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 June 30, 1997 Commission file number 2-89185
GULLEDGE REALTY INVESTORS II, L.P.
State of Organization: VIRGINIA I.R.S. Employer Identification No. 54-1191237
ONE NORTH JEFFERSON AVENUE
ST. LOUIS, MISSOURI 63103
Registrant's telephone number, including area code: (314) 955-3006
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
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
BALANCE SHEETS
(UNAUDITED)
June 30, December 31,
ASSETS 1997 1996
Cash $ 442,297 $ 366,271
Advances to Project Partnerships 54,097 62,158
Intangible assets,
net of accumulated amortization 18,409 21,473
Total Assets $ 514,802 $ 449,902
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 21,000 $ 14,000
Payable to affiliates 1,208,218 1,144,783
Capital contributions payable 50,000 50,000
Total Liabilities 1,279,218 1,208,783
Partners' Capital (Deficit) (764,416) (758,881)
Total Liab. and Partners'
Capital (Deficit) $ 514,802 $ 449,902
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenue:
Interest income $ 5,251 $ 4,740 $ 9,265 $ 9,045
Distributions 12,851 24,063 52,764 26,763
18,102 28,803 62,029 35,808
Expenses:
Asset management fee 28,645 28,644 57,290 57,288
Professional fees 3,500 3,500 7,000 7,000
Amortization 1,532 1,533 3,065 3,065
Operating expenses 180 425 210 497
33,857 34,102 67,564 67,850
Net loss $(15,755) $(5,329) $(5,535) $(32,042)
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Special
Total General Limited Limited
Balances at January 1, 1996 $(645,548) $(15,692) $(28,883) $(601,579)
Net loss for three months
ended June 30, 1996 (32,042) (352) (609) (31,081)
Balances at June 30, 1996 $(677,590) $(16,044) $(28,886) $(632,660)
Balances at January 1, 1997 $(758,881) $(16,939) $(30,430) $(711,512)
Net loss for six months
ended June 30, 1997 (5,535) (61) (105) (5,369)
Balances at June 30, 1997 $(764,416) $(17,000) $(30,535) $(716,881)
Number of ownership units 11,814 131 225 11,458
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30,
1997 1996
Cash Flows From Operating Activities:
Net loss $ (5,535) $(32,042)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Distributions from
Project Partnerships (52,764) (26,763)
Amortization 3,065 3,065
Change in assets and liabilities:
Decrease in advances to
Project Partnerships 8,061 13,942
Increase (decrease) in accounts payable 7,000 (7,000)
Increase in payable to affiliates 63,435 57,318
Net Cash Provided By Operating Activities 23,262 8,520
Cash Flows From Investing Activities:
Distributions from Project Partnerships 52,764 26,763
Increase In Cash 76,026 35,283
Cash Beginning of Period 366,271 371,220
Cash End of Period $442,297 $406,503
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(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
Colony Place Associates, Ltd., Country Oaks Apartments Limited Partnership,
Florence Housing Limited 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, 1996. 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 six months ended June 30, 1997, are not necessarily
indicative of the results for the year ending December 31, 1997.
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 was not 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
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
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 losses 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 six months ended
June 30, 1997 and June 30, 1996 that altered the Project Partnerships' ability
to pay distributions to the Registrant.
The decrease in Distribution income for the three months ended June 30, 1997,
compared to the three months ended June 30, 1996, is primarily due to a
distribution received from one Project Partnership that paid its distribution in
the first quarter of the current year compared to the second quarter of the
previous year.
The increase in Distribution income for the six months ended June 30, 1997,
compared to the six months ended June 30, 1996, is primarily due to
distributions received in the current year from two Project Partnerships that
did not pay distributions in the previous year.
The Registrant's ownership interest in five of the Project Partnerships (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 promissory notes are due June 30, 1997,
December 31, 1997, December 31, 1999, December 31, 1996, and December 31, 2000,
respectively.
The General Partner is negotiating an extension of Colony Place's promissory
note, which matured on June 30, 1997, while pursuing a possible sale of the
project.
The General Partner is negotiating an extension of Hawthorn Housing's promissory
note, which came due on December 31, 1996, and attempting to refinance the first
mortgage. Proceeds from the refinancing would be used to make a partial payment
to the noteholder. The remaining balance of the promissory note would be
renegotiated with a new maturity date.
If the General Partner is unsuccessful in renegotiating the promissory notes,
the Registrant could lose its ownership interest in the Project Partnerships.
Though the Registrant's investment in Project Partnerships is zero, the impact
on future operations could be significant as distributions from Project
Partnerships is the primary source of revenue to the Registrant.
PART II OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K - There were no reports filed on Form 8-K for
the quarter ended June 30, 1997.
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: August 13, 1997 By:/s/Robert L. Proost
Robert L. Proost
President and Treasurer
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