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, 1998 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, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Three and Nine
months ended September 30, 1998 and 1997 Page 4
Consolidated Statements of Cash Flows for the Nine months Ended
September 30, 1998 and 1997 Page 5
Item 2. Results of Operations and Management's Discussion and
Analysis of Financial Condition Page 6
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, 1997 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
September 30,1998 December 31,1997
(Unaudited)
ASSETS
Real Estate assets, at cost $580,045 $580,045
Land 4,560,894 4,560,894
Buildings and improvements 5,140,939 5,140,939
Less: Accumulated depreciation (2,683,125) (2,539,125)
Real estate, net 2,457,814 2,601,814
Investments in Real Estate Held for Sale
Cash including cash investments 184,248 593,721
Escrow deposits 173,943 154,681
Deferred Costs and Fees 43,904 49,036
Other assets 8,987 8,796
Total assets $2,868,896 3,408,048
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES:
Mortgage and notes payable $2,368,627 $2,396,692
Payable to Affiliates 2,571 8,774
Interest payable 0 18,624
Real estate taxes payable 60,711 0
Security deposits 17,640 16,800
Accounts payable and accrued expenses 82,887 124,025
Total liabilities 2,532,436 2,564,915
PARTNERS CAPITAL (DEFICIT):
Limited Partners 426,342 933,039
General Partners (89,882) (89,906)
Total Partners Capital (Deficit) 336,460 843,133
Total Liability and Partners Equity $2,868,896 $3,408,048
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,
1998 1997 1998 1997
Rental income $199,578 $190,645 $572,041 $602,711
Other property 7,389 4,117 33,516 27,240
Total revenues 206,967 194,762 605,557 629,951
Salaries & wages 13,714 14,071 41,600 65,279
Maintenance & repairs 10,907 9,185 49,637 60,142
Utilities 8,579 8,196 23,822 30,763
Real estate taxes 20,250 17,400 60,750 55,986
General administrative 12,725 12,860 38,378 40,064
Contract services 10,859 10,613 31,898 34,454
Insurance 3,602 5,237 12,429 19,055
Interest 55,378 56,058 166,548 211,551
Depreciation and amortization 48,000 41,000 144,000 123,000
Property management fees 10,142 9,667 28,996 30,388
Amortization of deferred 1,711 1,711 5,132 5,712
costs and fees
Total expenses 195,867 185,998 603,190 676,394
$11,100 $8,764 $2,367 (46,443)
GAIN ON SALE OF PROPERTY 0 22,649 0 1,316,171
Net Income (Loss) $11,100 $31,413 $2,367 $1,269,728
Net Income per Share $ 0.76 $ 2.16 $0.16 $ 87.30
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Nine Months Ended
September 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $2,367 $1,269,728
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 144,000 123,000
Gain on Sale of Asset 0 (1,293,522)
Net Effect of changes in operating accounts
Escrow deposits (19,262) (14,248)
Deferred Costs 5,132 35,311
Accrued real estate taxes 60,711 52,200
Security deposits 840 (22,354)
Accounts payable (41,138) (58,210)
Other assets (191) 5,727
Net cash used by operating activities 152,459 97,632
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Asset 4,155,766
Net cash used by operating activities 0 4,155,766
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (28,065) (2,652,223)
Distribution to Limited Partners (509,040) (1,454,400)
Proceeds from amounts due affiliates (6,203) (6,408)
Increase in accrued interest (18,624) (35,827)
Net cash provided by investing activities (561,932) (4,148,858)
NET INCREASE (DECREASE) IN CASH AND CASH (409,473) 104,540
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 593,721 362,135
PERIOD
CASH AND CASH EQUIVALENT, END OF PERIOD $184,248 $466,675
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, 1998 the Partnership owned one property, Chimney
Square Apartments located in Abilene Texas with approximately
126,554 net rentable square feet.
The occupancy of Chimney square was 98.0% as of September 30, 1998,
compared to 96.0% September 30, 1997.
THIRD QUARTER 1998 COMPARED TO THIRD QUARTER 1997
Revenue from property operations increased $12,205 or 6.27%, for the
third quarter of 1998, as compared to the 1997 third quarter. The
increase in rental income of $8,933 or 4.69% is primarily due to
increased occupancy and higher rental rates. Other income increased
$3,272 or 79.48% primarily due to increased late charges along with
other fees. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income $8,933 4.69%
Other property 3,272 79.48%
$12,205 6.27%
Property operating expenses increased $9,869 or 5.31%, for the third
quarter of 1998, as compared to the same period in 1997, primarily
due to increased depreciation. Real estate taxes increased $2,850
or 16.38% reflecting a higher assessed valuation. The following
table illustrates the components by category:
Increase Per Cent
(Decrease) Change
Salaries & wages ($357) 2.54%
Maintenance & repairs 1,722 18.75%
Utilities 383 4.67%
Real estate taxes 2,850 16.38%
General administrative (135) 1.05%
Contract services 246 2.32%
Insurance (1,635) 31.22%
Interest (680) 1.21%
Depreciation and amortization 7,000 17.07%
Property management fees 475 4.91%
Net Increase (Decrease) $9,869 5.31%
FIRST NINE MONTHS 1998 COMPARED TO FIRST NINE MONTHS 1997
Revenue from property operations decreased $24,394 or 3.87%, for the
first nine months of 1998, as compared to the 1997 the first nine
months. The decrease in Rental income of $30,670 or 5.09% is
primarily due the sale of the Shorewood Apartments, an apartment
complex located in Charlotte, North Carolina. The following table
illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income ($30,670) 5.09%
Other property 6,276 23.04%
($24,394) 3.87%
Property operating expenses decreased $72,624 or 10.74%, for the
nine months of 1998, as compared to the same period in 1997,
primarily due to the sale of the 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 ($23,679) 36.27%
Maintenance & repairs (10,505) 17.47%
Utilities (6,941) 22.56%
Real estate taxes 4,764 8.51%
General administrative (1,686) 4.21%
Contract services (2,556) 7.42%
Insurance (6,626) 34.77%
Interest (45,003) 21.27%
Depreciation and amortization 21,000 17.07%
Property management fees (1,392) 4.58%
Net Increase (Decrease) ($72,624) 10.74%
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
resulting in cash distribution of $100.00 per unit.
As of September 30, 1998, the Partnership had $184,248 in cash and
cash equivalents as compared to $593,721 as of December 31 1997.
The net decrease in cash of $409,473 is principally due to a
distribution of $509,040 as of June 30,1998.
The property is encumbered by non-recourse mortgage as of September
30, 1998, 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 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, CEO.
Management intends to continue operating the Partnership in its
present form while investigating options to improve operations of
the Partnership.
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: November 9, 1998
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30, 1998 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
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-1998
[PERIOD-END] SEP-30-1998
[CASH] 184,248
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 5,140,939
[DEPRECIATION] 2,683,125
[TOTAL-ASSETS] 2,868,896
[CURRENT-LIABILITIES] 0
[BONDS] 2,368,627
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 336,460
[TOTAL-LIABILITY-AND-EQUITY] 2,868,896
[SALES] 0
[TOTAL-REVENUES] 206,967
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 140,489
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 55,378
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 11,100
[EPS-PRIMARY] .76
[EPS-DILUTED] 0
</TABLE>
