SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended September 30, 1995
Commission File Number: 01-16874
National Real Estate Limited Partnership
Income Properties-II
(Exact name of registrant as specified in its charter)
Wisconsin
(State or other jurisdiction of
incorporation or organization)
39-1553195
(I.R.S. Employer Identification
Number)
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226-4353
(Address of principal executive offices)
(zip code)
Registrant's telephone number, including area code:
(414) 453-3498
N/A
Former name, address and fiscal year if changed since
last report.
Indicate by check mark whether the registrant (1) has
filed all reports required to be filed by Sections 13
or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period
that the registrant was required to file such reports)
and (2) has been subject to such filing requirements
for the past 90 days.
(X) Yes No
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
INDEX
Page
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - September 30, 1995
and December 31, 1994. . . . . . . . . . .2
Statement of Operations (unaudited) - Three months
& nine months
ended September 30, 1995 and 1994. . . . .3
Statement of Cash Flows (unaudited) -
Nine months ended September 30, 1995 and 19944
Notes to Financial Statements (unaudited) . .5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation7
PART II. OTHER INFORMATION AND SIGNATURES . . .8-9
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
Spetember 30, December 31,
1995 1994
ASSETS
Current Assets:
Cash $ 467,418 $ 369,244
Escrow and other deposits
0 23,254
Accounts receivable and other assets
28,570 8,346
Other Assets:
Investment properties, at cost
Land 516,590 516,590
Buildings and improvements
4,145,090 4,140,774
4,661,680 4,657,364
Less accumulated depreciation
1,090,367 985,470
3,571,313 3,671,894
Intangible Assets:
Debt issue costs, net of accumulated amortization
of $5215 as of September 30, 1995 and
$3,700 as of December 31, 1994
2,862 4,377
$ 4,070,163 $ 4,077,115
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses and other liabilities
$ 930 $ 1,500
Tenant security deposits
27,374 27,924
Mortgage notes payable (Note 5)
502,333 535,333
Rent received in advance
12,577 10,968
543,214 575,725
Partners' Capital (Note 3):
General Partners (deficit)
32,717 26,792
Limited Partners
(authorized----40,000 Interests;
3,494,230 3,474,598
outstanding--20,653.69)
3,526,947 3,501,390
$ 4,070,163 $ 4,077,115
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROERTIES-II
(A Wisconsin Limited Partnership)
Statement of Operations
(Unaudited)
Three Months Ended Nine Months ended
September 30, September 30,
1995 1994 1995 1994
Income:
Operating Income
$183,849 $183,318 $563,661 $536,942
183,849 183,318 563,661 536,942
Operating expenses:
Operating
79,674 79,428 237,799 229,026
Administration
26,898 25,356 85,227 85,964
Depreciation and amortization
35,620 35,557 106,858 106,671
Interest (Note 6)
17,881 12,730 40,889 35,524
160,073 153,071 470,773 457,185
Income (Loss) from operations
23,776 30,247 92,888 79,757
Other income (expense):
Interest and other income
12,091 3,726 25,613 8,697
Net Income/(Loss)
$35,867 $33,973 118,501 88,454
Net Income/(Loss) attributable to
General Partners (5%)
$1,793 $1,699 5,925 4,423
Net Income/Loss attributable to
Limited Partners (95%)
$34,074 $32,274 112,576 84,031
Per Limited Partnership
Interest outstanding-20,653.69
$1.65 $1.56 5.45 4.07
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
1995 1994
Operating Activities:
Net income (loss) for the period
$118,501 $88,454
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization
105,344 105,156
Amortization of debt issue costs
1,515 1,515
Gain on retirement of personal property
793 0
Changes in operating assets and
liabilities:
Escrow deposits and other assets
3,030 (1,810)
Rents received in advance
1,609 277
Accrued expenses and other liabilities
(570) (5,554)
Tenant security deposits
(550) 2,700
Accrued real estate taxes
0 0
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
229,672 190,738
Investment activity:
Additions to investment property
(5,556) 0
Financing activities:
Distributions to partners
(92,942) (92,942)
Proceeds from mortgage note payable
0 0
Payments on mortgage note payable
(33,000) (33,000)
NET CASH PROVIDED BY FINANCING ACTIVITIES
(125,942) (125,942)
INCREASE (DECREASE) IN CASH
98,174 64,796
Cash at beginning of period
369,244 278,892
CASH AT END OF PERIOD
$467,418 $343,688
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
September 30, 1995
1. In the opinion of the General Partners, the
accompanying unaudited financial statements
contain all adjustments (consisting of normal
recurring accruals) which are necessary for a fair
presentation. The statements, which do not include
all of the information and footnotes required by
generally accepted accounting principles for
complete financial statements, should be read in
conjunction with the National Real Estate Limited
Partnership Income Properties-II annual report for
the year ended December 31, 1994. Refer to the
footnotes of those statements for additional
details of the Partnership's financial condition.
The operating results for the period ended
September 30, 1995 may not be indicative of the
operating results for the entire year.
2. National Real Estate Limited Partnership Income
Properties-II (the "Partnership") was organized
under the Wisconsin Uniform Limited Partnership
Act pursuant to a Certificate of Limited
Partnership dated June 5, 1986, to acquire
primarily existing commercial and residential real
properties and hotels. John Vishnevsky and
National Development and Investment, Inc., have
contributed the sum of $1,000 to the Partnership
as General Partners. The Limited Partnership
Agreement had authorized the issuance of 40,000
Limited Partnership Interests (the "Interests") at
$250 per Interest with the offering period running
from August 18, 1986 through August 18, 1988. On
August 18, 1988, the Partnership concluded its
offering and capital contributions totaled
$5,163,031 for 20,653.69 Limited Partnership
Interests.
Pursuant to the Escrow Agreement with the First
Wisconsin Trust Company, Milwaukee, Wisconsin,
until the minimum number of Interests (4,850) and
investors (100) were subscribed, payments were
impounded in a special interest-bearing escrow
account. On February 2, 1987, the Partnership
received the required minimum capital
contributions and $1,332,470, representing
5,329.88 Interests, was released to the
Partnership.
3. Changes in Partners' Equity:
LIMITED PARTNERS
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $3,491,137
Distributions (30,981)
Net Income (Loss) 34,074
Partners' Equity, end of quarter $3,494,230
Quarter Ended September 30, 1994
Partners' Equity, beginning of quarter $3,476,549
Distributions (30,981)
Net Income (Loss) 32,274
Partners' Equity, end of quarter $3,477,842
GENERAL PARTNERS
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $30,924
Distributions --
Net Income (Loss) 1,793
Partners' Equity, end of quarter $32,717
Quarter Ended September 30, 1994
Partners' Equity, beginning of quarter $23,634
Distributions --
Net Income (Loss) 1,699
Partners' Equity, end of quarter $25,333
TOTAL
Quarter Ended September 30, 1995
Partners' Equity, beginning of quarter $3,522,061
Distributions (30,981)
Net Income (Loss) 35,867
Partners' Equity, end of quarter $3,526,947
Quarter Ended September 30, 1994
Partners' Equity, beginning of quarter $3,500,183
Distributions (30,981)
Net Income (Loss) 33,973
Partners' Equity, end of quarter $3,503,175
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements (cont'd)
(Unaudited)
September 30, 1995
4. National Realty Management, Inc. (NRMI): The
Partnership incurred property management fees of
$30,296 under an agreement with NRMI for the nine
month period ended September 30, 1995.
5. The mortgage note payable is secured by Amberwood
Apartments. Monthly principal and interest
payments are required in amounts sufficient to
fully amortize the loan over 15 years. The
interest rate is adjustable annually at 1.5% plus
First Michigan Bank prime rate and is currently at
10.25%. The note matures on March 1, 1997.
Maturities of the mortgage from 1995 to 1997 based
on the current accrual rate, are as follows:
$44,000, $44,000, and $447,333.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Management's Discussion and Analysis of
Financial Condition and Results of Operations
September 30, 1995
The Partnership owns and operates two investment
properties: a portion of Cave Creek Lock-It Lockers,
located in Phoenix, Arizona, and the Amberwood
Apartments, a 56-unit apartment complex in Holland,
Michigan.
National Real Estate Limited Partnership Income
Properties ("NRELP-IP") owns the remaining portion of
Cave Creek Lock-It Lockers. National Real Estate
Limited Partnership-VI ("NRELP-VI") owned 12 units of
Amberwood through February 28, 1992, at which time the
units were sold to the Partnership for $660,000 and a
Future Interest Proceeds Agreement. The purchase was
funded by proceeds of a first mortgage note. The
mortgage is collateralized by all 56 units of Amberwood
Apartments. The Partnership is contingently liable to
pay NRELP-VI proceeds from a future sale of Amberwood
Apartments as set forth in a Future Interest Proceeds
Agreement. Upon the future sale of Amberwood
Apartments, NRELP-VI is entitled to receive 50% of the
net sales price above $57,500 per unit (reduced by
normal selling costs) until the Partnership earns a
cumulative return of 20% on its investment. Beyond
that, once the Partnership earns its cumulative return
of 20% on its investment, NRELP-VI will receive 60% of
the net sales price above $57,500 per unit. NRELP-IP
and NRELP-VI are Wisconsin limited partnerships,
affiliated with the General Partners.
Amberwood is located in a wooded setting and is
conveniently located near shopping, bike paths and
businesses, and offers superior amenities. The economy
within the area has remained stable. The rental market
is very strong which has prompted several apartment
communities to add additional units.
Upon the purchase of Cave Creek Lock-It Lockers, the
Partnership entered into master lease agreements with
the Seller, Enterprise Growth Group (EGG). The
Partnership was informed that EGG had been funding the
lease payments, because cash flow from the property had
not been sufficient to cover the payments. EGG made
only a partial lease payment in August of 1991 for
July's installment and had been delinquent in
subsequent payments. The General Partners officially
notified EGG of their default on October 17, 1991.
Management of the property was turned over to National
Realty Management, Inc. on November 1, 1991 in order to
ensure maximization of net operating income to the
Partnership. As of early 1992, the master lease
agreements expired. The Partnership started legal
proceedings relating to collection from EGG and its
principals.
Amberwood's occupancy rate for the third quarter of
1995 was 100%. Cave Creek Lock-It Lockers' occupancy
during the same period was 98% based on net rentable
square footage. During the comparable period in 1994
occupancy rates were 100% for Amberwood and 99.6% for
Cave Creek Lock-It Lockers.
Total operating revenues for Cave Creek Lock-It Lockers
in 1995 are higher than those in 1994 due to an
increase in rental rates. Operating expenses have
remained in line with the same quarter of 1994.
Interest expense increased slightly compared with the
same quarter of 1994 due to a slight increase in
interest rates. Planned renovations for 1995 include
installing a fence at Cave Creek Lock-It Lockers.
The distributions have remained at $1.50 per share per
quarter and totaled $30,980.55 for the third quarter.
These distributions are required to be allocated 100%
to the Limited Partners, as outlined in the prospectus.
<PAGE>
PART II. OTHER INFORMATION
Item 6(b). Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended
September 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
National Real Estate Limited Partnership
Income Properties-II
(Registrant)
Date November 15, 1995
/S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/November 15, 1995
/S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/November 15, 1995
Stephen P. Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
B:\NIP2-3QT.ELE
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 467,418
<SECURITIES> 0
<RECEIVABLES> 28,570
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 495,988
<PP&E> 4,661,680
<DEPRECIATION> 1,090,367
<TOTAL-ASSETS> 4,070,163
<CURRENT-LIABILITIES> 40,881
<BONDS> 502,333
<COMMON> 0
0
0
<OTHER-SE> 3,526,947<F1>
<TOTAL-LIABILITY-AND-EQUITY> 4,070,163
<SALES> 0
<TOTAL-REVENUES> 195,940
<CGS> 0
<TOTAL-COSTS> 142,192
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,881
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,867
<EPS-PRIMARY> 1.65<F2>
<EPS-DILUTED> 0
<FN>
<F1>Refers to General Partners & Limited Partners Capital
<F2>95% Limited Partners - Interest Outstanding = 20,653.69
</FN>
</TABLE>
