Hutton/ConAm Realty Investors 2
And Consolidated Ventures
United States Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X Quarterly Report Pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997
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: 0-11085
HUTTON/CONAM REALTY INVESTORS 2
Exact Name of Registrant as Specified in its Charter
California 13-3100545
State or Other Jurisdiction of I.R.S. Employer Identification No.
Incorporation or Organization
3 World Financial Center, 29th Floor,
New York, NY Attn: Andre Anderson 10285
Address of Principal Executive Offices Zip Code
(212) 526-3237
Registrant's Telephone Number, Including Area Code
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 ____
Consolidated Balance Sheets At March 31, At December 31,
1997 1996
Assets
Investments in real estate:
Land $ 5,744,972 $ 5,744,972
Buildings and improvements 23,632,402 23,525,644
-------------------------------
29,377,374 29,270,616
Less accumulated depreciation (12,111,509) (11,874,334)
-------------------------------
17,265,865 17,396,282
Cash and cash equivalents 943,844 962,290
Restricted cash 400,439 317,268
Other assets, net of accumulated amortization
of $213,607 in 1997 and $197,977 in 1996 228,310 243,940
-------------------------------
Total Assets $18,838,458 $18,919,780
===============================
Liabilities and Partners' Capital (Deficit)
Liabilities:
Mortgages payable $11,717,556 $11,769,703
Accounts payable and accrued expenses 255,033 127,810
Due to general partners and affiliates 17,953 17,931
Security deposits 103,040 106,353
Distribution payable _ 200,000
-------------------------------
Total Liabilities 12,093,582 12,221,797
Partners' Capital (Deficit):
General Partners (560,440) (565,129)
Limited Partners (80,000 units outstanding) 7,305,316 7,263,112
-------------------------------
Total Partners' Capital 6,744,876 6,697,983
Total Liabilities and Partners' Capital $18,838,458 $18,919,780
===============================
Consolidated Statement of Partners' Capital (Deficit)
For the three months ended March 31, 1997
Limited General
Partners Partners Total
Balance at December 31, 1996 $ 7,263,112 $ (565,129) $ 6,697,983
Net income 42,204 4,689 46,893
--------------------------------------
Balance at March 31, 1997 $ 7,305,316 $ (560,440) $ 6,744,876
======================================
Consolidated Statements of Operations
For the three months ended March 31, 1997 1996
Income
Rental $ 1,072,556 $ 1,064,538
Interest and other 12,505 10,859
--------------------------
Total Income 1,085,061 1,075,397
Expenses
Property operating 509,063 526,204
Depreciation and amortization 252,805 250,946
Interest 227,703 231,579
General and administrative 48,597 47,749
--------------------------
Total Expenses 1,038,168 1,056,478
Net Income $ 46,893 $ 18,919
==========================
Net Income Allocated:
To the General Partners $ 4,689 $ 1,892
To the Limited Partners 42,204 17,027
--------------------------
$ 46,893 $ 18,919
==========================
Per limited partnership unit
(80,000 outstanding) $.53 $.21
Consolidated Statements of Cash Flows
For the three months ended March 31, 1997 1996
Cash Flows From Operating Activities:
Net income $ 46,893 $ 18,919
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 252,805 250,946
Increase (decrease) in cash arising from
changes in operating assets and liabilities:
Fundings to restricted cash (83,171) (75,622)
Release of restricted cash _ 51,285
Other assets _ 5,900
Accounts payable and accrued expenses 127,223 9,197
Due to general partners and affiliates 22 1,509
Security deposits (3,313) (4,526)
-------------------------
Net cash provided by operating activities 340,459 257,608
Cash Flows From Investing Activities:
Additions to real estate (106,758) _
-------------------------
Net cash used for investing activities (106,758) _
Cash Flows From Financing Activities:
Distributions (200,000) (200,000)
Mortgage principal payments (52,147) (48,270)
-------------------------
Net cash used for financing activities (252,147) (248,270)
Net increase (decrease) in cash and cash
equivalents (18,446) 9,338
Cash and cash equivalents, beginning of period 962,290 710,686
-------------------------
Cash and cash equivalents, end of period $ 943,844 $ 720,024
=========================
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 227,703 $ 231,579
Notes to the Consolidated Financial Statements
The unaudited consolidated financial statements should be read in
conjunction with the Partnership's annual 1996 audited
consolidated financial statements within Form 10-K.
The unaudited consolidated financial statements include all
normal and reoccurring adjustments which are, in the opinion of
management, necessary to present a fair statement of financial
position as of March 31, 1997 and the results of operations and
cash flows for the three months ended March 31, 1997 and 1996 and
the statement of partner's capital (deficit) for the three months
ended March 31, 1997. Results of operations for the periods are not
necessarily indicative of the results to be expected for the full
year.
Certain prior year amounts have been reclassified to conform to
the current year's presentation.
No significant events have occurred subsequent to fiscal year
1996, and no material contingencies exist, which would require
disclosure in this interim report per Regulation S-X, Rule 10-01,
Paragraph (a)(5).
Part I, Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Liquidity and Capital Resources
At March 31, 1997, the Partnership had cash and cash equivalents
of $943,844, which were invested in unaffiliated money market
funds, relatively unchanged from the balance at December 31,
1996. The Partnership also maintains a restricted cash balance,
which totaled $400,439 at March 31, 1997, representing escrows
for insurance and real estate taxes required under the terms of
the current mortgage loans. The Partnership expects sufficient
cash to be generated from operations to meet its current
operating expenses and debt service requirements.
Repairs are currently underway at Ponte Vedra Beach Village I to
address existing roof problems that were aggravated by severe
tropical rain storms late in 1996 The repairs are expected to
cost approximately $400,000 and are scheduled to be completed by
the end of the second quarter. In order to pay for the repairs,
the General Partners are temporarily suspending quarterly cash
distributions beginning with the first quarter distribution which
would have been paid on or about May 15, 1997. It is anticipated
that cash distributions will remain suspended until the end of
the year at which point the General Partners will assess the
Partnership's ability to pay cash distributions based on the
Partnership's operating results and future cash needs.
Accounts payable and accrued expenses totaled $255,033 at March
31, 1997 compared with $127,810 at December 31, 1996. The
increase is primarily due to differences in the timing of
payments and accruals of real estate taxes between the two
periods.
Results of Operations
Partnership operations for the three months ended March 31, 1997
resulted in net income of $46,893 compared with net income of
$18,919 in the first quarter of 1996. The increase is due
primarily to a slight increase in rental income and reduction in
property operating expenses. Net cash provided by operating
activities was $340,459 for the three months ended March 31,
1997, an increase from $257,608 for the same period in 1996. The
increase is due primarily to differences in the timing of
payments and accruals of real estate taxes between the two
periods.
Rental income for the three months ended March 31, 1997 was
$1,072,556 compared with $1,064,538 in the first quarter of 1996.
The slight increase reflects increases at Creekside Oaks and
Rancho Antigua due to higher average occupancy levels. These
were largely offset by decreases in average occupancy and rental
income at Ponte Vedra Beach Village I and Village at the
Foothills I.
Property operating expenses totaled $509,063 for the three months
ended March 31, 1997 compared with $526,204 for the corresponding
period in 1996. The decrease is primarily due to a reduction in
repairs and maintenance expense at Creekside Oaks and Rancho
Antigua.
General and administrative expense totaled $48,597 for the three
months ended March 31, 1997 compared with $47,749 for the
corresponding period in 1996. During the 1997 period, certain
expenses incurred by an unaffiliated third party service provider
in servicing the Partnership, which were voluntarily absorbed by
affiliates of RI 2 Real Estate Services, Inc. in prior periods,
were reimbursed to RI 2 Real Estate Services, Inc. and its
affiliates.
During the first three months of 1997 and 1996, average occupancy
levels at each of the properties were as follows:
Property 1997 1996
Creekside Oaks 95% 94%
Ponte Vedra Beach Village I92% 95%
Rancho Antigua 96% 94%
Village at the Foothills I 93% 94%
Part II Other Information
Items 1-5 Not applicable.
Item 6 Exhibits and reports on Form 8-K.
(a) Exhibits -
(27) Financial Data Schedule
(b)Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
HUTTON/CONAM REALTY INVESTORS 2
BY: RI2 REAL ESTATE SERVICES INC.
General Partner
Date: May 20, 1997 BY: /s/ Paul L. Abbott
Director, President, Chief
Executive Officer and
Chief Financial Officer
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<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Mar-31-1997
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<PP&E> 29,377,374
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<CURRENT-LIABILITIES> 376,026
<BONDS> 11,717,556
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<NET-INCOME> 46,893
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