<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1996 Commission file number 2-90654
AMRECORP REALTY FUND II
(Exact name of registrant as specified in its charter)
WISCONSIN 75-1956009
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
6210 Campbell Road Suite 140
Dallas, Texas 75248
(Address of principal executive offices)
Registrant's telephone number, including area code: (214) 380-8000.
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 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: Y No:
--------- ---------
REGISTRANT IS A LIMITED PARTNERSHIP
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TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of June 30, 1996 and
December 31, 1995.................................................3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 1996 and 1995...............................4
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1995............................................5
Notes to Consolidated Financial Statement.........................6
Item 2. Results of Operations and Management's Discussion and Analysis of
Financial Condition...............................................7
Liquidity and Capital Resources...................................8
Other Information.................................................9
Signatures........................................................10
The statements, insofar as they relate to the period subsequent to
December 31, 1995, are Unaudited.
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN REPUBLIC REALTY FUND II
Condensed Consolidated Balance Sheets
June 30 December 31
1996 1995
ASSETS
Real Estate assets, at cost
Land $ 1,858,048 $ 1,858,048
Buildings and improvements 10,347,641 10,347,641
------------ ------------
12,205,689 12,205,689
Less: Accumulated depreciation (5,454,192) (5,234,192)
------------ ------------
Real Estate, net 6,751,497 6,971,497
Cash including cash investments 328,497 254,189
Escrow deposits 138,949 143,417
Deferred Costs and fees 92,960 99,863
Other assets 23,977 30,015
------------ ------------
TOTAL ASSETS $ 7,335,880 $ 7,498,981
============ ============
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES
Mortgage and notes payable $ 6,534,493 $ 6,571,120
Payable to Affiliates 1,092 4,379
Interest Payable 197,333 233,648
Real estate taxes payable 72,000 0
Security deposits 42,116 43,778
Accounts payable & accrued expenses 96,528 128,753
------------ ------------
Total liabilities 6,943,562 6,981,678
------------ ------------
Partners Capital (Deficit)
Limited Partners 508,548 632,283
General Partner (116,230) (114,980)
------------ ------------
Total Partners Capital (Deficit) 392,318 517,303
------------ ------------
Total Liability And Partners Equity $ 7,335,880 $ 7,498,981
============ ===========
See notes to Condensed Consolidated Financial Statements
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AMERICAN REPUBLIC REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
------------------ ----------------
1996 1996 1996 1996
---- ---- ---- ----
REVENUES
Rental income $ 401,598 $ 392,629 $ 817,990 $ 786,509
Other property 10,838 15,881 17,164 26,599
--------- --------- --------- ---------
Total revenues 412,436 408,510 835,154 813,108
EXPENSES
Salaries & wages 42,767 37,661 80,493 80,533
Maintenance & repairs 66,303 70,350 107,647 147,710
Utilities 15,788 19,752 37,065 37,220
Real estate taxes 36,000 42,300 72,000 75,090
General administrative 22,714 31,314 42,150 50,485
Contract services 16,833 16,524 37,290 36,340
Insurance 8,788 9,076 17,810 17,790
Interest 148,241 161,743 296,842 311,393
Depreciation and
amortization 110,000 108,000 220,000 216,000
Amortization of deferred
costs and fees 3,702 1,741 7,653 3,482
Property management fees 19,310 21,073 41,189 41,917
--------- --------- --------- ---------
Total expenses 490,446 519,534 960,139 1,017,960
--------- --------- --------- ---------
NET INCOME (LOSS) ($78,010) ($111,024) ($124,985) ($204,852)
========= ========== ========== ==========
NET INCOME PER SHARE $ (5.36) $ (7.63) $ (8.59) $ (14.09)
See Notes to Condensed Consolidated Financial Statements
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AMERICAN REPUBLIC REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Six Months Ended
June 30
-------------------
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($124,985) ($204,852)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 220,000 216,000
Net Effect of changes in operating accounts
Escrow deposits 4,468 (178,353)
Deferred Costs and fees 6,903 (48,163)
Real estate taxes payable 72,000 75,090
Accounts payable & accrued expenses (32,225) 39,698
Security deposits (1,662) 3,015
Other assets 6,038 (10,962)
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Net cash used by operating activities 150,537 (108,527)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (36,627) 374,655
Repayment of payable to affiliate (3,287) 2,020
Repayment of interest payable (36,315) (1,380)
---------- ----------
Net cash provided by investing activities (76,229) 375,295
---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 74,308 266,768
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 254,189 480
--------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 328,497 $ 267,248
========= ==========
See Notes to Condensed Consolidated Financial Statements
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Basis of Presentation:
- ----------------------
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regula-
tions, although the Partnership believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Partnership's latest annual
report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION
Results of Operations
At June 30, 1996 the Partnership owned three properties. The two apartment
communities aggregate approximately 250,748 net rentable square feet. The
Shopping Center, Lancaster Place consists of approximately 53,860 net rentable
square feet. The portfolio had an average occupancy of 96.10% for the second
three months of 1996, as compared to 92.56% for the second three months of
1995.
SECOND QUARTER 1996 COMPARED TO SECOND QUARTER 1995
- ---------------------------------------------------
Revenue from property operations increased $ 7,838, or 1.94%, for the second
quarter of 1996, as compared to the same period in 1995. The following table
illustrates the components:
Increase
(Decrease)
----------------
Rental income 7,718
Other property 120
----------------
Net Increase (Decrease) 7,838
================
Property operating expenses decreased $ 9,941, or 1.99%, for the second
quarter of 1996, as compared to the same period in 1995, primarily due to
decreases in maintenance and repairs and contract services.
* Maintenance and repairs decreased by $ 11,056 or 14.29% primarily due
to Repairs made on Shorewood Apartments in the first quarter of 1995.
* General and administrative expenses increases of $ 3,613 or 18.92% due
to an increase in tax/audit expense.
* Contract services decreased by $ 2,983 or 15.05% due to a reduction in
cost of lawn care.
The following table illustrates the components by category:
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Increase
(Decrease)
----------------
Salaries & wages (104)
Maintenance & repairs (11,056)
Utilities (1,751)
Real estate taxes 3,210
General administrative 3,613
Contract services (2,983)
Insurance 73
Interest (1,409)
Depreciation and amortization 2,000
Property management fees (1,534)
----------------
Net Increase (Decrease) $ (9,941)
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Revenue from property operations increased $ 22.046 or 2.71%, for the first
Six months of 1996, as compared to the first Six months of 1995. The follow-
ing tables illustrates the components:
Increase
(Decrease)
----------------
Rental income 31,481
Other property (9,435)
================
22,046
Property operating expenses decreased $ 61,992, or 6.09%, for the first Six
months of 1996, as compared to the same period in 1995, primarily due to
decreases in maintenance and repairs and general adminstrative costs.
* Maintenance and repairs decreased by $ 40,063 or 27.12% primarily due
to Repairs made on Shorewood Apartments in the first quarter of 1995.
* General administrative expense decreased by $ 8,335, or 16.51% were
primarily due to legal and accounting costs associated with the
refinance of the mortgage note which came due January 1995.
The following table illustrates the components by category:
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Increase
(Decrease)
----------------
Salaries & wages (40)
Maintenance & repairs (40,063)
Utilities (155)
Real estate taxes (3,090)
General administrative (8,335)
Contract services 950
Insurance 20
Interest (14,551)
Depreciation and amortization 4,000
Property management fees (728)
----------------
Net Increase (Decrease) (61,992)
================
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
While it is the General Partners primary intention to operate and manage the
existing real estate investments, the General Partner also continually
evaluates this investment in light of current economic conditions and trends
to determine if these assets should be considered for disposal. At this time,
there is no plan to dispose of Chimney Square or Shorewood Apartments.
Lancaster Shopping Center is currently being marketed for sale.
As of June 30, 1996, the Partnership had $320,112 in cash and cash
equivalents as compared to $254,189 as of December 31, 1995. The net
increase in cash of $65,923 is principally due to funds provided from a
decrease in accrued real estate taxes and positive cash flow from operations
offset by decreases in escrow deposits and increases in accounts payable.
The properties are encumbered by non-recourse mortgages as of June 30, 1996,
with interest rates ranging from 7.75% to 11%. Required principal payments on
these mortgage notes for the five years ended December 31, 2000, are $66,398,
$75,828, $1,533,091, $86,639 and $97,471 respectively.
For the foreseeable future, the Partnership anticipates that mortgage
principal payments (excluding balloon mortgage payments), improvements and
capital expenditures will be funded by net cash from operations. The primary
source of capital to fund future Partnership acquisitions and balloon mortgage
payments will be proceeds from the sale, financing or refinancing of the
properties.
The Partnership has incurred losses from operations for the years ended
December 31, 1995 and 1994. There are no further commitments for limited
partner contributions or general partner funding of cash flow deficits.
Accordingly, the Partnership's ability to continue its present form is
uncertain. The refinancing of the Partnership's mortgage loans, described
below, plus an improvement in the markets where these properties are located
has benefited the Partnership's financial position. Management intends to
continue operating the partnership in its present form while investigating
options to improve operations of the Partnership.
8
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On February 7, 1995 the Partnership refinanced the loan on Chimney Square
Apartments. The original loan matured and a new $2,475,000 loan bearing
interest at 9.325% per year was secured from Newport Mortgage Company L.P. The
loan matures on March 1, 2005. In connection with this loan, the lender
required, and the Partnership provided, a new single asset partnership known
as Chimney Square Apartments, owned 99% by the Fund.
In May 2, 1994 the Partnership refinanced the loan on Shorewood Apartments. A
new $2,725,000 loan bearing interest at 7.75% per year replaced the original
loan bearing interest at 11.75%. The new loan with John Hancock Mutual Life
Insurance Company matures on June 1, 2001.
During 1991, the Partnership defaulted on its required mortgage note payments
on the Lancaster Place Shopping Center mortgage note. The Partnership entered
into an agreement with the note holder (Transamerica) to pay net operating
income until the note matured in 1993. In November 1993 the general partner
negotiated the purchase of the mortgage note from Transamerica Life Insurance
Company. The Partnership had no ability to purchase the note and the con-
sequence would have been the foreclosure of the property. The general partner
modified the note after his purchase of it to enable the partnership to retain
ownership of the Lancaster Place Shopping Center. Effective November, 1993
the modified note calls for monthly payments of interest only from available
cash flow from the property until maturity, June 30, 1998. During 1993, the
Partnership recorded an impairment amount of $150,607.
In February, 1991, Amrecorp Realty Inc., resigned as the Managing General
Partner of the Partnership. As was communicated to all limited partners, this
step was taken in order to minimize any effect that Amrecorp's financial
difficulties might have on the partnership. Management of the Partnership's
assets is performed by Univesco, Inc., a Texas corporation, Robert J. Werra,
President.
Management intends to continue operating the Partnership in its present form
while investigating options to improve operations of the Partnership and to
refinance and modify the existing indebtedness. However, there is no
assurance management will be successful in its efforts, in which case the
partnership's assets could be foreclosed upon and the Partnership would cease
to be a going concern.
9
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Other Information
Item 1. Legal Proceedings
See Part I Item 2. Management's Discussion and Analysis
of Financial Conditions and Results of Operations
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibit and Reports on Form 8-K
(A)The following documents are filed herewith or
incorporated herein by reference as indicated as
Exhibits:
Exhibit Designation Document Description
- ------------------- --------------------
Limited Partnership Agreement
incorporated by reference to
Registration Statement No.
2-90654 effective July 6, 1984.
Limited Partnership Agreement,
incorporated by reference to
Registration Statement
No.2-90654 effective July 6,1984.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
10
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SIGNATURES
Pursuant to the requirements 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.
AMERICAN REPUBLIC REALTY FUND I
a Wisconsin limited partnership
By: /s/ Robert J. Werra
-------------------
Robert J. Werra,
General Partner
Date: August 8, 1996
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10
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 30, 1006 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000745061
<NAME> AMRECORP REALTY FUND II
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 328,497
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,205,689
<DEPRECIATION> 5,454,192
<TOTAL-ASSETS> 7,335,880
<CURRENT-LIABILITIES> 96,528
<BONDS> 6,534,493
0
0
<COMMON> 0
<OTHER-SE> 392,318
<TOTAL-LIABILITY-AND-EQUITY> 7,335,880
<SALES> 0
<TOTAL-REVENUES> 817,990
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 663,297
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 296,842
<INCOME-PRETAX> 0
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<NET-INCOME> (124,985)
<EPS-PRIMARY> (8.59)
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