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 March 31, 1995Commission File Number:
01-16874
National Real Estate Limited Partnership Income
Properties-II
(Exact name of registrant as specified in its charter)
Wisconsin 39-1553195
(State or other jurisdiction of
(I.R.S. Employer Identification
incorporation or organization)
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) YesNo<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME
PROPERTIES-II
INDEX
Page
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - March 31, 1995
and December 31, 1994 . . . . . . . . . . . . . .2
Statement of Operations (unaudited) - Three months
ended March 31, 1995 and 1994 . . . . . . . . . .3
Statement of Cash Flows (unaudited) -
Three months ended March 31, 1995 and 1994. . . .4
Notes to Financial Statements (unaudited) . . .5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation. . .7
PART II. OTHER INFORMATION AND SIGNATURES . . .8-9<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
March 31,
December 31,
1995
1994
ASSETS
Current Assets:
Cash
$
401,891
$
369,244
Escrow and other deposits (Note 5)
21,822
23,254
Accounts receivable and other assets
10,067
8,346
Other Assets:
Investment properties, at cost
Land
516,590
516,590
Buildings and improvements
4,140,774
4,140,774
4,657,364
4,657,364
Less accumulated depreciation
1,020,584
985,470
3,636,780
3,671,894
Intangible Assets:
Debt issue costs, net of accumulated amortization
of $5720 as of December 31, 1994 and
$3,700 as of December 31, 1993
3,872
4,377
$
4,074,432
$
4,077,115
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses and other liabilities
$
1,962
$
1,500
Tenant security deposits
27,124
27,924
Mortgage notes payable (Note 6)
524,333
535,333
Rent received in advance
15,018
10,968
568,437
575,725
Partners' Capital (Note 3):
General Partners (deficit)
28,572
26,792
Limited Partners
(authorized----40,000 Interests;
3,477,423
3,474,598
outstanding--20,653.69)
3,505,995
3,501,390
$
4,074,432
$
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
March 31,
1995
1994
Income:
Operating Income
$
188,483
$
175,134
188,483
175,134
Operating expenses:
Operating
77,202
74,072
Administration
33,549
33,774
Depreciation and amortization
35,619
35,506
Interest (Note 6)
13,716
10,785
160,086
154,137
Income (Loss) from operations
28,397
20,997
Other income (expense):
Interest and other income
7,190
2,255
Net Income/(Loss)
$
35,586
$
23,252
Net Income/(Loss) attributable to
General Partners (5%)
$
1,779
$
1,163
Net Income/Loss attributable to
Limited Partners (95%)
$
33,807
$
22,089
Per Limited Partnership
Interest outstanding-20,653.69
$
1.64
$
1.07
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Statement of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1995
1994
Operating Activities:
Net income (loss) for the period
$
35,586
$
23,252
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation and amortization
35,114
35,001
Amortization of debt issue costs
505
505
Changes in operating assets and
liabilities:
Escrow deposits and other assets
(289)
(17,280)
Rents received in advance
4,050
4,489
Accrued expenses and other
liabilities
462
14,181
Tenant security deposits
(800)
2,350
Accrued real estate taxes
0
0
NET CASH PROVIDED BY (USED
IN)
OPERATING ACTIVITIES
74,628
62,498
Investment activity:
Additions to investment property
(0)
0
Financing activities:
Distributions to partners
(30,981)
(30,981)
Proceeds from mortgage note
payable
0
0
Payments on mortgage note payable
(11,000)
(11,000)
NET CASH PROVIDED BY FINANCING
ACTIVITIES
(41,981)
(41,981)
INCREASE (DECREASE) IN CASH
32,647
20,517
Cash at beginning of period
369,244
278,892
CASH AT END OF PERIOD
$
401,891
$
299,409
See notes to financial statements.
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
March 31, 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 March 31, 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 General
Partners Partners Total
Quarter Ended March 31, 1995
Partners' Equity, beginning of quarter$3,474,598
$26,792 $3,501,390
Distributions(30,981)- - (30,981)
Net Income (Loss) 33,8071,779 35,586
Partners' Equity, end of quarter$3,477,423
$28,572$3,505,995
Quarter Ended March 31, 1994
Partners' Equity, beginning of quarter$3,486,753
$20,910 $3,507,663
Distributions (30,981)- - (30,981)
Net Income (Loss) 22,0891,163 23,252
Partners' Equity, end of quarter$3,477,861
$22,073$3,499,934 <PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements (cont'd)
(Unaudited)
March 31, 1995
4.National Realty Management, Inc. (NRMI): The
Partnership incurred property management fees of $9,501
under an agreement with NRMI for the three month period
ended March 31, 1995.
5.For Cave Creek Lock-It Lockers and Amberwood
Apartments, monthly payments are being deposited for
the estimated 1995 real estate taxes. Funds are
escrowed at a rate of $5,000 per month for Amberwood
and $2,400 per month for Cave Creek Lock-It Lockers.
Amberwood's real estate taxes are prepaid in two
installments, one in September and one in February.
6.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 10.5%. 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
March 31, 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 continues to
consider legal remedies relating to enforcing
collection from EGG.
Amberwood's occupancy rate for the first quarter of
1995 was 100%. Cave Creek Lock-It Lockers' occupancy
during the same period was 98.2% based on net rentable
square footage. During the comparable period in 1994
occupancy rates were 97.6% for Amberwood and 99% for
Cave Creek Lock-It Lockers.
Rental Rates at Cave Creek Lock-It Lockers were raised
in April and the rental rates at Amberwood were
increased in January. Planned renovations for 1995 at
Cave Creek Lock-It Lockers and Amberwood include
various painting projects.
Total operating revenues for Amberwood and Cave Creek
Lock-It Lockers in 1995 are higher than those in 1994
due to an increase in rental rates and a decrease in
delinquency at Cave Creek Lock-It Lockers. Operating
and administrative expenses have remained in line with
the same quarter of 1994. Interest expense has
increased due to increases in the prime rate in
comparison to 1994.
The distributions have remained at $1.50 per share per
quarter and totaled $30,980.55 for the first 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
March 31, 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 /S/May 12, 1995
/S/ John Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/May 12, 1995
/S/ John Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/May 12, 1995
Stephen P. Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
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