<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 September 30, 1997
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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. Employer
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
--- ---
<PAGE> 2
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
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INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Net Assets in Liquidation --
September 30, 1997 (Unaudited).............................3
Statement of Changes of Net Assets in Liquidation --
Three Months Ended September 30, 1997 (Unaudited)..........4
Balance Sheet --
December 31, 1996..........................................5
Statements of Operations (Unaudited) --
Three Months Ended March 31, 1997 and Three and Nine
Months Ended September 30, 1996............................6
Statement of Cash Flows (Unaudited) --
Nine Months Ended September 30, 1996.......................7
Notes to Financial Statements (Unaudited)..................8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............12
PART II. OTHER INFORMATION.........................................14
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
-----------------------------
ITEM 1. FINANCIAL STATEMENTS
--------------------
DAMSON/BIRTCHER REALTY INCOME FUND-II
STATEMENT OF NET ASSETS IN LIQUIDATION
SEPTEMBER 30, 1997
(UNAUDITED)
--------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS (Liquidation Basis):
- ---------------------------
Properties held for sale $23,075,000
Investment in Cooper Village Partners 3,643,000
Cash and cash equivalents 1,449,000
Accounts receivable 97,000
Other assets 35,000
-----------
Total Assets 28,299,000
-----------
LIABILITIES (Liquidation Basis):
- --------------------------------
Accounts payable and accrued liabilities 757,000
Accrued expenses for liquidation 281,000
-----------
Total Liabilities 1,038,000
Net Assets in Liquidation $27,261,000
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
STATEMENT OF CHANGES OF NET ASSETS IN LIQUIDATION
FOR THE PERIOD FROM JULY 1, 1997 TO SEPTEMBER 30, 1997
(UNAUDITED)
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<TABLE>
<CAPTION>
<S> <C>
Net assets in liquidation at June 30, 1997 $27,188,000
Increase (decrease) during period:
Operating activities:
Property operating income, net 774,000
Cooper Village equity income 48,000
Interest income 18,000
General and administrative expenses (194,000)
Leasing commissions (11,000)
-----------
635,000
-----------
Liquidating activities:
Distribution to partners (562,000)
-----------
(562,000)
Net increase in assets in liquidation 73,000
-----------
Net assets in liquidation at September 30, 1997 $27,261,000
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
BALANCE SHEET
DECEMBER 31, 1996
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<TABLE>
<CAPTION>
<S> <C>
ASSETS
Properties held for sale (net of valuation
allowance of $1,028,000) $22,318,000
Investment in Cooper Village Partners 3,630,000
Cash and cash equivalents 1,639,000
Accounts receivable 30,000
Accrued rent receivable 436,000
Prepaid expenses and other assets 159,000
-----------
$28,212,000
===========
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable and accrued liabilities $ 636,000
-----------
Partners' capital(deficit):
Limited Partners 27,746,000
General Partner (170,000)
-----------
27,576,000
Commitments and contingencies
-----------
$28,212,000
===========
</TABLE>
Note: The balance sheet at December 31, 1996 has been prepared from the audited
financial statements as of that date.
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
(UNAUDITED)
----------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Three Months Nine Months
Ended Ended Ended
3/31/97 9/30/96 9/30/96
------------ ------------ -----------
<S> <C> <C> <C>
REVENUES
Rental income $1,157,000 $1,198,000 $3,601,000
Interest income 20,000 17,000 44,000
---------- ---------- ----------
Total revenues 1,177,000 1,215,000 3,645,000
---------- ---------- ----------
EXPENSES
Operating expenses 255,000 259,000 774,000
Real estate taxes 187,000 175,000 555,000
Amortization 17,000 18,000 51,000
General and administrative 244,000 165,000 481,000
Adjustment to the carrying
value of real estate -- 157,000 225,000
---------- ---------- ----------
Total expenses 703,000 774,000 2,086,000
---------- ---------- ----------
Income before equity
in earnings 474,000 441,000 1,559,000
Equity in earnings of Cooper
Village Partners 91,000 65,000 283,000
---------- ---------- ----------
NET INCOME $ 565,000 $ 506,000 $1,842,000
========== ========== ==========
NET INCOME ALLOCABLE TO:
General Partner $ 6,000 $ 5,000 $ 18,000
========== ========== ==========
Limited Partners $ 559,000 $ 501,000 $1,824,000
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
STATEMENT OF CASH FLOWS
(UNAUDITED)
----------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months
Ended
9/30/96
------------
<S> <C>
Cash flows from operating activities:
Net income $ 1,842,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization 51,000
Equity in earnings of Cooper Village Partners (283,000)
Adjustment to carrying value of real estate 225,000
Changes in:
Accounts receivable (88,000)
Accrued rent receivable 54,000
Prepaid expenses and other assets (7,000)
Accounts payable and accrued liabilities 39,000
-----------
Net cash provided by operating activities 1,833,000
Cash flows from investing activities:
Investments in real estate (189,000)
Distributions received from
Cooper Village Partners 302,000
-----------
Net cash provided by investing activities 113,000
Cash flows from financing activities:
Distributions (1,438,000)
-----------
Net cash used in financing activities (1,438,000)
Net increase in cash and cash equivalents 508,000
Cash and cash equivalents, beginning of period 1,055,000
-----------
Cash and cash equivalents, end of period $ 1,563,000
===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
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, 1996.
Liquidation Basis of Accounting
On February 18, 1997, the Partnership mailed a Consent Solicitation to
the Limited Partners which sought their consent to dissolve the
Partnership and sell and liquidate all of its remaining properties as
soon as practicable, consistent with selling the Partnership's
properties to the best advantage under the circumstances. A majority in
interest of the Limited Partners consented by March 13, 1997. As a
result, the Partnership has adopted the liquidation basis of accounting
as of March 31, 1997. The difference between the adoption of the
liquidation basis of accounting as of March 13, 1997 and March 31, 1997
was not material.
Under the liquidation basis of accounting, assets are stated at their
estimated net realizable values and liabilities are stated at their
anticipated settlement amounts. The valuation of assets and liabilities
necessarily requires many estimates and assumptions, and there are
substantial uncertainties in carrying out the dissolution of the
Partnership. The actual values upon dissolution and costs associated
therewith could be higher or lower than the amounts recorded.
The Partnership adopted the liquidation basis of accounting on March
31, 1997. Comparison of results to prior years, therefore, is not
practical. The Statement of Net Assets in Liquidation and Statement of
Changes of Net Assets in Liquidation reflect the Partnership in the
process of liquidation. Prior financial statements reflect the
Partnership as a going concern.
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
8
<PAGE> 9
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(1) Accounting Policies (Cont'd.)
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 (Prior to Adoption of the Liquidation
Basis of Accounting)
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.
Further, assets held for sale, including any unrecoverable accrued rent
receivable or capitalized leasing commissions, were carried at the
lower of carrying value or fair value less estimated selling costs. Any
adjustment to carrying value were recorded as a valuation allowance
against property held for sale. Each reporting period, the General
Partner reviewed its estimates of fair value, which were 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.
Utilizing the same methodology, assuming a twelve month holding period,
for the year ended December 31, 1996, the General Partner determined
that Ladera-II Shopping Center and Kennedy Corporate Center had
carrying values greater than their respective appraised values, less
selling costs. As a result, the carrying values were adjusted by
$185,000 and $343,000 to $2,200,000 and $2,460,000, respectively. In
addition, the carrying value of Atrium Place was reduced in September
1996 by $75,000 in order to reflect its approximate selling price and
the carrying value of Lakeland Industrial Park was increased by $40,000
to $5,300,000, its estimated fair value less selling costs.
9
<PAGE> 10
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(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
September 30, 1997 and 1996 the Partnership incurred approximately
$31,000 and $42,000, respectively, of such expenses. For the nine
months ended September 30, 1997 and 1996, such payments were $88,000
and $105,000, respectively.
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 $41,000 and $43,000, respectively, for the three months
ended September 30, 1997 and 1996. For the nine months ended September
30, 1997 and 1996, such expenses were $118,000 and $126,000,
respectively. In addition, an affiliate of the General Partner received
$27,000 and $27,000 for the three months ended September 30, 1997 and
1996, respectively, as reimbursement of costs of on-site property
management personnel and other reimbursable expenses. For the nine
months ended September 30, 1997 and 1996, such costs were $82,000 and
$83,000, respectively.
Leasing fees for the three months ended September 30, 1997 and 1996,
included charges of $3,000 and $6,000, 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. Such fees amounted to $20,000 and $16,000,
respectively, for the nine months ended September 30, 1997 and 1996.
As previously reported, on June 24, 1993, the Partnership completed its
solicitation of written consents 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 were 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 .65% for 1997 and .75% for 1996 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 three months
ended September 30, 1997 and 1996, amounted to $43,000 and $50,000, and
for the nine months there ended, $127,000 and $150,000, respectively.
In addition to the aforementioned, the General Partner was also paid
$20,000 and $18,000, 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
10
<PAGE> 11
DAMSON/BIRTCHER REALTY INCOME FUND-II, LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS - UNAUDITED (Cont'd.)
(2) Transactions with Affiliates (Cont'd.)
Partners for the three months ended September 30, 1997 and 1996,
respectively. For the nine months ended September 30, 1997 and 1996,
such payments amounted to $57,000 and $61,000, respectively.
(3) Commitments and Contingencies
Litigation
So far as is known to the General Partner, neither the Partnership nor
its properties are subject to any material pending legal proceedings.
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court of Common Pleas of Philadelphia County against
Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
fiduciary duty and breach of contract and seeking to enjoin the Consent
Solicitation dated February 18, 1997. On April 18, 1997, the court
denied the plaintiff's motion for a preliminary injunction. On June 10,
1997, the court dismissed the plaintiff's complaint on the basis of
lack of personal jurisdiction and forum non conveniens.
--------------------
On June 13, 1997, the Partnership, its affiliated partnership, Real
Estate Income Partners III, and their general partner,
Birtcher/Liquidity Properties, filed a complaint for declaratory relief
in the Court of Chancery in Delaware against Bigelow/Diversified
Secondary Partnership Fund 1990 L.P. The complaint seeks a declaration
that the vote that the limited partners of the Partnership and Real
Estate Income Partners III took pursuant to the respective consent
solicitations dated February 18, 1997 were effective to dissolve the
respective partnerships and complied with applicable law, that the
actions of the General Partner in utilizing the consent solicitations
to solicit the vote of the limited partners did not breach any
fiduciary or contractual duty to such limited partners, and an award of
costs and fees to the plaintiffs. The defendant has answered the
complaint. The parties have initiated discovery. No motions are
pending at this time.
(4) Accrued Expenses for Liquidation
Accrued expenses for liquidation as of September 30, 1997, include
estimates of costs to be incurred in carrying out the dissolution and
liquidation of the Partnership. These costs include estimates of legal
fees, accounting fees, tax preparation and filing fees, professional
services and the general partner's liability insurance. The actual
costs could vary significantly from the related provisions due to the
uncertainty related to the length of time required to complete the
liquidation and dissolution and the complexities which may arise in
disposing of the Partnership's remaining assets.
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
Liquidity and Capital Resources
The Partnership completed its acquisition program in December 1988 and
is principally engaged in the operation of its properties. The
Partnership's original objective had been to hold its properties as
long-term investments. However, an Information Statement, dated May 5,
1993, mandated that the General Partner seek a vote of the Limited
Partners no later than December 31, 1996, regarding prompt liquidation
of the Partnership in the event that properties with appraised values
as of January 1993, which constituted at least one-half of the
aggregate appraised values of all Partnership properties as of that
date, were not sold or under contract for sale by the end of 1996.
Given the mandate of the May 5, 1993 Information Statement, at December
31, 1995, the General Partner decided to account for the Partnership's
properties as assets held for sale instead of for investment. In a
Consent Solicitation dated February 18, 1997, the Partnership solicited
and received the consent of the Limited Partners as of March 13, 1997,
to dissolve the Partnership and gradually settle and close the
Partnership's business and dispose of and convey the Partnership's
property as soon as practicable, consistent with obtaining reasonable
value for the properties. The Partnership's properties were held for
sale throughout 1996 and continue to be held for sale.
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.
Regular distributions through September 30, 1997 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. In December 1996, the Partnership
made a special distribution of $720,000 representing 100% of the net
proceeds from the sale of Atrium Place. 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.
Results of Operations for the Three Months Ended September 30, 1997
Because the Partnership adopted the liquidation basis of accounting on
March 31, 1997, a comparison of the results of operations is not
practical. As the Partnership's assets (properties) are sold, the
results of operations will be generated from a smaller asset base, and
are therefore not comparable. The Partnership's operating results have
been reflected on the Statement of Changes of Net Assets in Liquidation
since March 31, 1997 (the date of adoption of the liquidation basis of
accounting).
For the three months ended September 30, 1997, the Partnership
generated $774,000 of net operating income from operation of its
properties (exclusive
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 September 30, 1997
(Cont'd.)
of Cooper Village Partners). Even though the Partnership did not sell
Atrium Place until November 1996 (therefore its results were included
in the comparable period), results for the current period were higher
than the results in 1996. This positive impact was primarily due to a
higher occupancy level at Creekridge that provided the Partnership with
higher overall rental income.
Interest income resulted from the temporary investment of Partnership
working capital. For the three months ended September 30, 1997,
interest income was approximately $18,000.
General and administrative expenses for the three months ended
September 30, 1997 include charges of $77,000 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 three months ended September 30, 1997 are direct
charges of $117,000 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.
Accrued expenses for liquidation, as reflected in the Statement of Net
Assets in Liquidation as of September 30, 1997, are not included in
results of operations for the three month period ended March 31, 1997.
The liquidation basis of accounting was adopted on March 31, 1997
therefore, it was not appropriate to include such adjustments in the
results of operations for prior periods.
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.
On March 25, 1997, a limited partner named Bigelow/Diversified
Secondary Partnership Fund 1990 filed a purported class action lawsuit
in the Court of Common Pleas of Philadelphia County against
Damson/Birtcher Partners, Birtcher Investors, Birtcher/Liquidity
Properties, Birtcher Investments, L.F. Special Fund II, L.P., L.F.
Special Fund I, L.P., Arthur Birtcher, Ronald Birtcher, Robert
Anderson, Richard G. Wollack and Brent R. Donaldson alleging breach of
fiduciary duty and breach of contract and seeking to enjoin the Consent
Solicitation dated February 18, 1997. On April 18, 1997, the court
denied the plaintiff's motion for a preliminary injunction. On June 10,
1997, the court dismissed the plaintiff's complaint on the basis of
lack of personal jurisdiction and forum non conveniens.
--------------------
On June 13, 1997, the Partnership, its affiliated partnership, Real
Estate Income Partners III, and their general partner,
Birtcher/Liquidity Properties, filed a complaint for declaratory relief
in the Court of Chancery in Delaware against Bigelow/Diversified
Secondary Partnership Fund 1990 L.P. The complaint seeks a declaration
that the vote that the limited partners of the Partnership and Real
Estate Income Partners III took pursuant to the respective consent
solicitations dated February 18, 1997 were effective to dissolve the
respective partnerships and complied with applicable law, that the
actions of the General Partner in utilizing the consent solicitations
to solicit the vote of the limited partners did not breach any
fiduciary or contractual duty to such limited partners, and an award of
costs and fees to the plaintiffs. The defendant has answered the
complaint. The parties have initiated discovery. No motions are
pending at this time.
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 September 30, 1997.
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.
DAMSON/BIRTCHER REALTY INCOME FUND-II
By: BIRTCHER/LIQUIDITY By: BIRTCHER INVESTORS,
PROPERTIES a California limited partnership
(General Partner)
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: November 13, 1997 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: November 13, 1997 By: /s/ Brent R. Donaldson
--------------------------
Brent R. Donaldson
President
Liquidity Fund Asset Management, Inc.
15
<PAGE> 16
EXHIBIT INDEX
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ------- ----------- ------------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENT OF
NET ASSETS IN LIQUIDATION OF DAMSON BIRTCHER REALTY INCOME FUND II AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,449,000
<SECURITIES> 0
<RECEIVABLES> 97,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,581,000
<PP&E> 23,075,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,299,000
<CURRENT-LIABILITIES> 1,038,000
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 27,261,000
<TOTAL-LIABILITY-AND-EQUITY> 28,299,000
<SALES> 0
<TOTAL-REVENUES> 0<F1>
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0<F1>
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0<F1>
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1>STATEMENT OF OPERATION IS NOT PRESENTED IN LIQUIDATION BASIS OF ACCOUNTING.
</FN>
</TABLE>
