UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report March 12th, 1999
REII INCORPORATED
(Formerly Bap Acquisition Corp.)
___________________________________________________
Exact name of registrant as specified in its charter
Delaware 21-16563-B 51-0373976
_____________________ _______________ ______________________
(State or other jurisdiction (Commission (IRS Employee
of Incorporation) File number) Identification No.)
1051 Fifth Avenue North, Naples, FL 34102
___________________________________________________
( Address of Principal Executive office) (Zip Code)
(941) 261-3396
______________________________
(Registrant's Telephone Number
Including Area Code)
Item 1. N/A
Item 2. Acquisition of Assets
On December 18, 1998, REII (the "Company") acquired five (5) residential
rental properties from Garfield Ricketts, a 60% stockholder for
$544,000. The cost to acquire each property was based on the market
value established by an independent appraiser. The acquired properties
are included in the Company's balance sheet in revenue producing assets
as of December 31, 1998 and were recorded at cost. The acquisition was
financed with bank mortgages in the amount of $359,100 and mortgages to
Garfield Ricketts in the amount of $184,900. A description of the
properties and related financing arrangements follow.
Property Description & Financing Arrangement Cost
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1) 5247-49 24th Avenue SW, Naples, Florida -
Duplex with two rentals $115,000
Mortgage with Washington Mutual Bank in
the amount of $77,000, payable in monthly
payments of $440 including principal and interest
at the bank's index plus 2.50% (effective rate
of 5.55% at December 31,1998). Due January 2029.
Mortgage with Garfield Ricketts, a 60%
shareholder, in the amount of $38,000, payable in
monthly payments of $253 including principal and
interest at 7%. Balloon payment is due January 2004.
2) 1110 SE 9th Court, Cape Coral, Florida -
Duplex with two rentals 89,000
Mortgage with Washington Mutual Bank in
the amount of $54,600, payable in monthly
payments of $312 including principal and interest
at the bank's index plus 2.50% (effective rate
of 5.55% at December 31,1998). Due January 2029.
Mortgage with Garfield Ricketts, a 60%
shareholder, in the amount of $34,400, payable in
monthly payments of $229 including principal and
interest at 7%. Balloon payment is due January 2004.
3) 1009 SE 9th Avenue, Cape Coral, Florida -
Duplex with two rentals 89,000
Mortgage with Washington Mutual Bank in
the amount of $58,800, payable in monthly
payments of $336 including principal and interest
at the bank's index plus 2.50% (effective rate
of 5.55% at December 31,1998). Due January 2029.
Mortgage with Garfield Ricketts, a 60%
shareholder, in the amount of $30,200, payable in
monthly payments of $201 including principal and
interest at 7%. Balloon payment is due January 2004.
4) 205 SW 33rd Street, Cape Coral, Florida -
House with one rental 95,000
Mortgage with Washington Mutual Bank in
the amount of $63,700, payable in monthly
payments of $362 including principal and interest
at the bank's index plus 2.45% (effective rate
of 5.50% at December 31,1998). Due January 2029.
Mortgage with Garfield Ricketts, a 60%
shareholder, in the amount of $31,300, payable in
monthly payments of $208 including principal and
interest at 7%. Balloon payment is due January 2004.
Property Description & Financing Arrangement - continued Cost
-----------
5) 222 Willoughby Drive, Naples, Florida -
House with one rental 156,000
Mortgage with Washington Mutual Bank in
the amount of $105,000, payable in monthly
payments of $596 including principal and interest
at the bank's index plus 2.45% (effective rate
of 5.50% at December 31,1998). Due January 2029.
Mortgage with Garfield Ricketts, a 60%
shareholder, in the amount of $51,000, payable in
monthly payments of $339 including principal and
interest at 7%. Balloon payment is due January 2004.
__________
Total Cost of Property Acquisitions and Related
Financing $ 544,000
<TABLE>
<CAPTION>
The proforma effects of the Company's operations if REII had acquired
the five properties as of January 1,1996 are as follows:
<S>
1998 1997 1996
________ ________ ________
<C> <C> <C>
Rental Income $ 60,120 $ 59,820 $ 59,520
Comparable Expenses 48,985 49,237 49,645
________ ________ ________
Subtotal $ 11,135 $ 10,583 $ 9,875
Non-Comparable Expenses 33,522 37,034 34,939
________ ________ ________
Net Loss $ (22,387) $(26,451) $(25,064)
________ ________ ________
Non-comparable expenses include mortgage interest, depreciation,
corporate expenses, and income taxes. Comparable expenses include
advertising, repairs, maintenance, insurance, real estate taxes,
utilities, sales commissions, and other miscellaneous expenses.
Management believes that future estimated taxable operating results of
the properties will approximate the results as shown above.
The Company plans to acquire 20 additional residential rental
properties and one commercial office property from Garfield Ricketts,
majority stockholder, as soon as permanent financing can be arranged.
Purchase price upon acquisition will be the properties' market value,
based on independent appraisals. Each property will be subject to an
updated independent appraisal at the time of acquisition. Market value
of the 21 properties is currently approximately $2 million, based on
Multiple Listing Service's market analysis, which tracks sales prices of
comparable properties within the area. Financial data of the 21
properties consisted of the following for the years ended December 31,
1998, 1997, and 1996:
</TABLE>
<TABLE>
<CAPTION>
<S>
1998 1997 1996
________ ________ ________
<C> <C> <C>
Rental Income $ 217,826 $ 221,755 $ 218,363
Comparable Expenses 99,235 89,355 87,313
________ ________ ________
Subtotal $ 118,591 $ 132,400 $ 131,050
Non-Comparable Expenses 128,335 123,988 129,626
________ ________ ________
Net Income (Loss) $ (9,744) $ 8,412 $ 1,424
________ ________ ________
Non-comparable expenses include mortgage interest, depreciation,
corporate expenses, and income taxes. Comparable expenses include
advertising, repairs, maintenance, insurance, real estate taxes,
utilities, sales commissions, and other miscellaneous expenses.
Management believes that future estimated taxable operating results of
the properties will approximate the results as shown above. Results
could differ based on the financing structure used to acquire the
properties. The Corporation is not aware of any material factors
relating to the properties that could cause the above financial
information not to be indicative of future operating results. The
Corporation does not intend to pay cash distributions from any positive
cash flow that may be generated from the properties.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant is duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
REII INCORPORATED
(Formerly BAP Acquisition Corp.)
(Registrant)
Dated March 12th, 1999
BY /S/ Garfield Ricketts BY /s/ Una M. Ricketts
__________________________ _________________________
Garfield Ricketts-President Una. M. Ricketts-Secretary
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