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, 1996
Commission File Number: 01-16874
National Real Estate Limited Partnership
Income Properties-II
(Exact name of registrant as specified in its charter)
Wisconsin
39-1553195
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification Number)
9800 West Bluemound Road, Wauwatosa, Wisconsin
53226-4353
(Address of principal executive offices)
(zip code)
Registrant's telephone number, including area code:
(414) 453-3498
N/A
Former name, address and fiscal year if changed since
last report.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Sections 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.
(X) Yes (X) No
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
INDEX
Page
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - September 30, 1996
and December 31, 1995 . . . . . . . . . . . . . .2
Statement of Operations (unaudited) - Three months and
nine months
ended September 30, 1996 and 1995 . . . . . . . .3
Statement of Cash Flows (unaudited) -
Nine months ended September 30, 1996 and 1995 . .4
Notes to Financial Statements (unaudited) . . .5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation. . .7
PART II. OTHER INFORMATION AND SIGNATURES . . .8-9
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
Current Assets:
Cash $ 445,566 $ 478,326
Escrow and other deposits (Note 5)
11,532 0
Accounts receivable and other assets
5,557 9,671
Other Assets:
Investment properties, at cost
Land 516,590 516,590
Buildings and improvements
4,146,875 4,145,090
4,663,466 4,661,680
Less accumulated depreciation
1,231,890 1,125,982
3,431,575 3,535,698
Intangible Assets:
Debt issue costs, net of accumulated amortization
of $5720 as of December 31, 1996 and
$3,700 as of December 31, 1995
842 2,357
$ 3,895,073 $ 4,026,052
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses and other liabilities
$ (15,045) $ 926
Tenant security deposits
26,440 26,050
Mortgage notes payable (Note 6)
459,021 491,333
Rent received in advance
16,157 10,017
486,573 528,326
Partners' Capital (Note 3):
General Partners (deficit)
36,088 33,579
Limited Partners
(authorized----40,000 Interests;
3,372,411 3,464,147
outstanding--20,653.69)
3,408,500 3,497,726
$ 3,895,073 $ 4,026,052
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROERTIES-II
(A Wisconsin Limited Partnership)
Statement of Operations
(Unaudited)
Three Months Ended Nine Months ended
September 30,
September 30,
19965 19954 19965 19954
Income:
Operating Income
$175,431 $183,849 $531,991 $563,661
175,431 183,849 531,991 563,661
Operating expenses:
Operating
86,398 79,674 260,525 237,799
Administration
29,731 26,898 97,503 85,227
Depreciation and amortization
35,808 35,620 107,423 106,858
Interest (Note 6)
12,273 17,001 50,700 40,009
164,210 160,073 502,220 470,773
Income (Loss) from operations
11,221 23,776 29,771 92,888
Other income (expense):
Interest and other income
7,980 12,091 20,416 25,613
Net Income/(Loss)
$19,201 $35,867 50,186 118,501
Net Income/(Loss) attributable to
General Partners (5%)
$960 $1,793 2,509 5,925
Net Income/Loss attributable to
Limited Partners (95%)
$18,241 $34,074 47,676 112,576
Per Limited Partnership
Interest outstanding-20,053.00
$0.00 $1.06 2.31 5.46
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1996 1995
Operating Activities:
Net income (loss) for the period
$50,186 $118,501
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization
105,908 105,344
Amortization of debt issue costs
1,515 1,515
Gain on retirement of personal property
0 793
Changes in operating assets and
liabilities:
Escrow deposits and other assets
(7,418) 3,030
Rents received in advance
6,140 1,609
Accrued expenses and other liabilities
(15,971) (570)
Tenant security deposits
390 (550)
Accrued real estate taxes
0 0
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
140,750 229,672
Investment activity:
Additions to investment property
(1,786) (5,556)
Financing activities:
Distributions to partners
(139,412) (92,942)
Proceeds from mortgage note payable
0 0
Payments on mortgage note payable
(32,312) (33,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES
(171,725) (125,942)
INCREASE (DECREASE) IN CASH
(32,760) 98,174
Cash at beginning of period
478,326 369,244
CASH AT END OF PERIOD
$445,566 $467,418
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 1996
1. In the opinion of the General Partners, the
accompanying unaudited financial statements
contain all adjustments (consisting of normal
recurring accruals) which are necessary for a fair
presentation. The statements, which do not include
all of the information and footnotes required by
generally accepted accounting principles for
complete financial statements, should be read in
conjunction with the National Real Estate Limited
Partnership Income Properties-II annual report for
the year ended December 31, 1995. Refer to the
footnotes of those statements for additional
details of the Partnership's financial condition.
The operating results for the period ended
September 30, 1996 may not be indicative of the
operating results for the entire year.
2. National Real Estate Limited Partnership Income
Properties-II (the "Partnership") was organized
under the Wisconsin Uniform Limited Partnership
Act pursuant to a Certificate of Limited
Partnership dated June 5, 1986, to acquire
primarily existing commercial and residential real
properties and hotels. John Vishnevsky and
National Development and Investment, Inc., have
contributed the sum of $1,000 to the Partnership
as General Partners. The Limited Partnership
Agreement had authorized the issuance of 40,000
Limited Partnership Interests (the "Interests") at
$250 per Interest with the offering period running
from August 18, 1986 through August 18, 1988. On
August 18, 1988, the Partnership concluded its
offering and capital contributions totaled
$5,163,031 for 20,653.69 Limited Partnership
Interests.
Pursuant to the Escrow Agreement with the First
Wisconsin Trust Company, Milwaukee, Wisconsin,
until the minimum number of Interests (4,850) and
investors (100) were subscribed, payments were
impounded in a special interest-bearing escrow
account. On February 2, 1987, the Partnership
received the required minimum capital
contributions and $1,332,470, representing
5,329.88 Interests, was released to the
Partnership.
3. Changes in Partners' Equity:
LIMITED PARTNERS
Quarter Ended September 30, 1996
Partners' Equity, beginning of quarter $3,400,641
Distributions (46,471)
Net Income (Loss) 18,240
Partners' Equity, end of quarter $3,372,410
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $3,476,549
Distributions (30,981)
Net Income (Loss) 32,274
Partners' Equity, end of quarter $3,477,842
GENERAL PARTNERS
Quarter Ended September 30, 1996
Partners' Equity, beginning of quarter $35,128
Distributions --
Net Income (Loss) 960
Partners' Equity, end of quarter $36,088
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $23,634
Distributions --
Net Income (Loss) 1,699
Partners' Equity, end of quarter $25,333
TOTAL
Quarter Ended September 30, 1996
Partners' Equity, beginning of quarter $3,435,769
Distributions (46,471)
Net Income (Loss) 19,200
Partners' Equity, end of quarter $3,408,498
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $3,500,183
Distributions (30,981)
Net Income (Loss) 33,973
Partners' Equity, end of quarter $3,503,175
4. National Realty Management, Inc. (NRMI): The
Partnership incurred property management fees of
$28,145 under an agreement with NRMI for the nine
month period ended September 30, 1996.
5. The mortgage note payable is secured by Amberwood
Apartments. Monthly principal and interest
payments are required in amounts sufficient to
fully amortize the loan over 15 years. The
interest rate is adjustable annually at 1.5% plus
First Michigan Bank prime rate and is currently at
10.25%. The note matures on March 1, 1997.
Maturities of the mortgage from 1996 to 1997 based
on the current accrual rate, are as follows:
$44,000, and $447,333.
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
September 30, 1996
The Partnership owns and operates two investment
properties: a portion of Cave Creek Lock-It Lockers,
located in Phoenix, Arizona, and the Amberwood
Apartments, a 56-unit apartment complex in Holland,
Michigan.
National Real Estate Limited Partnership Income
Properties ("NRELP-IP") owns the remaining portion of
Cave Creek Lock-It Lockers. National Real Estate
Limited Partnership-VI ("NRELP-VI") owned 12 units of
Amberwood through February 28, 1992, at which time the
units were sold to the Partnership for $660,000 and a
Future Interest Proceeds Agreement. The purchase was
funded by proceeds of a first mortgage note. The
mortgage is collateralized by all 56 units of Amberwood
Apartments. The Partnership is contingently liable to
pay NRELP-VI proceeds from a future sale of Amberwood
Apartments as set forth in a Future Interest Proceeds
Agreement. Upon the future sale of Amberwood
Apartments, NRELP-VI is entitled to receive 50% of the
net sales price above $57,500 per unit (reduced by
normal selling costs) until the Partnership earns a
cumulative return of 20% on its investment. Beyond
that, once the Partnership earns its cumulative return
of 20% on its investment, NRELP-VI will receive 60% of
the net sales price above $57,500 per unit. NRELP-IP
and NRELP-VI are Wisconsin limited partnerships,
affiliated with the General Partners.
Amberwood is located in a wooded setting and is
conveniently located near shopping, bike paths and
businesses, and offers superior amenities.
Amberwood's occupancy rate for the third quarter of
1996 was 96.5%. Cave Creek Lock-It Lockers' occupancy
during the same period was 94.2% based on net rentable
square footage. During the comparable period in 1995
occupancy rates were 100% for Amberwood and 98% for
Cave Creek Lock-It Lockers.
Total operating revenues for Cave Creek Lock-It Lockers
in 1996 are in line with the comparable period of 1995.
Total operating revenue for Amberwood Apartments
decreased due to higher vacancies. Operating expenses
have increased over the same quarter of 1995 due to
increased maintenance expense at Amberwood Apartments
and Cave Creek Lock-It Lockers. Interest expense
remained in line with the same quarter of 1995.
The distributions have increased to $2.25 per share per
quarter and totaled $46,470.80 for the third quarter.
These distributions are required to be allocated 100%
to the Limited Partners, as outlined in the prospectus.
<PAGE>
PART II. OTHER INFORMATION
Item 6(b). Reports on Form 8-K
There were no reports on Form 8-K for the quarter
ended September 30, 1996.
<PAGE>
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.
National Real Estate Limited Partnership
Income Properties-II
(Registrant)
Date November 15, 1996
/S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/November 15, 1996
/S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/November 15, 1996
Stephen P. Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
F:\WPDOCS\LETTERS\NIP2-3QT.EL6
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<PERIOD-END> SEP-30-1996
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<RECEIVABLES> 5557
<ALLOWANCES> 0
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0
0
<COMMON> 0
<OTHER-SE> 3408500<F1>
<TOTAL-LIABILITY-AND-EQUITY> 3895073
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<TOTAL-REVENUES> 552407
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 502220
<LOSS-PROVISION> 0
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<FN>
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<F2>95% Limited Partners - Interests outstanding=20653.69.
</FN>
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