FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(D)
FORM 10-KSB
(Mark One)
[X] Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 [No Fee Required]
For the fiscal year ended December 31, 1997
[ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 [No Fee Required]
For the transition period from_______to_______
Commission file number 2-85829
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
(Name of small business issuer in its charter)
New York 13-3202289
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Limited Partnership Units
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year $2,725,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of a specified date within the past 60 days. Market value
information for Registrant's partnership interests is not available. Should a
trading market develop for these interests, it is the General Partner's belief
that the aggregate market value of the voting partnership interests would not
exceed $25,000,000.
DOCUMENTS INCORPORATED BY REFERENCE
1.Portions of the Prospectus of Registrant dated December 30, 1983 (included
in Registration Statement, No. 2-85829, of Registrant) are incorporated by
reference into Parts I and III.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
Drexel Burnham Lambert Real Estate Associates II (the "Partnership" or the
"Registrant") was organized in 1983 as a New York limited partnership pursuant
to the Partnership Law of the state of New York. The general partner of the
Partnership is DBL Properties Corporation ("DBL" or "General Partner"), an
affiliate of Insignia Financial Group, Inc. ("Insignia") (see "Change in
Control" below). The Partnership is engaged in the business of acquiring,
operating and holding real properties for investment. The partnership acquired
interests in five properties during 1984 and 1985 and it continues to own and
operate two of those, Wendover Business Park-Phase II and Presidential House,
and it continues to hold a 50% joint venture interest in Table Mesa. On March
19, 1997, SP Associates ("SPA"), a joint venture in which the Partnership had a
two-thirds interest, sold the Sheraton Poste Inn ("Hotel") for $6,300,000 to
CapStar Management Company, L.P. ("CapStar"), the Hotel's management company.
In addition, under the sale agreement, CapStar was entitled to collect and
retain all secured receivables and assumed all outstanding payables, as defined,
with respect to the Hotel. The proceeds from the sale of the Hotel were used
first to satisfy the mortgage payable of approximately $3,964,000 on the Hotel
and the balance was paid to Almanzil, Inc. ("Almanzil"), the managing partner of
SPA, in accordance with the terms of the joint venture agreement. As the result
of the sale, the Partnership recognized a gain on disposition of investment in
joint venture of approximately $812,000 in its statement of operations for the
year ended December 31, 1997.
Commencing in February 1984 pursuant to the Prospectus, the Partnership offered
$20,000,000 in Limited Partnership Interests (the "Interests"). A total of
37,273 Interests were sold to the public at $500 per Interest. The offering
closed on October 10, 1984. No Limited Partner has made any additional capital
contribution after that date. The Limited Partners of the Partnership share in
the benefits of ownership of the Partnership's real property investments
according to the number of Interests held.
The Partnership's Registration Statement was filed pursuant to the Securities
Act of 1933 (No. 2-85829). The Partnership marketed its securities pursuant to
its Prospectus dated December 30, 1983 (the "Prospectus"), and thereafter
supplemented. This Prospectus was filed with the Securities and Exchange
Commission pursuant to Rule 424 (b) of the Securities Act of 1933.
A further description of the Partnership's business is included in "Item 6.
Management's Discussion and Analysis or Plan of Operation".
The General Partner of the Partnership intends to maximize the operating results
and, ultimately, the net realizable value of each of the Partnership's
properties in order to achieve the best possible return for the investors. Such
results may best be achieved through property sales, refinancings, debt
restructurings or relinquishment of the assets. The Partnership intends to
evaluate each of its holdings periodically to determine the most appropriate
strategy for each of the assets.
The Partnership has no full time employees. The General Partner is vested with
full authority as to the general management and supervision of the business and
affairs of the Partnership. Limited partners have no right to participate in
the management or conduct of such business and affairs. Affiliates of Insignia
provide day-to-day management services for the Partnership's investment
properties.
The business in which the Partnership is engaged is highly competitive, and the
Partnership is not a significant factor in its industry. The Partnership's
properties are located in major urban areas and, accordingly, compete for
rentals not only with similar properties in immediate area but with several
similar properties throughout the urban area, including properties owned
and/or managed by affiliates of the Partnership. Such competition is primarily
on the basis of location, rents, services and amenities. In addition, the
Partnership competes with significant numbers of individuals and organizations
(including similar partnerships, real estate investment trusts and financial
institutions) with respect to the sale of improved real properties, primarily
on the basis of the prices and terms of such transactions.
There have been, and it is possible there may be other, Federal, state, and
local legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
Changes in Control
On June 24, 1997, Insignia, a Delaware corporation, and IFGP Corporation, a
wholly-owned subsidiary of Insignia and a Delaware corporation (collectively,
the "Buyer"), entered into a Stock Purchase Agreement (the "Agreement") with The
Wynnewood Company, Inc., a New York corporation ("Seller"), DBL, a New York
corporation, and William Clements, an individual and the owner of 100% of the
capital stock of Seller. The closing of the transactions contemplated by the
Agreement occurred on June 24, 1997 (the "Closing"). At the Closing, pursuant
to the terms and conditions of the Agreement, the Buyer acquired all of the
issued and outstanding stock of DBL.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 2. DESCRIPTION OF PROPERTIES.
The following table sets forth the Partnership's investments in properties:
Date of
Property Purchase Type of Ownership Use
Wendover Business Park 4/1/84 Fee ownership subject Office/Warehouse-
Phase II to first mortgage 80,410 sq.ft.
Greensboro, NC
Presidential House Apartments 10/22/84 Fee ownership subject Apartments-
North Miami Beach, FL to first mortgage 203 units
SCHEDULE OF PROPERTIES (IN THOUSANDS):
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
Wendover II $ 4,268 $ 2,282 3-25 yrs SL $ 735
Presidential House 7,465 5,237 5-31.5 yrs SL 2,133
$ 11,733 $ 7,519 $2,868
See "Note A" to the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation
policy.
SCHEDULE OF MORTGAGES (IN THOUSANDS):
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1997 Rate Amortized Date Maturity
Wendover II $ 1,224 7.75% 20 years 2/1/01 $ 1,091
Presidential House 3,356 8.00% 20 years 8/1/00 3,047
Total $ 4,580
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties. The mortgage notes payable include prepayment penalties if prepaid
prior to maturity.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
Average Annual Average
Rental Rates Occupancy
Property 1997 1996 1997 1996
Wendover II $6.19/sq.ft. $6.32/sq.ft. 98% 91%
Presidential House $6,920/unit $6,713/unit 95% 97%
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other properties in the area. The General Partner believes
that all of the properties are adequately insured. The multi-family residential
property's lease terms are for one year or less. No residential or commercial
tenant leases 10% or more of the available rental space.
The General Partner attributes the increase in occupancy at Wendover to the
addition of one tenant and the expansions of two current tenants into previously
vacant spaces. In addition the decrease in the average annual rental rate at
Wendover is the result of renting spaces at below market rates to stimulate
occupancy.
The following is a schedule of the commercial lease expirations for the years
1998-2007:
Number of % of Gross
Wendover II Expirations Square Feet Annual Rent Annual Rent
(in thousands)
1998 8 24,390 $ 167 32.3%
1999 5 20,847 124 23.9%
2000 5 22,033 149 28.7%
2001 -- -- -- --
2002 3 13,140 78 15.1%
2003-2007 -- -- -- --
Real estate taxes (in thousands) and rates in 1997 for each property were as
follows:
1997 1997
Billing Rate
Wendover II $ 50 1.26%
Presidential House 144 2.29%
ITEM 3. LEGAL PROCEEDINGS
The Partnership is unaware of any pending or outstanding litigation that is not
routine in nature. The General Partner of the Partnership believes that all
such pending or outstanding litigation will be resolved without a material
adverse effect upon the business, financial condition, or operations of the
Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The unit holders of the Partnership did not vote on any matter during the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR THE PARTNERSHIP EQUITY AND RELATED PARTNER MATTERS
As of December 31, 1997, the Partnership included approximately 1,701 limited
partners, holding a total of 37,273 Interests. No public trading market has
developed for the Interests and it is not anticipated that such a market will
develop in the future.
Cash distributions were made quarterly from April 1985 until October 1987 and
then were suspended until the December 1989 distribution of $5.00 per Interest.
In December 1995, the General Partner approved a cash distribution to the
Limited Partners in the amount of approximately $280,000 ($7.50 per limited
partner unit) which was paid in February 1996. In December 1996, the
Partnership declared a cash distribution to the limited partners in the amount
of approximately $280,000 ($7.50 per limited partnership interest). The
distribution was accrued at December 1996 and paid in March 1997.
In February 1998, the Partnership declared and paid a distribution to the
limited partners of approximately $140,000.
As of December 31, 1997, the remaining unpaid preferred return arrearage totaled
approximately $14,543,000 or $390.18 per interest. Reference is made to "Item
6. Management's Discussion and Analysis or Plan of Operation" for a description
of liquidity and capital resources.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The Partnership realized net income for the year ended December 31, 1997, of
approximately $724,000 versus a net loss of approximately $89,000 for the year
ended December 31, 1996. The increase in net income is primarily attributable to
the gain recognized on the sale of the Sheraton Poste Inn Hotel in Cherry Hill,
New Jersey, in which the Partnership had a subordinated interest. The
Partnership did not receive any proceeds due to the senior position of one of
the partners. As a result of the sale, the Partnership recognized a gain on
disposition of investment in joint venture of $812,000 during the year ended
December 31, 1997. Also contributing to the increase in net income was an
increase in rental income due to an increase in occupancy at Wendover II and an
increase in rental rate at Presidential House. Offsetting the increase in rental
income was an increase in operating expenses. The increase in operating
expenses is attributable to the increase in both property and maintenance
expenses. During the year ended December 31, 1997, the Partnership spent
approximately $76,000 for major repairs and maintenance compared to
approximately $34,000 for the comparable period in 1996. Included in 1997
expenditures were parking lot and exterior building repairs at Wendover. The
1996 expenditures consisted primarily of exterior building repairs at
Presidential House. In addition, the increase in operating expenses is
partially attributable to an increase in personnel costs at Presidential House.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of the 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 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 General Partner
will be able to sustain such a plan.
Liquidity and Capital Resources
At December 31, 1997, the Partnership had unrestricted cash and cash equivalents
of approximately $578,000 compared to approximately $675,000 at December 31,
1996. The net decrease in cash and cash equivalents for the year ended December
31, 1997, was approximately $97,000, compared to a net decrease of approximately
$31,000, for the comparable period in 1996. Net cash from operations decreased
primarily due to an increase in payments for lease commissions at Wendover II as
a result of several new tenants being added in 1997. Net cash used in investing
activities increased due to an increase in property improvements and
replacements expenditures. Net cash used in financing activities increased as a
result of an increase in payments on mortgage notes payable.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership. Such assets are currently
thought to be sufficient for any near-term needs of the Partnership. The
mortgage indebtedness of approximately $4,580,000 requires monthly principal and
interest payments and balloon payments on or before February 1, 2001, at which
time the properties will either be refinanced or sold. In addition to the
Partnership's debt, the mortgage encumbering Table Mesa is currently being
negotiated. The refinancing is expected to close during the second quarter of
1998. Distributions of approximately $283,000 were paid to the limited partners
during the years ended December 31, 1997 and 1996. In February 1998, the
Partnership declared and paid a distribution to the limited partners of
approximately $140,000.
Year 2000
The Partnership is dependent upon the General Partner and Insignia for
management and administrative services. Insignia has completed an assessment
and will have to modify or replace portions of its software so that its computer
systems will function properly with respect to dates in the year 2000 and
thereafter (the "Year 2000 Issue"). The project is estimated to be completed
not later than December 31, 1998, which is prior to any anticipated impact on
its operating systems. The General Partner believes that with modifications to
existing software and conversions to new software, the Year 2000 Issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the
Partnership.
Other
Certain items discussed in this annual report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this annual report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates of revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
ITEM 7. FINANCIAL STATEMENTS.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
LIST OF FINANCIAL STATEMENTS
Independent Auditor's Report
Balance Sheet - December 31, 1997
Statements of Operations - Years ended December 31, 1997 and 1996
Statements of Changes in Partners' Capital (Deficit) - Years ended December
31, 1997 and 1996
Statements of Cash Flows - Years ended December 31, 1997 and 1996
Notes to Financial Statements
Independent Auditor's Report
To the Partners
Drexel Burnham Lambert Real Estate Associates II
We have audited the accompanying balance sheet of Drexel Burnham Lambert Real
Estate Associates II (a limited partnership) as of December 31, 1997, and the
related statements of operations, changes in partners' capital (deficit) and
cash flows for each of the two years in the period ended December 31, 1997.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Drexel Burnham Lambert Real
Estate Associates II (a limited partnership) at December 31, 1997, and the
results of its operations and its cash flows for each of the two years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/Pannell Kerr Forster PC
New York, NY
February 6, 1998
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
BALANCE SHEET
December 31, 1997
(in thousands, except unit data)
Assets
Cash and cash equivalents $ 578
Receivables and deposits 185
Other assets 144
Investment in joint venture (Note C) 634
Investment properties (Notes A and H):
Land $ 1,578
Buildings and related personal property 10,155
11,733
Less accumulated depreciation (7,519) 4,214
$ 5,755
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 23
Tenant security deposits payable 103
Other liabilities 90
Mortgage notes payable (Note D) 4,580
Partners' Capital
General partner's $ 6
Limited partners' (37,273 units issued
and outstanding) 953 959
$ 5,755
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended
December 31,
1997 1996
Revenues:
Rental income $ 1,841 $ 1,789
Other income 72 60
Gain on disposition of investment in joint venture (Note C) 812 --
Total revenues 2,725 1,849
Expenses:
Operating 800 714
General and administrative 97 100
Depreciation 456 450
Interest 399 411
Property taxes 197 193
Total expenses 1,949 1,868
Equity in net loss of joint venture (52) (70)
Net income (loss) $ 724 $ (89)
Net income (loss) allocated to general partner $ 107 $ (1)
Net income (loss) allocated to limited partners 617 (88)
$ 724 $ (89)
Net income (loss) per limited partnership unit $ 16.55 $ (2.36)
Distributions per limited partnership unit $ .11 $ 7.59
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner's Partners' Total
Original capital contributions 37,273 $ 1 $ 18,637 $18,638
Partners' (deficit) capital at
December 31, 1995 37,273 $ (100) $ 711 $ 611
Distributions to partners -- -- (283) (283)
Net loss for the year
ended December 31,1996 -- (1) (88) (89)
Partners' (deficit) capital at
December 31, 1996 37,273 (101) 340 239
Distributions to partners -- -- (4) (4)
Net income for the year
ended December 31, 1997 -- 107 617 724
Partners' capital at
December 31, 1997 37,273 $ 6 $ 953 $ 959
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended
December 31,
1997 1996
Cash flows from operating activities:
Net income (loss) $ 724 $ (89)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation 456 450
Amortization of loan costs and lease
commissions 44 46
Equity in net loss of joint venture 52 70
Gain on disposition of investment in joint venture (812) --
Change in accounts:
Receivables and deposits (17) (3)
Other assets (23) (2)
Accounts payable 7 4
Tenant security deposits payable 1 (2)
Other liabilities (6) (17)
Net cash provided by operating activities 426 457
Cash flows used in investing activities:
Property improvements and replacements (100) (76)
Cash flows from financing activities:
Payments on mortgage notes payable (140) (129)
Distributions paid to partners (283) (283)
Net cash used in financing activities (423) (412)
Net decrease in cash and cash equivalents (97) (31)
Cash and cash equivalents at beginning of year 675 706
Cash and cash equivalents at end of year $ 578 $ 675
Supplemental disclosure of cash flow information:
Cash paid for interest $ 369 $ 380
See Accompanying Notes to Financial Statements
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
Notes to Financial Statements
December 31, 1997
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Organization:
Drexel Burnham Lambert Real Estate Associates II ("Partnership") was organized
as a limited partnership under the laws of the State of New York pursuant to a
Certificate of Limited Partnership dated November 2, 1983. The general partner
of the Partnership is DBL Properties Corporation ("DBL" or the "General
Partner"). Effective June 24, 1997, IFGP Corporation, an affiliate of Insignia
Financial Group, Inc. ("Insignia"), purchased all of the issued and outstanding
stock of DBL.
As of December 31, 1997, the Partnership owns and operates Wendover Business
Park - Phase II ("Wendover") an office and warehouse complex located in
Greensboro, North Carolina and Presidential House at Sky Lake ("Presidential") a
residential apartment complex located in North Miami Beach, Florida. The
Partnership also owns a 50% joint venture interest in Table Mesa Shopping Center
("Table Mesa") located in Boulder, Colorado.
Investment in Joint Venture:
Effective December 31, 1996, the Partnership began accounting for its 50%
investment in Table Mesa on the equity method. The Partnership had previously
accounted for its 50% share in the assets, liabilities, revenues and expenses on
a pro rata basis. In accordance with the equity method of accounting, the
Partnership's original investment in Table Mesa is increased by advances to
Table Mesa and by the Partnership's share of the earnings of Table Mesa. The
investment is decreased by distributions from Table Mesa and by the
Partnership's share of losses of Table Mesa.
Use of Estimates:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
Fair Value of Financial Instruments:
Statement of Financial Accounting Standards ("SFAS") No. 107, "Disclosures about
Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures
about Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Cash and Cash Equivalents:
The Partnership considers all highly liquid investments with a maturity of three
months or less at the time of purchase to be cash equivalents. At certain
times, the amount of cash deposited at a bank may exceed the limit on insured
deposits.
Security Deposits:
The Partnership requires security deposits from lessees for the duration of the
lease, and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.
Investment Properties:
Investment properties are stated at cost. Acquisition fees are capitalized as a
cost of real estate. In accordance with SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
the Partnership records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets may be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of these assets.
Depreciation:
Depreciation is computed by the straight-line method over estimated useful lives
ranging from 15 to 31.5 years for buildings and improvements and three to seven
years for furnishings. Tenant improvements are depreciated using the straight-
line method over the tenant's lease term.
Other assets:
Included in other assets are loan costs and lease commissions. Loan costs are
capitalized and are amortized on a straight-line basis as interest expense over
the life of the loans. At December 31, 1997, unamortized loan costs of
approximately $86,000 are included in other assets. Lease commissions are
deferred and amortized over the lives of the related leases. Such amortization
is charged to operating expenses. At December 31, 1997, unamortized leasing
commissions totaled approximately $27,000 and are included in other assets.
Leases:
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on these leases.
The Partnership leases commercial space to tenants under various lease terms.
For leases containing fixed rental increases during their term, rents are
recognized on a straight-line basis over the terms of the leases. For all other
commercial leases, rents are recognized over the terms of the leases as earned.
Advertising Costs:
Advertising costs of approximately $14,000 in 1997, and $11,000 in 1996, were
charged to expense as incurred and are included in operating expenses.
Income Taxes:
Taxable income or loss of the Partnership is reported in the income tax returns
of its partners. Accordingly, no provision for income taxes is made in the
financial statements of the Partnership.
Reclassifications:
Certain reclassifications have been made to the 1996 balances to conform to the
1997 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the 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.
On June 24, 1997, Insignia, a Delaware corporation, and IFGP Corporation, a
wholly-owned subsidiary of Insignia and a Delaware corporation (collectively the
"Buyer"), entered into a Stock Purchase Agreement (the "Agreement") with The
Wynnewood Company, Inc., a New York corporation ("Seller"), DBL, a New York
corporation, and William Clements, an individual and the owner of 100% of the
capital stock of Seller. The closing of the transactions contemplated by the
Agreement occurred on June 24, 1997 (the "Closing"). At the Closing, pursuant
to the terms and conditions of the Agreement, the Buyer acquired all of the
issued and outstanding stock of DBL.
Upon the Closing, the former officers and directors of DBL resigned and Insignia
caused new officers and directors of this entity to be elected.
The following transactions with The Wynnewood Company prior to June 24, 1997,
and with affiliates of Insignia subsequent to June 24, 1997, were incurred
during the years ended December 31, 1997 and 1996 (in thousands):
1997 1996
Property management fees (included in operating
expenses) $64 $34
Reimbursement for services of affiliates (included in
general and administrative expenses) 19 --
Prior to Insignia's affiliation on June 24, 1997, affiliates of Insignia
provided property management and partnership administrative services for the
Partnership.
In addition, the operations of Table Mesa include management fees paid to
affiliates of Table Mesa which totaled approximately $74,000 in 1997 and 1996.
In addition, leasing commissions paid to affiliates of Table Mesa amounted to
approximately $110,000 and $29,000 in 1997 and 1996, respectively.
For the period from January 1, 1996 to August 31, 1997, the Partnership insured
Presidential House under a master policy through an agency and insurer
unaffiliated with the General Partner. An affiliate of the 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
General Partner, who received payments on these obligations from the agent.
The amount of the Partnership's insurance premiums to the benefit of the
affiliate of the General Partner by virtue of the agent's obligations is
not significant.
NOTE C - INVESTMENT IN JOINT VENTURE
SP Associates (SPA)
SPA was formed in 1984 as a joint venture to acquire the Sheraton Poste Inn
("Hotel"), a 220-room hotel located in Cherry Hill, New Jersey. The managing
partner of the SPA joint venture is Almanzil, Inc. ("Almanzil"), with a 50%
interest. The remaining interests are owned by the Partnership and Coreal N.V.,
Inc. ("Coreal"), owning 33.3% and 16.7%, respectively. Coreal is an affiliate
of Almanzil.
Under the terms of SPA's joint venture agreement, cash from operations and
capital transactions, as defined, are allocated 50% to Almanzil, 33.3% to the
Partnership and 16.7% to Coreal, after Almanzil receives an amount equal to an
annual 20% preferred cumulative return on its outstanding capital and a return
of its original investment of approximately $1,954,000. Losses from operations
of SPA are allocated 66.7% to the Partnership and 33.3% to Coreal. At December
31, 1996, the Partnership's accountability to the SPA joint venture,
representing management's estimate of the Partnership's share of recourse
liabilities of SPA, amounted to approximately $812,000. Losses of SPA were
limited to the Partnership's share of recourse liabilities of SPA and for the
year ended December 31, 1996, no additional losses were recorded.
The Partnership's share of unrecognized losses for the year ended December 31,
1996, totaled approximately $182,000.
On March 19, 1997, SPA sold the Hotel for $6,300,000 to CapStar Management
Company, L.P. ("CapStar"), the Hotel's management company. In addition, under
the sale agreement Capstar was entitled to collect and retain all accrued
receivables and assumed all outstanding payables, as defined, with respect to
the Hotel. The proceeds from the sale of the Hotel were used first to satisfy
the mortgage payable of approximately $3,964,000 on the Hotel and the balance
was paid to Almanzil in accordance with the terms of the joint venture
agreement. As the result of the sale, the Partnership recognized a gain on
disposition of investment in joint venture of approximately $812,000 in its
statement of operations for the year ended December 31, 1997.
Table Mesa
Table Mesa Shopping Center Partnership was formed in 1985, as a joint venture to
own and operate a shopping center in Boulder, Colorado. The Partnership owns a
50% interest in this joint venture. The Partnership's equity in the operations
of Table Mesa, after an adjustment for allocation of depreciation based on its
basis in the property, amounted to losses of approximately $52,000 and $70,000
for the years ended December 31, 1997 and 1996, respectively.
The Table Mesa joint venture agreement provides among other things, that the
Partnership shall be entitled to receive a cash flow preference, as defined, of
$252,000 per year, which is equivalent to a 9% return on the Partnership's
initial cash investment. This annual preference is not cumulative.
Summarized financial information for Table Mesa at December 31, 1997, is as
follows (in thousands):
Assets:
Real and personal property net
of accumulated depreciation $ 5,940
Other assets 981
Total assets $6,921
Liabilities:
Mortgage payable $ 6,816
Other liabilities 516
Total liabilities $7,332
Gross revenue $2,172
Net income $ 98
NOTE D - MORTGAGE NOTES PAYABLE
The principle terms of mortgage notes payable are as follows (in thousands):
Principal Monthly Principal
Balance At Payment Balance
December 31, Including Interest Maturity Due At
Property 1997 Interest Rate Date Maturity
Wendover II $ 1,224 $ 11 7.75% 2/1/01 $ 1,091
Presidential House 3,356 31 8.00% 8/1/00 3,047
$ 4,580 $ 42
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties. The mortgage notes include prepayment penalties if repaid prior to
maturity.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1997, are as follows (in thousands):
1998 $ 152
1999 164
2000 3,169
2001 1,095
Total $ 4,580
NOTE E- PARTNERS' CAPITAL
Pursuant to a public offering, 37,273 units were sold at $500 per interest. The
calculation of net income (loss) per limited partner interest is based on 37,273
interests outstanding.
For income tax purposes the limited partners share 99% and the General Partner
1% (subordinated as defined in the partnership agreement) in all profits or
losses from operations until the limited partners have received an 8% cumulative
preferred return on their invested capital. Thereafter, the limited partners
share 90% and the General Partner shares 10% in the profits or losses from
operations.
Cash distributions from sales or refinancing, if any, shall be made to the
partners to the extent available and, as more fully described in the partnership
agreement, as follows: first, to each partner in an amount equivalent to the
positive amount of such partner's capital account on the date of distribution
after adjustment; second, to the limited partners, until the limited partners
have received an amount equal to their original invested capital; third, 99% to
the limited partners equal to any unpaid preferred return arrearage; and fourth,
as to any excess, 85% to the limited partners and 15% to the General Partner.
Distributions in liquidation to the partners shall be made pro rata in
accordance with the partners' capital accounts.
In accordance with the Agreement of Limited Partnership, limited partners are
entitled to receive an 8% cumulative preferred return on their unrecovered
invested capital. No distributions have been made or accrued to the General
Partner, since the limited partners must receive their original invested capital
plus any preferred return arrearage before payment to the General Partner. As
of December 31, 1997, the unpaid preferred return arrearage totaled
approximately $14,543,000.
NOTE F - OPERATING LEASES
The Partnership leases office, warehouse and retail space to tenants of Wendover
Business Park Phase II under operating lease agreements which expire on various
dates through 2002. Future minimum rental income, excluding escalation charges,
under these leases as of December 31, 1997, are as follows (in thousands):
1998 $ 460
1999 305
2000 191
2001 83
2002 39
Total $1,078
NOTE G - INCOME TAXES
A reconciliation of the net income (loss) per the financial statements to the
net taxable income (loss) to partners is as follows (in thousands, except unit
data):
Years Ended
December 31,
1997 1996
Net income (loss) as reported $ 724 $ (89)
Preferred returns not recognized as income for
tax purposes --
Depreciation and amortization differences (25) (46)
Amount of tax loss under (over) book loss of equity investees 927 (52)
Prepaid rent 14 (16)
Federal taxable net income (loss) $1,612 $ (203)
Federal taxable income (loss) per limited partnership
unit $42.82 $(5.39)
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
1997
Net assets as reported $ 959
Investment property at cost, net (1,228)
Other assets and liabilities (12)
Investment in JV 353
Net assets - tax basis $ 72
NOTE H - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (IN THOUSANDS)
Initial Cost
To Partnership
Net Cost
Buildings (Written
and Related Down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
Presidential House $ 3,356 $1,510 $ 6,037 $ (82)
Wendover II 1,224 359 4,547 (638)
Total $ 4,580 $1,869 $10,584 $ (720)
<TABLE>
<CAPTION>
Gross Amount at Which Carried
At December 31, 1997
Buildings Accumu- Year Date Deprec-
And Related lated of of iable
Personal Deprec- Construc- Acqui- Life-
Description Land Property Total iation tion sition Years
<S> <C> <C> <C> <C> <C> <C> <C>
Presidential House $ 1,287 $ 6,178 $ 7,465 $ 5,237 1967/1974 10/84 5-31.5 yrs.
Wendover II 291 3,977 4,268 2,282 1982 4/84 3-25 yrs.
Total $ 1,578 $ 10,155 $ 11,733 $ 7,519
</TABLE>
Reconciliation of Investment Properties and Accumulated Depreciation:
Years Ended December 31,
1997 1996
Investment Properties
Balance at beginning of year $ 11,633 $ 11,557
Property improvements 100 76
Balance at end of year $ 11,733 $ 11,633
Accumulated Depreciation
Balance at beginning of year $ 7,063 $ 6,613
Additions charged to expense 456 450
Balance at end of year $ 7,519 $ 7,063
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1997 and 1996, is approximately $11,258,000 and $11,158,000,
respectively. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1997 and 1996, is approximately $8,272,000 and
$7,783,000, respectively.
NOTE I - DISTRIBUTIONS
In December 1995, the General Partner approved a cash distribution to the
limited partners in the amount of approximately $280,000 ($7.50 per limited
partner unit) which was paid in February 1996. In April 1996, the Partnership
paid approximately $3,000 for withholding taxes on behalf of the limited
partners. This payment is reflected as a distribution to the limited partners.
In December 1996, the Partnership declared a cash distribution to the limited
partners in the amount of approximately $280,000 ($7.50 per limited partnership
unit). The distribution was accrued at December 1996 and paid in March 1997.
In April 1997, the Partnership paid approximately $4,000 for withholding taxes
on behalf of the limited partners. This payment is reflected as a distribution
to the limited partners.
In February 1998, the Partnership declared and paid a cash distribution to the
limited partners in the amount of approximately $140,000.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There were no disagreements with Pannell Kerr Forster PC regarding the 1997 and
1996 audits of the Partnership's financial statements.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Partnership does not have any officers or directors. Management and
administrative services are performed by DBL Properties Corporation ("DBL" or
the "General Partner") and its affiliates. The General Partner has general
responsibility and authority in all matters affecting the business of the
Partnership.
On June 24, 1997, Insignia Financial Group, Inc., a Delaware corporation
("Insignia"), and IFGP Corporation, a Delaware corporation (collectively, the
"Buyer"), entered into a Stock Purchase Agreement (the "Agreement") with The
Wynnewood Company, Inc., a New York corporation ("Seller"), DBL, a New York
corporation, and William Clements, an individual and the owner of 100% of the
capital stock of Seller. The closing of the transactions contemplated by the
Agreement occurred on June 24, 1997 (the "Closing"). At the Closing, pursuant to
the terms and conditions of the Agreement, the Buyer acquired all of the issued
and outstanding stock of DBL. Upon the Closing, the former officers and
directors of DBL resigned and Insignia caused new officers to be elected.
The names of the directors and executive officers of DBL as of January 29, 1998,
their ages and nature of all positions presently held by them are set forth
below. There are no family relationships between or among any officers and
directors:
Name Age Position
William H. Jarrard, Jr. 51 President and Director
Ronald Uretta 41 Vice President and
Treasurer
Martha L. Long 38 Controller
Daniel M. LeBey 32 Vice President and
Secretary
Kelley M. Buechler 40 Assistant Secretary
William H. Jarrard, Jr. has been President and Director of the General Partner
since June 24, 1997. He has acted as Senior Vice President of Insignia
Properties Trust ("IPT"), an affiliate of the General Partner, since May 1997.
Mr. Jarrard previously acted as Managing Director - Partnership Administration
of Insignia from January 1991 through September 1997 and served as Managing
Director - Partnership Administration and Asset Management of Insignia from July
1994 until January 1996.
Ronald Uretta has been Vice President and Treasurer of the General Partner since
June 24, 1997, and Insignia's Treasurer since January 1992. Since August 1996,
he has also served as Insignia's Chief Operating Officer. He has also served as
Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief
Financial Officer from January 1992 to August 1996.
Martha L. Long has been Controller of the General Partner since June 24, 1997,
and Senior Vice President - Finance and Controller of Insignia since January
1997. In June 1994, Ms. Long joined Insignia as its Controller, and was
promoted to Senior Vice President - Finance in January 1997. Prior to that
time, she was Senior Vice President and Controller of the First Savings Bank, in
Greenville, SC.
Daniel M. LeBey has been Vice President and Secretary of the General Partner
since January 29, 1998, and Insignia's Assistant Secretary since April 30, 1997.
Since July 1996 he has also served as Insignia's Associate General Counsel. From
September 1992 until June 1996, Mr. LeBey was an attorney with the law firm of
Alston & Bird LLP, Atlanta, Georgia.
Kelley M. Buechler has been Assistant Secretary of the General Partner since
June 24, 1997, and Assistant Secretary of Insignia since 1991.
ITEM 10. EXECUTIVE COMPENSATION
No direct form of compensation or remuneration was paid by the Partnership to
any officer or director of the General Partner. The Partnership has no plan,
nor does the Partnership presently propose a plan, which will result in any
remuneration being paid to any officer or director upon termination of
employment. However, reimbursements and other payments have been made to the
Partnership's General Partner and its affiliates, as described in "Item 12.
Certain Relationships and Related Transactions" below.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The Partnership is a limited partnership and has no officers or directors. The
General Partner has discretionary control over most of the decisions made by or
for the Partnership in accordance with the terms of the Partnership Agreement.
The directors and officers of the General Partner, as a group, do not own any of
the Partnership's units.
As of January 1, 1998, there is no person known to the Partnership who owns
beneficially or of record more than five percent of the limited partnership
units of the Partnership.
On March 17, 1998, Insignia entered into an agreement to merge its national
residential property management operations, and its controlling interest in
Insignia Properties Trust, with Apartment Investment and Management Company
("AIMCO"), a publicly traded real estate investment trust. The closing, which
is anticipated to happen in the third quarter of 1998, is subject to customary
conditions, including government approvals and the approval of Insignia's
shareholders. If the closing occurs, AIMCO will then control the General
Partner of the Partnership.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Partnership has no employees and is dependent on the 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.
On June 24, 1997, Insignia, a Delaware corporation, and IFGP Corporation, a
wholly-owned subsidiary of Insignia and a Delaware corporation (collectively the
"Buyer"), entered into a Stock Purchase Agreement (the "Agreement") with The
Wynnewood Company, Inc., a New York corporation ("Seller"), DBL, a New York
corporation, and William Clements, an individual and the owner of 100% of the
capital stock of Seller. The closing of the transactions contemplated by the
Agreement occurred on June 24, 1997 (the "Closing"). At the Closing, pursuant
to the terms and conditions of the Agreement, the Buyer acquired all of the
issued and outstanding stock of DBL.
Upon the Closing, the former officers and directors of DBL resigned and Insignia
caused new officers and directors of this entity to be elected.
The following transactions with The Wynnewood Company prior to June 24, 1997,
and with affiliates of Insignia subsequent to June 24, 1997, were incurred
during the years ended December 31, 1997 and 1996 (in thousands):
1997 1996
Property management fees $64 $34
Reimbursement for services of affiliates 19 --
Prior to Insignia's affiliation on June 24, 1997, affiliates of Insignia
provided property management and partnership administrative services for the
Partnership.
In addition, the operations of Table Mesa include management fees paid to
affiliates of Table Mesa which totaled approximately $74,000 in 1997 and 1996.
In addition, leasing commissions paid to affiliates of Table Mesa amounted to
approximately $110,000 and $29,000 in 1997 and 1996, respectively.
For the period from January 1, 1996 to August 31, 1997, the Partnership insured
Presidential House under a master policy through an agency and insurer
unaffiliated with the General Partner. An affiliate of the 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
General Partner, who received payments on these obligations from the agent. The
amount of the Partnership's insurance premiums accruing to the benefit of the
affiliate of the General Partner by virtue of the agent's obligations is not
significant.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: See Exhibit Index contained herein.
(b) Reports on Form 8-K filed during the fourth quarter of 1997: None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II
By: DBL Properties Corporation
Its General Partner
By: /s/William H. Jarrard, Jr.
William H. Jarrard, Jr.
President and Director
Date: March 25, 1998
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature/Name Title Date
/s/William H. Jarrard, Jr. President and Director March 25, 1998
William H. Jarrard, Jr.
/s/Ronald Uretta Vice President and March 25, 1998
Ronald Uretta Treasurer
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Prospectus of the Partnership filed pursuant to rule 424(b), dated
December 30, 1983 is hereby incorporated herein by reference.
3.2 Supplement dated October 10, 1984 to Prospectus dated December 30,
1983 is hereby incorporated herein by reference.
3.3 Form of Agreement of Limited Partnership of the Partnership
reference is made to Exhibit A to the Prospectus.
3.4 Certificate of Limited Partnership of the Partnership, which appears
as Exhibit 3.2 to the Registration Statement is hereby incorporated
herein by the reference.
10.1 Agreement related to purchase by the Partnership of Wendover
Business Park Phase II in Greensboro, North Carolina, which appears
as Exhibit 2.1 to the Registration Statement of the Partnership is
hereby incorporated herein by reference.
10.2 Agreement related to purchase by the Partnership of an interest in
the Sheraton Poste Inn in Cherry Hill, New Jersey, which appears as
Exhibit 2.2 to the Registration Statement of the Partnership is
hereby incorporated herein by reference.
10.3 Agreement relating to purchase by the Partnership of Presidential
House at Sky Lake in North Miami Beach, Florida, for which a Report
on Form 8-K was filed with the Commission on November 5, 1984, is
hereby incorporated herein by reference.
10.4 Agreement relating to purchase by the Partnership of an interest in
Table Mesa Shopping Center in Boulder, Colorado, for which a Report
on Form 8-K was filed with the Commission on May 21, 1985, is hereby
incorporated herein by reference.
10.5 Amendment No. 1, dated October 1, 1992, among the Partnership,
Coreal N.V., Inc. and Almanzil, Inc., to the Joint Venture
Agreements, dated April 4, 1984, between the Partnership and Coreal
relating to the Sheraton Poste Inn is incorporated by reference to
the Registrant's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1992.
10.6 Contracts related to refinancing of the debt of Wendover Business
Park Phase II were filed as Exhibit 10.6 to the report on Form 10-
KSB for the fiscal year ended December 31, 1993, and are hereby
incorporated herein by reference:
(a) Mortgage note dated January 13, 1994 between Drexel Burnham
Lambert Real Estate Associates II, a New York limited
partnership, and United Family Life Insurance Company, a Georgia
corporation.
(b) Deed of Trust and Security Agreement dated January 13, 1994
between Drexel Burnham Lambert Real Estate Associates II, a New
York limited partnership, and Stewart Title Guaranty Company for
the benefit of United Family Life Insurance Company, a Georgia
corporation.
(c) Assignment of Leases, Rents, Contracts, and Agreements dated
January 13, 1994 from Drexel Burnham Lambert Real Estate
Associates II, a New York limited partnership, to United Family
Life Insurance Company, a Georgia corporation.
(d) Hazardous Material Indemnification Agreement dated January 13,
1994 between Drexel Burnham Lambert Real Estate Associates II, a
New York limited partnership, and United Family Life Insurance
Company, a Georgia corporation.
(e) Escrow Agreement dated January 13, 1994 by and between United
Family Life Insurance Company, a Georgia corporation, Drexel
Burnham Lambert Real Estate Associates II, a New York limited
partnership, and Dickinson, Logan, Todd and Barber, Inc. (the
"Escrow Agent").
27 Financial Data Schedule.
99.1 Special Report/Acquisition Bulletin dated May 9, 1985 regarding the
Purchase by the Partnership of interests in Table Mesa Shopping
Center in Boulder, Colorado, and the 123 Office Building in Tyson's
Corner, Virginia is hereby incorporated herein by reference.
99.2 Report on Form 8-K filed November 4, 1984 regarding the purchase of
Presidential House at Sky Lake in North Miami Beach, Florida is
hereby incorporated herein by reference.
99.3 Report on Form 8-K filed May 21, 1985 regarding the acquisition of a
50% interest in Table Mesa Shopping Center in Boulder, Colorado is
hereby incorporated herein by reference.
99.4 On May 17, 1988, a report on Form 8-K was filed regarding the
refinancing of the four loans underlying the Presidential wrap
mortgage is hereby incorporated herein by reference.
99.5 On June 12, 1989, a report on Form 8-K was filed regarding the
modification of Table Mesa Promissory Note is hereby incorporated
herein by reference.
99.7 On October 11, 1989, a report on Form 8-K was filed regarding the
change in control of the parent company of the General Partner is
hereby incorporated herein by reference.
99.8 Second Note and Deed of Trust Revision Agreement dated December 3,
1990 regarding Table Mesa Shopping Center in Boulder, Colorado.
99.9 Report on Form 8-K filed February 3, 1993 regarding the sale of the
outstanding stock of the General Partner is hereby incorporated
herein by reference.
99.10 Report on Form 8-K filed July 9, 1997, regarding the change in
control of the Partnership.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Drexel
Burnham Lambert Real Estate Associates II 1997 year-end 10-KSB and is qualified
in its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 00000725646
<NAME> DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATESII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 578
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 11,733
<DEPRECIATION> (7,519)
<TOTAL-ASSETS> 5,755
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,580
0
0
<COMMON> 0
<OTHER-SE> 959
<TOTAL-LIABILITY-AND-EQUITY> 5,755
<SALES> 0
<TOTAL-REVENUES> 2,725
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,151
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 399
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 724
<EPS-PRIMARY> 16.55<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
