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, 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 June 30, 1999 and
December 31, 1998 Page 3
Consolidated Statements of Operations for the Three and Six
months Ended June 30, 1999 and 1998 Page 4
Consolidated Statements of Cash Flows for the Three months
Ended June 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
June 30, December 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(2,826,495) (2,730,495)
Real estate, net 2,344,537 2,440,537
Investments in Real Estate Held
for Sale
Cash including cash investments 295,449 217,493
Escrow deposits 150,447 179,757
Deferred Costs and Fees 50,084 42,194
Other assets 1,150 6,552
Total assets $2,841,667 $2,886,533
LIABILITIES AND PARTNERS'
EQUITY:
LIABILITIES:
Mortgage and notes payable $2,341,818 $2,362,879
Payable to Affiliates 0 1,284
Interest payable 0 18,384
Real estate taxes payable 40,470 0
Security deposits 18,421 17,200
Accounts payable and accrued 69,320 120,886
expenses
Total liabilities 2,470,029 2,520,633
PARTNERS CAPITAL (DEFICIT):
Limited Partners 461,169 455,488
General Partners (89,531) (89,588)
Total Partners Capital 371,638 365,900
(Deficit)
Total Liab. & Partners Equity$2,841,667 $2,886,533
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Six
Months Months
Ended Ended
June 30, June 30,
REVENUES 1999 1998 1999 1998
Rental income $197,413 $189,531 $394,921 $372,463
Other property 7,823 18,325 13,379 26,127
Total revenues 205,236 207,856 408,300 398,590
EXPENSES
Salaries & wages 18,170 14,993 30,910 27,886
Maint & Repairs 12,660 17,787 27,779 38,730
Utilities 6,563 7,326 13,443 15,243
Real estate taxes 20,250 20,250 40,500 40,500
General & Admin. 10,623 12,975 32,939 25,653
Contract services 9,732 10,426 20,336 21,039
Insurance 3,609 4,054 7,250 8,827
Interest 54,805 55,488 109,820 111,170
Depr. & Amort. 48,000 48,000 96,000 96,000
Property Mgmt Fees 10,073 9,643 20,164 18,854
Amortization of 1,710 1,710 3,421 3,421
deferred costs and
fees
Total expenses 196,195 202,652 402,562 407,323
NET Income (Loss) $9,041 $5,204 $5,738 ($8,733)
NET Income Per Share $ 0.62 $ 0.36 $ 0.39 $ (0.60)
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Six
Months
Ended
June 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $5,738 ($8,733)
Adjustments to reconcile net income (loss)
to net cash
provided by operating activities:
Depreciation and amortization 96,000 96,000
Net Effect of changes in operating accounts
Escrow deposits 29,310 12,093
Deferred Costs (7,890) 3,421
Accrued real estate taxes 40,470 40,461
Security deposits 1,221 718
Accounts payable (51,566) (48,006)
Other assets 5,402 (3,420)
Net cash used by operating activities 118,685 92,534
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by operating activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (21,061) (16,772)
Distribution to Limited Partners 0 (509,040)
Proceeds from amounts due affiliates (1,284) (8,774)
Increase in accrued interest (18,384) (18,624)
Net cash provided by investing activities (40,729) (553,210)
NET INCREASE (DECREASE) IN CASH AND CASH 77,956 (460,676)
EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 217,493 593,721
PERIOD
CASH AND CASH EQUIVALENT, END OF PERIOD $295,449 $133,045
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, 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 96.0% during the second
quarter of 1999 as compared to 98.0% for the second quarter of 1998.
SECOND QUARTER 1999 COMPARED TO SECOND QUARTER 1998
Revenue from property operations decreased $2,620 or 1.26%, for the
second quarter of 1999, as compared to the 1998 second quarter. The
increase in rental income of $7,882 or 4.16% is primarily due to
higher rental rates. Other income decreased $10,502 or 57.31%
primarily due to decreased late charges and other fees. The
following table illustrates the components:
Increase Per
Cent
(Decrease) Change
Rental income $7,882 4.16%
Other property (10,502) 57.31%
($2,620) 1.26%
Property operating expenses decreased $6,457 or 3.19%, for the
second quarter of 1999, as compared to the same period in 1998.
This was primarily due to decreased maintenance and repairs which
decreased $5,127 or 28.82%. General and administrative decreased
$2,352 or 10.98% primarily due to reduced legal costs. Insurance
costs decreased $445 or 10.98% primarily due to lower rates as a
result of better than expected loss claims. The following table
illustrates the components by category:
Increase Per
Cent
(Decrease) Change
Salaries & wages $3,177 21.19%
Maint. & Repairs (5,127) 28.82%
Utilities (763) 10.41%
Real estate taxes 0 0.00%
General & Admin. (2,352) 18.13%
Contract services (694) 6.66%
Insurance (445) 10.98%
Interest (683) 1.23%
Depr. & Amortization 0 0.00%
Property Mgmt Fees 430 4.46%
Net (Decrease) ($6,457) 3.19%
FIRST SIX MONTHS 1999 COMPARED TO FIRST SIX MONTHS 1998
Revenue from property operations increased $9,710 or 2.44%, for the
first six months of 1999, as compared to the 1998 first six months.
The increase in rental income of $22,458 or 6.03% is primarily due
to higher rental rates. Other income decreased $12,748 or 48.79%
primarily due to decreased late charges and other fees. The
following table illustrates the components:
Increase Per Cent
(Decrease) Change
Rental income $22,458 6.03%
Other property (12,748) 48.79%
$9,710 2.44%
Property operating expenses decreased $4,761 or 1.17%, for the first
six months of 1999, as compared to the same period in 1998. This
was primarily due to decreased maintenance and repairs which
decreased $10,951 or 28.28%. General and administrative increased
$7,286 or 28.40% primarily due to increased postage for the fund.
Insurance costs decreased $1,350 or 17.87% primarily due to lower
rates as a result of better than expected loss claims. The
following table illustrates the components by category:
Increase Per
(Decrease) Cent
Change
Salaries & wages $3,024 10.84%
Maintenance & repairs (10,951) 28.28%
Utilities (1,800) 11.81%
Real estate taxes 0 0.00%
General administrative 7,286 28.40%
Contract services (703) 3.34%
Insurance (1,577) 17.87%
Interest (1,350) 1.21%
Depreciation and 0 0.00%
amortization
Property management fees 1,310 6.95%
Net Increase (Decrease) ($4,761) 1.17%
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, 1999, the Partnership had $295,449 in cash and cash
equivalents as compared to $217,493 as of December 31 1998. The
net increase in cash of $77,956 is principally due to cash flow from
operations.
The property is encumbered by non-recourse mortgage as of June 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 surveys are expected to be completed by June 1999. 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: July 29, 1999
[ARTICLE] 5
[LEGEND]
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BOTH
THE JUNE 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] JUN-30-1999
[CASH] 295,449
[SECURITIES] 0
[RECEIVABLES] 0
[ALLOWANCES] 0
[INVENTORY] 0
[CURRENT-ASSETS] 0
[PP&E] 5,171,032
[DEPRECIATION] 2,826,495
[TOTAL-ASSETS] 2,841,667
[CURRENT-LIABILITIES] 0
[BONDS] 2,341,818
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 0
[OTHER-SE] 371,638
[TOTAL-LIABILITY-AND-EQUITY] 2,841,667
[SALES] 0
[TOTAL-REVENUES] 205,236
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 141,390
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 54,805
[INCOME-PRETAX] 0
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (9,041)
[EPS-BASIC] 0.62
[EPS-DILUTED] 0
</TABLE>
