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 March 31, 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)
March 31, December 31,
ASSETS 1997 1996
Cash $ 417,397 $ 366,271
Advances to Project Partnerships 54,958 62,158
Intangible assets,
net of accumulated amortization 19,941 21,473
Total Assets $ 492,296 $ 449,902
LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
Accounts payable $ 17,500 $ 14,000
Payable to affiliates 1,173,458 1,144,783
Capital contributions payable 50,000 50,000
Total Liabilities 1,240,958 1,208,783
Partners' Capital (Deficit) (748,662) (758,881)
Total Liabilities and
Partners' Capital (Deficit) $ 492,296 $ 449,902
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
1997 1996
Revenue:
Interest income $ 4,014 $ 4,305
Distributions 39,913 2,700
43,927 7,005
Expenses:
Asset management fee 28,645 28,644
Professional fees 3,500 3,500
Amortization 1,532 1,532
Operating expenses 31 72
33,708 33,748
Net income (loss) $10,219 $(26,743)
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
Special
Total General Limited Limited
<S> <C> <C> <C> <C>
Balances at January 1, 1996 $(645,548) $(15,692) $(28,277) $(601,579)
Net loss for three months
ended March 31, 1996 (26,743) (294) (508) (25,941)
Balances at March 31, 1996 $(672,291) $(15,986) $(28,785) $(627,520)
Balances at January 1, 1997 $(758,881) $(16,939) $(30,430) $(711,512)
Net income for three months
ended March 31, 1997 10,219 112 194 9,913
Balances at March 31, 1997 $(748,662) $(16,827) $(30,236) $(701,599)
Number of ownership units 11,814 131 225 11,458
</TABLE>
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended March 31,
1997 1996
Cash Flows From Operating Activities:
Net income (loss) $ 10,219 $ (26,743)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Distributions from
Project Partnerships (39,913) (2,700)
Amortization 1,532 1,532
Change in assets and liabilities:
Decrease in advances to Project Partnerships 7,200 17,117
Increase in accounts payable 3,500 3,500
Increase in payable to affiliates 28,675 28,718
Net Cash Provided By Operating Activities 11,213 21,424
Cash Flows From Investing Activities:
Distributions from Project Partnerships 39,913 2,700
Increase In Cash 51,126 24,124
Cash Beginning of Period 366,271 371,220
Cash End of Period $417,397 $ 395,344
See notes to financial statements.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 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 three months ended March 31, 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 THREE MONTHS ENDED MARCH 31, 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 three months
ended March 31, 1997 and March 31, 1996 that altered the Project Partnerships'
ability to pay distributions to the Registrant.
The increase in Distribution income for the three months ended March 31, 1997,
compared to the three months ended March 31, 1996, is primarily due to a
distribution received from two Project Partnerships that did not pay a
distribution in the previous year and to a third Project Partnership that paid
its distribution earlier than 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 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.
GULLEDGE REALTY INVESTORS II, L.P.
(A LIMITED PARTNERSHIP)
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
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 March 31, 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: May 13, 1997 By:/s/Robert L. Proost
Robert L. Proost
President and Treasurer
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 417,397
<SECURITIES> 0
<RECEIVABLES> 54,958
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 472,355
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 492,296
<CURRENT-LIABILITIES> 1,240,958
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (748,662)
<TOTAL-LIABILITY-AND-EQUITY> 492,296
<SALES> 0
<TOTAL-REVENUES> 43,927
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 33,708
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,219
<INCOME-TAX> 0
<INCOME-CONTINUING> 10,219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,219
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
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