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 September 30, 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:
(972) 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
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of September 30, 1996 and
December 31, 1995 Page 3
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 1996 and 1995 Page 4
Consolidated Statements of Cash Flows for the Nine Months Ended
September 30, 1996 and 1995 Page 5
Notes to Consolidated Financial Statement 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.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
September 30, December 31,
1996 1995
(Unaudited)
ASSETS
Real Estate assets, at cost
Land $1,256,409 $1,858,048
Buildings and improvements 8,999,595 10,347,641
10,256,004 12,205,689
Less: Accumulated (4,233,345) (5,234,192)
depreciation
Real Estate, net 6,022,659 6,971,497
Cash including cash 1,025,332 254,189
investments
Escrow deposits 183,269 143,417
Deferred cost and fees 90,871 99,863
Other assets 25,221 30,015
TOTAL ASSETS $7,347,352 $7,498,981
LIABILITIES AND PARTNERS'EQUITY:
Note payable to affiliates
LIABILITIES
Mortgage and notes payable $5,065,416 $6,571,120
Amounts due affiliates 9,731 4,379
Interest payable 0 233,648
Real estate taxes payable 82,800 0
Security deposits 36,466 43,778
Accounts payable & accrued expenses 90,439 128,753
Total liabilities 5,284,852 6,981,678
Partners Capital (Deficit)
Limited Partners 2,162,028 632,283
General Partner (99,528) (114,980)
Total Partners Capital 2,062,500 517,303
(Deficit)
Total Liability And
Partners Equity $7,347,352 $7,498,981
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 1996 1995 1996 1995
Rental income $402,441 $391,829 $1,220,431 $1,178,338
Gain on sale of property $1,687,725 $0 $1,687,725 $0
Other income 19,368 6,767 36,532 33,366
Total revenues 2,109,534 398,596 2,944,688 1,211,704
EXPENSES
Salaries & wages 41,260 40,824 121,753 121,357
Maintenance & repairs 55,438 168,704 163,082 316,414
Utilities 18,518 18,590 55,584 55,810
Real estate taxes 35,382 32,790 107,382 107,880
General administrative 20,324 22,572 62,474 76,539
Contract services 17,082 19,739 54,372 56,079
Insurance 7,637 9,022 25,447 26,812
Interest 131,474 150,197 428,316 461,590
Amortization of deferred
costs and fees 3,452 0 11,105 0
Depreciation and
amortization 90,000 108,000 310,000 324,000
Property management fees 18,785 20,410 59,976 62,327
Total expenses 439,352 590,848 1,399,491 1,608,808
NET INCOME (LOSS) $1,670,182 ($192,252) $1,545,197 ($397,104)
NET INCOME PER SHARE $114.84 $(13.22) $106.24 $(27.30)
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Nine Months Ended
September 30,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) 1545197 -397104
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization -1000847 324000
Net Effect of changes in operating accounts
Escrow deposits -39852 -218114
Deferred cost and fees 8992 -45358
Other assets 4794 75
Accrued real estate taxes 82800 107880
Security deposits -7312 3814
Net cash used by operating activities 593772 -224807
CASH FLOWS FROM INVESTING ACTIVITIES
Disposition of property 1949685 0
Change in mortgage notes payable -1505704 358339
Increase in note payable - affiliates 5352 1199
Change in amounts due affiliate -233648 11918
Change in interest payable -38314 62490
Net cash provided by investing activities 177371 433946
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 771143 209139
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 254189 480
CASH AND CASH EQUIVALENTS, END OF PERIOD 1025332 209619
See Notes to Condensed Consolidated Financial Statements
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
THIRD QUARTER 1996 COMPARED TO THIRD QUARTER 1995
Revenue from property operations increased $1,710,398 or 429.4%, for
the third quarter of 1996, as compared to the 1995 third quarter. The
increase is primarily due to the gain on sale of Lancaster. The
following table illustrates the components,
Three Month
Comparison
Increase
(Decrease)
Rental income 10,612
Gain on sale of property 1,687,725
Other income 12,601
Net Increase (Decrease) 1,710,938
property operating expenses decreased $151,496 or 25.46%, for the third
quarter of 1996, as compared to the same period in 1995, primarily due
to a decrease in maintenance and repairs, which was a result of repairs
made on the Shorewood Apartments in the first quarter of 1995. The
following table illustrates the components by category,
Increase
(Decrease)
Salaries & wages 436
Maintenance & repairs (113,266)
Utilities (72)
Real estate taxes 2,592
General administrative (2,248)
Contract services (2,657)
Insurance (1,385)
Interest (18,723)
Amortization of deferred 3,452
costs and fees
Depreciation and (18,000)
amortization
Property management fees (1,625)
Net Increase (Decrease) (151,496)
NINE MONTHS ENDED SEPTEMBER 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 1995
Revenue from property operations increased $1,732,984 or 143.02% for
the first nine months of 1996, as compared to the first nine months of
1995. The increase was primarily due to the gain on the sale of
Lancaster . The following tables illustrates the components, :
Increase
(Decrease)
Rental income 42,093
Gain on sale of property 1,687,725
Other income 3,166
Net Increase (Decrease) 1,732,984
Property operating expenses decreased $209,317 or 13.01%, for the first
nine months of 1996, as compared to the same period in 1995, primarily
due to a decrease in maintenance and repairs, which was a result of
repairs made on the Shorewood Apartments in the first quarter of 1995.
The follows table illustrates the components by category,
Increase
(Decrease)
Salaries & wages 396
Maintenance & repairs (153,332)
Utilities (226)
Real estate taxes (498)
General administrative (14,065)
Contract services (1,707)
Insurance (1,365)
Interest (33,274)
Amortization of deferred costs and fees 11,105
Depreciation and amortization (14,000)
Property management fees (2,351)
Net Increase (Decrease) (209,317)
LIQUIDITY AND CAPITAL RESOURCES
The Partnership has incurred losses from operations for the years
ended December 31, 1995 and 1993. 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, 1996 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, 1995 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.
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.
In August 1996 the Fund sold Lancaster Place Shopping Center, a
fee simple interest in a neighborhood shopping center, located in
Lancaster, Texas. Lancaster was purchased in 1984 and contained
53,860 square feet on approximately 7.89 acres of land with paved
surface parking for 372 cars. The sales price was $1,000,000 Each
limited partner received a distribution of $50 (fifty dollars) per
$1,000 unit.
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
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 October 31, 1996
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THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30, 1996 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<NAME> AMRECORP REALTY FUND II
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