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
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For Quarter Ended March 31, 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 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
<PAGE>
TABLE OF CONTENTS
Item 1. Financial Statements
- ------
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of March 31, 1997 and
December 31, 1996 Page 3
Consolidated Statements of Operations for the Three
Months Ended March 31, 1997and 1996 Page 4
Consolidated Statements of Cash Flows for the Three Months
Ended March 31, 1997and 1996 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, 1996 are Unaudited.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------------------
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
March 31, 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 (2,397,376) (2,350,376)
Real estate, net 2,729,992 2,776,992
Investments in Real Estate Held for Sale 2,862,244
Cash including cash investments 1,837,547 362,135
Escrow deposits 136,851 166,070
Deferred Costs and Fees 54,168 86,057
Other assets 11,756 17,866
Accounts Receivable ---------- ----------
Total assets $4,770,314 $6,271,364
========== ===========
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES:
Mortgage and notes payable $2,417,493 $5,054,073
Payable to Affiliates 8,326 6,854
Interest payable 0 35,827
Real estate taxes payable 17,400 0
Security deposits 16,552 40,002
Accounts payable and accrued expenses 42,706 103,019
---------- ----------
Total liabilities 2,502,477 5,239,775
PARTNERS CAPITAL (DEFICIT): --------- ---------
Limited Partners 2,358,040 1,134,154
General Partners (90,203) (102,565)
--------- ---------
Total Partners Capital (Deficit) 2,267,837 1,031,589
--------- ----------
Total Liability and Partners Equity $4,770,314 $6,271,364
========== ===========
See notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
------------------
REVENUES 1997 1996
---- ----
Rental income $231,941 $416,393
Other property 7,133 6,325
-------- --------
Total revenues 239,074 422,718
EXPENSES
Salaries & wages 29,853 37,726
Maintenance & repairs 34,349 41,341
Utilities 15,401 22,103
Real estate taxes 21,186 36,000
General administrative 17,407 19,439
Contract services 12,807 20,457
Insurance 5,169 9,022
Interest 99,253 148,600
Depreciation and amortization 47,000 110,000
Property management fees 11,632 21,053
Amortization of deferred costs and fees 2,291 3,952
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Total expenses 296,348 469,693
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NET INCOME BEFORE EXTRAORDINARY ITEM ($57,274) (46,975)
GAIN ON SALE OF PROPERTY 1,293,522 0
----------- --------
NET INCOME (LOSS) $1,236,248 ($46,975)
========== =========
NET INCOME PER SHARE $ 85.00 $ (3.23)
========== ==========
See Notes to Condensed Consolidated Financial Statements
<PAGE>
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Three Months Ended
Three Months Ended
March 31,
------------------
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $1,236,248 ($46,975)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 47,000 110,000
Gain on Sale of Asset (1,293,522) 0
Net Effect of changes in operating accounts
Escrow deposits 29,219 (45,588)
Deferred Costs 31,889 3,452
Accrued real estate taxes 17,400 97,695
Security deposits (23,450) 1,526
Accounts payable (60,313) (34,770)
Other assets 6,110 7,443
Accounts Receivable 0 0
----------- ---------
Net cash used by operating activities (9,419) 92,783
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Asset 4,155,766 0
---------- ---------
Net cash used by operating activities 4,155,766 0
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (2,636,580) (19,255)
Proceeds from refinancing
Proceeds from amounts due affiliates 1,472 2,115
Increase in accrued interest (35,827) (9,720)
----------- --------
Net cash provided by investing activities (2,670,935) (26,860)
----------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,475,412 65,923
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 362,135 254,189
----------- --------
CASH AND CASH EQUIVALENT, END OF PERIOD $1,837,547 $320,112
========== ========
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 March 31, 1997 the Partnership owned one property. The Shorewood
Apartments consisting of 124,194 net rentable square feet and
located in Mecklenburg County, North Carolina was sold in January,
1997. The Chimney Square Apartment community aggregate
approximately 126,554 net rentable square feet. The Shopping Center,
Lancaster Place consists of approximately 53,860 net rentable square
feet. was sold in 1996.
FIRST QUARTER 1997 COMPARED TO FIRST QUARTER 1996
- -------------------------------------------------
Revenue from property operations decreased $183,644 or 43.44%, for
the first quarter of 1997, as compared to the 1996 first quarter.
The decrease in other income of $184,644 or 44.30% 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 (184,452)
Other property 808
---------
Net Increase (Decrease) (183,644)
=========
Property operating expenses decreased $171,684 or 36.55%, for the first
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
(Decrease)
----------
Salaries & wages (7,873)
Maintenance & repairs (6,992)
Utilities (6,702)
Real estate taxes (14,814)
General administrative (2,032)
Contract services (7,650)
Insurance (3,853)
Interest (49,347)
Depreciation and amortization (63,000)
Property management fees (9,421)
--------
Net Increase (Decrease) (171,684)
========
<PAGE>
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 March 31, 1997, the Partnership had $1,837,547 in cash and cash
equivalents as compared to $362,135 as of December 31, 1996. The net
increase in cash of $1,475,412 is principally due to funds from the sale
of Lancaster shopping center and Shorewood Apartments.
The properties are encumbered by non-recourse mortgages as of March 31, 1997,
with interest rates ranging from 7.75% to 11%. Required principal payments
on these mortgage notes for the five years ended December 31, 2001, are
$75,828, $82,422, $86,639 and $2,464,463 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.
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.
<PAGE>
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>
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
<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: May 20, 1997
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,837,547
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 5,127,368
<DEPRECIATION> 2,397,376
<TOTAL-ASSETS> 4,770,314
<CURRENT-LIABILITIES> 0
<BONDS> 2,417,493
0
0
<COMMON> 0
<OTHER-SE> 2,267,837
<TOTAL-LIABILITY-AND-EQUITY> 4,770,314
<SALES> 0
<TOTAL-REVENUES> 231,941
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 197,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 99,253
<INCOME-PRETAX> 0
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<INCOME-CONTINUING> 0
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<EXTRAORDINARY> 1,293,522
<CHANGES> 0
<NET-INCOME> 1,236,248
<EPS-PRIMARY> 85.00
<EPS-DILUTED> 0
</TABLE>
