3
<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 March 31, 1996 Commission file number 2-90654
AMRECORP REALTY FUND II
(Exact name of registrant as specified in its charter)
TEXAS 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 March 31, 1996 and
December 31, 1995 Page 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1996 and 1995 Page 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1996 and 1995 Page 5
Notes to Consolidated Financial Statements Page 6
Item 2. Results of Operations and Management's Discussion
and Analysis of Financial Condition Page 7
Liquidity and Capital Resources Page 8
Other Information Page 9
Signatures Page 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
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
(Unaudited)
ASSETS
Real Estate assets, at cost $1,858,048 $1,858,048
Land 10,347,641 10,347,641
Buildings and improvements 12,205,689 12,205,689
Less: Accumulated depreciation (5,344,192) (5,234,192)
Real estate, net 6,861,497 6,971,497
Cash including cash investments 320,112 254,189
Escrow deposits 189,005 143,417
Deferred Costs and Fees 96,411 99,863
Other assets 22,572 30,015
Accounts Receivable
Total assets $7,489,597 $7,498,981
LIABILITIES AND PARTNERS'
EQUITY:
LIABILITIES:
Mortgage and notes payable $6,551,865 $6,571,120
Payable to Affiliates 6,494 4,379
Interest payable 223,928 233,648
Real estate taxes payable 97,695 0
Security deposits 45,304 43,778
Accounts payable and accrued 93,983 128,753
expenses
Total liabilities 7,019,269 6,981,678
PARTNERS CAPITAL (DEFICIT):
Limited Partners 585,778 632,283
General Partners (115,450) (114,980)
Total Partners Capital (Deficit) 470,328 517,303
Total $7,489,597 $7,498,981
Liability and Partners Equity
See notes to Condensed Consolidated Financial Statements
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AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
See Notes to Condensed Consolidated Financial Statements
Three Months Ended
March 31,
REVENUES 1996 1995
Rental income $416,393 $392,629
Other property 6,325 15,881
Total revenues 422,718 408,510
EXPENSES
Salaries & wages 37,726 37,661
Maintenance & repairs 41,341 70,350
Utilities 22,103 19,752
Real estate taxes 36,000 42,300
General administrative 19,439 31,314
Contract services 20,457 16,524
Insurance 9,022 9,076
Interest 148,600 161,743
Depreciation and 110,000 108,000
amortization
Property management fees 21,053 21,073
Amortization of deferred 3,952 1,741
costs and fees
Total expenses 469,693 519,534
NET INCOME (LOSS) ($46,975) ($111,024)
NET INCOME PER SHARE $ (3.23) $ (7.63)
See Notes to Condensed Financial Statements
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AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Three Months Ended
March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $46,975) ($111,024)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 110,000 108,000
Net Effect of changes in operating accounts
Escrow deposits (45,588) (153,629)
Deferred Costs 3,452 (72,608)
Accrued real estate taxes 97,695 42,300
Security deposits 1,526 2,265
Accounts payable (34,770) 2,043
Other assets 7,443 22,968
Accounts Receivable 0 0
Net cash used by operating activities 92,783 (159,685)
CASH FLOWS FROM INVESTING ACTIVITIES
Repayment of mortgage notes payable (19,255) 409,852
Proceeds from refinancing
Proceeds from amounts due affiliates 2,115 3,360
Increase in accrued interest (9,720) (33,894)
Net cash provided by investing activities (26,860) 379,318
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 65,923 219,633
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 254,189 480
CASH AND CASH EQUIVALENT, END OF PERIOD $320,112 $220,113
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 regulations, 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 March 31, 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 first three months of 1996, as compared to 92.56% for the first three
months of 1995.
FIRST QUARTER 1996 COMPARED TO FIRST QUARTER 1995
Revenue from property operations increased $14,208 or 3.48%, for the first
quarter of 1996, as compared to the 1995 first quarter. The decrease in
other income of $9,556 or 60.17% is primarily due to a reduction in late and
returned check charges from the prior year. The following table illustrates
the components:
The following table illustrates the components,
Increase
(Decrease)
Rental income 23,764
Other property (9,556)
14,208
Property operating expenses decreased $52,052 or 10.02%, for the first
quarter of 1996, as compared to the same period in 1995, primarily due to
decreases in maintenance & repairs, real estate taxes and general
administrative expenses..
Maintenance and repairs decreased by $29,009 or 41.24% primarily due to
repairs made on the Shorewood Apartments in the first quarter of 1995.
Utility expenses rose primarily as a result of increased occupancy in
connection with rate increases.
Real estate taxes decreased by $6,300 or 14.89% as a result of
successful tax appeals.
General and administrative expenses decreases of $11,875 or 37.92%
were primarily due to legal and accounting costs associated with the
refinancing of the mortgage note which came due in January of 1995.
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Contract services expense increased by $3,933 or 23.80% due primarily to
increased cost of landscaping and sanitation removal services.
The following table illustrates the components by category,
Increase
(Decrease)
Salaries & wages 65
Maintenance & repairs (29,009)
Utilities 2,351
Real estate taxes (6,300)
General administrative (11,875)
Contract services 3,933
Insurance (54)
Interest (13,143)
Depreciation and amortization 2,000
Property management fees (20)
Net Increase (Decrease) (52,052)
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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 Squares or Shorewood
Apartments. Lancaster Shopping Center is currently being marketed for sale.
As of March 31, 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
decreased 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 March 31,
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.
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 September 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 consequence 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, September 30, 1998. During 1993, the Partnership recorded an
impairment amount of $150,607.
On 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 the Partnership would cease to
be a going concern.
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Part II
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 Matter to a Vote of Security Holders.
None
Item 5. Other Information
None
Item 6. Exhibits 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
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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.
AMRECORP REALTY FUND II
a Texas limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: April 9, 1996
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRATED FROM BOTH
THE MARCH 31, 1996 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 320,112
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,205,689
<DEPRECIATION> 5,344,192
<TOTAL-ASSETS> 7,489,597
<CURRENT-LIABILITIES> 93,983
<BONDS> 6,551,865
0
0
<COMMON> 0
<OTHER-SE> 470,328
<TOTAL-LIABILITY-AND-EQUITY> 7,489,597
<SALES> 0
<TOTAL-REVENUES> 416,393
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 321,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 148,600
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,975)
<EPS-PRIMARY> (3.23)
<EPS-DILUTED> 0
</TABLE>
