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 March 31, 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 March 31, 1998 and
December 31, 1997 Page 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1998 and 1997 Page 4
Consolidated Statements of Cash Flows for the Three months
Ended March 31, 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 7
Other Information Page 8
Signatures Page 9
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
March 31, 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 (2,587,125) (2,539,125)
--------- ---------
Real estate, net 2,553,814 2,601,814
Cash including cash investments 599,729 593,721
Escrow deposits 121,082 154,681
Deferred Costs and Fees 47,325 49,036
Other assets 3,493 8,796
--------- ---------
Total assets $3,325,443 $3,408,048
========= =========
LIABILITIES AND PARTNERS'
EQUITY:
LIABILITIES:
Mortgage and notes payable $2,388,403 $2,396,692
Payable to Affiliates 1,015 8,774
Interest payable 0 18,624
Real estate taxes payable 20,250 0
Security deposits 16,950 16,800
Accounts payable and accrued 69,629 124,025
expenses --------- ---------
Total liabilities 2,593,548 2,564,915
--------- ---------
PARTNERS CAPITAL (DEFICIT):
Limited Partners 919,241 933,039
General Partners (90,045) (89,906)
--------- --------
Total Partners Capital (Deficit) 829,196 843,133
--------- --------
Total Liability and Partners $3,325,443 $3,408,048
Equity
========= =========
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended
March 31,
REVENUES 1998 1997
Rental income $182,932 $231,941
Other property 7,802 7,133
------- -------
Total revenues 190,734 239,074
EXPENSES
Salaries & wages 12,893 29,853
Maintenance & repairs 20,943 34,349
Utilities 7,917 15,401
Real estate taxes 20,250 21,186
General 12,678 17,407
administrative
Contract services 10,613 12,807
Insurance 4,773 5,169
Interest 55,682 99,253
Depreciation and 48,000 47,000
amortization
Property management 9,211 11,632
fees
Amortization of 1,711 2,291
deferred costs and
fees
------- -------
Total expenses 204,671 296,348
------- -------
NET INCOME BEFORE ($13,937) ($57,274)
EXTRAORDINARY ITEM
GAIN ON SALE OF 0 1,293,522
PROPERTY ------- ---------
NET INCOME (LOSS) ($13,937) $1,236,248
======= =========
NET INCOME PER SHARE $ (0.96) $ 85.00
======= ========
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Three Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) ($13,937) $1,236,248
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 48,000 47,000
Gain on Sale of Asset 0 ($1,293,522)
Net Effect of changes in operating accounts
Escrow deposits 33,599 29,219
Deferred Costs 1,711 31,889
Accrued real estate taxes 20,250 17,400
Security deposits 150 (23,450)
Accounts payable (73,020) (60,313)
Other assets 5,303 6,110
------- ---------
Net cash used by operating activities 22,056 (9,419)
------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from Sale of Asset 0 4,155,766
------- ---------
Net cash used by operating activities 0 4,155,766
------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (8,289) (2,636,580)
Repayments from amounts due affiliates (7,759) 0
Proceeds from amounts due affiliates 0 1,472
Increase in accrued interest 0 (35,827)
------- ---------
Net cash provided by investing activities (16,048) (2,670,935)
------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH 6,008 1,475,412
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 593,721 362,135
PERIOD
------- ---------
CASH AND CASH EQUIVALENT, END OF PERIOD $599,729 $1,837,547
======= =========
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 March 31, 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 89.1% as of March 31, 1998
compared to 92.0% March 31, 1997.
FIRST THREE MONTHS 1998 COMPARED TO FIRST THREE MONTHS 1997
Revenue from property operations decreased $48,340 or 20.22%, for
the first three months of 1998, as compared to the 1997 the first
three months. The decrease in Rental income of $49,009 or 21.13% is
primarily due the sale of the Shorewood Apartments, an apartment
complex located in Charlotte, North Carolina. The following table
illustrates the components:
Increase Percent
(Decrease) Change
Rental income $(49,009) 21.13%
Other property 669 9.38%
------- -----
$(48,340) 20.22%
====== =====
Property operating expenses decreased $91,097 or 30.74%, for the
three 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 Percent
(Decrease) Change
Salaries & wages $(16,960) 56.81%
Maintenance & repairs (13,406) 39.03%
Utilities (7,484) 48.59%
Real estate taxes (936) 4.42%
General administrative (4,729) 27.17%
Contract services (2,194) 17.13%
Insurance (396) 7.66%
Interest (43,571) 43.90%
Depreciation and 1,000 2.13%
amortization
Property management fees (2,421) 20.81%
-------- -----
Net Increase $(91,097) 30.74%
(Decrease)
======== =====
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, 1998, the Partnership had $599,729 in cash and cash
equivalents as compared to $593,721 as of December 31 1997. The
net increase in cash of $6,008 is principally due to cash flow from
operations.
The property is encumbered by non-recourse mortgage as of March 31,
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 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: April 22, 1998
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
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
(Decreas Chang
e) e
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
(Decreas
e)
Salaries & wages (27,189) 65.90
%
Maintenance & (46,253) 83.43
repairs %
Utilities (10,322) 55.74
%
Real estate taxes (17,982) 50.82
%
General (7,464) 36.73
administrative %
Contract services (6,469) 37.87
%
Insurance (2,400) 31.43
%
Interest (75,416) 57.36
%
Depreciation and (49,000) 54.44
amortization %
Property (9,118) 48.54
management fees %
Net Increase (251,613 57.27
(Decrease) ) %
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE MARCH 31, 1998 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-END> MAR-31-1998
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