<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
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Commission file number 0-14633
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DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3294820
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(State or other jurisdiction of (I.R.S. Employee
incorporation or organization) Identification No.)
27611 La Paz Road, P.O. Box A-1, Laguna Niguel, California 92677-0100
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(Address of principal executive offices) (Zip Code)
(714) 643-7700
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 12(g), 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding twelve 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
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<PAGE> 2
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED JUNE 30, 1996
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets -
June 30, 1996 (Unaudited) and December 31, 1995 . . . . . . . . . . . . . . . . . . . 3
Statements of Operations (Unaudited) -
Three and Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . 4
Statements of Cash Flows (Unaudited) -
Six Months Ended June 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements (Unaudited) . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
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(Unaudited) (Note)
<S> <C> <C>
ASSETS
- ------
Properties held for sale (net of valuation
allowance of $775,000 in 1996 and $707,000
in 1995) $23,425,000 $23,387,000
Investment in Cooper Village Partners 3,925,000 3,892,000
Cash and cash equivalents 1,416,000 1,055,000
Accounts receivable 79,000 29,000
Accrued rent receivable 498,000 527,000
Prepaid expenses and other assets 196,000 244,000
----------- -----------
$29,539,000 $29,134,000
=========== ===========
LIABILITIES AND PARTNERS' CAPITAL
- ---------------------------------
Accounts payable and accrued liabilities $ 708,000 $ 712,000
----------- -----------
Partners' capital(deficit):
Limited Partners 28,995,000 28,590,000
General Partner (164,000) (168,000)
----------- -----------
28,831,000 28,422,000
Commitments and contingencies - -
----------- -----------
$29,539,000 $29,134,000
=========== ===========
</TABLE>
Note: The balance sheet at December 31, 1995 has been prepared from the
audited financial statements as of that date.
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
--------------------------- ----------------------------
1996 1995 1996 1995
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
- --------
Rental income $1,227,000 $1,097,000 $2,403,000 $2,164,000
Interest income 15,000 14,000 28,000 29,000
---------- ---------- ---------- ----------
Total revenues 1,242,000 1,111,000 2,431,000 2,193,000
---------- ---------- ---------- ----------
EXPENSES
- --------
Operating expenses 251,000 279,000 515,000 533,000
Real estate taxes 182,000 181,000 380,000 365,000
Depreciation and amortization 17,000 319,000 33,000 640,000
General and administrative 164,000 171,000 316,000 335,000
Adjustment to carrying value
of real estate 68,000 - 68,000 -
---------- ---------- ---------- ----------
Total Expenses 682,000 950,000 1,312,000 1,873,000
---------- ---------- ---------- ----------
Income before equity
in earnings 560,000 161,000 1,119,000 320,000
Equity in earnings of Cooper
Village Partners 63,000 40,000 218,000 83,000
---------- ---------- ---------- ----------
NET INCOME $ 623,000 $ 201,000 $1,337,000 $ 403,000
========== ========== ========== ==========
NET INCOME ALLOCABLE TO:
General Partner $ 6,000 $ 2,000 $ 13,000 $ 4,000
========== ========== ========== ==========
Limited Partners $ 617,000 $ 199,000 $1,324,000 $ 399,000
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,337,000 $ 403,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 33,000 640,000
Equity in earnings of Cooper Village Partners (218,000) (83,000)
Adjustment to carrying value of real estate 68,000 -
Changes in:
Additions to properties held for sale (106,000) -
Accounts receivable (50,000) (74,000)
Accrued rent receivable 29,000 (52,000)
Prepaid expenses and other assets 15,000 40,000
Accounts payable and accrued liabilities (4,000) 46,000
---------- ----------
Net cash provided by operating activities 1,104,000 920,000
Cash flows from investing activities:
Investments in real estate - (96,000)
Distributions received from
Cooper Village Partners 185,000 151,000
---------- ----------
Net cash provided by investing activities 185,000 55,000
Cash flows from financing activities:
Distributions (928,000) (912,000)
---------- ----------
Net cash used in financing activities (928,000) (912,000)
Net increase in cash and cash equivalents 361,000 63,000
Cash and cash equivalents, beginning of period 1,055,000 1,058,000
---------- ----------
Cash and cash equivalents, end of period $1,416,000 $1,121,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
(1) Accounting Policies
-------------------
The financial statements of Damson/Birtcher Realty Income Fund-II,
Limited Partnership (the "Partnership") included herein have been
prepared by the General Partner, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. These
financial statements include all adjustments which are of a normal
recurring nature and, in the opinion of the General Partner, are
necessary for a fair 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 the rules and regulations of the
Securities and Exchange Commission. These financial statements should
be read in conjunction with the financial statements and notes thereto
included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1995.
Earnings Per Unit
The Partnership Agreement does not designate investment interests in
units. All investment interests are calculated on a "percent of
Partnership" basis, in part to accommodate reduced rates on sales
commissions for subscriptions in excess of certain specified amounts.
A Limited Partner who was charged a reduced sales commission or no
sales commission was credited with proportionately larger Invested
Capital and therefore had a disproportionately greater interest in the
capital and revenues of the Partnership than a Limited Partner who
paid commissions at a higher rate. As a result, the Partnership has
no set unit value as all accounting, investor reporting and tax
information is based upon each investor's relative percentage of
Invested Capital. Accordingly, earnings or loss per unit is not
presented in the accompanying financial statements.
Carrying Value of Real Estate
In March 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of," ("FAS 121"). This Statement requires that if the
General Partner believes factors are present that may indicate
long-lived assets are impaired, the undiscounted cash flows, before
debt service, related to the assets should be estimated. If these
estimated cash flows are less than the carrying value of the asset,
then impairment is deemed to exist. If impairment exists, the asset
should be written down to the estimated fair value.
6
<PAGE> 7
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
-------------------
Further, assets held for sale, including any unrecoverable accrued
rent receivable or capitalized leasing commissions, should be carried
at the lower of carrying value or fair value less estimated selling
costs. Any adjustment to carrying value is recorded as a valuation
allowance against property held for sale. Each reporting period, the
General Partner will review its estimates of fair value, which may be
decreased or increased up to the original carrying value. Finally,
assets held for sale are no longer depreciated. The General Partner
adopted FAS 121 at December 31, 1995 and the adoption did not have a
material impact on the Partnership's operations or financial position,
as prior to December 31, 1995, the Partnership had not had any
properties held for sale.
As noted above, as of December 31, 1995 the General Partner decided to
account for the Partnership's properties as assets held for sale,
assuming an average 12 month holding period, instead of for
investment. Accordingly, the General Partner compared the carrying
value of each property to its appraised value as of January 1, 1996.
If the carrying value of a property and certain related assets was
greater than its appraised value, less selling costs, the General
Partner reduced the carrying value of the property by the difference.
Using this methodology, the General Partner determined that Atrium
Place, Kennedy Corporate Center, Lakeland Industrial Park and Cooper
Village (58% interest) had carrying values greater than they had
appraised values, and therefore reduced their carrying values by
$167,000, $500,000, $40,000 and $789,000 to $829,000, $2,625,000,
$4,929,000 and $3,704,000, respectively.
For the six months ended June 30, 1996, the Partnership has spent a
total of $106,000 on building and tenant improvements at Kennedy
Corporate Center ($10,000), Lakeland Industrial Park ($43,000),
Ladera II ($2,000) and Creekridge ($51,000). Since these expenditures
had already been anticipated by the Partnership in 1995 and taken into
account in the third-party appraisals that form the basis of the
General Partner's estimate of the fair market value of the
Partnership's portfolio as of December 31, 1995, the General Partner
did not change its estimate of the fair market value of the portfolio
as of June 30, 1996.
(2) Transactions with Affiliates
----------------------------
The Partnership has no employees and, accordingly, the General Partner
and its affiliates perform services on behalf of the Partnership in
connection with administering the affairs of the Partnership. The
General Partner and affiliates are reimbursed for their general and
administrative costs actually incurred and associated with services
performed on behalf of the Partnership. For the three months ended
June 30, 1996 and 1995 the Partnership incurred approximately $31,000
and $34,000, respectively, of such expenses. For the six months ended
June 30, 1996 and 1995, such payments were $62,000 and $78,000
respectively.
7
<PAGE> 8
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(2) Transactions with Affiliates (Cont'd.)
--------------------------------------
An affiliate of the General Partner provides property management
services with respect to the Partnership's properties and receives a
fee for such services not to exceed 6% of the gross receipts from the
properties under management provided that leasing services are
performed, otherwise not to exceed 3%. Such fees amounted to
approximately $43,000 and $37,000, respectively, for the three months
ended June 30, 1996 and 1995, and $83,000 and $74,000 for the six
months ended June 30, 1996 and 1995 respectively. In addition, an
affiliate of the General Partner received $30,000 and $32,000 for the
three months ended June 30, 1996 and 1995, respectively, as
reimbursement of costs of on-site property management personnel and
other reimbursable expenses. For the six months ended June 30, 1996
and 1995, such expenses were $56,000 and $64,000, respectively.
Leasing fees for the six months ended June 30, 1996 and 1995, included
charges of $10,000 and $14,000, respectively, from the General Partner
and its affiliates for leasing services rendered in connection with
leasing space in a Partnership property after expiration or
termination of leases.
As previously reported on June 24, 1993, the Partnership completed its
solicitation of written consent from its Limited Partners. A majority
in interest of the Partnership's Limited Partners approved each of the
proposals contained in the Information Statement dated May 5, 1993.
Those proposals have been implemented by the Partnership as
contemplated by the Information Statement as amendments to the
Partnership Agreement, and are reflected in these financial statements
as such.
The amended Partnership Agreement provides for the Partnership's
payment to the General Partner of an annual asset management fee equal
to .75% of the aggregate appraised value of the Partnership's
properties as determined by independent appraisal undertaken in
January of each year. Such fees for the six months ended June 30,
1996 and 1995, amounted to $108,000 and $100,000, respectively.
In addition to the aforementioned, the General Partner was also paid
$20,000 and $22,000, related to the Partnership's portion (58%) of
asset management fees, property management fees, leasing fees,
reimbursement of on-site property management personnel and other
reimbursable expenses for Cooper Village Partners for the three months
ended June 30, 1996 and 1995, respectively. For the six months ended
June 30, 1996 and 1995, such cost were $42,000 and $42,000
respectively.
8
<PAGE> 9
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(3) Commitments and Contingencies
-----------------------------
Litigation
The Partnership is not a party to any pending legal proceedings other
than ordinary routine litigation incidental to its business. It is
the General Partner's belief that the outcome of these proceedings
will not be material to the business or financial condition of the
Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Liquidity and Capital Resources
-------------------------------
Since completion of its acquisition program in December 1988, the
Partnership has been engaged primarily in the operation of its
properties. The Partnership's objective has been to hold its
properties as long-term investments, although properties may be sold
at any time depending upon the General Partner's judgment of the
anticipated remaining economic benefits of continued ownership.
Working capital is and will be provided principally from the operation
of the Partnership's properties and the working capital reserve
established for the properties. The Partnership may incur mortgage
indebtedness relating to such properties by borrowing funds primarily
to fund capital improvements or to obtain sale or financing proceeds
for distribution to the Partners.
Certain of the Partnership's properties are not fully leased. The
Partnership is actively marketing the vacant space in these
properties, subject to the competitive environment in each of the
market areas. To the extent the Partnership is not successful in
maintaining or increasing occupancy levels at these properties, the
Partnership's future cash flow and distributions may be reduced.
Distributions through June 30, 1996 represent cash flow generated from
operations of the Partnership's properties and interest earned on the
temporary investment of working capital net of capital improvement
reserve requirements. Future cash distributions will be made
principally to the extent of cash flow attributable to operations and
sales of the Partnership's properties and interest earned on the
investment of capital reserve, after providing for capital reserve and
payment for capital improvements to the Partnership's properties.
In accordance with the terms of the Partnership Agreement, each year
the Partnership secures an independent appraisal of each of the
Partnership's properties as of January 1. Prior to the January 1,
1995 appraisals, the independent appraiser had estimated each
property's "Investment Value," utilizing a seven to ten-year cash
flow model to estimate value based upon an income approach.
9
<PAGE> 10
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
The amendment to the Partnership Agreement consented to by the Limited
Partners in June 1993 mandated, among other things, that the General
Partner seek a vote of (and provide an analysis and recommendation to)
the Limited Partners no later than December 31, 1996 regarding the
prompt liquidation of the Partnership in the event that properties
with (then) current appraised values constituting at least one-half of
the total (then) current appraised values of all of the Partnership's
properties are not sold or under contract for sale by the end of 1996.
Given that mandate, the General Partner requested that the appraiser
provide an assessment of value that reflects a shorter investment
holding term. Although the General Partner does not currently have a
specific liquidation plan for the Partnership's properties, it
requested that the appraiser assume that the entire portfolio would be
sold over four years, in connection with the January 1995 appraisals
and over three years in connection with the January 1996 appraisals.
Using the shorter-term investment methodology that is consistent with
the mandate of the 1993 amendment to the Partnership Agreement, the
appraiser estimated the value of the partnership's properties at
January 1, 1996 to be $30,355,000, or $5,772 per $10,000 original
investor subscription.
Over the past year, the General Partner has examined several
alternative methods to achieve the Partnership's goal of selling the
Partnership's properties and liquidating the Partnership at the
earliest practicable time consistent with achieving reasonable value
for the Limited Partners' investment. As explained in the
Partnership's May 5, 1993 Information Statement, "achieving reasonable
value" has meant for the Partnership to balance receiving higher sales
prices per property than their 1993 values while at the same time not
waiting forever to sell at a theoretical "top of the market."
Alternatives under consideration by the General Partner may include a
property-by-property liquidation or selling all the properties as a
single portfolio. The General Partner has had preliminary discussions
regarding disposition, in whole or in part, of the Partnership's
properties with various potential purchasers of some or all of the
Partnership's portfolio.
In connection with its consideration of these alternatives, the
General Partner has decided to treat its properties as held for sale,
instead of for investment, for financial statement purposes. In
accordance with Statement of Financial Accounting Standards No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of," the carrying value of these properties was
evaluated to ensure that each property was carried on
10
<PAGE> 11
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Liquidity and Capital Resources (Cont'd.)
-------------------------------
the Partnership's balance sheet at the lower of cost or fair value
less estimated selling costs. The General Partner estimated fair
value for this purpose based on appraisals performed as of January 1,
1996. However, fair value can only be determined based upon sales to
third parties and sales proceeds could differ substantially.
Based upon the General Partner's survey of the current marketplace,
the General Partner believes, in fact, that in the relatively short
term the Partnership's properties could generate sales prices that, in
the aggregate, could be materially less than their aggregate appraised
values based upon an "Investment Value" appraisal model. The amount
of the possible variance between the aggregate appraised values and
potential sales prices cannot be reliably estimated at this time,
because of the numerous variables that could affect the sales prices,
including but not limited to the time frame in which the properties
must be sold, method of sale (property-by-property or single
transaction), prevailing capitalization rates at which comparable
properties are being sold at the time of the Partnership's sales,
constantly changing local market conditions and the state of leasing
negotiations and capital expenditures for the properties at the time
of sale.
Results of Operations for the Three Months Ended June 30, 1996
Compared With the Three Months Ended June 30, 1995 and for the Six
Months Ended June 30, 1996 Compared With the Six Month Ended
June 30, 1995
------------------------------------------------------------------
The increase in revenue for the three and six months ended June 30,
1996, as compared to the corresponding period in 1995, was primarily
attributable to the following factors: at Lakeland Industrial Park
several new leases were successfully negotiated in mid 1995 and in
1996 which resulted in an increase in occupancy to a level of 100% and
an increase in revenue by approximately $10,000 and $39,000 for the
three and six month ended June 30, 1996, respectively, when compared
to the same periods in 1995. At Iomega, Iomega Corporation increased
its occupancy to 100% of the building effective August 1, 1995,
resulting in an increase in revenue by approximately $28,000 and
$57,000 for the three and six months ended June, 1996, respectively,
when compared to the same periods in 1995. At Creekridge, successful
negotiation of leases with California Growers Corp., in August 1995,
Premier Resorts, Inc. in December 1995, and Rada Advertising in April
1996 resulted in an increase in occupancy to a level of 98% and
increased revenue of approximately $45,000 and $52,000
11
<PAGE> 12
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended June 30, 1996
Compared With the Three Months Ended June 30, 1995 and for the Six
Months Ended June 30, 1996 Compared With the Six Month Ended
June 30, 1995 (Cont'd.)
------------------------------------------------------------------
for the three and six months ended June 30, 1996, respectively, when
compared to the same periods in 1995. Operating expense recoveries
also increased at Creekridge in 1996.
Interest income resulted from the temporary investment of partnership
working capital. For the three and six months ended June 30, 1996
interest income was generally comparable to the same periods in 1995.
The increase in real estate taxes for the six months ended June 30,
1996, as compared to the corresponding period in 1995, was primarily
attributable to the increase in real estate tax assessment at
Creekridge. The aforementioned increase was partially offset by a
decrease in real estate taxes at Atrium Place, which was the result of
a successful tax appeal in 1996.
The decrease in operating expenses for the three months ended June 30,
1996, as compared to the corresponding period in 1995, was primarily
attributable to a decrease in cleaning, HVAC repairs, landscaping
repairs and maintenance at Kennedy Corporate Center ($12,000). In
addition, building repairs, HVAC repairs and utility costs were lower
at Creekridge ($10,000). On-site payroll expenses also decreased at
Lakeland Industrial Park ($4,000).
The decrease in operating expenses for the six months ended June 30,
1996, as compared to the corresponding period in 1995, was primarily
attributable to the decrease in cleaning cost, HVAC repairs and
landscaping repairs at Kennedy Corporate Center ($11,000). In
addition, on-site payroll and utility costs were lower at Lakeland
Industrial Park ($13,000). The aforementioned decreases were
partially offset by an increase in management fees at Creekridge
($6,000)
The Partnership adjusted the carrying value of the portfolio by
$68,000, which is the amount spent on the building improvements,
tenant improvements, leasing commissions and other related assets for
Lakeland Industrial Park and Kennedy Corporate Center.
The decrease in depreciation and amortization expense for the six
moths ended June 30, 1996 as compared to the corresponding period in
1995, was attributable to the adoption of statement of Financial
Account Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of," pursuant to
which assets held for sale are no longer depreciated.
12
<PAGE> 13
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (Cont'd.)
Results of Operations for the Three Months Ended June 30, 1996
Compared With the Three Months Ended June 30, 1995 and for the Six
Months Ended June 30, 1996 Compared With the Six Month Ended
June 30, 1995 (Cont'd.)
------------------------------------------------------------------
The increase in equity in earnings of Cooper Village Partners for the
six months ended June 30, 1996, as compared to the corresponding
period in 1995, was primarily attributable to the Partnership's
portion (58%) of a $127,000 lease termination settlement fee collected
from Boston Stores in March 1996.
General and administrative expenses for the six months ended June 30,
1996 and 1995 include charges of $181,000 and $192,000, respectively,
from the General Partner and its affiliates for services rendered in
connection with administering the affairs of the Partnership and
operating the Partnership's properties. Also included in general and
administrative expenses for the six months ended June 30, 1996 and
1995 are direct charges of $135,000 and $143,000, respectively,
relating to audit fees, tax preparation fees, legal and professional
fees, insurance expenses, costs incurred in providing information to
the Limited Partners and other miscellaneous costs.
The decrease in general and administrative expenses for the three
months ended June 30, 1996, as compared to the corresponding period
in 1995, was primarily attributable to a decrease in leasing fees and
appraisal fees.
The decrease in general and administrative expenses for the six months
ended June 30, 1996, as compared to the corresponding period in 1995,
was primarily attributable to the decrease in general and
administrative wages, leasing fees and appraisal fees.
13
<PAGE> 14
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
So far as is known to the General Partner, neither the Partnership nor
its properties are subject to any material pending legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
27 - Financial Data Schedule
b) Reports on Form 8-K:
None filed in quarter ended June 30, 1996.
14
<PAGE> 15
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
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.
<TABLE>
<CAPTION>
<S> <C>
DAMSON/BIRTCHER REALTY INCOME FUND-II
By: BIRTCHER/LIQUIDITY PROPERTIES By: BIRTCHER INVESTORS,
(General Partner) a California limited partnership
By: BIRTCHER INVESTMENTS,
a California general partnership,
General Partner of Birtcher Investors
By: BIRTCHER LIMITED,
a California limited partnership,
General Partner of Birtcher Investments
By: BREICORP,
a California corporation,
formerly known as Birtcher
Real Estate Inc., General
Partner of Birtcher Limited
Date: August 12, 1996 By: /s/ ROBERT M. ANDERSON
------------------------------
Robert M. Anderson
Executive Director
BREICORP
By: LF Special Fund I, L.P.,
a California limited partnership
By: Liquidity Fund Asset Management, Inc.,
a California corporation, General
Partner of LF Special Fund I, L.P.
Date: August 12, 1996 By: /s/ BRENT R. DONALDSON
-------------------------------
Brent R. Donaldson
President
Liquidity Fund Asset
Management, Inc.
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF OPERATIONS OF DAMSON BIRTCHER REALTY INCOME FUND II AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,416,000
<SECURITIES> 0
<RECEIVABLES> 79,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,189,000
<PP&E> 23,425,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,539,000
<CURRENT-LIABILITIES> 708,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 28,831,000
<TOTAL-LIABILITY-AND-EQUITY> 29,539,000
<SALES> 0
<TOTAL-REVENUES> 2,649,000
<CGS> 0
<TOTAL-COSTS> 1,244,000
<OTHER-EXPENSES> 68,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,337,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,337,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
