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, 1999 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, 1999 and December 31, 1998
Page 3
Consolidated Statements of Operations for the Three and Nine months
Ended September 30, 1999 and 1998 Page 4
Consolidated Statements of Cash Flows for the Nine months Ended
September 30, 1999 and 1998 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, 1998 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
September December
30, 31,
1999 1998
(Unaudited)
ASSETS
Real Estate assets, at cost $580,045 $580,045
Land 4,590,987 4,590,987
Buildings and improvements 5,171,032 5,171,032
Less: Accumulated depreciation (2,874,495) (2,730,495)
Real estate, net 2,296,537 2,440,537
Cash including cash investments 338,784 217,493
Escrow deposits 183,195 179,757
Deferred Costs and Fees 44,979 42,194
Other assets 1,150 6,552
Total assets $2,864,645 $2,886,533
LIABILITIES AND PARTNERS' EQUITY:
LIABILITIES:
Mortgage and notes payable $2,332,436 $2,362,879
Payable to Affiliates 679 1,284
Interest payable 0 18,384
Real estate taxes payable 61,887 0
Security deposits 18,756 17,200
Accounts payable and accrued expense 78,748 120,886
Total liabilities 2,492,506 2,520,633
PARTNERS CAPITAL (DEFICIT):
Limited Partners 461,665 455,488
General Partners (89,526) (89,588)
Total Partners Capital (Deficit) 372,139 365,900
Total Liability and Partners Equity $2,864,645 $2,886,533
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 1999 1998 1999 1998
Rental income $203,019 $199,578 $597,940 $572,041
Other property 6,343 7,389 19,722 33,516
Total revenues 209,362 206,967 617,662 605,557
EXPENSES
Salaries & wages 15,576 13,714 46,486 41,600
Maintenance & repairs 16,904 10,907 44,683 49,637
repairs
Utilities 7,447 8,579 20,890 23,822
Real estate taxes 21,417 20,250 61,917 60,750
General & Admin. 19,213 12,725 52,152 38,378
Contract Services 9,868 10,859 30,204 31,898
Insurance 3,767 3,602 11,017 12,429
Interest 54,590 55,378 164,410 166,548
Depreciation and Amort. 48,000 48,000 144,000 144,000
Property Mgmt Fees 10,368 10,142 30,532 28,996
Amort. of deferred costs 1,711 1,711 5,132 5,132
Total expenses 208,861 195,867 611,423 603,190
NET INCOME (LOSS) $501 $11,100 $6,239 $2,367
NET INCOME PER UNIT $0.03 $0.76 $0.43 $0.16
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Nine Months Ended
September 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $6,239 $2,367
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 144,000 144,000
Net Effect of changes in operating accounts
Escrow deposits (3,438) (19,262)
Deferred Costs (2,785) 5,132
Accrued real estate taxes 61,887 60,711
Security deposits 1,556 840
Accounts payable (42,138) (41,138)
Other assets 5,402 (191)
Net cash used by operating activities 170,723 152,459
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by operating activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (30,443) (28,065)
Distribution to Limited Partners 0 (509,040)
Payments to amounts due affiliates (605) (6,203)
Decrease in accrued interest (18,384) (18,624)
Net cash provided by investing activities (49,432) (561,932)
NET INCREASE (DECREASE) IN CASH AND CASH 121,291 (409,473)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 217,493 593,721
PERIOD
CASH AND CASH EQUIVALENT, END OF PERIOD $338,784 $184,248
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, 1999 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 averaged 98.0% during the third
quarter of 1999 as compared to 96.0% for the third quarter of 1998.
THIRD QUARTER 1999 COMPARED TO THIRD QUARTER 1998
Revenue from property operations increased $2,395 or 1.16%, for the
third quarter of 1999, as compared to the 1998 third quarter. The
increase in rental income of $3,441 or 1.72% is primarily due to
higher rental rates. Other income decreased $1,046 or 14.16%
primarily due to decreased late charges and other fees. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income $3,441 1.72%
Other property (1,046) 14.16%
Net Increase $2,395 1.16%
Property operating expenses increased $12,994 or 6.63%, for the
third quarter of 1999, as compared to the same period in 1998. This
was primarily due maintenance & repairs expenses increasing $5,997
or 54.98% this due to increased occupancy turnover. General and
administrative increased $6,488 or 50.99% due to printing & mailing
costs. Salaries & wages increased $1,862 or 13.58% primarily due to
increased hours worked for apartment make-readies. Utilities
decreased $1,132 or 13.20% as a result of water conservation efforts
by the property. The following table illustrates the components by
category:
Increase Per Cent
(Decrease) Change
Salaries & wages $1,862 13.58%
Maintenance & Repairs 5,997 54.98%
Utilities (1,132) 13.20%
Real estate taxes 1,167 5.76%
General & Administrative 6,488 50.99%
Contract services (991) 9.13%
Insurance 165 4.58%
Interest (788) 1.42%
Depreciation and Amort. 0 0.00%
Property Mgmt Fees 226 2.23%
Net Increase $12,994 6.63%
FIRST NINE MONTHS 1999 COMPARED TO FIRST NINE MONTHS 1998
Revenue from property operations increased $12,105 or 2.00%, for the
first nine months of 1999, as compared to the 1998 first nine
months. The increase in rental income of $25,899 or 4.53% is
primarily due to higher rental rates. Other income decreased
$13,794 or 41.16% primarily due to decreased fee income. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income $25,899 4.53%
Other property (13,794) 41.16%
$12,105 2.00%
Property operating expenses increased $8,233 or 1.36%, for the first
nine months of 1999, as compared to the same period in 1998. This
was primarily due to increased general & administrative including
printing and mailing costs. Utilities decreased $2,932 or 12.31%
primarily due to water conservation efforts. Salaries and wages
increased $4,886 or 11.75% due to increased labor for apartment
make-readies. Insurance costs decreased $1,412 or 11.36% primarily
due to lower rates as a result of better than expected loss claims
expected loss claims. The following table illustrates the
components by category:
Increase Per Cent
(Decrease) Change
Salaries & wages $4,886 11.75%
Maintenance & repairs (4,954) 9.98%
Utilities (2,932) 12.31%
Real estate taxes 1,167 1.92%
General administrative 13,774 35.89%
Contract services (1,694) 5.31%
Insurance (1,412) 11.36%
Interest (2,138) 1.28%
Depreciation and Amort. 0 0.00%
Property management fees 1,536 5.30%
Net Increase (Decrease) $8,233 1.36%
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 were 1.3 million dollars
resulting in cash distribution of $100.00 per unit.
As of September 30, 1999, the Partnership had $338,784 in cash and
cash equivalents as compared to $217,493 as of December 31 1998.
The net increase in cash of $121,291 is principally due to cash flow
from operations.
The property is encumbered by non-recourse mortgage as of September
30, 1999, with an interest rate of 9.325%. Required principal
payments on this mortgage note for the three years ended
December 31, 2001, are $37,105, $40,717, and $44,680, 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 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.
Year 2000
The Partnership and Management Company have replaced all data
processing systems with the last three years within year 2000
compliant hardware and software. The Partnership and Management
Company have completed testing of its data processing systems.
While compliance cannot be assured, the systems tested to date are
compliant.
Surveys of financial institutions and vendors used by the
Partnership and Management Company also indicate compliance to date.
The Partnership and Management Company have prepared contingency
plans. These include redundant back-ups and paper copies of all
system reports through 1999.
The Partnership anticipates that it will not incur significant costs
associated with its computers and building operating systems as it
relates to the conversion to the year 2000.
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 11, 1999
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE SEPTEMBER 30, 1999 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-31-1999
[PERIOD-END] SEP-30-1999
[CASH] 338,784
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 5,171,032
[DEPRECIATION] 2,874,495
[TOTAL-ASSETS] 2,864,645
[CURRENT-LIABILITIES] 0
[BONDS] 2,332,436
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 372,139
[TOTAL-LIABILITY-AND-EQUITY] 2,864,645
[SALES] 0
[TOTAL-REVENUES] 209,362
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 154,271
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 54,590
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 501
[EPS-BASIC] 0.03
[EPS-DILUTED] 0
</TABLE>
