UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 2-89185
GULLEDGE REALTY INVESTORS II, L.P.
VIRGINIA 54-1191237
State of Organization: I.R.S. Employer Identification No.
ONE NORTH JEFFERSON AVENUE
ST. LOUIS, MISSOURI 63103
Registrant's telephone number, including area code: (314) 289-3006
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 of 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
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
INDEX
PART I. FINANCIAL INFORMATION:
Balance Sheets
Statements of Operations
Statements of Changes in Partners' Capital
Statements of Cash Flows
Notes to Financial Statements
Management's Financial Discussion
PART II. OTHER INFORMATION
SIGNATURES
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GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1995 1994
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ASSETS
Cash $ 387,627 $ 352,192
Advances to Project Partnerships 27,323 1,866
Intangible assets,
net of accumulated amortization 29,134 33,731
Total Assets $ 444,084 $ 387,789
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 10,500 $ 18,700
Payable to affiliates 1,003,265 915,623
Capital contributions payable 50,000 50,000
Total Liabilities 1,063,765 984,323
Partners' Capital (Deficit) (619,681) (596,534)
Total Liabilities and
Partners' Capital (Deficit) $ 444,084 $ 387,789
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
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Revenue:
Interest income $ 5,443 $ 2,365 $ 14,065 $ 5,765
Distributions 105,353 59,955 108,053
Miscellaneous revenue 4,274 75
5,443 107,718 78,294 113,893
Expenses:
Asset management fee 28,644 28,644 85,932 85,932
Professional fees 3,500 3,550 10,500 12,400
Amortization 1,532 1,532 4,597 4,597
Operating expenses 51 557 412 882
33,727 34,283 101,441 103,811
Net (loss) income $(28,284) $ 73,435 $ (23,147) $ 10,082
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Special
Total General Limited Limited
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Balances at January 1, 1994 $(564,223) $ (14,798) $ (26,732) $(522,693)
Net income for nine months
ended September 30, 1994 10,082 111 192 9,779
Balances at September 30, 1994 $(554,141) $ (14,687) $ (26,540) $(512,914)
Balances at January 1, 1995 $(596,534) $ (15,153) $ (27,346) $(554,035)
Net loss for nine months
ended September 30, 1995 (23,147) (255) (440) (22,452)
Balances at September 30, 1995 $(619,681) $ (15,408) $ (27,786) $(576,487)
Number of ownership units 11,814 131 225 11,458
<FN>
See notes to financial statements.
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<TABLE>
<CAPTION>
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended September 30,
1995 1994
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Cash Flows From Operating Activities:
Net (loss) income $ (23,147) $ 10,082
Adjustments to reconcile net (loss) income
to net cash used in operating activities:
Distributions from
Project Partnerships (59,955) (108,053)
Amortization 4,597 4,597
Change in assets and liabilities:
Increase in advances to Project Partnerships (25,457) (9,279)
Decrease in accounts payable (8,200) (1,799)
Increase in payable to affiliates 87,642 86,439
Net Cash Used In Operating Activities (24,520) (18,013)
Cash Flows From Investing Activities:
Distributions from Project Partnerships 59,955 108,053
Increase In Cash 35,435 90,040
Cash Beginning of Period 352,192 258,324
Cash End of Period $ 387,627 $ 348,364
<FN>
See notes to financial statements.
</TABLE>
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
Note A Summary of Significant Accounting Policies
Partnership Organization
Gulledge Realty Investors II, L.P. (the Registrant) is a limited partnership
organized in December 1983 under the laws of the Commonwealth of Virginia for
the purpose of acquiring limited partner interests in real estate limited
partnerships (Project Partnerships). These Project Partnerships are known as
Camelot Housing Limited Partnership, Colony Place Associates, Ltd., Country Oaks
Apartments Limited Partnership, Florence Housing Partnership, Greentree Housing
Limited Partnership, Hawthorn Housing Limited Partnership, Olympic Housing
Limited Partnership, Pine West Ltd., and Rancho Vista Associates. Each of the
Project Partnerships owns an operating real estate project which receives
mortgage interest subsidies and/or rental assistance from the United States
Department of Housing and Urban Development (HUD) or Farmer's Home
Administration. The Registrant commenced operations in March 1984.
The financial statements include only those assets, liabilities, and results of
operations which relate to the business of the Registrant and do not include any
assets, liabilities, or operating results attributable to the partners'
individual activities. These financial statements should be read in conjunction
with the Registrant's annual report for the year ended December 31, 1994. All
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results of operations for the interim period have been
reflected. All such adjustments consist of normal recurring accruals, unless
otherwise disclosed in these interim financial statements. The results of
operations, for the nine months ended September 30, 1995, are not necessarily
indicative of the results for the year ending December 31, 1995.
Investment in Project Partnerships
The investment in Project Partnerships is accounted for using the equity method
of accounting. Under the equity method, investments are reflected at cost,
adjusted for the Registrant's share of the Project Partnerships' income or loss
and distributions, if any. The Registrant is under no obligation to contribute
additional capital or to lend monies necessary to fund cash flow deficiencies
of the Project Partnerships because the Registrant is a limited partner in such
partnerships. As a result, the investment account will not be reduced below
zero. As of December 31, 1992, all nine of the Project Partnership investment
accounts had reached zero. Losses in subsequent years will be maintained
separately for tax purposes. These losses are available to be applied toward
any possible future income from these partnerships. Any distributions from the
Project Partnerships will be recognized as income in the year received.
Income Taxes
No provision has been made for income taxes as they are the responsibility of
each partner. Profits (or gains) and losses of the Registrant are allocated to
the partners in accordance with the partnership agreement.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
MANAGEMENT'S FINANCIAL DISCUSSION
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
The Registrant's investments in the Project Partnerships are recorded using the
equity method of accounting (see Note A). Due to all nine investments having
reached zero by the year ended December 31, 1992, additional losses will not be
reported for financial reporting purposes, consequently no fluctuations will
occur in future financial statements from recognizing equity in the income of
Project Partnerships. However, losses in subsequent years will continue to be
maintained separately for tax reporting purposes. The major source of future
revenue to the Registrant will be distribution income received from the Project
Partnerships. The Project Partnerships' ability to pay distributions is
dependent upon the operating results and cash flow of each project. Other than
that described below, no significant events occurred during the nine months
ended September 30, 1995 and September 30, 1994 that altered the Project
Partnerships ability to pay distributions to the Registrant. All Project
Partnerships that had sufficient surplus cash to pay distributions in 1995 had
done so by June 30, 1995. Therefore, no distributions were received during the
three months ended September 30, 1995. Total distributions received from all
Project Partnerships for the nine months ended September 30, 1995, was $59,955
compared to $108,053 for the nine months ended September 30, 1994. The decrease
in distributions received is primarily due to a decrease in distributions from
one Project Partnership that experienced an increase in operating expenses.
The Registrant's ownership interest in six of the Project Partnerships (Camelot
Housing, Colony Place, Florence Housing, Greentree Housing, Hawthorn Housing and
Olympic Housing) is pledged as collateral in connection with promissory notes
issued by the Project Partnerships. The general partner is attempting to
refinance or renegotiate the promissory notes, three of which are due in 1995
(Colony Place, Florence Housing and Olympic Housing). The general partner has
negotiated a one year extension on Colony Place's promissory note. This time
will be used to pursue new debt financing through HUD under the Low Income
Housing Preservation and Resident Homeownership Act ("LIHPRHA"). However,
obtaining new debt financing is in no way assured as Congress has proposed
numerous cuts in HUD's budget including the elimination of funding for the
LIHPRHA program. The general partner is continuing negotiations on the other
two promissory notes which come due on December 31, 1995. If the general
partner is unsuccessful in refinancing or renegotiating these promissory notes,
the Registrant could lose its ownership interests in the Project Partnerships.
The effect on future operations could be significant as distributions from
Project Partnerships are the primary source of revenue to the Registrant. The
effect on the Registrant's balance sheets would be minimal due to the investment
in Project Partnerships being previously reduced to zero.
Camelot Housing defaulted on its mortgage in June, 1995. The default was
primarily caused by a decrease in housing assistance payments from HUD and a
decline in occupancy. Due to a significant amount of housing quality standard
violations noted by HUD in a recent physical inspection report, HUD greatly
reduced its housing assistance payments until such time as the repairs are
completed. Without the payments from HUD, the Project Partnership will be
unable to make future mortgage payments. The mortgage will likely be assigned
to HUD at which time HUD could initiate foreclosure proceedings. The affect on
the Registrant's financial statements will be negligible because the investment
in Project Partnerships was reduced to zero several years ago. Also, this
Project Partnership never paid distributions nor was it expected to do so for
the foreseeable future. In addition, the tax effect of a foreclosure will be
negligible as losses from other Project Partnerships will be available to
offset the gain due to foreclosure.
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
Exhibit 27 Financial Data Schedule.
(b) Reports on Form 8-K - There were no reports filed on Form 8-K for
the quarter ended September 30, 1995.
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.
GULLEDGE REALTY INVESTORS II, L.P.
By:GULL-AGE Properties, Inc.
Managing General Partner
Date: November 10, 1995 By: /s/ David Mesker
David Mesker
President and Treasurer
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER
30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 387,627
<SECURITIES> 0
<RECEIVABLES> 27,323
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 414,950
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 444,084
<CURRENT-LIABILITIES> 1,063,765
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (619,681)
<TOTAL-LIABILITY-AND-EQUITY> 444,084
<SALES> 0
<TOTAL-REVENUES> 78,294
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 101,441
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (23,147)
<INCOME-TAX> 0
<INCOME-CONTINUING> (23,147)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,147)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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