FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM.....................TO......................
COMMISSION FILE NUMBER 0-16793
BASS REAL ESTATE FUND II
(EXACT NAME OF PARTNERSHIP AS SPECIFIED IN ITS CHARTER)
NORTH CAROLINA 56-1490907
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4000 PARK ROAD CHARLOTTE, NORTH CAROLINA 28209
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
PARTNERSHIP'S TELEPHONE NUMBER, INCLUDING AREA CODE: (704) 523-9407
____________
INDICATE BY CHECK MARK WHETHER THE PARTNERSHIP (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
PARTNERSHIP 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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BASS REAL ESTATE FUND II
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEET
AS OF JUNE 30, 1995
(UNAUDITED) 3
CONDENSED STATEMENT OF INCOME
THREE MONTHS AND SIX
MONTHS ENDED
JUNE 30, 1995 AND 1994
(UNAUDITED) 4
STATEMENT OF PARTNERS' EQUITY 5
(UNAUDITED)
CONDENSED STATEMENT OF CASH
FLOWS
SIX MONTHS ENDED JUNE
30, 1995 AND 1994
(UNAUDITED) 6
NOTES TO CONDENSED FINANCIAL
STATEMENTS (UNAUDITED) 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND
RESULTS OF
OPERATIONS 9
PART II. OTHER INFORMATION 10
SIGNATURES 12
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BASS REAL ESTATE FUND II
CONDENSED BALANCE SHEET
JUNE 30, DECEMBER 31,
1995 1994
ASSETS (UNAUDITED)
RENTAL PROPERTIES, AT COST:
LAND $ 930,002 $ 930,002
BUILDINGS 8,393,797 8,393,797
FURNISHINGS AND FIXTURES 621,359 610,949
ACCUMULATED DEPRECIATION (2,426,526) (2,274,180)
7,518,632 7,660,568
CASH AND CASH INVESTMENTS 122,407 160,079
RESTRICTED ESCROW DEPOSITS 28,207 27,844
DEFERRED COSTS AND OTHER ASSETS, NET 94,823 63,897
TOTAL ASSETS $ 7,764,069 $ 7,912,388
LIABILITIES AND PARTNERS' EQUITY
MORTGAGE LOAN PAYABLE $ 6,079,279 $ 6,103,361
SECURITY DEPOSITS 30,255 23,277
ACCRUED LIABILITIES 49,120 17,897
TOTAL LIABILITIES 6,158,654 6,144,535
PARTNERS' EQUITY:
LIMITED PARTNERS' INTEREST 1,589,228 1,750,042
GENERAL PARTNERS' INTEREST 16,187 17,811
TOTAL PARTNERS' EQUITY 1,605,415 1,767,853
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 7,764,069 $ 7,912,388
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS.
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BASS REAL ESTATE FUND II
CONDENSED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1995 1995 1994 1994
<S> <C> <C> <C> <C>
REVENUE:
RENTAL INCOME $ 336,337 $ 666,507 $ 315,793 $ 620,442
INTEREST INCOME 523 1,046 503 1,184
OTHER OPERATING INCOME 7,889 20,077 13,388 26,616
344,749 687,630 329,684 648,242
OPERATING EXPENSES:
FEES AND EXPENSES TO AFFILIATES 42,738 89,369 40,950 84,168
PROPERTY TAXES AND INSURANCE 18,905 37,811 20,083 40,166
UTILITIES 18,474 37,939 18,100 36,940
REPAIRS AND MAINTENANCE 33,313 66,425 30,176 63,918
ADVERTISING 5,925 12,999 10,068 19,996
DEPRECIATION AND AMORTIZATION 64,392 157,086 92,694 185,388
OTHER 1,441 2,360 2,012 5,257
185,188 403,989 214,083 435,833
INTEREST EXPENSE 154,088 308,480 155,257 310,789
OTHER NONOPERATING EXPENSES 16,504 37,599 10,452 17,147
TOTAL EXPENSES 355,780 750,068 379,792 763,769
NET LOSS ($11,031) ($62,438) ($50,108) ($115,527)
NET LOSS ALLOCATED TO GENERAL PARTNERS ($110) ($624) ($501) ($1,155)
NET LOSS ALLOCATED TO LIMITED PARTNERS ($10,921) ($61,814) ($49,607) ($114,372)
NET LOSS PER LIMITED PARTNERSHIP UNIT, BASED
ON NUMBER OF UNITS OUTSTANDING (9,938) ($1.10) ($6.22) ($4.99) ($11.51)
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS.
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BASS REAL ESTATE FUND II
STATEMENT OF PARTNERS' EQUITY
(UNAUDITED)
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
BALANCE, JANUARY 1, 1995 $1,750,042 $ 17,811 $1,767,853
DISTRIBUTION TO PARTNERS (99,000) (1,000) ($100,000)
NET LOSS (61,814) (624) (62,438)
BALANCE, JUNE 30, 1995 $1,589,228 $ 16,187 $1,605,415
LIMITED GENERAL
PARTNERS PARTNERS TOTAL
BALANCE, JANUARY 1, 1994 $2,025,651 $20,595 $2,046,246
DISTRIBUTION TO PARTNERS (49,500) (500) ($50,000)
NET LOSS (114,372) (1,155) (115,527)
BALANCE, JUNE 30, 1994 $1,861,779 $18,940 $1,880,719
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS.
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BASS REAL ESTATE FUND II
CONDENSED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, JUNE 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS ($62,438) ($115,527)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES-
DEPRECIATION AND AMORTIZATION 157,086 185,388
CHANGE IN ASSETS AND LIABILITIES:
INCREASE (DECREASE) IN ACCRUED AND OTHER
LIABILITIES 31,223 (28,219)
INCREASE IN ESCROWS AND OTHER ASSETS, NET (29,051) (49,446)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 96,820 (7,804)
CASH FLOWS FROM INVESTING ACTIVITIES:
ADDITIONS TO RENTAL PROPERTIES (10,410) (11,860)
CASH FLOWS FROM FINANCING ACTIVITIES:
PAYMENTS ON MORTGAGE LOAN PAYABLE TO BANK (24,082) (25,296)
DISTRIBUTION TO PARTNERS (100,000) (50,000)
NET CASH USED IN FINANCING ACTIVITIES (124,082) (75,296)
NET DECREASE IN CASH AND CASH INVESTMENTS (37,672) (94,960)
CASH AND CASH INVESTMENTS, BEGINNING OF YEAR 160,079 205,711
CASH AND CASH INVESTMENTS, JUNE 30 $ 122,407 $ 110,751
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL
PART OF THE FINANCIAL STATEMENTS.
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BASS REAL ESTATE FUND II
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. ORGANIZATION
Bass Real Estate Fund II (the Partnership) was
organized to engage in the acquisition, development,
operation, holding and disposition of income-producing
residential and commercial properties. Limited partnership
interests were sold at $500 per unit (9,938 units) for a
total of $4,969,000.
Under the terms of the partnership agreement, net
income (loss) and cash distributions from operations are to
be allocated 99% to the limited partners and 1% to the
general partners. Upon the sale or liquidation of the
partnership property, the partnership agreement specifies
certain allocations of net proceeds and taxable gain or
loss from the transaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Partnership records are maintained on the accrual
basis of accounting in accordance with generally accepted
accounting principles.
In the opinion of management, the accompanying
unaudited financial statements reflect all adjustments
(which include only normal recurring adjustments) necessary
to present fairly the Partnership's financial position as of
June 30, 1995, results of operations for the three months
and six months ended June 30, 1995 and 1994, and cash flow
for the six months ended June 30, 1995 and 1994.
3. RENTAL PROPERTIES
The rental property consists of a residential
apartment complex named Sabal Point I. The complex, which
was constructed by an affiliate of the general partners, is
composed of 202 rental units. The units were available for
lease beginning June 1988. The 23.75 acres of land in
Mecklenburg County, North Carolina, where the apartment
complex is located were purchased in December 1986 for
$930,002 (including closing costs).
Affiliates of the general partners own two adjacent
residential apartment complexes, Sabal Point II and Sabal
Point III. The three complexes merged their management and
leasing operations in 1990 and are sharing expenses related
to grounds, maintenance, leasing, management and other
related costs. The managing general partner believes that
the allocation of expenses to each partnership has been made
on a reasonable basis.
The mortgage loan payable is a 10-year note due April
1, 1999, with principal and interest at 10 1/8% payable
monthly based upon a 30-year amortization period. The Sabal
Point I complex is pledged as collateral for this mortgage.
4. GENERAL PARTNERS AND RELATED PARTY TRANSACTIONS
The general partners are Marion F. Bass (The Individual
General Partner) and Marion Bass Real Estate Group, Inc.,
(The Managing General Partner). The rental properties are
managed by Marion Bass Properties, Inc., which is wholly
owned by Marion F. Bass.
Under the terms of the partnership agreement, the
general partners or their affiliates charged certain fees
and expenses during the six-month period ending June 30,
1995 as follows:
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BASS REAL ESTATE FUND II
Management fee of 5% of gross revenues $34,385
Reimbursed maintenance salaries and benefits 27,348
Reimbursed property manager salaries and benefits 27,636
$89,369
The general partners and certain of their affiliates
also perform, without cost to the Partnership, day-to-day
investment, management and administrative functions of the
Partnership.
The general partners are entitled to receive 1% of all
items of partnership income, gain, loss, deduction, credit
and net cash flow from operations. Therefore, during the
first quarter of 1995 the General Partners received a cash
distribution of $1,000 that represented excess cash
reserves and net cash flow from operations for the period
January 1, 1994 through December 31, 1994.
8
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BASS REAL ESTATE FUND II
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
At June 30, 1995, partners' equity was $1,605,415 or
21% of total assets and cash and cash reserves amounted to
$122,407. The Partnership had accrued liabilities of
$49,120 that consisted of 1995 property taxes of $32,013,
management fees due to an affiliate of $5,930, trade
accounts payable of $5,886 and resident prepaid rent of
$5,291.
Net cash provided by operating activities totaled
$96,820 for the six months ended June 30, 1995. This is
compared to net cash used in operating activities of $7,804
for the corresponding period in 1994. The Partnership had a
10 1/8% mortgage note in the amount of $6,079,279
outstanding at June 30, 1995. Principal payments of $24,082
were made during the six month period ended June 30, 1995 on
the amortizing mortgage note.
The 1995 operating plan and budget projects net cash
flow from partnership activities (exclusive of changes in
assets and liabilities and distribution to partners) of
$96,000. The budget assumes that the Partnership will
achieve occupancy rates equivalent to 95%. For the six
months ended June 30, 1995, actual average economic
occupancy was 95% and actual net cash flow from partnership
activities (exclusive of changes in assets and liabilities
and distribution to partners) was $60,156. Rents have been
increased 5% over rates charged in 1994 to offset any normal
increase in operating expenses. Capital expenditures of
$59,240 are budgeted and include selected carpet and vinyl
replacements. This also includes scheduled exterior
painting of $22,800 planned in 1995. As of June 30, 1995,
capital expenditures and additions to rental property of
$34,807 had been completed which included exterior painting
for an actual cost of $21,034. On the basis of these
estimates and year-to-date results, the Partnership believes
that the cash flow from operations will be sufficient to
meet cash requirements, rebuild cash reserves and provide
distributions to partners. Funds totaling $100,000 provided
by cash reserves and 1994 operational net cash flow were
distributed to partners in January 1995. The next available
distribution to partners is scheduled for the first quarter
of 1996 and is tentative upon 1995 operating results.
Results of Operations
The following discussion relates to the Partnership's
operation of Sabal Point for the three months and six months
ended June 30, 1995 and 1994.
Results of operations for the three months ended June
30, 1995 reflect an average economic occupancy of 95%
compared to 95% for the corresponding period in 1994. A
second quarter comparison of 1995 and 1994 reflects higher
rental income of $20,544 during 1995 due to rents being
increased 5% to 8% over rates charged in 1994. Other
operating income was lower by $5,499 during the second
quarter of 1995 due to leasing fewer corporate units
(furnished apartment units with all available utilities).
Overall, total income for the second quarter ended June 30,
1995 was $15,065 higher than the corresponding period in
1994.
Operating expenses were $185,188 for the three months
ended June 30, 1995, compared to $214,083 for the
corresponding period in 1994 which reflects a variance of
$28,895. Fees and expenses to affiliates that consist of a
management fee of 5% of gross revenues and the reimbursement
of complex employee salaries and benefits were higher by
$1,788. Repairs and maintenance were $3,137 higher due to
landscaping (improvement of the grounds maintains high
occupancy and assists leasing efforts) and normal
replacements. Utilities were higher by $374.
9
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BASS REAL ESTATE FUND II
After interest expense of $154,088 and other
nonoperating expenses (partnership expenses and nonrecurring
replacement costs) of $16,504, partnership operations
recognized a net loss of $11,031 for the three months ended
June 30, 1995. This is compared to a net loss of $50,108
for the corresponding period in 1994.
Overall the Partnership recognized a net increase in
total revenues of $39,388 (due to rents being increased 5%
to 8% over rates charged in 1994) and a net decrease in
total operating expenses of $31,844 (of which $28,302
reflected a decrease in depreciation and amortization) for
the six months ended June 30, 1995 compared to the
corresponding period in 1994. After interest expense of
$308,480 and other operating expenses of $37,599
(partnership expenses and nonrecurring replacement costs;
this category was $20,452 higher in 1995 due mainly to
painting the exterior of the property) the Partnership had a
net loss of $62,438 for the six months ended June 30, 1995.
This is compared to a net loss of $115,527 for the
corresponding period in 1994.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Response: None
Item 2. Changes in Securities
Response: None
Item 3. Defaults upon Senior Securities
Response: None
Item 4. Submission of Matters to a Vote of Security Holders
Response: None
Item 5. Other Information
Response: None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3(a) Copy of Certificate of Limited Partnership dated as
of November 13, 1985, filed as Exhibit 3(a) to the
Partnership's Form 10-K Annual Report for the fiscal year
ended December 31, 1987, filed with the Securities and
Exchange Commission, which is incorporated herein by
reference.
3(b) Copy of Amended and Restated Limited Partnership
Agreement dated as of July 10, 1986, filed as
Exhibit 3(b) to the Partnership's Form 10-K Annual
Report for the fiscal year ended December 31, 1987,
filed with the Securities and Exchange Commission, which
is incorporated herein by reference.
3(c) Copy of Amended and Restated Certificate of Limited
Partnership, dated as of July 10, 1986, filed as
Exhibit 3(c) to the Partnership's Form 10- K Annual
Report for the fiscal year ended December 31, 1987,
filed with the Securities and Exchange Commission,
which is incorporated herein by reference.
3(d) Copy of Second Amended and Restated Certificate
of Limited Partnership, dated as of July 31, 1986,
files as Exhibit 3(d) to the Partnership's Form
10-K Annual Report for the
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BASS REAL ESTATE FUND II
fiscal year ended December 31, 1987, filed with the
Securities and Exchange Commission, which is
incorporated herein by reference.
3(e) Copy of Third Amended and Restated Certificate of
Limited Partnership, dated as of August 29, 1986,
filed as Exhibit 3(e) to the Partnership's Form 10-K
Annual Report for the fiscal year ended December 31,
1987, filed with the Securities and Exchange Commission,
which is incorporated herein by reference.
3(f) Copy of Fourth Amended and Restated Certificate
of Limited Partnership, date as of September 30, 1986,
filed as Exhibit 3(f) to the Partnership's Form 10-K
Annual Report for the fiscal year ended December 31,
1987, filed with the Securities and Exchange
Commission, which is incorporated herein by reference.
3(g) Copy of Certificate of Domestic Limited Partnership,
dated as of October 31, 1986, filed as Exhibit 3(g)
to the Partnership's Form 10-K Annual Report for the
fiscal year ended December 31, 1987, filed with the
Securities and Exchange Commission, which is
incorporated herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
during the quarter covered by this report.
11
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BASS REAL ESTATE FUND II
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the Partnership has duly caused this
Report to be signed on its behalf by the undersigned
thereunto duly authorized.
BASS REAL ESTATE FUND II
By Marion Bass Real Estate Group, Inc. as Managing General
Partner
By /s/ Marion F. Bass
Marion F. Bass, President
Date 8/7/95 hand written
By /s/ Robert J. Brietz
Robert J. Brietz, Executive Vice President
Date 8/7/95 hand written
12
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