SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 25, 1999
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-14941
CAMBRIDGE ADVANTAGED
PROPERTIES II LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 13-3330195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securi-
ties 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 X No ____
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
<CAPTION>
June 25, March 25,
1999 1999
<S> <C> <C>
ASSETS
Property and equipment - net of
accumulated depreciation of
$47,416,294 and $46,716,125,
respectively $67,211,087 $67,909,812
Cash and cash equivalents 1,441,267 1,449,846
Cash - restricted for tenants'
security deposits 566,970 583,583
Mortgage escrow deposits 2,316,611 2,476,406
Deferred costs, net of
accumulated amortization
of and $1,173,220 and
$1,070,872, respectively 1,949,676 2,027,363
Prepaid expenses and other assets 558,472 258,296
Total assets $74,044,083 $74,705,306
LIABILITIES AND PARTNERS' DEFICIT
Liabilities
Mortgage notes payable $ 89,760,273 $ 89,892,922
Accounts payable, accrued
expenses and other liabilities 7,224,837 7,434,059
Tenants' security deposits payable 566,970 583,583
Due to general partners of
subsidiaries and
their affiliates 1,591,565 1,581,637
Due to general partners and
affiliates 6,856,415 6,549,593
Total liabilities 106,000,060 106,041,794
Minority interest 4,593,159 4,626,130
Commitments and contingencies
(Note 3)
Partners' deficit:
Limited partners (35,866,098) (35,285,445)
General partners (683,038) (677,173)
Total partners' deficit (36,549,136) (35,962,618)
Total liabilities and partners'
deficit $ 74,044,083 $ 74,705,306
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended
June 25,
1999 1998
<S> <C> <C>
Revenues
Rentals, net $4,214,677 $4,039,565
Other 158,600 154,854
Total revenues 4,373,277 4,194,419
Expenses
Administrative and management 734,079 734,117
Administrative and management-
related parties (Note 2) 384,834 366,535
Operating 323,947 318,445
Repairs and maintenance 524,793 540,282
Taxes and insurance 454,596 476,389
Interest 1,736,908 1,750,646
Depreciation and amortization 802,517 834,923
Total expenses 4,961,674 5,021,337
Loss before minority interest
and extraordinary item (588,397) (826,918)
Minority interest in loss of
subsidiaries 1,879 11,825
Net Loss $ (586,518) $ (815,093)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Deficit
(Unaudited)
<CAPTION>
Limited General
Total Partners Partners
<S> <C> <C> <C>
Balance-
March 26, 1999 $(35,962,618) $(35,285,445) $(677,173)
Net loss-three
months ended
June 25, 1999 (586,518) (580,653) (5,865)
Balance-
June 25, 1999 $(36,549,136) $(35,866,098) $(683,038)
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Decrease) Increase in Cash and Cash Equivalents
(Unaudited)
<CAPTION>
Three Months Ended
June 25,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(586,518) $(815,093)
Adjustments to reconcile net
loss to net cash provided by
operating activities:
Depreciation and amortization 802,517 834,923
Minority interest in loss of
subsidiaries (1,879) (11,825)
Decrease (increase) in cash-restricted
for tenants' security deposits 16,613 (71,410)
Decrease (increase) in mortgage
escrow deposits 196,365 (265,651)
Increase in prepaid
expenses and other assets (300,176) (21,993)
(Decrease) increase in accounts payable,
accrued expenses and other
liabilities (209,222) 449,356
(Decrease) increase in tenants'
security deposits payable (16,613) 71,410
Increase in due to general partners
of subsidiaries and their affiliates 9,928 0
Decrease in due to general partners
of subsidiaries and their affiliates 0 (234,255)
Increase in due to general partners
and affiliates 306,822 180,609
Total adjustments 804,355 931,164
Net cash provided by operating
activities 217,837 116,071
Cash flows from investing activities:
Increase in mortgage reserve deposits (36,570) 0
Acquisitions of property and
equipment (1,444) (11,357)
Net cash used in investing activities (38,014) (11,357)
Cash flows from financing activities:
Principal payments of mortgage
notes payable (132,649) (224,382)
Decrease in capitalization
of consolidated subsidiaries
attributable to minority interest (31,092) (18,000)
Increase in deferred costs (24,661) (30,001)
Net cash used in financing
activities (188,402) (272,383)
Net decrease in cash and
cash equivalents (8,579) (167,669)
Cash and cash equivalents-
beginning of period 1,449,846 1,011,604
Cash and cash equivalents-
end of period $1,441,267 $ 843,935
See Accompanying Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED
PARTNERSHIP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 25, 1999
(Unaudited)
Note 1 - General
The consolidated financial statements for the three months ended
June 25, 1999 and 1998 include the accounts of Cambridge Advan-
taged Properties II Limited Partnership, (the "Partnership"), and
ten subsidiary partnerships ("subsidiaries", "subsidiary partner-
ships" or "Local Partnerships"), respectively. The Partnership is a
limited partner, with an ownership interest of 98% in each of the
subsidiary partnerships. Through the rights of the Partnership
and/or one of its general partners (a "General Partner"), which
General Partner has a contractual obligation to act on behalf of the
Partnership, to remove the general partner of the subsidiary part-
nerships (the "Local General Partners") and to approve certain
major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary partnerships.
For financial reporting purposes, the Partnership's fiscal quarter
ends June 25. All subsidiaries have fiscal quarters ending March
31. Accounts of the subsidiary partnerships have been adjusted
for intercompany transactions from April 1 through June 25. The
Partnership's fiscal quarter ends on June 25 in order to allow ade-
quate time for the subsidiaries' financial statements to be prepared
and consolidated. The books and records of the Partnership are
maintained on the accrual basis of accounting, in accordance with
generally accepted accounting principles ("GAAP").
All intercompany accounts and transactions have been eliminated
in consolidation.
Increases (decreases) in the capitalization of consolidated subsidi-
aries attributable to minority interest arise from cash contributions
and cash distributions to the minority interest partners.
The Partnership's investment in each subsidiary is equal to the
respective subsidiary's partners' equity less minority interest capi-
tal, if any. Losses attributable to minority interests which exceed
the minority interests' investment in a subsidiary have been
charged to the Partnership. Such losses aggregated approximately
$5,800 and $500 for the three months ended June 25, 1999 and
1998, respectively. In consolidation, all subsidiary partnership
losses are included in the Partnership's capital account except for
losses allocated to minority interest capital.
The unaudited financial statements have been prepared on the
same basis as the audited financial statements included in the
Partnership's Form 10-K for the year ended March 25, 1999. In the
opinion of the General Partners, the accompanying unaudited
financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the fi-
nancial position of the Partnership as of June 25, 1999 and the
results of operations and cash flows for the three months ended
June 25, 1999 and 1998, respectively. However, the operating
results for the three months ended June 25, 1999 may not be in-
dicative of the results for the year.
Certain information and note disclosures normally included in
financial statements prepared in accordance with GAAP have
been omitted. It is suggested that these consolidated financial
statements should be read in conjunction with the financial state-
ments and notes thereto included in the Partnership's March 25,
1999 Annual Report on Form 10-K.
As of June 25, 1999, several subsidiary partnerships are experi-
encing financial difficulties. There is substantial doubt about the
Partnership's ability to continue as a going concern. Recoverabil-
ity of a significant portion of the Partnership's investments will
depend upon material improvements in the ability of each sub-
sidiary partnership to meet its debt service obligations. In addi-
tion, the level of cash distributions provided to the Partnership by
the Local Partnerships have not been sufficient, and may not be
sufficient in the future, to cover the Partnership's operating ex-
penses. As a result, the Partnership has required, and may in the
future require, funding from other sources for such purposes.
There can be no assurance that the Partnership will be successful
in obtaining such financing. The consolidated financial statements
do not include any adjustments that might result from the out-
come of these uncertainties. See Note 3 and the Partnership's
March 25, 1999 Annual Report on Form 10-K for management's
intentions.
Note 2 - Related Party Transactions
One of the General Partners of the Partnership, Related and Cam-
bridge Associates Limited Partnership ("Related and Cambridge
Associates"), has a 1% interest as a special limited partner in each
of the subsidiary partnerships.
Whitney Management Corp., an affiliate of the General Partners, is
the managing agent of three properties.
<TABLE>
Fees incurred to related parties for the three months ended June
25, 1999 and 1998 were as follows:
<CAPTION>
Three Months Ended
June 25,
1999 1998
<S> <C> <C>
Partnership management fees (a) $161,000 $161,000
Expense reimbursement (b) 23,925 16,000
Property management fees incurred
to affiliates of the
General Partners (c) 137,094 128,514
Local administrative fee (d) 2,000 3,000
Total general and administrative-
General Partners 324,019 308,514
Property management fees incurred
to affiliates of the subsidiary
partnerships' general partners (c) 60,815 58,021
Total general and administrative-
related parties $384,834 $366,535
</TABLE>
(a) After all other expenses of the Partnership are paid, an annual
partnership management fee of up to .5% of invested assets is
payable to the Partnership's General Partners and affiliates. Part-
nership management fees have been charged to operations and are
included in administrative and management-related parties ex-
penses. Partnership management fees owed to the General Part-
ners amounting to approximately $2,658,000 and $2,497,000 were
accrued and unpaid as of June 25, 1999 and March 25, 1999, re-
spectively.
(b) An affiliate of Related Advantaged Residential Associates, Inc.
(the "Related General Partner") performs services for the Partner-
ship which include, but are not limited to: accounting and fi-
nancing management, registrar, transfer and assignment func-
tions, asset management, investor communications, printing and
other administrative services. The amount of reimbursement from
the Partnership is limited by the provisions of the Partnership
Agreement. Another affiliate of the Related General Partner per-
forms asset monitoring for the Partnership. These services include
site visits and evaluations of the subsidiary partnerships' perform-
ance. Expense reimbursements and asset monitoring fees owed to
the Related General Partner amounting to approximately $649,000
and $626,000 were accrued and unpaid as of June 25, 1999 and
March 25, 1999, respectively.
(c) Property management fees paid by subsidiary partnerships
amounted to $211,693 and $198,198 for the three months ended
June 25, 1999 and 1998, respectively. Of these fees $138,798 and
$92,516 were incurred to affiliates of the subsidiary general part-
ners. In addition, $137,094 and $128,514 were incurred to affiliates
of the General Partners for the three months ended June 25, 1999
and 1998. Of such amounts incurred to affiliates of the General
Partners, $77,983 and $34,495 are also included in amounts in-
curred to affiliates of the subsidiary partners because they were
incurred to affiliates of both.
(d) Related and Cambridge Associates, a limited partner of the
subsidiary partnerships, is entitled to receive a local administra-
tive fee of up to $2,500 per year from each subsidiary partnership.
Note 3 - Commitments and Contingencies
There were no material changes and/or additions to disclosures
regarding the subsidiary partnerships which were included in the
Partnership's Annual Report on Form 10-K for the period ended
March 25, 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Con-
dition and Results of Operations
Liquidity and Capital Resources
The Partnership's primary source of funds are the cash distribu-
tions from operations of the Local Partnerships in which the Part-
nership has invested. These sources are available to meet obliga-
tions of the Partnership. However, the cash distributions received
from the Local Partnerships to date have not been sufficient to
meet all such obligations of the Partnership. During the three
months ended June 25, 1999 and 1998 such distributions
amounted to approximately $134,000 and $178,000, respectively.
Accordingly, the Related General Partner advanced funds to meet
the Partnership's third party obligations with remaining unpaid
balances due to the Related General Partner totaling approxi-
mately $3,007,000 and $2,859,000 at June 25, 1999 and March 25,
1999, respectively. In addition, certain fees and expense reim-
bursements owed to the General Partners amounting to approxi-
mately $3,307,000 and $3,122,000 were accrued and unpaid as of
June 25, 1999 and March 25, 1999, respectively. Without the Gen-
eral Partners' advances and continued accrual without payment of
certain fees and expense reimbursements, the Partnership will not
be in a position to meet its obligations. The General Partners have
continued advancing and allowing the accrual without payment
of these amounts, but are under no obligation to do so.
During the three months ended June 25, 1999, cash and cash
equivalents of the Partnership and its ten consolidated Local Part-
nerships decreased approximately $9,000. This decrease was pri-
marily attributable to an increase in mortgage reserve deposits
($37,000), a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($31,000), an increase in deferred
costs ($25,000) and principal payments of mortgage notes payable
($133,000) which exceeded cash flow provided by operating activi-
ties ($218,000). Included in the adjustments to reconcile the net
loss to cash flow provided by operating activities is depreciation
and amortization ($803,000).
For a discussion of contingencies affecting certain Local Partner-
ships, see Notes 1 and 3 to the Financial Statements.
Management is not aware of any trends or events, commitments
or uncertainties, which have not otherwise been disclosed, that
will or are likely to impact liquidity in a material way. Manage-
ment believes the only impact would be from laws that have not
yet been adopted. The portfolio is diversified by the location of
the properties around the United States so that if one area of the
United States is experiencing downturns in the economy, the re-
maining properties in the portfolio may be experiencing upswings.
However, the geographic diversification of the portfolio may not
protect against a general downturn in the national economy.
Results of Operations
The results of operations of the Partnership, as well as the Local
Partnerships remained fairly consistent during the three months
ended June 25, 1999 and 1998. The majority of Local Partnership
income continues to be in the form of rental income with the cor-
responding expenses being divided among operations, deprecia-
tion and mortgage interest.
Rental income increased approximately 4% for the three months
ended June 25, 1999 as compared to the corresponding period in
1998, due to an increase in occupancy at three Local Partnerships
and rental rate increases.
Total expenses remained fairly consistent with a decrease of ap-
proximately 1% for the three months ended June 25, 1999 as com-
pared to 1998.
Year 2000 Compliance
The Partnership utilizes the computer services of an affiliate of the
General Partners. The affiliate of the General Partners have up-
graded their computer information systems to be year 2000 com-
pliant. The most likely worst case scenario that the General Part-
ners face is that computer operations will be suspended for a few
days to a week commencing on January 1, 2000. The Partnership
contingency plan is to have (i) a complete backup done on De-
cember 31, 1999 and (ii) both electronic and printed reports gener-
ated for all critical data up to and including December 31, 1999.
In regard to third parties, the General Partners are in the process
of evaluating the potential adverse impact that could result from
the failure of material service providers to be year 2000 compliant.
A detailed survey and assessment was sent to the material service
providers in the fourth quarter of 1998. The Partnership has re-
ceived assurances from a majority of the material service provid-
ers with which it interacts that they have addressed the year 2000
issues and is evaluating these assurances for their adequacy and
accuracy. In cases where the Partnership has not received assur-
ances from third parties, it is initiating further mail and/or phone
correspondence. The Partnership relies heavily on third parties
and is vulnerable to the failures of third parties to address their
year 2000 issues. There can be no assurance given that the third
parties will adequately address their year 2000 issues.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were
filed during the quarter.
<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.
CAMBRIDGE ADVANTAGED
PROPERTIES II LIMITED PARTNERSHIP
(Registrant)
By: RELATED ADVANTAGED RESIDENTIAL
ASSOCIATES, INC., a General Partner
Date: July 13, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Senior Vice President
(principal financial officer)
Date: July 13, 1999
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
By: RELATED AND CAMBRIDGE ASSOCIATES,
LIMITED PARTNERSHIP,
a General Partner
By: Related Advantaged Residential
Associates, Inc.,
its General Partner
Date: July 13, 1999
By: /s/ Alan P. Hirmes
Alan P. Hirmes,
Senior Vice President
(principal financial officer)
Date: July 13, 1999
By: /s/ Glenn F. Hopps
Glenn F. Hopps,
Treasurer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted
from the financial statements for Cambridge Advantaged Proper-
ties II Limited Partnership and is qualified in its entirety by refer-
ence to such financial statements
</LEGEND>
<CIK> 0000771996
<NAME> Cambridge Advantaged Properties II Limited Partner-
ship
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-25-2000
<PERIOD-START> MAR-26-1999
<PERIOD-END> JUN-25-1999
<CASH> 1,441,267
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,442,053
<PP&E> 114,627,381
<DEPRECIATION> 47,416,294
<TOTAL-ASSETS> 74,044,083
<CURRENT-LIABILITIES> 16,239,787
<BONDS> 89,760,273
0
0
<COMMON> 0
<OTHER-SE> (31,955,977)
<TOTAL-LIABILITY-AND-EQUITY> 74,044,083
<SALES> 0
<TOTAL-REVENUES> 4,373,277
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,224,766
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,736,908
<INCOME-PRETAX> (588,397)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (586,518)
<EPS-BASIC> (81)
<EPS-DILUTED> 0
</TABLE>
