<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, 1997 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 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
<PAGE>
TABLE OF CONTENTS
Item 1. Financial Statements
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The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of June 30, 1997 and
December 31,1996 Page 3
Consolidated Statements of Operations for the Three and Six
Months Ended June 30, 1997 and 1996 Page 4
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 1997 and 1996 Page 5
Item 2.Results of Operations and Management's Discussion
and Analysis of Financial Condition Page 6-7
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, 1996 are Unaudited.
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PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
June 30, December 31,
1997 1996
---- ----
(Unaudited)
ASSETS
Real Estate assets, at cost $580,045 $580,045
Land 4,547,323 4,547,323
----------- ------------
Buildings and improvements 5,127,368 5,127,368
Less: Accumulated depreciation (2,432,376) (2,350,376)
----------- -----------
Real estate, net 2,694,992 2,776,992
Investments in Real Estate
Held for Sale 2,862,244
Cash including cash investments 393,438 362,135
Escrow deposits 151,393 166,070
Deferred Costs and Fees 52,457 86,057
Other assets 14,566 17,866
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Total assets $3,306,846 $6,271,364
========== ==========
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES:
Mortgage and notes payable $2,409,762 $5,054,073
Payable to Affiliates 0 6,854
Interest payable 0 35,827
Real estate taxes payable 34,800 0
Security deposits 16,652 40,002
Accounts payable and accrued expenses 30,128 103,019
----------- -----------
Total liabilities 2,491,342 5,239,775
--------- -----------
PARTNERS CAPITAL (DEFICIT):
Limited Partners 905,686 1,134,154
General Partners (90,182) (102,565)
-------- -----------
Total Partners Capital Deficit) 815,504 1,031,589
-------- ----------
Total Liability and Partners Equity $3,306,846 $6,271,364
=========== ============
See notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
REVENUES
Rental income $180,125 $401,598 $412,066 $817,990
Other property 15,990 10,838 23,123 17,164
--------- --------- --------- ---------
Total revenues 196,115 412,436 435,189 835,154
EXPENSES
Salaries & wages 21,355 42,767 51,208 80,493
Maintenance & repairs 16,608 66,303 50,957 107,647
Utilities 7,166 15,788 22,567 37,065
Real estate taxes 17,400 36,000 38,586 72,000
General administrative 9,797 22,714 27,204 42,150
Contract services 11,034 16,833 23,841 37,290
Insurance 8,649 8,788 13,818 17,810
Interest 56,240 148,24 155,493 296,842
Depreciation and amortization 35,000 110,00 82,000 220,000
Property management fees 9,089 19,310 20,721 41,189
Amortization of deferred costs 1,710 3,702 4,001 7,653
and fees ------ ------- ------- -------
Total expenses 194,048 490,446 490,396 960,139
------- ------- --------- ---------
NET INCOME BEFORE EXTRA
ORDINARY ITEM $2,067 (78,010) ($55,207) (124,985)
GAIN ON SALE OF 0 0 1,293,522 0
PROPERTY -------- -------- ---------- ---------
NET INCOME (LOSS) $2,067 ($78,010) $1,238,315 ($124,985)
======== ========= ========== ==========
NET INCOME PER SHARE
$0.14 $(5.36) $85.14 $(8.59)
===== ======= ====== =======
See Notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Six Months Ended
June 30,
1997 1996
----------------------------------
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $1,238,315 ($124,985)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 82,000 220,000
Gain on Sale of Asset (1,293,522) 0
Net Effect of changes in operating accounts
Escrow deposits 14,677 4,468
Deferred Costs 33,600 6,903
Accrued real estate taxes 34,800 72,000
Security deposits (23,350) (1,662)
Accounts payable (72,891) (32,225)
Other assets 3,300 6,038
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Net cash used by operating activities 16,929 150,537
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Asset 4,155,766 0
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Net cash used by operating activities 4,155,766 0
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (2,644,311) (36,627)
Distribution to Limited Partners (1,454,400) 0
Proceeds from amounts due affiliates (6,854) (3,287)
Increase in accrued interest (35,827) (36,315)
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Net cash provided by investing activities (4,141,392) (76,229)
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NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 31,303 74,308
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 362,135 254,189
--------- ---------
CASH AND CASH EQUIVALENT, END OF PERIOD $393,438 $328,497
========= =========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
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 June 30, 1997 the Partnership owned one property. The Chimney Square
Apartment community aggregate approximately 126,554 net rentable square
feet. he Shorewood Apartments consisting of 124,194 net rentable square
feet and located in Mecklenburg County, North Carolina was sold in
January, 1997. The Shopping Center, Lancaster Place consists of
approximately 53,860 net rentable square feet. was sold in 1996. The
occupancy of Chimney square was 89% as of June 30 1997 compared to 93%
June 30, 1996.
FIRST SIX MONTHS 1997 COMPARED TO FIRST SIX MONTHS 1996
Revenue from property operations decreased $399,965 or 47.89%, for the
first six months of 1997, as compared to the 1996 the first six months.
The decrease in Rental income of $405,924 or 49.62% is primarily due the
sale of the shopping center located in Lancaster Texas and Shorewood
Apartments, an apartment complex located in Charlotte, North Carolina.
The following table illustrates the components:
Increase
(Decrease)
----------------------
Rental Income $(405,924) 49.62%
Other Income 5,959 34.72%
--------- --------
$(399,965) 47.89%
========== ========
Property operating expenses decreased $468,091 or 48.54%, for the six
months of 1997, as compared to the same period in 1996, primarily due to
the sale of the shopping center located in Lancaster Texas and Shorewood
Apartments, an apartment complex located in Charlotte, North Carolina.
The following table illustrates the components by category:
Increase
(Decrease)
------------------------
Salaries & wages $(29,285) 36.38%
Maintenance & repairs (56,690) 52.66%
Utilities (14,498) 39.12%
Real estate taxes (33,414) 46.41%
General administrative (14,946) 35.46%
Contract services (13,449) 36.07%
Insurance (3,992) 22.41%
Interest (141,349) 47.62%
Depreciation and amortization (138,000) 62.73%
Property management fees (20,468) 49.69%
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Net Increase (Decrease) $(466,091) 48.54%
========== ======
<PAGE>
SECOND QUARTER 1997 COMPARED TO SECOND QUARTER 1996
- ----------------------------------------------------
Revenue from property operations decreased $216,321 or 52.45%, for the
second quarter of 1997, as compared to the 1996 second quarter. The
decrease in rental income of $221,473 or 55.15% is primarily due the sale
of the shopping center located in Lancaster Texas and Shorewood
Apartments, an apartment complex located in Charlotte, North Carolina.
The following table illustrates the components:
Increase Percent
(Decrease) Change
------------- ------------
Rental income $(221,473) 55.15%
Other property 5,152 47.54%
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$(216,321) 52.45%
============ =============
Property operating expenses decreased $294,406 or 60.03%, for the second
quarter of 1997, as compared to the same period in 1996, primarily due to
the sale of the shopping center located in Lancaster Texas and Shorewood
Apartments, an apartment complex located in Charlotte, North Carolina.
The following table illustrates the components by category:
Increase Percent
(Decrease) Change
-------------- ------------
Salaries & wages $(21,412) 50.07%
Maintenance & repairs (49,695) 74.95%
Utilities (8,622) 54.61%
Real estate taxes (18,600) 51.67%
General administrative (12,917) 56.87%
Contract services (5,799) 34.45%
Insurance (139) 1.58%
Interest (92,001) 62.06%
Depreciation and (75,000) 68.18%
amortization
Property management fees (10,221) 52.93%
------------ -------------
Net Increase (Decrease) (294,406) 60.03%
============= ==============
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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. Accordingly, in 1996 the Partnership sold its investment
in the shopping center located in Lancaster Texas, recognizing a loss of
$10,177. Shorewood Apartments, an apartment complex located in
Charlotte, North Carolina was sold in January 1997. Net proceeds from
the sale was 1.3 million dollars. The Partnership plans to actively
market Chimney Square Apartments in 1997.
As of June 30, 1997, the Partnership had $393438 in cash and cash
equivalents as compared to $362,135 as of December 31 1996. The net
increase in cash of $31,303 is principally due to funds from the sale of
Lancaster shopping center and Shorewood Apartments.
The property is encumbered by non-recourse mortgage as of June 30, 1997,
with an interest rate of 9.325%.
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.
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.
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.
<PAGE>
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
<PAGE>
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:August 11,1997
---------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 30, 1997 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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 393,438
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,127,368
<DEPRECIATION> 2,482,376
<TOTAL-ASSETS> 3,306,846
<CURRENT-LIABILITIES> 0
<BONDS> 2,409,762
0
0
<COMMON> 0
<OTHER-SE> 815,504
<TOTAL-LIABILITY-AND-EQUITY> 3,306,846
<SALES> 0
<TOTAL-REVENUES> 412,066
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 334,903
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 155,493
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 1,293,522
<CHANGES> 0
<NET-INCOME> 1,238,315
<EPS-PRIMARY> 85.14
<EPS-DILUTED> 0
</TABLE>
