FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-14483
Davidson Diversified Real Estate II, L.P.
(Exact name of small business issuer as specified in its charter)
Delaware 62-1207077
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
Davidson Diversified Real Estate II, L.P.
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 1,472
Receivables and deposits, net of $196
for doubtful accounts 284
Restricted escrows 448
Other assets 422
Investment properties:
Land $ 2,603
Buildings and related personal property 37,848
40,451
Less accumulated depreciation (21,900) 18,551
$ 21,177
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 215
Tenant security deposit liabilities 136
Accrued property taxes 587
Other liabilities 588
Due to Managing General Partner 880
Mortgage notes payable 23,943
Partners' Deficit
General partners $ (538)
Limited partners (1,224.25 units issued and
outstanding) (4,634) (5,172)
$ 21,177
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
<PAGE>
b)
Davidson Diversified Real Estate II, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2000 1999
Revenues: (restated)
Rental income $ 1,779 $ 1,933
Other income 112 136
Total revenues 1,891 2,069
Expenses:
Operating 1,043 890
General and administrative 62 88
Depreciation 474 426
Interest 535 522
Property taxes 137 156
Total expenses 2,251 2,082
Loss from continuing operations (360) (13)
Loss from discontinued operation -- (49)
Net loss $ (360) $ (62)
Net loss allocated to general partners (2%) $ (7) $ (1)
Net loss allocated to limited partners (98%) (353) (61)
$ (360) $ (62)
Per limited partnership unit:
Loss from continuing operations $(288.34) $ (10.62)
Loss from discontinued operation -- (39.21)
Net loss $(288.34) $ (49.83)
See Accompanying Notes to Consolidated Financial Statements
c)
Davidson Diversified Real Estate II, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partners Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 1,224.25 $ 1 $24,485 $24,486
Partners' deficit at
December 31, 1999 1,224.25 $ (531) $(4,281) $(4,812)
Net loss for the three months
ended March 31, 2000 -- (7) (353) (360)
Partners' deficit at
March 31, 2000 1,224.25 $ (538) $(4,634) $(5,172)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
d)
Davidson Diversified Real Estate II, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net loss $ (360) $ (62)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation 474 519
Amortization of discounts, loan costs
and leasing commissions 55 59
Loss on disposal of property 19 --
Change in accounts:
Receivables and deposits 296 141
Other assets (80) (56)
Accounts payable (179) (81)
Tenant security deposit liabilities (31) (2)
Accrued property taxes (12) (37)
Other liabilities (79) 87
Net cash provided by operating activities 103 568
Cash flows used in investing activities:
Property improvements and replacements (287) (179)
Net withdrawals from restricted escrows 64 15
Net cash used in investing activities (223) (164)
Cash flows used in financing activities:
Advances from Managing General Partner 378 --
Payments on mortgage notes payable (184) (195)
Net cash provided by (used in) financing activities 194 (195)
Net increase in cash and cash equivalents 74 209
Cash and cash equivalents at beginning of period 1,398 971
Cash and cash equivalents at end of period $ 1,472 $ 1,180
Supplemental disclosure of cash flow information:
Cash paid for interest $ 460 $ 498
Supplemental disclosures of non-cash activity: At December 31, 1999, property
improvements and replacements and accounts payable were both adjusted by
approximately $91,000 for non-cash activity.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
Davidson Diversified Real Estate II, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Davidson
Diversified Real Estate II, L.P. (the "Partnership" or "Registrant") have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Davidson Diversified Properties, Inc.
(the "Managing General Partner"), all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2000. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Partnership's Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1999.
Principles of Consolidation:
The Registrant's financial statements include all the accounts of the
Partnership and its four 99.9% owned partnerships. The Managing General Partner
of the consolidated partnerships is Davidson Diversified Properties, Inc.
Davidson Diversified Properties, Inc. may be removed as the general partner of
the consolidated partnerships by the Registrant; therefore, the consolidated
partnerships are controlled and consolidated by the Registrant. All significant
interpartnership balances have been eliminated.
Reclassifications:
Certain reclassifications have been made to the 1999 balances to conform to the
2000 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the Managing General Partner. The Managing General Partner does not believe that
this transaction has had or will have a material effect on the affairs and
operations of the Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the Managing General
Partner and its affiliates for the management and administration of all
Partnership activities. The Partnership Agreement provides for (i) certain
payments to affiliates for services and (ii) reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following amounts were
paid or accrued to the Managing General Partner and its affiliates during the
three months ended March 31, 2000 and 1999:
2000 1999
---- ----
(in thousands)
Property management fees (included in
operating expenses) $ 97 $104
Reimbursement for services of affiliates
(included in general and administrative
expenses and investment properties) 48 61
Due to affiliates (included in other
liabilities) 226 203
Due to Managing General Partner 880 --
During the three months ended March 31, 2000 and 1999, affiliates of the
Managing General Partner were entitled to receive 5% of gross receipts from all
of the Registrant's residential properties for providing property management
services. The Registrant paid to such affiliates approximately $97,000 and
$104,000 for the three months ended March 31, 2000 and 1999, respectively.
An affiliate of the Managing General Partner was entitled to receive
reimbursement of accountable administrative expenses amounting to approximately
$48,000 and $61,000 for the three months ended March 31, 2000 and 1999,
respectively. A portion of both the current fees and the prior year fees were
not able to be paid due to the Partnership's cash flow. Accordingly, as of March
31, 2000, a liability of approximately $226,000 exists and is reflected in other
liabilities.
As of March 31, 2000 the Managing General Partner has loaned the Partnership
approximately $880,000 to cover operational expenses required at Greensprings
Manor Apartments. This loan was made in accordance with the terms of the
Partnership Agreement. Interest is charged at the prime rate plus 1%.
AIMCO and its affiliates currently own 467.25 limited partnership units in the
Partnership representing 38.166% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the Managing General Partner because of their
affiliation with the Managing General Partner.
Note D - Discontinued Operations
Shoppes at River Rock was the only commercial property owned by the Partnership
and represented one segment of the Partnership's operations. Due to the sale of
the property on December 30, 1999, the results of the commercial segment have
been shown as loss from discontinued operation as of March 31, 2000 and 1999 and
accordingly, the statements of operations have been restated to reflect this
presentation. Revenues of this property were approximately $263,000 for the
three months ended March 31, 1999 and loss from operations was approximately
$49,000 for the same period.
Note E - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership had two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of four apartment complexes located in Ohio, Kentucky, Tennessee, and Indiana.
The Partnership rents apartment units to tenants for terms that are typically
twelve months or less. The commercial property segment consisted of a shopping
center located in Tennessee, which was sold on December 30, 1999. As a result of
the sale of the commercial property during 1999, the commercial segment is shown
as discontinued operation.
Measurement of segment profit and loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.
Segment information for the three months ended March 31, 2000 and 1999 is shown
in the tables below. The "Other" column includes partnership administration
related items and income and expense not allocated to the reportable segment (in
thousands).
2000 Residential Other Totals
Rental income $ 1,779 $ -- $ 1,779
Other income 106 6 112
Interest expense 530 5 535
Depreciation 474 -- 474
General and administrative expense -- 62 62
Segment loss (299) (61) (360)
Total assets 20,247 930 21,177
Capital expenditures for investment
properties 196 -- 196
<TABLE>
<CAPTION>
1999 Residential Commercial Other Totals
(discontinued 1999)
<S> <C> <C> <C> <C>
Rental income $ 1,933 $ -- $ -- $ 1,933
Other income 132 -- 4 136
Interest expense 513 -- 9 522
Depreciation 426 -- -- 426
General and administrative expense -- -- 88 88
Loss from discontinued operations (49) -- (49)
Segment profit (loss) 80 (49) (93) (62)
Total assets 21,076 3,470 590 25,136
Capital expenditures for investment
properties 171 8 -- 179
</TABLE>
<PAGE>
Note F - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the Managing General Partner filed a motion seeking dismissal of the
action. In lieu of responding to the motion, the plaintiffs have filed an
amended complaint. The Managing General Partner filed demurrers to the amended
complaint which were heard February 1999. Pending the ruling on such demurrers,
settlement negotiations commenced. On November 2, 1999, the parties executed and
filed a Stipulation of Settlement, settling claims, subject to final court
approval, on behalf of the Partnership and all limited partners who own units as
of November 3, 1999. Preliminary approval of the settlement was obtained on
November 3, 1999 from the Superior Court of the State of California, County of
San Mateo, at which time the Court set a final approval hearing for December 10,
1999. Prior to the December 10, 1999 hearing the Court received various
objections to the settlement, including a challenge to the Court's preliminary
approval based upon the alleged lack of authority of class plaintiffs' counsel
to enter the settlement. On December 14, 1999, the Managing General Partner and
its affiliates terminated the proposed settlement. Certain plaintiffs have filed
a motion to disqualify some of the plaintiffs' counsel in the action. The
Managing General Partner does not anticipate that costs associated with this
case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and other filings with the Securities
and Exchange Commission made by the Registrant from time to time. The discussion
of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2000 and 1999:
Average Occupancy
2000 1999
Big Walnut Apartments
Columbus, Ohio 90% 91%
LaFontenay I & II Apartments
Louisville, Kentucky (1) 94% 91%
The Trails Apartments
Nashville, Tennessee 96% 94%
Greensprings Manor Apartments
Indianapolis, Indiana (2) 61% 94%
(1) The Managing General Partner attributes the increase in occupancy at
LaFontenay I & II Apartments to management's intensified marketing efforts
as well as capital improvements to enhance the exterior of the property.
(2) The Managing General Partner attributes the decrease in occupancy at
Greensprings Manor Apartments to construction at the property. The
property is currently undergoing a major renovation project to enhance the
appearance of the property to attract additional tenants.
Results of Operations
The Registrant's net loss for the three months ended March 31, 2000, was
approximately $360,000 compared to a net loss of approximately $62,000 for the
three months ended March 31, 1999. The increase in net loss was due to a
decrease in total revenues and an increase in total expenses. Total revenues
decreased due to a decrease in rental income and other income. Rental income
decreased primarily due to the decrease in occupancy at Greensprings Manor
Apartments as discussed above. This decrease in rental income was partially
offset by an increase in occupancy at two of Registrant's investment properties
and an increase in average annual rental rates at all four of the properties.
Other income decreased due to a decrease in late charges charged to tenants.
Total expenses increased primarily due to an increase in operating and
depreciation expenses which was partially offset by a decrease in property tax
and general and administrative expenses. Operating expenses increased primarily
due to an increase in security expenses at Greensprings Manor Apartments.
Depreciation expense increased due to an increase in capital improvements which
occurred in 1999. Property tax expense decreased due to a tax refund which was
received from the taxing authorities for LaFontenay I & II Apartments during
2000. General and administrative expense decreased as a result of a decrease in
general partner reimbursement fees. Also included in general and administrative
expenses were costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement.
As part of the ongoing business plan of the Partnership, the Managing General
Partner monitors the rental market environment of the investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of this
plan, the Managing General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
Managing General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At March 31, 2000, the Partnership had cash and cash equivalents of
approximately $1,472,000 as compared to approximately $1,180,000 at March 31,
1999. Cash and cash equivalents increased approximately $74,000 for the three
months ended March 31, 2000 from the Partnership's year end, primarily due to
approximately $103,000 of cash provided by operating activities and
approximately $194,000 of cash provided by financing activities which was
partially offset by approximately $223,000 of cash used in investing activities.
Cash provided by financing activities consisted of advances from the Managing
General Partner, which was partially offset by payments of principal made on the
mortgages encumbering the Partnership's properties. Cash used in investing
activities consisted of property improvements and replacements, partially offset
by net withdrawals from escrow accounts maintained by the mortgage lender. The
Partnership invests its working capital reserves in money market accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
Big Walnut Apartments: The property has budgeted, but is not limited to, capital
improvements of approximately $662,000 during the current year which consists of
floor covering and appliance replacements, roof replacements, swimming pool
improvements and other property enhancements. The Partnership has completed
approximately $79,000 in capital expenditures at Big Walnut Apartments as of
March 31, 2000 consisting primarily of parking lot and swimming pool
improvements, electrical upgrades, and appliance and floor covering
replacements. These improvements were funded primarily from property operations.
LaFontenay I & II Apartments: The property has budgeted, but is not limited to,
capital improvements of approximately $117,000 during the current year which
consists of floor covering and appliance replacement, air conditioning and
heating replacements. The Partnership has completed approximately $50,000 in
capital expenditures at LaFontenay I & II Apartments as of March 31, 2000,
consisting primarily of plumbing improvements appliances and floor covering
replacements. These improvements were funded primarily from property operations.
The Trails: The property has budgeted, but is not limited to, capital
improvements of approximately $86,000 during the current year which consists of
floor covering and appliance replacements, and air conditioning upgrades. The
Partnership has completed approximately $35,000 in capital expenditures at The
Trails Apartments as of March 31, 2000, consisting primarily of swimming pool
improvements, and floor covering replacements. These improvements were funded
primarily from property operations.
Greensprings Manor: The property has budgeted, but is not limited to, capital
improvements of approximately $190,000 during the current year which consists of
floor covering and appliance replacements, cabinet replacements, and heating and
air conditioning improvements. The Partnership has completed approximately
$32,000 in capital expenditures at Greensprings Manor Apartments as of March 31,
2000, consisting primarily of floor covering replacements and appliances. These
improvements were funded primarily from property operations. The property is
also undergoing a major renovation project to improve the exterior and interior
appearance of the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $23,943,000, net of discount, is amortized over
periods with required balloon payments ranging from November 15, 2002 to
December 1, 2009. The Managing General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Registrant
will risk losing such property through foreclosure.
No cash distributions were made during the three months ended March 31, 2000 or
1999. The Registrant's distribution policy is reviewed on a semi-annual basis.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancing and/or property sales. There can be no assurance,
however, that the Registrant will generate sufficient funds from operations
after planned capital expenditures to permit distributions to its partners in
2000 or subsequent periods. In addition, the Partnership may be restricted from
making distributions if the amount in the reserve accounts for Big Walnut and
Greensprings Manor Apartments is below $400 per unit or $333,000 in total. As of
March 31, 2000, the account balances were approximately $172,000 for Big Walnut
Apartments and $235,000 for Greensprings Manor Apartments.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the Managing General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer
of Control"). The plaintiffs seek monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the
Managing General Partner filed a motion seeking dismissal of the action. In lieu
of responding to the motion, the plaintiffs have filed an amended complaint. The
Managing General Partner filed demurrers to the amended complaint which were
heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement, settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the Managing General Partner and its
affiliates terminated the proposed settlement. Certain plaintiffs have filed a
motion to disqualify some of the plaintiffs' counsel in the action. The Managing
General Partner does not anticipate that costs associated with this case will be
material to the Partnership's overall operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K:
A Form 8-K dated December 30, 1999 was filed with the
Securities and Exchange Commission on January 6, 2000, in
connection with the sale of The Shoppes at River Rock.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DAVIDSON DIVERSIFIED REAL ESTATE II, L.P.
By: Davidson Diversified Properties, Inc.
Its Managing General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: May 10, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Davidson
Diversified Real Estate II 2000 First Quarter 10-QSB and is qualified in its
entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000750258
<NAME> Davidson Diversified Real EstateII
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 1,472
<SECURITIES> 0
<RECEIVABLES> 284
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 40,451
<DEPRECIATION> 21,900
<TOTAL-ASSETS> 21,177
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 23,943
0
0
<COMMON> 0
<OTHER-SE> (5,172)
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 1,891
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 535
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (360)
<EPS-BASIC> (288.34) <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
