkway
defaulted on its mortgage. Since that time, the Local Limited Partnership has
submitted various proposals to HUD to cure the mortgage default, all of which
have been rejected. The Partnership has been notified that this mortgage will be
included in an auction to be held in 1996. The Partnership will continue its
efforts to negotiate a workout agreement. The Local Limited Partnership sends
any net cash flow to HUD in partial satisfaction of its mortgage obligation.
Change in Control
On December 22, 1994, pursuant to an Investment Agreement entered into
among Nomura Asset Capital Corporation ("NACC"), Arthur J. Halleran, Jr., the
sole general partner of Linnaeus Associates Limited Partnership ("Linnaeus"),
the sole general partner of WFA, Mr. Halleran and certain other individuals who
comprised the senior management of WFA, transferred the general partnership
interest in Linnaeus to W.L. Realty, L.P. ("W.L. Realty"). W.L. Realty is a
Delaware limited partnership, the general partner of which was, until July 18,
1995, A.I. Realty Company, LLC ("Realtyco"), an entity owned by certain
employees of NACC. On July 18, 1995 Londonderry Acquisition II Limited
Partnership (Londonderry II"), a Delaware limited partnership, and affiliate of
Apollo Real Estate Advisors, L.P. ("Apollo"), acquired, among other things,
Realtyco's general partner interest in W.L. Realty and a sixty four percent
(64%) limited partnership interest in W.L. Realty, and the general partnership
interest in Linneaus-Hampshire.
As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
which in turn is the sole general partner of WFA. As a result of the foregoing,
effective July 18, 1995, Londonderry II, an affiliate of Apollo, became the
controlling entity of the General Partners. In connection with the transfer of
control, the officers and directors of One Winthrop resigned and Londonderry II
appointed new officers and directors. See Item 10, "Directors and Executive
Officers of Registrant.
<PAGE>
Employees
The Partnership does not have any employees. Services are performed for
the Partnership by the Managing General Partner, and agents retained by it,
including an affiliate of the Managing General Partner, WP Management Co., Inc.
Item 2. Properties.
Other than the limited partnership interests set forth in Item 1 above,
the Partnership does not own any property.
Item 3. Legal Proceedings.
The Partnership is not a party nor are any of its properties subject to
any material pending legal proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the period
covered by this report.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
The Registrant is a partnership and thus has no common stock. There is no
active market for the Units. Trading in the Units is sporadic and occurs solely
through private transactions.
As of December 31, 1995, there were 2,589 holders of Units.
The Partnership Agreement requires that if the Partnership has Cash
Available for Distribution, it be distributed quarterly to the Partners in
specified proportions. The Partnership Agreement defines Cash Available for
Distribution as Cash Flow less cash designated by the Managing General Partner
to be held for restoration or creation of reserves. Cash Flow, in turn, is
defined as cash derived from the Local Limited Partnerships (but excluding sale
or refinancing proceeds) and all cash derived from Partnership operations, less
cash used to pay operating expenses of the Partnership. For the years ended
December 31, 1995 and 1994, cash distributions paid or accrued to the Investor
Limited
<PAGE>
Partners as a group totaled $300,000 and $200,000, respectively.
Item 6. Selected Financial Data.
The following represents selected financial data for Registrant for the
years ended December 31, 1995, 1994, 1993, 1992 and 1991. The data should be
read in conjunction with the financial statements included elsewhere herein.
This data is not covered by the independent auditors' report.
<TABLE>
For the Year Ended or as of December 31,
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
Income from Short-term
Investments $ 99,972 $ 60,246 $ 41,809 $ 60,782 $ 102,191
Income from Local Limited
Partnership Cash Distribu-
tions 700,616 459,599 188,251 274,117 267,391
Other Income 39,232 -- -- -- --
Operating Expenses (127,167) (83,445) (67,708) (82,280) (86,207)
Equity in loss of Local
Limited Partnerships -- -- -- -- (88,477)
Net Income 712,653 436,400 162,352 252,619 194,898
Net Income per
weighted average Unit
of Limited Partner-
ship Interest out-
standing 27.07 16.58 6.17 9.60 7.41
Total Assets 2,086,415 1,640,220 1,414,819 1,459,614 1,628,215
Total Cash Distributions per
Unit of Limited Partnership
Interest, including
amounts distributed
or to be distributed
after year end with
respect to 1991, 1992,
1993, 1994 and 1995,
respectively 12 8 8 14 20
</TABLE>
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity and Capital Resources
As of March 15, 1996, the Partnership retained an equity interest in
nine Local Limited Partnerships owning 11 apartment properties. The Partnership
follows the equity method of accounting for these interests and recognizes its
proportionate share of income and losses incurred by the Local Limited
Partnerships. With the exception of 1990, the recognition of losses has
decreased due to two factors. First, certain properties have reached break even
or profitable operations. Second, losses which would cause the Partnership's
investment account in a Local Limited Partnership to become negative are not
recognized since the Partnership has no obligation to fund them. In 1995, the
recognition of losses increased due to an increase in losses for the Local
Limited Partnerships in which the Partnership's investment accounts were at a
sufficient level for recognition of losses. At December 31, 1991, all investment
accounts had zero balances. For fiscal 1995, the Partnership's share of losses
of $1,643,103 from the nine Local Limited Partnerships were deferred as required
by the equity method. Cumulatively through 1995, a total of $19,817,153 of the
Partnership's equity in losses from the Local Limited Partnerships have been
deferred. The equity method of accounting is used solely for financial reporting
purposes; all losses continue to be recognized for tax purposes. The tax losses
of the Partnership will decrease over time because the advantages of accelerated
depreciation taken by the Local Limited Partnerships are greatest in the earlier
years. Also, the deductions for mortgage interest expense will steadily decrease
as the mortgage principals are amortized.
The Partnership requires cash to pay its general and administrative
expenses or to make contributions to any of the Local Limited Partnerships which
the Managing General Partner deems to be in the Partnership's best interest to
preserve its ownership interest. To date, all cash requirements have been
satisfied by interest income earned on short-term investments and cash
distributed to the Partnership by the Local Limited Partnerships. If the
Partnership funds any operating deficits, it will use monies from its operating
reserves. As of December 31, 1995, the Partnership held operating reserves of
<PAGE>
approximately $1,981,000 which is expected to be sufficient to fund any
anticipated deficits. The Managing General Partner's current policy is to
maintain a reserve balance sufficient to provide, at a minimum, interest income
in an amount equal to the Partnership's annual general and administrative
expenses. Therefore, a lack of cash distributed by the Local Limited
Partnerships to the Partnership in the future will not deplete the reserves,
though it may restrict the Partnership from making distributions.
The Partnership has reserves which, in principal, could be used to
make contributions to the Local Limited Partnerships. However, the Partnership
does not intend to make contributions in order to fund any possible future
operating deficits incurred by the Local Limited Partnerships, but retains its
prerogative to exercise a business judgment to reverse this position if
circumstances warrant a change in this policy. Moreover, the Partnership is not
obligated to provide any additional funds to the Local Limited Partnerships to
fund operating deficits. If a Local Limited Partnership sustains continuing
operating deficits and has no other source of funding, it is likely that the
Local Limited Partnership will eventually default on its mortgage obligation and
risk a foreclosure on its property by the lender. If a foreclosure were to
occur, the Local Limited Partnership would lose its investment in the property
and would incur a tax liability due to the recapture of tax benefits taken in
prior years. The Partnership, as an owner of the Local Limited Partnerships,
would share these consequences in proportion to its ownership interest in the
Local Limited Partnerships.
<PAGE>
Results of Operations
A number of the properties owned by the Local Limited Partnerships in
which the Partnership has invested have operated at a deficit for many years due
to their location in areas with weak economies or overbuilt rental markets.
Economic and competitive forces also impede properties operating at break even
or better to improve their financial results, that is, to generate increasing
net cash flow in each subsequent year after operating expenses and financial
obligations. As markets deteriorated during the mid-1980's, the Local Limited
Partnerships experiencing financial difficulties sought alternative sources of
funding to cover operating deficits. In some cases, these Local Limited
Partnerships secured additional funding from their general partners. From 1984
through 1987, the Partnership did provide some funding to two Local Limited
Partnerships to preserve its ownership interest in those properties. However, as
it became apparent that the recovery of these markets would be prolonged and
that the Partnership's resources were limited, funding was discontinued.
Consequently, some Local Limited Partnerships incurring continuing deficits
ceased making full debt service payments, putting the mortgages into default,
and instead began negotiating with HUD for workout agreements to reduce debt
service payments to a level property operations could support.
One Local Limited Partnership, Southwest Parkway, is currently in
default on its mortgage obligation. Southwest Parkway has also been attempting
to secure a workout agreement with HUD since it defaulted on its mortgage
obligation in March 1987. Due to Southwest Parkway's financial situation, it was
unable to make cash distributions to the Partnership in 1993, 1994 and 1995.
Sanford Landing, which had previously been in default on its mortgage
obligation, negotiated a workout agreement with HUD pursuant to which the
interest rate was reduced so that the debt service payments are at a serviceable
level based on the property's current cash flow.
The other nine properties owned by the remaining seven Local Limited
Partnerships met their financial obligations during 1995.
<PAGE>
Brookside operated at break even in 1995. Accordingly, no cash
distribution will be made to the Partnership in 1996. Brookside operated at a
deficit in 1994 and 1993, precluding it from making cash distributions to the
Partnership in 1995 and 1994, respectively.
Wedgewood Creek operated incurred an operating deficit in 1995 which
was funded by extending payables and will not be making a cash distribution to
the Partnership in 1996. Wedgewood Creek was unable to make cash distributions
to the Partnership in 1995 and 1994 as well because it operated at break even in
1994 and at a deficit in 1993.
Mountain Vista II generated positive cash flow in 1995 and made a cash
distribution of $73,125 to the Partnership in 1995. While Mountain Vista II
operated slightly above a break-even level in 1994 and 1993, no cash
distributions were made to the Partnership.
Westbury Springs has generated positive cash flow in 1995, 1994 and
1993 which has been used to reduce a note payable.
Mountain Vista I generated positive cash flow in 1995 and made a cash
distribution of $73,125 to the Partnership in 1995. Mountain Vista I also
generated positive cash flow in 1994 and 1993 and made a cash distribution of
$67,500 to the Partnership in 1994.
Cibola generated positive cash flow in 1995, 1994 and 1995 and made a
cash distribution of $146,250 and $135,000 to the Partnership in 1995 and 1994,
respectively.
Honeywood made cash distributions totaling $166,748 to the Partnership
in 1995, representing cash flow generated during the second half of 1994 and the
first half of 1995. It is anticipated that cash distributions will be made to
the Partnership in 1996 from cash flow generated during the second half of 1995
and the first half of 1996. A total of $90,044 was received by the Partnership
in 1994 representing cash flow generated during the second half of 1993 and the
first half of 1994.
Crofton made cash distributions totaling $241,368 to the Partnership in
1995, representing cash flow generated during the second half of 1994 and the
first half of 1995. It is anticipated that cash distributions will be made to
the Partnership in 1996 from cash flow generated during the second half of 1995
and the first half of 1996. A total of $144,555 was received by the Partnership
in 1994 representing cash flow generated during the second half of 1993 and the
first half of 1994.
Whisper Lake operated at break even in 1995 and will not be making a
cash distribution to the Partnership in 1996. Whisper Lake was unable to make
cash distributions to the Partnership in 1995 and 1994 as well because it
operated at a deficit in 1994 and 1993.
The Local Limited Partnerships' objectives are to improve operating
results for all properties and obtain workout agreements for those properties
that are in default on their mortgage obligations. The Partnership believes that
as long as the Local Limited Partnership which owns the property in default
continues to negotiate with HUD to work out its financial difficulties, the
threat of foreclosure is mitigated. Moreover, any workout agreement entered into
between HUD and the Local Limited Partnerships will have no effect on the
Partnership's ability to deduct mortgage interest expense unless HUD agrees to
forgive such interest indebtedness. As of March 15, 1996, none of the Local
Limited Partnerships had agreements with HUD which would forgive accrued
interest.
The results of operations for future years may differ from those in 1995 as
a result of many factors. One will be the ability of the Local Limited
Partnerships which owns a property in default on its mortgage obligations
(Southwest Parkway) to negotiate a workout agreement with HUD to modify its debt
service requirements. Another factor will be the ability of each Local Limited
Partnership to deal with consequences of changing economic conditions that
affect property operations. The Partnership's investment in Local Limited
Partnerships owning rental real estate is subject to the risk involved with the
management and ownership of rental real estate. Vacancy level, rental payment
defaults and operating expenses are all dependent on general and local economic
conditions. Shifts in the economy could result in differing operating results
for each individual Local Limited Partnership. In these markets, operating
results in future years may depend on the properties' ability to maintain
competitive rental rates while using its available resources to fund necessary
repairs and replacements.
The Partnership's plan is to work with the Local Limited Partnerships
to maintain ownership of and seek a workout agreement with HUD for the property
in default on its mortgage. Although the Partnership has no ability to force a
sale of properties owned by the Local Limited Partnerships, the Partnership will
also work with the Local Limited Partnerships to investigate sale opportunities
and will continue to work with the Local Limited Partnerships to improve the
financial performance of all the properties.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
FINANCIAL STATEMENTS AND SCHEDULE
INDEX
FINANCIAL STATEMENTS
Report of Independent Public Accountants
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993
Balance Sheets as of December 31, 1995 and 1994
Statements of Changes in Partners' Capital
for the Years Ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years Ended
December 31, 1995, 1994 and 1993
Notes to Financial Statements
SCHEDULE III - Real Estate and Accumulated Depreciation
of Property Held by Local Limited Partnerships
as of December 31, 1995
All schedules prescribed by Regulation S-X other than the one indicated above
have been omitted as the required information is inapplicable or the information
is presented elsewhere in the financial statements or related notes.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED PARTNERSHIP:
We have audited the accompanying balance sheets of WINTHROP RESIDENTIAL
ASSOCIATES II, A LIMITED PARTNERSHIP (a Maryland limited partnership) as of
December 31, 1995 and 1994, and the related statements of operations, changes in
partners' capital and cash flows for each of the three years in the period ended
December 31, 1995. These financial statements and the schedule referred to below
are the responsibility of the Partnership's management. Our responsibility is to
express an opinion on these financial statements and schedule based on our
audits. We did not audit the financial statments of certain Local Limited
Partnerships, the investments in which are reflected in the accompanying
financial statements using the equity method of accounting and were written down
to zero (see note 2). Those statements were audited by other auditors whose
reports have been furnished to us, and our opinion, in so far as it relates to
the amounts included for those Local Limited Partnerships, is based solely on
the reports or the other auditors.
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
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WINTHROP RESIDENTIAL ASSOCIATES II, A LIMITED
PARTNERSHIP as of December 31, 1995 and 1994, and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. Schedule III, listed in the index to the
financial statements, is the responsibility of WINTHROP RESIDENTIAL ASSOCIATES
II, A LIMITED PARTNERSHIP management and is presented for purposes of complying
with the Securities and Exchange Commission's rules and is not a required part
of the basic financial statements. This schedule has been subjected to the
auditing procedures applied in our audits of the basic financial statements and,
in our opinion, fairly states in all material respects, the financial data
required to be set forth therein in relation to the basic financial statements
taken as a whole.
ARTHUR ANDERSEN LLP
Boston, Massachusetts
March 23, 1995
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF OPERATIONS
For the years ended
December 31, 1995, 1994 and 1993 1995 1994 1993
<S> <C> <C> <C>
Income from Local Limited Partnership cash
distributions.......................................................... $ 700,616 $ 459,599 $ 188,251
Interest income.......................................................... 99,972 60,246 41,809
Other income............................................................. 39,232 - -
839,820 519,845 230,060
--------------------------------------------------
Expenses:
Management fees (Note 3)................................................ 76,812 39,210 18,825
General and administrative.............................................. 50,355 44,235 48,883
--------------------------------------------------
127,167 83,445 67,708
--------------------------------------------------
Net income .............................................................. $ 712,653 $ 436,400 $ 162,352
==================================================
Net income allocated to General Partners................................. $ 35,633 $ 21,820 $ 8,118
==================================================
Net income allocated to Limited Partners................................. $ 677,020 $ 414,580 $ 154,234
==================================================
Net income per Unit of Limited Partnership
Interest............................................................... $ 27.07 $ 16.58 $ 6.17
==================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
BALANCE SHEETS
- -------------------------------------------------------------------------------------------
December 31, 1995 and 1994 1995 1994
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Investments in Local Limited Partnerships (Note 4)...................................... $ - $ -
Other Assets:
Cash and cash equivalents............................................................ 2,077,684 1,565,490
Other................................................................................. 8,731 74,730
-------------------------------
$ 2,086,415 $ 1,640,220
===============================
</TABLE>
<TABLE>
LIABILITIES AND PARTNERS' CAPITAL
<S> <C> <C>
Liabilities:
Accounts payable and accrued expenses................................................ $ - $ 3,194
Distribution payable.................................................................. 105,305 52,653
-------------------------------
105,305 55,847
-------------------------------
Commitments and Contingencies (Note 6)
Partners' Capital:
Limited Partners
Units of Limited Partnership Interest, $1,000 stated value per Unit;
authorized, issued and outstanding -
25,010 Units...................................................................... 2,969,811 2,592,911
General Partners...................................................................... (988,701) (1,008,538)
-------------------------------
1,981,110 1,584,373
-------------------------------
$ 2,086,415 $ 1,640,220
===============================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
- --------------------------------------------------------------------------------------------
UNITS OF
LIMITED GENERAL LIMITED
For the Years Ended PARTNERSHIP PARTNERS' PARTNERS' TOTAL
December 31, 1995, 1994 and 1993 INTEREST CAPITAL CAPITAL CAPITAL
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1992................................ 25,010 $(1,017,412) $2,424,257 $1,406,845
Net income................................................ 8,118 154,234 162,352
Distributions............................................. (10,532) (200,080) (210,612)
----------------------------------------------------------------
Balance, December 31, 1993................................ 25,010 (1,019,826) 2,378,411 1,358,585
Net income............................................... 21,820 414,580 436,400
Distributions............................................. (10,532) (200,080) (210,612)
----------------------------------------------------------------
Balance,December 31, 1994................................. 25,010 (1,008,538) 2,592,911 1,584,373
Net income................................................ 35,633 677,020 712,653
Distributions............................................. (15,796) (300,120) (315,916)
----------------------------------------------------------------
Balance, December 31, 1995................................ 25,010 $ (988,701) $2,969,811 $1,981,110
================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
<TABLE>
STATEMENTS OF CASH FLOWS
- ---------------------------------------------------------------------------------------------
For the Years Ended
December 31, 1995, 1994 and 1993 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income ............................................................ $ 712,653 $ 436,400 $ 162,352
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Income from Local Limited Partnership cash
distributions......................................................... (700,616) (459,599) (188,251)
Change in assets and liabilities:
Decrease (increase) in accounts payable
and accrued expenses................................................ (3,194) (387) 3,465
Decrease (increase) in other assets................................. 65,999 (71,148) 334
--------------------------------------
Net cash provided by (used in) operating
activities........................................................... 74,842 (94,734) (22,100)
---------------------------------------------
Cash flows from investing activities:
Cash distributions from Local Limited
Partnerships.......................................................... 700,616 459,599 188,251
---------------------------------------------
Cash flows from financing activities:
Cash distributions paid
to Partners........................................................... (263,264) (210,612) (210,612)
---------------------------------------------
Net increase (decrease) in cash and cash
equivalents............................................................ 512,194 154,253 (44,461)
Cash and cash equivalents, beginning of year.............................. 1,565,490 1,411,237 1,455,698
---------------------------------------------------
Cash and cash equivalents, end of year.................................... $2,077,684 $1,565,490 $1,411,237
===================================================
Supplemental disclosure of noncash activities:
The Managing General Partner declared a fourth quarter distribution of
$105,305, which was distributed on February 14, 1996.
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. ORGANIZATION
Winthrop Residential Associates II, A Limited Partnership (the "Partnership")
was organized on October 21, 1981 under the Uniform Limited Partnership Act of
the State of Maryland to invest in limited partnerships (the "Local Limited
Partnerships") which develop, manage, operate and otherwise deal in government
assisted apartment complexes that do not significantly restrict distributions to
owners or the rate of return on investments in such properties. On June 23,
1983, the Partnership elected to comply with and be governed by the Maryland
Revised Uniform Limited Partnership Act. The Partnership will terminate on
December 31, 2031 or sooner, in accordance with the terms of the Partnership
agreement.
2. SIGNIFICANT ACCOUNTING POLICIES
Financial Statements - The financial statements of the Partnership are prepared
on the accrual basis of accounting.
Cash and cash equivalents - Cash and cash equivalents consist of money market
mutual funds that invest in treasury bills and repurchase agreements with
original maturities of three months or less. Cash equivalents are valued at
cost, which approximates market value.
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 the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Income Taxes - No provision has been made for federal, state or local income
taxes in the financial statements of the Partnership. Partners are required to
report on their individual tax returns their allocable share of income, gains,
losses, deductions and credits of the Partnership. The Partnership files its tax
returns on the accrual basis. On January 29, 1982, the Internal Revenue Service
issued a ruling that the Partnership will be classified as a partnership for
federal income tax purposes.
Investments in Local Limited Partnerships - The Partnership accounts for its
investment in each Local Limited Partnership using the equity method. Under the
equity method of accounting, the investment cost (including amounts paid or
accrued) is subsequently adjusted by the Partnership's share of the Local
Limited Partnership's results of operations and by distributions received or
accrued. Equity in the loss of Local Limited Partnerships is not recognized to
the extent that the investment balance would become negative, as the Partnership
has no obligation to fund the losses of the Local Limited Partnerships.
Distributions to Partners - Cash distributions from the Local Limited
Partnerships are included in the computation of the Partnership's cash available
for distribution in the quarter received. As provided for in the Partnership
agreement, quarterly distributions are payable to the Partners within 60 days
after the end of the quarter.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
On April 1, 1985, the Managing General Partner determined that the operating
reserves of the Partnership were not sufficiently funded. Accordingly, from
April 1, 1985 to December 31, 1990, the Partnership had retained cash that would
otherwise have been available for distribution as additional reserves to fund
operating deficits of certain Local Limited Partnerships. Beginning in 1991, the
Managing General Partner determined that cash distributions would be made on a
quarterly basis. The Partnership paid or accrued approximately $300,000 to the
Investor Limited Partners in 1995 and approximately $200,000 in 1994 and 1993.
3. TRANSACTIONS WITH RELATED PARTIES
One Winthrop Properties, Inc. ("One Winthrop"); the Managing General Partner,
WP Management Co., Inc. ("WP Management"), the manager of the Partnership's
investments in the Local Limited Partnerships; and Winthrop Financial Co.,
Inc. ("Winthrop Financial") are wholly owned subsidiaries of First Winthrop
Corporation, which, in turn, is wholly owned by Winthrop Financial Associates,
A Limited Partnership ("WFA").
WP Management is entitled to a fee for services rendered in managing the
Partnership's investments in the Local Limited Partnerships equal to 10% of the
Partnership's share of cash distributions from the Local Limited Partnerships,
not to exceed 1/2 of 1% of the sum of (a) the amount of the Partnership's
aggregate total investment in all Local Limited Partnerships, plus (b) the
Partnership's allocable share of all liens and mortgages secured by the projects
of all Local Limited Partnerships. The fee is noncumulative and commences at the
closing of each Local Limited Partnership's permanent loan. For the years ended
December 31, 1995, 1994 and 1993, WP Management earned $76,812, $39,210 and
$18,825, respectively, for managing the Partnership's investments in the Local
Limited Partnerships.
An affiliate of WFA has an equity interest in a partnership that has a 42%
limited partnership interest in one of the Local Limited Partnerships. In
addition, an affiliate of WFA acquired a general partner interest in one of the
Local Limited Partnerships in 1986 and remains the Managing General Partner in
one other Local Limited Partnership.
The General Partners are entitled to 5% of cash available for distribution. The
General Partners were entitled to $15,796, $10,532 and $10,532 of cash
distributions in 1995, 1994 and 1993, respectively.
During the liquidation stage of the Partnership, the General Partners and their
affiliates are entitled to receive certain distributions, subordinated to
specified minimum returns to the Limited Partners as described in the
Partnership agreement.
<PAGE>
4. INVESTMENTS IN LOCAL LIMITED PARTNERSHIPS
As of December 31, 1995, the Partnership had limited partnership equity
interests in nine Local Limited Partnerships. These nine Local Limited
Partnerships, which own 11 fully operating apartment complexes, have outstanding
mortgages totaling $59,892,745 which are secured by the Local Limited
Partnerships' real property, security interests, liens and endorsements common
to first mortgage loans.
The Partnership has not made additional investments in any Local Limited
Partnerships during 1995 but had cumulatively contributed $942,992 in several
Local Limited Partnerships. These investments had been accounted for as
operating deficit advances by the Local Limited Partnerships.
The investments in Local Limited Partnerships balance as of December 31, 1995
and 1994 are as follows:
<TABLE>
1995
1994 Activity 1995
<S> <C> <C> <C>
Equity payments made...................................................... $20,727,907 $20,727,907
Additional investments paid to and recognized
as operating deficit advances by Local
Limited Partnerships..................................................... 942,992 942,992
Capitalized costs ............................................... 355,450 355,450
Cash distributions from Local Limited
Partnerships ............................................... (9,733,988) (700,616) (10,434,604)
Amortization of the capitalized costs and the
costs in excess of the Partnership's initial
basis in the net assets of the Local Limited
Partnerships ............................................... (1,099,174) (1,099,174)
Equity in loss of Local Limited Partnerships.............................. (12,405,890) (12,405,890)
Income from Local Limited Partnership cash
distribution ............................................... 1,212,703 700,616 1,913,319
------------ -----------
Investments per balance sheet............................................. $ 0 $ 0
Difference in basis (including equity
payments paid to partners of two Local
Limited Partnerships of $2,187,850)...................................... (3,571,776) (3,571,776)
Additional investments paid to and recognized
as operating deficit advances by Local
Limited Partnerships..................................................... (942,992) (942,992)
Capitalized costs ............................................... (355,450) (355,450)
Amortization of the capitalized costs and the
costs in excess of the Partnership's initial
basis in the net assets of the Local Limited
Partnerships ............................................... 1,099,174 1,099,174
Equity in loss of Local Limited Partnerships
not recognizable under the equity method of
accounting (Note 2)...................................................... (19,174,050) (643,103) (19,817,153)
Income from Local Limited Partnership cash
distribution ............................................... (1,212,703) (700,616) (1,913,319)
------------ ------------
Equity per Local Limited Partnerships'
combined financial statements............................................ $(24,157,797) $(25,501,516)
============ ============
</TABLE>
<PAGE>
<TABLE>
The combined balance sheets of the Local Limited Partnerships at December 31,
1995 and 1994 are as follows:
- ---------------------------------------------------------------------------------------
1995 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Real Estate, at cost:
Land.................................................................. $ 4,615,796 $ 4,615,796
Buildings, net of accumulated depreciation
of $35,426,165 and $32,757,563 in 1995
and 1994, respectively.............................................. 32,002,580 34,236,478
Cash and cash equivalents................................................ 1,115,525 1,228,902
Other assets, net of accumulated amortization
of $1,581,143 and $1,516,151 in 1995 and
1994, respectively.................................................... 3,876,464 4,019,512
---------------------------------
$ 41,610,365 $44,100,688
=================================
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Notes payable......................................................... $ 2,949,658 $ 2,955,576
Due to Winthrop Residential Associates II............................. 973,575 973,575
Mortgage notes payable................................................ 59,892,745 58,748,271
Accounts payable and accrued expenses................................. 4,338,991 6,526,188
---------------------------------
68,154,969 69,203,610
---------------------------------
Partners' Capital:
Winthrop Residential Associates II.................................... (25,501,516) (24,157,797)
Other partners........................................................ (1,043,088) (945,125)
---------------------------------
(26,544,604) (25,102,922)
---------------------------------
$ 41,610,365 $44,100,688
=================================
</TABLE>
<TABLE>
The combined statements of operations of the Local Limited Partnerships for the
years ended December 31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues:
Rental income...........................................$13,125,164 $12,612,377 $12,006,146
Other income............................................ 497,325 517,250 426,792
-----------------------------------------------------------
13,622,489 13,129,627 12,432,938
-----------------------------------------------------------
Expenses:
Interest................................................ 4,989,859 4,875,193 4,995,444
Depreciation and amortization........................... 2,749,145 2,702,778 2,688,668
Taxes and insurance..................................... 1,481,140 1,555,077 1,417,822
Management and administration fees...................... 733,328 714,683 705,841
Repairs and maintenance................................. 2,132,376 1,824,332 1,662,753
General and administrative.............................. 2,874,900 2,979,335 2,781,888
-----------------------------------------------------------
14,960,748 14,651,398 14,252,416
-----------------------------------------------------------
Net loss before gain on
extinguishment of debt.................................... (1,338,259) (1,521,771) (1,819,478)
Gain from extinguishment on debt........................... 863,044 - -
-------------------------------------------------------
Net loss...................................................$ (475,215) $(1,521,771) $(1,819,478)
===========================================================
Net loss allocated to Winthrop
Residential Associates II...............................$ (643,099) $(1,601,479) $(1,807,315)
===========================================================
Net income (loss) allocated to other
partners................................................$ 167,884 $ 79,708 $ (12,163)
===========================================================
</TABLE>
<PAGE>
5. TAX LOSS
The Partnership's tax loss for 1995 differs from the net income for financial
reporting purposes primarily due to accounting differences in the recognition of
depreciation incurred by the Local Limited Partnerships and losses not
recognizable under the equity method. The taxable loss for 1995 is as follows:
<TABLE>
<S> <C>
Net income for financial reporting purposes............ $ 712,653
Less: Equity in Local Limited Partnerships' tax
loss in excess of financial statement
loss (due primarily to the depreciation
differences caused by ACRS and amounts
capitalized for construction)................ (619,649)
Equity in Local Limited Partnerships' losses not recognizable
under the equity method of accounting for financial reporting
purposes (Note 2).......................... (643,103)
Income from Local Limited Partnership cash
distribution............................... (700,616)
-----------
Tax loss............................................. $(1,250,715)
===========
</TABLE>
6. LOCAL LIMITED PARTNERSHIPS
In 1993, the Department of Housing and Urban Development (HUD) issued a letter
indicating its intention to initiate foreclosure proceedings on Sanford Landing.
Subsequently, the Local Limited Partnership submitted a workout proposal in
order to avoid foreclosure. The Local Limited Partnership owning Sanford
Landing, and HUD have agreed to terms in 1995. Pursuant to a mortgage
modification agreement effective May 12, 1995, the outstanding first mortgage
principal balance was reduced. Concurrently, a second mortgage note was drawn
between the local limited partnership and HUD. These transactions resulted in
the extinguishment of $863,044 of debt, and in recasting unpaid accrued interest
as second mortgage principal debt.
The Local Limited Partnership owning Southwest Parkway has submitted various
proposals to HUD, the latest in January 1995, to cure the mortgage default. In
October 1995, HUD notified the Local Limited Partnership that the mortgage has
been preliminarily selected for sale in 1996. Management is attempting to
negotiate a provisional workout arrangement with HUD, and in the event the
mortgage is sold, management will attempt to negotiate a workout arrangement
with the new lender.
The Partnership is unable to determine at this time if these Local Limited
Partnerships will be able to meet their financing requirements during the coming
year. The Partnership is not obligated to fund operating deficits or mortgage
loans of these Local Limited Partnerships. The Partnership's investment balance
in these Local Limited Partnerships is zero at December 31, 1995.
<PAGE>
SUPPLEMENTARY INFORMATION
REQUIRED PURSUANT TO SECTION 9.4 OF THE PARTNERSHIP AGREEMENT
<TABLE>
- -------------------------------------------------------------------------------------------
December 31, 1995 Three Months Ended Year Ended
(Unaudited) December 31, 1995 December 31, 1995
- ----------------------------------------------------------------------------------------------------------------------
1. Statement of Cash Available for Distribution:
<S> <C> <C>
Net income......................................... $ 224,018 $ 712,653
Add: Cash distributions from Local Limited
Partnerships............................. 180,000 700,616
Cash to reserves......................... (118,713) (396,737)
Less: Income from cash distributions............. (180,000) (700,616)
-------- --------
Cash Available for Distribution.................... $105,305 $315,916
======== ========
</TABLE>
2. Fees or other compensation paid or accrued by the Partnership to the General
Partners, or their affiliates, during the three months ended December 31,
1995:
Entity Receiving Form
Compensation of Compensation Amount
General Partners Distribution and Interest $ 5,265
in Cash Available for
Distribution
WFC Realty Co., Inc. Distribution and Interest $ 20
(Assignor Limited in Cash Available for
Partner) Distribution
WP Management Management fees $18,000
All other information required pursuant to Section 9.4 of the Partnership
Agreement is set forth in the attached Financial Statements and related notes or
Annual Partnership Report.
<PAGE>
<TABLE>
WINTHROP RESIDENTIAL ASSOCIATES II,
A LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS SCHEDULE III
DECEMBER 31, 1995
Initial cost to Local Limited Partnership
and gross amount at which carried as of Accumulated
December 31, 1995 (A, B and C) Depreciation
Description Number as of
and Ownership of Outstanding Buildings and December 31,
Percentage Apts. Encumbrance Land Improvements Total 1995 (D)
- ---------- ------ ----------- ---- ------------ ----- ----------------
<S> <C> <C> <C> <C> <C> <C>
Whisper Lake, Ltd.
Orlando, FL
98.93% 400 $12,150,025 $1,029,000 $13,221,490 $14,250,490 $ 6,865,271
Sanford Landing
Apartments, Ltd.
Sanford, FL
98.39% 264 9,447,756 460,000 8,583,423 9,043,423 4,445,023
Brookside, Ltd.
Sylacauga, AL
98.92% 80 1,438,503 54,871 1,757,239 1,812,110 1,013,800
Westbury Springs, Ltd.
Gwinnett County, GA
99% 150 4,410,309 273,588 4,911,802 5,185,390 2,612,541
Southwest Parkway, Ltd.
Wichita Falls, TX
99% 200 4,898,615 262,753 5,291,292 5,554,045 2,788,723
Wedgewood Creek
Limited Partnership
Gurnee, IL - 99% 201 9,096,820 595,000 10,382,938 10,977,938 5,232,576
Crofton Village
Limited Partnership
Crofton, MD - 52.8% 258 6,612,648 806,397 9,146,275 9,952,672 5,051,692
First Investment
Limited Partnership
IX, Albuquerque, NM
90% (F) 348 5,933,201 754,794 8,359,229 9,114,023 4,206,702
Honeywood Associates
Roanoke, VA - 95% 300 5,904,868 379,393 5,775,057 6,154,450 3,209,837
----- ----------- ---------- ----------- ----------- -----------
2,201 $59,892,745 $4,615,796 $67,428,745 $72,044,541 $35,426,165
===== =========== ========== =========== =========== ===========
</TABLE>
<TABLE>
Description Con- Date Depre-
and Ownership struction Interest ciable
Percentage Period Acquired Life
<S> <C> <C> <C>
Whisper Lake, Ltd.
Orlando, FL
98.93% 2/82-6/83 2/24/82 10-25yrs.
Sanford Landing
Apartments, Ltd.
Sanford, FL
98.39% 4/82-5/83 4/6/82 10-25yrs.
Brookside, Ltd.
Sylacauga, AL
98.92% 9/81-4/82 4/20/82 10-25yrs.
Westbury Springs, Ltd.
Gwinnett County, GA
99% 5/82-3/83 5/27/82 10-25yrs.
Southwest Parkway, Ltd.
Wichita Falls, TX
99% 5/82-7/83 6/22/82 10-25yrs.
Wedgewood Creek
Limited Partnership
Gurnee, IL - 99% 6/82-9/83 6/24/82 10-25yrs.
Crofton Village
Limited Partnership
Crofton, MD - 52.8% (E) 10/4/82 10-25yrs.
First Investment
Limited Partnership
IX, Albuquerque, NM
90% (F) (E) 10/28/82 10-25yrs.
Honeywood Associates
Roanoke, VA - 95% (E) 1/5/83 5-30yrs.
</TABLE>
(A) Substantially all project costs, including costs such as construction
period interest and various fees are capitalized as part of the cost of
the properties. These costs are amortized over the lives of the related
assets.
(B) The total cost of land and buildings and improvements less accumulated
depreciation at December 31, 1995 for federal income tax purposes is
$13,539,563.
(C) Reconciliation of Cost:
Balance as of December 31, 1994................... $71,609,837
Additions in 1995, net of deletions............... 434,704
----------
Balance as of December 31, 1995................... $72,044,541
===========
(D) Reconciliation of Accumulated Depreciation:
Balance as of December 31, 1994.................... $32,757,563
Depreciation expense in 1995, net of deletions..... 2,668,602
-----------
Balance as of December 31, 1995.................... $35,426,165
===========
(E) These apartment complexes were completed and fully operating at the time of
the Partnership's investment. (F) This Local Limited Partnership owns two
apartment complexes, both of which are located in Albuquerque, New Mexico.
<PAGE>
<PAGE>
Item 9. Changes in and Disagreements on Accounting and
Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
(a) and (b) Identification of Directors and Executive Officers.
Registrant has no officers or directors. The Managing General Partner manages
and controls substantially all of Registrant's affairs and has general
responsibility and ultimate authority in all matters effective its business. As
of March 1, 1996, the names of the directors and executive officers of the
Managing General Partner and the position held by each of them, are as follows:
Has served as
Position Held with the Director or
Name and Age Managing General Partner Officer Since
Michael L. Ashner Chief Executive Officer 1-96
and Director
Ronald Kravit Director 7-95
W. Edward Scheetz Director 7-95
Richard J. McCready President and
Chief Operating Officer 7-95
Jeffrey Furber Executive Vice President 1-96
and Clerk
Anthony R. Page Chief Financial Officer 8-95
Vice President and
Treasurer
Peter Braverman Senior Vice President 1-96
(c) Identification of Certain Significant Employees. None.
<PAGE>
(d) Family Relationships. None.
(e) Business Experience. The Managing General Partner was incorporated in
Massachusetts in October 1978. The background and experience of the executive
officers and directors of the Managing General Partner, described above in Items
10(a) and (b), are as follows:
Michael L. Ashner, age 44, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") since January 15,
1996. From June 1994 until January 1996, Mr. Ashner was a Director, President
and Co-chairman of National Property Investors, Inc., a real estate investment
company ("NPI"). Mr. Ashner was also a Director and executive officer of NPI
Property Management Corporation ("NPI Management") from April 1984 until January
1996. In addition, since 1981 Mr. Ashner has been President of Exeter Capital
Corporation, a firm which has organized and administered real estate limited
partnerships.
W. Edward Scheetz, age 31, has been a Director of WFA since July 1995.
Mr. Scheetz was a director of NPI from October 1994 until January 1996. Since
May 1993, Mr. Scheetz has been a limited partner of Apollo Real Estate Advisors,
L.P. ("Apollo"), the managing general partner of Apollo Real Estate Investment
Fund, L.P., a private investment fund. Mr. Scheetz has also served as a Director
of Roland International, Inc., a real estate investment company since January
1994, and as a Director of Capital Apartment Properties, Inc., a multi-family
residential real estate investment trust, since January 1994. From 1989 to May
1993, Mr. Scheetz was a principal of Trammel Crow Ventures, a national real
estate investment firm.
Ronald Kravit, age 39, has been a Director of WFA since July 1995. Mr.
Kravit has been associated with Apollo since August 1995. From October 1993 to
August 1995, Mr. Kravit was a Senior Vice President with G. Soros Realty
Advisors/Reichman International. Mr. Kravit was a Vice President and Chief
Financial Officer of MAXXAM Property Company from July 1991 to October 1993.
<PAGE>
Richard J. McCready, age 37, is the President and Chief Operating Officer
of WFA and its subsidiaries. Mr. McCready previously served as a Managing
Director, Vice President and Clerk of WFA and a Director, Vice President and
Clerk of the Managing General Partner and all other subsidiaries of WFA. Mr.
McCready joined the Winthrop organization in 1990.
Jeffrey Furber, age 36, has been the Executive Vice President of WFA
and the President of Winthrop Management since January 1996. Mr. Furber served
as a Managing Director of WFA from January 1991 to December 1995 and as a Vice
President from June 1984 until December 1990.
Anthony R. Page, age 32, has been the Chief Financial Officer for WFA since
August 1995. From July 1994, to August 1995, Mr. Page was a Vice President with
Victor Capital Group, L.P. and from 1990 to July 1994, Mr. Page was a Managing
Director with Principal Venture Group. Victor Capital and Principal Venture are
investment banks emphasizing on real estate securities, mergers and
acquisitions.
Peter Braverman, age 44, has been a Senior Vice President of WFA since
January 1996. From June 1995 until January 1996, Mr. Braverman was a Vice
President of NPI and NPI Management. From June 1991 until March 1994, Mr.
Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.
One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop Partners
81 Limited Partnership; Winthrop Residential Associates I, A Limited
Partnership; Winthrop Residential Associates III, A Limited Partnership; 1626
New York Associates Limited Partnership; 1999 Broadway Associates Limited
Partnership; Indian River Citrus Investors Limited Partnership; Nantucket Island
Associates Limited Partnership; One Financial
<PAGE>
Place Limited Partnership; Presidential Associates I Limited Partnership;
Riverside Park Associates Limited Partnership; Sixty-Six Associates Limited
Partnership; Springhill Lake Investors Limited Partnership; Twelve AMH
Associates Limited Partnership; Winthrop California Investors Limited
Partnership; Winthrop Growth Investors I Limited Partnership; Winthrop Interim
Partners I, A Limited Partnership; Winthrop Financial Associates, A Limited
Partnership; Southeastern Income Properties Limited Partnership; Southeastern
Income Properties II Limited Partnership; Winthrop Miami Associates Limited
Partnership; and Winthrop Apartment Investors Limited Partnership.
(f) Involvement in Certain Legal Proceedings. None.
Item 11. Executive Compensation.
The Partnership is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 13, "Certain Relationships and Related Transactions.")
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security ownership of certain beneficial owners.
The General Partners own all the outstanding general partnership
interests. No person or group is known by the Partnership to be the beneficial
owner of more than 5% of the outstanding Units at December 31, 1995. Under the
Partnership Agreement, the voting rights of the Limited Partners are limited
and, in some circumstances, are subject to the prior receipt of certain opinions
of counsel or judicial decisions.
Under the Partnership Agreement, the right to manage the business of
the Partnership is vested in the General Partners and is generally to be
exercised only by the Managing General Partner, although approval of Linnaeus is
required as to all investments in Local Limited Partnerships and in connection
with any votes or consents arising out of the ownership of a Local Limited
Partnership interest.
(b) Security ownership of management.
None of the officers, directors or general partners of the General
Partners and none of the partners of WFA owned any Units at December 31, 1995 in
individual capacities; however, WFC Realty Co., Inc., a wholly owned subsidiary
of First Winthrop, (of which certain officers and directors of the Managing
General Partner are officers or directors) owns 100 units (.38%).
(c) Changes in control.
There exists no arrangement known to the Partnership the operation of
which may at a subsequent date result in a change in control of the Partnership
except as follows:
In connection with its acquisition of control of Linnaeus, Londonderry II
issued NACC a $22 million non-recourse purchase money note due 1998 (the
"Purchase Money Note"), as set forth in a loan agreement, dated as of July 14,
1995, by and between NACC and Londonderry II. Initial security for the Purchase
Money Note includes, among other things, the partnership interests in W.L.
Realty acquired by Londonderry II and the W.L. Realty partnership interest in
Linnaeus. Accordingly, if Londonderry II does not satisfy its obligations under
the Purchase Money Note, NACC would have the right to foreclose upon this
security and, as result, would gain control of the Partnership.
Item 13. Certain Relationships and Related Transactions.
The General Partners and their affiliates are entitled to receive
various fees, commissions, cash distributions, allocations of taxable income or
loss and expense reimbursements from the Partnership. WP Management Co., Inc.
("WP Management"), an affiliate of the Managing General Partner, is entitled to
a fee for services rendered in managing the Partnership's investments equal to
10% of the Partnership's share of cash distributions from the Local Limited
Partnerships, not to exceed 1/2 of 1% of the sum of (a) the amount of the
Partnership's aggregate total investment in all Local Limited Partnerships, plus
(b) the Partnership's allocable share of all liens and mortgages secured by the
projects of all Local Limited Partnerships. The fee is noncumulative and
commences at the closing of each Local Limited Partnership's permanent loan. For
the years ended December 31, 1995, 1994 and 1993, WP Management earned $76,812,
$39,210 and $18,825, respectively.
The Partnership's general partners are entitled to 5% of cash
available for distribution. The general partners received $15,796, $10,532 and
$10,532 of cash distributions in 1995, 1994 and 1993, respectively.
For the year ended December 31, 1995, the Partnership allocated
$23,451 of tax losses to the Managing General Partner and $39,085 to the
Associate General Partner.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a)(1)(2) Financial Statements and Financial Statement Schedules:
See Item 8 of this Form 10-K for Financial Statements of the
Partnership, Notes thereto, and Financial Statement Schedules.
(A Table of Contents to Financial Statements and Financial
Statement Schedules is included in Item 8 and incorporated
herein by reference.)
(a) (3) Exhibits:
The Exhibits listed on the accompanying Index to Exhibits are
filed as part of this Annual Report and incorporated in this
Annual Report as set forth in said Index.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 this 27th day of March
1996.
WINTHROP RESIDENTIAL ASSOCIATES II,
A LIMITED PARTNERSHIP
By: ONE WINTHROP PROPERTIES, INC.
Managing General Partner
By: /s/ Michael L. Ashner
Michael L. Ashner
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature/Name Title Date
/s/ Michael Ashner Chief Executive March 27, 1996
- ------------------
Michael Ashner Officer and Director
/s/ Ronald Kravit Director March 27, 1996
Ronald Kravit
/s/ Anthony R. Page Chief Financial Officer March 27, 1996
Anthony R. Page
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Title of Document
3. Agreement and Certificate of Limited
Partnership of Winthrop Residential
Associates II, A Limited Partnership,
dated as of June 23, 1983 (incorporated
by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended
December 31, 1983)
4. Agreement and Certificate of Limited
Partnership of Winthrop Residential
Associates II, A Limited Partnership,
dated as of June 23, 1983 (incorporated
herein by reference to the Registrant's
Annual Report on Form 10-K for the
fiscal year ended December 31, 1983)
10. Agreement between Winthrop Residential
Associates II, A Limited Partnership
and The Artery Organization, Inc.
(incorporated herein by reference to the
Registrant's Registration Statement on
Form S-11, File No. 2-74784)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial
information extracted from audited financial
statements for the one year period ending
December 31, 1995 and is qualified in its
entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0000356141
<NAME> Winthrop Residential Associates II
<MULTIPLIER> 1
<CURRENCY> U. S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<EXCHANGE-RATE> 1.0000
<CASH> 2077684
<SECURITIES> 0
<RECEIVABLES> 8731
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2086415
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2086415
<CURRENT-LIABILITIES> 105305
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1981110
<TOTAL-LIABILITY-AND-EQUITY> 2086415
<SALES> 0
<TOTAL-REVENUES> 839820
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 127167
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 712653
<INCOME-TAX> 0
<INCOME-CONTINUING> 712653
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 712653
<EPS-PRIMARY> 27.07
<EPS-DILUTED> 0.00
</TABLE>
