10
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, 1997 Commission file number 2-90654
AMRECORP REALTY FUND II
(Exact name of registrant as specified in its charter)
TEXAS 75-1956009
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(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.
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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, 1997 and
December 31, 1996 Page 3
Consolidated Statements of Operations for the Three and Six
Months Ended September 30, 1997 and 1996 Page 4
Consolidated Statements of Cash Flows for the Nine months Ended
September 30, 1997and 1996 Page 5
Item 2. Results of Operations and Management's Discussion and
Analysis of Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 9
The statements, insofar as they relate to the period subsequent to
December 31, 1996 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
---------------------------------
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
September 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 (2,473,376) (2,350,376)
Real estate, net 2,653,992 2,776,992
Investments in Real Estate Held for sale 2,862,244
Cash including cash investments 466,675 362,135
Escrow deposits 180,318 166,070
Deferred Costs and Fees 50,746 86,057
Other assets 12,139 17,866
--------- ----------
Total assets $3,363,87 $6,271,364
=========== ============
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES:
Mortgage and notes payable $2,401,850 $5,054,073
Payable to Affiliates 446 6,854
Interest payable 0 35,827
Real estate taxes payable 52,200 0
Security deposits 17,648 40,002
Accounts payable and accrued expenses 44,809 103,019
------------ -----------
Total liabilities 2,516,953 5,239,775
PARTNERS CAPITAL (DEFICIT):
Limited Partners 936,785 1,134,154
General Partners (89,868) (102,565)
Total Partners Capital (Deficit) 846,917 1,031,589
--------- -----------
Total Liability and Partners Equity $3,363,870 $6,271,364
============ ===========
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 1997 1996 1997 1996
---- ---- ---- ----
Rental income $190,645 $402,441 $602,711 $1,220,431
Other property 4,117 19,368 27,240 36,532
-------- -------- -------- ----------
Total revenues 194,762 421,809 629,951 1,256,963
EXPENSES
Salaries & wages 14,071 41,260 65,279 121,753
Maintenance & repairs 9,185 55,438 60,142 163,082
Utilities 8,196 18,518 30,763 55,584
Real estate taxes 17,400 35,382 55,986 107,382
General administrative 12,860 20,324 40,064 62,474
Contract services 10,613 17,082 34,454 54,372
Insurance 5,237 7,637 19,055 25,447
Interest 56,058 131,474 211,551 428,316
Depreciation and 41,000 90,000 123,000 310,000
amortization
Property management fees 9,667 18,785 30,388 59,976
Amortization ofdeferred 1,711 3,452 5,712 11,105
and fees ------- ------- ------- -------
Total expenses 185,998 439,352 676,394 1,399,491
-------- --------- -------- ----------
NET INCOME BEFORE EXTRAORDINARY 8,764 (17,543) ($46,443) (142,528)
ITEM
Gain on Sale of Property 22,649 1,687,725 1,316,171 1,687,725
------- --------- --------- ---------
NET INCOME (LOSS) $31,413 $1,670,182 $1,269,728 $1,545,197
======= ========= ========== ==========
NET INCOME PER SHARE $ 2.16 $ 114.84 $ 87.30 $ 106.24
======= ======== ======== ========
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Nine Months Ended
September 30,
1997 1996
---- ----
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $1,269,728 $1,545,197
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 123,000 (1,000,847)
Gain on Sale of Asset (1,293,5522) 1,949,685
Net Effect of changes in operating Accounts
Escrow deposits (14,248) (39,852)
Deferred Costs 35,311 8,992
Accrued real estate taxes 52,200 82,800
Security deposits (22,354) (7,312)
Accounts payable (58,210) (38,314)
Other assets 5,727 4,794
--------- --------
Net cash used by operating activities 97,632 2,505,143
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Asset 4,155,766 0
--------- ---------
Net cash provided by operating activities 4,155,766 0
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (2,652,223) (1,505,704)
Distribution to Limited Partners (1,454,400) 0
Proceeds from amounts due affiliates (6,408) 5,352
Increase in accrued interest (35,827) (233,648)
--------- ---------
Net cash provided by investing activities (4,148,858) (1,734,000)
NET INCREASE (DECREASE) IN CASH AND CASH 104,540 771,143
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 362,135 254,189
-------- --------
CASH AND CASH EQUIVALENT, END OF PERIOD $466,675 $1,025,332
========= ==========
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
At September 30, 1997 the Partnership owned one property. The
Chimney Square Apartment community aggregate approximately 126,554
net rentable square feet. The Shorewood Apartments consisting of
124,194 net rentable square feet 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 96% as of September 30 1997
compared to 100% September 30, 1996.
FIRST NINE MONTHS 1997 COMPARED TO FIRST NINE MONTHS 1996
Revenue from property operations decreased $627,012 or 49.88%, for
the first nine months of 1997, as compared to the 1996 the first
nine months. The decrease in Rental income of $617,720 or 50.61% 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 Per Cent
(Decrease) Change
----------- -----------
Rental income $(617,720) 50.61%
Other property (9,292) 25.44%
------------ ------------
$(627,012) 49.88%
=========== ===========
Property operating expenses decreased $717,704 or 51.28%, for
the nine 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 Per Cent
(Decrease) Change
----------- -----------
Salaries & wages $(56,474) 46.38%
Maintenance & repairs (102,940) 63.12%
Utilities (24,821) 44.65%
Real estate taxes (51,396) 47.86%
General administrative (22,410) 35.87%
Contract services (19,918) 36.63%
Insurance (6,392) 25.12%
Interest (216,765) 50.61%
Depreciation and amortization (187,000) 60.32%
Property management fees (29,588) 49.33%
----------- ---------
Net Increase (Decrease) $(717,704) 51.28%
========== ==========
THIRD QUARTER 1997 COMPARED TO THIRD QUARTER 1996
Revenue from property operations decreased $227,047 or 53.83%, for
the second quarter of 1997, as compared to the 1996 second quarter.
The decrease in rental income of $211,796 or 52.63% 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 Per Cent
(Decrease) Change
----------- ----------
Rental income $(211,796) 52.63%
Other property (15,251) 78.74%
---------- ---------
$(227,047) 53.83%
============ ===========
Property operating expenses decreased $251,613 or 57.27%, 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 Per Cent
(Decrease) Change
----------- -------------
Salaries & wages $(27,189) 65.90%
Maintenance & repairs (46,253) 83.43%
Utilities (10,322) 55.74%
Real estate taxes (17,982) 50.82%
General administrative (7,464) 36.73%
Contract services (6,469) 37.87%
Insurance (2,400) 31.43%
Interest (75,416) 57.36%
Depreciation and amortization (49,000) 54.44%
Property management fees (9,118) 48.54%
---------- -----------
Net Increase (Decrease) $(251,613) 57.27%
=========== =============
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 September 30, 1997, the Partnership had $466,675 in cash and
cash equivalents as compared to $362,135 as of December 31 1996.
The net increase in cash of $104,540 is principally due to funds
from the sale of Lancaster shopping center and Shorewood Apartments.
The property, Chimney Square, is encumbered by non-recourse mortgage
as of September 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.
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 17, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30, 1997 BALANCE SHEET AND STATEMENT OF INCOME AND EXPENSES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<NAME> AMRECORP REALTY FUND II
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<PERIOD-TYPE> 9-MOS
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<PERIOD-END> SEP-30-1997
<CASH> 466,675
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<INVENTORY> 0
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<PP&E> 5,127,368
<DEPRECIATION> 2,473,376
<TOTAL-ASSETS> 3,363,870
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<BONDS> 2,401,850
0
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