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, 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 June 30, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Three and Six
Months ended June 30, 1998 and December 31,1997 Page 4
Consolidated Statements of Cash Flows for the Six months
Ended June 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
June 30, December 31,
1998 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 (2,635,125) (2,539,125)
Real estate, net 2,505,814 2,601,814
Investments in Real Estate Held for sale
Cash including cash investments 133,045 593,721
Escrow deposits 142,588 154,681
Deferred Costs and Fees 45,615 49,036
Other assets 12,216 8,796
Total assets $2,839,278 3,408,048
LIABILITIES AND PARTNERS'EQUITY:
LIABILITIES:
Mortgage and notes payable $2,379,920 $2,396,692
Payable to Affiliates 0 8,774
Interest payable 0 18,624
Real estate taxes payable 40,461 0
Security deposits 17,518 16,800
Accounts payable and accrued 76,019 124,025
expenses
Total liabilities 2,513,918 2,564,915
PARTNERS CAPITAL (DEFICIT):
Limited Partners 415,353 933,039
General Partners (89,993) (89,906)
Total Partners Capital (Deficit) 834,400 843,133
Total Liability and Partners Equity $2,839,278 $3,408,048
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30,
1998 1197 1998 1997
REVENUES
Rental income $189,531 $180,125 $372,463 $412,066
Other property 18,325 15,990 26,127 23,123
Total revenues 207,856 196,115 398,590 435,189
EXPENSES
Salaries & wages 14,993 21,355 27,886 51,208
Maintenance & repairs 17,787 16,608 38,730 50,957
Utilities 7,326 7,166 15,243 22,567
Real estate taxes 20,250 17,400 40,500 38,586
General administrative 12,975 9,797 25,653 27,204
Contract services 10,426 11,034 21,039 23,841
Insurance 4,054 8,649 8,827 13,818
Interest 55,488 56,240 111,170 155,493
Depreciation and amortization 48,000 35,000 96,000 82,000
Property management fees 9,643 9,089 18,854 20,721
Amortization of deferred 1,710 1,710 3,421 4,001
costs and fees
Total expenses 202,652 194,048 407,323 490,396
NET INCOME BEFORE EXTRAORDINARY ITEM $5,204 $2,067 ($8,733) (55,207)
GAIN ON SALE OF PROPERTY 0 0 0 1,293,522
NET INCOME (LOSS) $5,204 $2,067 ($8,733) $1,238,315
NET INCOME PER SHARE $ 0.36 $0.14 $ (0.60) $85.14
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Six Months Ended
June 30,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($8,733) $1,238,315
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 96,000 82,000
Gain on Sale of Asset (1,293,522)
Net Effect of changes in operating accounts
Escrow deposits 12,093 14,677
Deferred Costs 3,421 33,600
Accrued real estate taxes 40,461 34,800
Security deposits 718 (23,350)
Accounts payable (48,006) (72,891)
Other assets (3,420) 3,300
Net cash used by operating activities 92,534 16,929
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 (16,772) (2,644,311)
Distribution to Limited Partners (509,040) (1,454,400)
Proceeds from amounts due affiliates (8,774 ) (6,854)
Increase in accrued interest (18,624) (35,827)
Net cash provided by investing activities (553,210) (4,141,392)
NET INCREASE (DECREASE) IN CASH AND CASH 460,076 31,303
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF PEROID 593,721 362,135
CASH AND CASH EQUIVALENT, END OF PERIOD $133,045 $393,438
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 June 30, 1998 the Partnership owned one property. The Chimney
Square Apartment community aggregate approximately 126,554 net
rentable square feet.
The occupancy of Chimney square was 98.0% as of June 30, 1998
compared to 89.0% June 30, 1997.
SECOND QUARTER 1998 COMPARED TO SECOND QUARTER 1997
Revenue from property operations increased $11,741 or 5.99%, for the
second quarter of 1998, as compared to the 1997 second quarter. The
increase in rental income of $9,406 or 5.22% is primarily due to
increased occupancy and higher rental rates. Other income increased
$2,335 or 14.6% primarily due to increased late charges along with
other fees. The following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income 9,406 5.22%
Other property 2,335 14.60%
11,741 5.99%
Property operating expenses increased $8,604 or 4.43%, for the
second quarter of 1998, as compared to the same period in 1997,
primarily due to increased depreciation. Salaries and wages were
lower by $6,362 or 29.79% primarily due to staff reductions. The
following table illustrates the components by category:
Increase
(Decrease)
Salaries & wages (6,362) 29.79%
Maintenance & repairs 1,179 7.10%
Utilities 160 2.23%
Real estate taxes 2,850 16.38%
General administrative 3,178 32.44%
Contract services (608) 5.51%
Insurance (4,595) 53.13%
Interest (752) 1.34%
Depreciation and 13,000 37.14%
amortization
Property management fees 554 6.10%
Net Increase (Decrease) 8,604 4.43%
FIRST SIX MONTHS 1998 COMPARED TO FIRST SIX MONTHS 1997
Revenue from property operations decreased $36,599 or 8.41%, for the
first six months of 1998, as compared to the 1997 the first six
months. The decrease in Rental income of $39,603 or 9.61% 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 (39,603) 9.61%
Other property 3,004 12.99%
(36,599) 8.41%
Property operating expenses decreased $82,493 or 16.82%, for the six
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
(Decrease)
Salaries & wages (23,322) 45.54%
Maintenance & repairs (12,227) 23.99%
Utilities (7,324) 32.45%
Real estate taxes 1,914 4.96%
General administrative (1,551) 5.70%
Contract services (2,802) 11.75%
Insurance (4,991) 36.12%
Interest (44,323) 28.50%
Depreciation and amortization 14,000 17.07%
amortization
Property management fees (1,867) 9.01%
Net Increase (Decrease) (82,493) 16.82%
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 June 30, 1998, the Partnership had $133,045 in cash and cash
equivalents as compared to $593,721 as of December 31 1997. The
net decrease in cash of $460,676 is principally due to a
distribution of $509,040 as of June 30,1998.
The property is encumbered by non-recourse mortgage as of June 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, President.
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: August 10, 1998
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 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] JUN-30-1998
[CASH] 133,045
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 5,140,939
[DEPRECIATION] 2,635,125
[TOTAL-ASSETS] 2,839,278
[CURRENT-LIABILITIES] 0
[BONDS] 2,379,920
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 834,400
[TOTAL-LIABILITY-AND-EQUITY] 2,839,278
[SALES] 0
[TOTAL-REVENUES] 207,856
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 147,164
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 55,488
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (5,204)
[EPS-PRIMARY] (.36)
[EPS-DILUTED] 0
</TABLE>
