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 June 30, 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
39-1553195
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
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) - June 30, 1997
and December 31, 19962
Statement of Operations (unaudited) - Three and six months
ended June 30, 1997 and 19963
Statement of Cash Flows (unaudited) -
Six months ended June 30,1997 and 19964
Notes to Financial Statements (unaudited)5-6
Management's Discussion and Analysis of
Financial Condition and Results of Operation7
PART II. OTHER INFORMATION AND SIGNATURES8-9
<PAGE>NATIONAL REAL ESTATE LIMITED PARTNERSHIP
INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Balance Sheet
(Unaudited)
June 30, December 31,
1997 1996
ASSETS
Current Assets:
Cash $ 475,794 $ 442,747
Escrow and other deposits (Note 5) 11,961 0
Accounts receivable and other assets 1,666 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 1,334,935
1,267,441
3,333,501 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 31,724 337
$ 3,854,647 $ 3,849,679
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Accrued expenses and other liabilities $ 19,313 $
5,128
Tenant security deposits 29,155 22,380
Mortgage notes payable (Note 6) 548,913 448,021
Rent received in advance 15,331 13,716
612,712 489,245
Partners' Capital (Note 3):
General Partners (deficit) 34,732 36,009
Limited Partners
(authorized----40,000 Interests; 3,207,203
3,324,425
outstanding--20,653.69)
3,241,935 3,360,434
$ 3,854,647 $ 3,849,679
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
June 30,
1997 1996
Operating Activities:
Net income (loss) for the period $ (25,559) $ 30,986
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 67,494 70,605
Amortization of debt issue costs (31,388) 1,010
Gain on retirement of personal property 0 0
Changes in operating assets and
liabilities:
Escrow deposits and other assets (8,027) 8,901
Rents received in advance 1,615 3,508
Accrued expenses and other liabilities 14,185 13,631
Tenant security deposits 6,775 1,540
Accrued real estate taxes 0 0
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 25,095 130,181
Investment activity:
Additions to investment property 0 (1,786)
Financing activities:
Distributions to partners (92,942) (92,942)
Proceeds from mortgage note payable 0 0
Payments on mortgage note payable 100,892 (22,000)
NET CASH PROVIDED BY FINANCING
ACTIVITIES 7,950 (114,942)
INCREASE (DECREASE) IN CASH 33,046 13,453
Cash at beginning of period 448,347 478,326
CASH AT END OF PERIOD $ 481,393 $ 491,779
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 Six Months Ended
June 30, 30
1997 1996 1997 1996
Income:
Operating Income $ 181,041 $ 185,437 $
347,705 $ 356,560
181,041 185,437 347,705 356,560
Operating expenses:
Operating 130,910 81,992 219,525
174,127
Administration 33,272 31,288 79,217
67,772
Depreciation and amortization 3,378 35,808
68,630 71,615
Interest (Note 6) 12,542 11,877
19,632 24,496
180,102 160,965 387,004 338,010
Income (Loss) from operations 939 24,472
(39,298) 18,550
Other income (expense):
Interest and other income 8,008 4,216
13,740 12,436
Net Income/(Loss) $ 8,947 $ 28,688
(25,559) 30,986
Net Income/(Loss) attributable to
General Partners (5%) $ 447 $ 1,434
(1,278) 1,549
Net Income/Loss attributable to
Limited Partners (95%) $ 8,500 $ 27,254
(24,281) 29,435
Per Limited Partnership
Interest outstanding-20,653.69 $ 0.41 $ 1.32
(1.18) 1.43
See notes to financial
statements.
<PAGE>NATIONAL REAL ESTATE LIMITED PARTNERSHIP INCOME PROPERTIES-II
(A Wisconsin Limited Partnership)
Notes to Financial Statements
(Unaudited)
June 30, 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 June 30, 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 General
Partners
Partners Total
Quarter Ended June 30, 1997
Partners' Equity, beginning of quarter $3,294,662
$34,442 $3,329,104
Distributions (46,471) -
- - (46,471)
Net Income (Loss) (24,281)
(1,278) (25,559)
Partners' Equity, end of quarter $3,223,910
$33,164 $3,257,074
Quarter Ended June 30, 1996
Partners' Equity, beginning of quarter $3,419,858
$33,694 $3,453,552
Distributions (46,471) -
- - (46,471)
Net Income (Loss) 27,254
1,434 28,688
Partners' Equity, end of quarter $3,400,641
$35,128 $3,435,769
4.National Realty Management, Inc. (NRMI): The Partnership incurred property
management fees of $17,760 under an agreement with NRMI for the six month
period ended June 30, 1997.
5.The mortgage note payable is secured by Amberwood Apartments. The loan of
$550,000 originated on April 16, 1997, and has a 10 year maturity with
payments based on a 25 year amortization. The loan has an interest rate of
8.4%, 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 are
$452,463 and $7,145, respectively.
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 ne
t 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
June 30, 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, such as
fireplaces and attached garages.
Amberwood's occupancy rate for the second quarter of 1997 was 80.14%. Cave
Creek Lock-It Lockers' occupancy during the same period was 94.51% based on
net rentable square footage. During the comparable period in 1996 occupancy
rates were 99.4% for Amberwood and 95.44% 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 three bedroom 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. Cave Creek Lock-It Lockers has upgraded the computer
system. Interest expense remained in line with the same quarter of 1996.
The distributions have remained $2.25 per share per quarter and totaled
$46,470.80 for the second 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 June 30,
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-II
(Registrant)
Date /August 1, 1997 /S/ John
Vishnevsky
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and
Investment, Inc.
Corporate General Partner
Date /S/August 1, 1997 /S/ John
Vishnevsky
John Vishnevsky
Chief Financial and Accounting Officer
Date /S/August 1, 1997 Stephen P.
Kotecki
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
<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 August 1,
1997
John Vishnevsky
President and Chief Operating and
Executive Officer
National Development and Investment, Inc.
Corporate General Partner
Date August 1,
1997
John Vishnevsky
Chief Financial and Accounting Officer
Date August 1,
1997
Stephen P. Kotecki
President
EC Corp
Corporate General Partner
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