U. S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
(Mark One)
( X ) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission File Number: 01-16874
National Real Estate Limited Partnership Income
Properties II
(Exact name of small business issuer as specified in
its charter)
Wisconsin
(State or other jurisdiction ofincorporation or
organization)
39-1553195
(I.R.S. Employer
Identification Number)
9800 West Bluemound Road
Wauwatosa, Wisconsin 53226-4353
(Address of principal executive offices)
(414) 453-3498
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year, if
changed since last report)
Check whether the issuer (1) filed all reports required
to be filed by Sections 13 or 15(d) of the Exchange Act
during the past 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.
Yes X No
<PAGE>
NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME
PROPERTIES-II
INDEX
Page
PART I. FINANCIAL INFORMATION
Balance Sheet (unaudited) - March 31, 1997
and December 31, 1996 . . . . . . . . . . . . . .2
Statement of Operations (unaudited) - Three months
ended March 31, 1997 and 1996 . . . . . . . . . .3
Statement of Cash Flows (unaudited) -
Three months ended March 31, 1997 and 1996. . . .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,
1997 1996
ASSETS
Current Assets:
Cash $ 408,464 $ 442,747
Escrow and other deposits (Note 5)
11,817 0
Accounts receivable and other assets
5879 5,600
Other Assets:
Investment properties, at cost
Land 516,590 516,590
Buildings and improvements
4,151,846 4,151,846
4,668,436 4,668,436
Less accumulated depreciation
1,332,187 1,267,441
3,336,249 3,400,995
Intangible Assets:
Debt issue costs, net of accumulated amortization
of $5720 as of December 31, 1996 and
$3,700 as of December 31, 1995
(168) 337
$ 3,762,240 $ 3,849,679
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses and other liabilities
$ (2,146) $ 5,128
Tenant security deposits
23,622 22,380
Mortgage notes payable (Note 6)
440,687 448,021
Rent received in advance
19,165 13,716
481,329 489,245
Partners' Capital (Note 3):
General Partners (deficit)
34,363 36,009
Limited Partners
(authorized----40,000 Interests;
3,246,547 3,324,425
outstanding--20,653.69)
3,280,547 3,360,434
$ 3,762,240 $ 3,849,679
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,
1997 1996
Income:
Operating Income $166,664 $171,122
$166,664 $171,122
Operating expenses:
Operating 88,616 92,135
Administration 45,945 36,484
Depreciation and amortization
65,252 12,619
Interest (Note 6)
7,090 12,619
206,902 177,045
Income (Loss) from operations
(40,238) (5,923)
Other income (expense):
Interest and other income
(7,314) 8,220
Net Income/(Loss)
$ (32,923) $2,297
Net Income/(Loss) attributable to
General Partners (5%)
$ (1,646) $115
Net Income/Loss attributable to
Limited Partners (95%)
$ 31,277 $2,182
Per Limited Partnership
Interest outstanding-20,653.69
$ (1.51) $0.11
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,
1997 1996
Operating Activities:
Net income (loss) for the period
$ (32,923) $ 2,297
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization
64,747 35,303
Amortization of debt issue costs
505 505
Gain on retirement of
personal property 0 0
Changes in operating assets and
liabilities:
Escrow deposits and other assets
(12,096) 1,207
Rents received in advance
5,449 3,398
Accrued expenses and other liabilities
(7,274) 123
Tenant security deposits
1,242 750
Accrued real estate taxes
0 0
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
19,650 43,583
Investment activity:
Additions to investment property
0 (1,786)
Financing activities:
Distributions to partners
(46,471) (46,471)
Proceeds from mortgage note payable
0 0
Payments on mortgage note payable
(7,334) (11,000)
NET CASH PROVIDED BY FINANCING
ACTIVITIES (53,804) (57,471)
INCREASE (DECREASE) IN CASH
(34,155) (57,674)
Cash at beginning of period
448,347 478,326
CASH AT END OF PERIOD
$414,192 $462,652
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, 1997
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, 1996. 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, 1997 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 March 31, 1997
Partner's Equity, beginning of quarter $3,372,410
Distributions (46,471)
Net Income (Loss) (31,277)
Partners' Equity, end of quarter $3,294,662
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $3,477,842
Distributions (30,981)
Net Income (Loss) 33,807
Partners' Equity, end of quarter $3,480,668
GENERAL PARTNERS
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $36,088
Distributions --
Net Income (Loss) (1,646)
Partners' Equity, end of quarter $34,442
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $25,333
Distributions --
Net Income (Loss) 1,779
Partners' Equity, end of quarter $27,132
TOTAL
Quarter Ended March 31, 1997
Partner's Equity, beginning of quarter $3,408,498
Distributions (46,471)
Net Income (Loss) (32,923)
Partners' Equity, end of quarter $3,329,104
Quarter Ended March 31, 1996
Partner's Equity, beginning of quarter $3,503,175
Distributions (30,981)
Net Income (Loss) (35,606)
Partners' Equity, end of quarter $3,507,800
4. National Realty Management, Inc. (NRMI): The
Partnership incurred property management fees of
$9,310 under an agreement with NRMI for the three
month period ended March 31, 1997.
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 was to mature on March 1, 1997,
and our lender agreed to extend the note until we
obtain refinancing of the mortgage for $550,000 by
April 18, 1997. The loan will have a 10 year
maturity with monthly payments based on a 25 year
amortization. The loan will have an interest rate
of approximately 9%, fixed for the first five
years, then adjustable to a new fixed rate for the
remaining five years. Maturities of the mortgages
for 1997 and 1998 based on the current accrual
rate are as follows: $451,532 and $9,917.
6. In 1992, the Partnership purchased 12 units of
Amberwood Condominiums from National Real Estate
Limited Partnership VI (NRELP VI), an affiliated
partnership. The Partnership is contingently
liable to pay NRELP VI proceeds from a future sale
of Amberwood Condominiums as set forth in a Future
Interest Proceeds Agreement. Upon the future sale
of Amberwood Condominiums, 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. After that, NRELP VI will
receive 60% of the net sales price above $57,500
per unit.
<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, 1997
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. NRELP-IP is a Wisconsin
limited partnership, 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.
Amberwood's occupancy rate for the first quarter of
1997 was 80.06%. Cave Creek Lock-It Lockers' occupancy
during the same period was 94.99% based on net rentable
square footage. During the comparable period in 1996
occupancy rates were 90.77% for Amberwood and 92.33%
for Cave Creek Lock-It Lockers. Amberwood's lower
occupancy can partially be attributed to increased
competition from new townhouses built in the area.
These new units are in direct competition to
Amberwood's three bedroom units. To remain competitive,
the rental rate for these units was lowered about $50.
Total operating revenues for Cave Creek Lock-It Lockers
in 1997 are in line with the comparable period of 1996.
Total operating revenue for Amberwood Apartments
decreased due to higher vacancies. Operating expenses
have increased over the same quarter of 1996 due to
increased maintenance expense at Amberwood Apartments
and Cave Creek Lock-It Lockers. Interest expense
remained in line with the same quarter of 1996.
The distributions have increased to $2.25 per share per
quarter and totaled $46,470.80 for the first quarter.
These distributions are required to be allocated 100%
to the Limited Partners, as outlined in the prospectus.
The Amberwood note was to mature on March 1, 1997, and
our lender agreed to extend the note until we obtain
refinancing. Management is working to finalize
refinancing of the mortgage for $550,000 by April 18,
1997.<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 1997.<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
(Registrant)
Date /S/April 18, 1997
/S/ John Vishnevsky
________________________________
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date /S/April 18, 1997
/S/ John Vishnevsky
__________________________________
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/April 18, 1997
Stephen P. Kotecki
__________________________________
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
J:\WPDOCS\LETTERS\NIP2-1QT.EL7
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 426160
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 426160
<PP&E> 4668436
<DEPRECIATION> 1332355
<TOTAL-ASSETS> 3762240
<CURRENT-LIABILITIES> 481329
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 3246547<F1>
<TOTAL-LIABILITY-AND-EQUITY> 3762240
<SALES> 173978
<TOTAL-REVENUES> 173978
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 141650
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65252
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (32923)
<EPS-PRIMARY> (1.51)<F2>
<EPS-DILUTED> 0
<FN>
<F1>Refers to Limited Partner's and General Partner's capital.
<F2>95% Limited Partners - Interest outstanding=20653.69.
</FN>
</TABLE>
