FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter 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 to
Commission file number 0-16798
SECURED INVESTMENT RESOURCES FUND, L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-3451000
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5453 W. 61st Place, Mission, Kansas 66205
(Address of principal executive offices) (Zip Code)
(Registrant's telephone number,
including area code) (913) 384-5700
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests ("Units")
Indicate by check mark whether the registrant (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 such shorter periods 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>
SECURED INVESTMENT RESOURCES FUND, L.P. II
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements (Unaudited):
Balance Sheets -- June 30, 1995 and
December 31, 1994 3-4
Statements of Operations -- Three and Six
Months Ended June 30, 1995 and 1994 5
Statements of Partnership Capital --
Six Months Ended June 30, 1995
and the Years Ended December 31, 1994,
and 1993 6
Statements of Cash Flows -- Six Months
Ended June 30, 1995 and 1994 7-8
Notes to Financial Statements 9-11
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 12-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS
June 30,
1995 December 31,
(Unaudited) 1994
ASSETS
INVESTMENT PROPERTIES--Note
Land and buildings $ 36,204,539 $ 36,167,642
Furniture, fixtures and equipment 1,618,224 1,488,893
____________ ____________
37,822,763 37,656,535
Less accumulated depreciation
and allowance for losses 10,117,546 9,529,532
____________ ____________
27,705,217 28,127,003
____________ ____________
RESTRICTED DEPOSITS
Bond cash reserves 1,510,000 1,510,000
Bond principal reduction reserves 429,174 424,464
____________ ____________
1,939,174 1,934,464
OTHER ASSETS
Cash 574,916 284,224
Rents and other receivables,
less allowance of $47,980
in 1995 and $47,282 in 1994 20,465 21,472
Due from related parties--Note B 169,476 173,996
Prepaid expenses 109,572 130,672
Debt issuance costs, net of
accumulated amortization of
$108,635 in 1995 and $88,602
in 1994 109,743 129,775
Commercial commissions, deposits
and other 168,190 161,674
____________ ____________
1,152,362 901,813
____________ ____________
$ 30,796,753 $ 30,963,280
____________ ____________
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS--CONT'D.
June 30,
1995 December 31,
(Unaudited) 1994
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt--Note D $ 27,635,096 $ 28,555,529
Deferred interest--Note D 1,108,465 1,108,465
Accrued interest 387,867 368,403
Accounts payable and accrued
expenses 610,993 391,988
Unearned revenue 16,215 14,012
Tenant security deposits 131,439 129,306
____________ ____________
TOTAL LIABILITIES 29,890,075 30,567,703
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (179,962) (185,073)
____________ ____________
(178,962) (184,073)
____________ ____________
Limited Partners
Capital contributions 18,901,831 18,901,831
Partnership deficit (17,816,191) (18,322,181)
____________ ____________
1,085,640 579,650
____________ ____________
TOTAL PARTNERSHIP CAPITAL 906,678 395,577
____________ ____________
$ 30,796,753 $ 30,963,280
____________ ____________
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF OPERATIONS (Unaudited)
Six Months Ended Three Months Ended
June 30, June 30,
1995 1994 1995 1994
REVENUES
Rents $2,841,141 $2,759,313 $1,408,413 $1,383,156
Maintenance
escalations
and other 64,162 44,399 41,714 20,331
__________ __________ __________ __________
2,905,303 2,803,712 1,450,127 1,403,487
__________ __________ __________ __________
OPERATING AND
ADMINISTRATIVE EXPENSES
Property operating
expenses 1,173,099 1,104,299 601,115 560,788
General and
administrative
expenses 63,712 66,357 34,118 34,838
Professional services 34,101 69,421 16,927 24,662
Management fees and
reimbursed direct
expenses 135,163 130,039 68,242 64,938
__________ __________ __________ __________
1,406,075 1,370,116 720,402 685,226
__________ __________ __________ __________
NET OPERATING INCOME 1,499,228 1,433,596 729,725 718,261
NON-OPERATING EXPENSES
Interest 1,194,846 1,115,656 675,776 571,545
Depreciation and
amortization 683,647 693,476 266,223 343,110
Gain on Debt
Restructure (890,366)
__________ __________ __________ __________
988,127 1,809,132 941,999 914,655
PARTNERSHIP INCOME
(LOSS) $ 511,101 $ (375,536) $ (212,274) $ (196,394)
__________ __________ __________ __________
Allocation of loss:
General Partners 5,111 (3,755) (2,123) (1,964)
Limited Partners 505,990 (371,781) (210,151) (194,430)
__________ __________ __________ __________
$ 511,101 $ (375,536) $ (212,274) $ (196,394)
__________ __________ __________ __________
Partnership loss per
limited partnership
unit $ 9.43 $ (6.93) $ (3.92) $ (3.62)
__________ __________ __________ __________
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited)
Six Months Ended June 30, 1995 (Unaudited) and
the Years Ended December 31, 1994 and 1993
General Limited
Partners Partners Total
Balances at January 1, 1993 $ (186,964) $ 293,378 $ 106,414
Partnership income 11,783 1,166,558 1,178,341
__________ __________ __________
Balances at December 31, 1993 (175,181) 1,459,936 1,284,755
Partnership loss (8,892) (880,286) (889,178)
__________ __________ __________
Balances at December 31, 1994 (184,073) 579,650 395,577
Partnership loss 5,111 505,990 511,101
__________ __________ __________
Balances at June 30, 1995 $ (178,962) $ 1,085,640 $ 906,678
__________ __________ __________
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS (Unaudited)
Six Months Ended
June 30,
1995 1994
OPERATING ACTIVITIES
Partnership income (loss) $ 511,101 $ (375,536)
Adjustments to reconcile
partnership loss to net cash
provided by (used in) operating
activities:
Depreciation and amortization 615,427 693,476
Amortization of bond discount 75,600 ---
Gain on debt restructuring (890,366) ---
Provision for losses on rents
and other receivables (193,129) (2,840)
Changes in assets and liabilities:
Rents and other receivables 194,136 7,738
Prepaid expenses 21,101 53,952
Due from related parties 4,520 3,953
Debt issuance costs --- (12,225)
Commercial commissions, deposits
and other (13,896) 19,465
Accounts payable
and accrued expenses 219,004 141,934
Accrued interest 134,830 (21,770)
Unearned revenue 2,203 925
Tenant security deposits 2,133 (692)
__________ __________
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 682,664 508,380
__________ __________
INVESTING ACTIVITIES
Purchases of and improvements
to investment properties (166,229) (70,392)
Purchase of restricted bond
cash reserves (4,710) (1,842)
__________ __________
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (170,939) (72,234)
__________ __________
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D.
Six Months Ended
June 30,
1995 1994
FINANCING ACTIVITIES
Deferral of long-term
interest payable $ --- $ 82,798
Principal payments on
long-term debt (221,033) (171,066)
__________ __________
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES (221,033) (88,268)
__________ __________
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 290,692 347,878
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD 284,224 208,515
__________ __________
CASH AND CASH EQUIVALENTS
END OF PERIOD $ 574,916 $ 556,393
__________ __________
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS (Unaudited)
June 30, 1995
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared
in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six month period
ended June 30, 1995 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1995. For
further information, refer to the financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-K
for the year ended December 31, 1994.
NOTE B--DUE FROM RELATED PARTY
Affiliates of the General Partners are entitled to receive payments
from the Partnership for management and other services. Specs, Inc.
(a corporation in which the General Partner has a minority interest)
receives property management fees for providing property management
services and direct cost reimbursements based upon time allocated to
performing certain Partnership functions. Amounts paid or accrued by
the Partnership to affiliates of the General Partners are as follows:
Six Months Ended
June 30,
1995 1994
Property Management Fees $ 135,163 $ 130,039
__________ __________
Amounts due from related parties consist of the following:
June 30, December 31,
1995 1994
Secured Investment Resources
II, Inc. (Excess
Syndication Costs) $ 124,422 $ 124,422
__________ __________
Secured Investment Resources
II, Inc. 45,054 49,574
__________ __________
$ 169,476 $ 173,996
__________ __________
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE B--RELATED PARTY TRANSACTIONS--CONT'D.
The net amount due from related parties represents excess syndication
costs, management fees payable and other advances. The terms of
repayment are discretionary and have not been formalized at this time.
The General Partners are entitled to receive a Partnership Management
Fee equal to 5% of Cash Flow From Operations (as defined) for managing
the normal operations of the Partnership. There was no management fee
due as of June 30, 1995 or December 31, 1994.
NOTE C--CASH DISTRIBUTIONS
No cash distributions have been made since April 1990. Future
distributions will only be made from excess cash flow not needed for
working capital reserves.
NOTE D--MORTGAGE DEBT
Mortgage debt consists of the following:
June 30, December 31,
1995 1994
Collateralized by Investment
Property:
First Mortgages:
Sunwood Village Apartments $ 8,201,997 $ 8,264,056
Bayberry Crossing Shopping Ctr. 832,714 835,292
Thomasbrook Apartments 4,983,906 4,995,784
Oak Terrace Active Retirement
Center and Healthcare Center 12,800,000 12,800,000
Less bond discount (2,428,642) (2,504,242)
Forest Park Shopping Ctr. 1,332,651 1,383,627
Second Mortgages:
Bayberry Crossing Shopping Ctr. 1,912,470 1,931,012
Thomasbrook Apartments -0- 850,000
___________ ___________
$27,635,096 $28,555,529
___________ ___________
Related to the Sunwood Village Apartments purchase money note is a
credit enhancement fee which is due at maturity. As of June 30, 1995
and December 31, 1994, $371,095 of credit enhancement fees have been
accrued and are reflected in long-term accrued interest.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D.
NOTE D--MORTGAGE DEBT--CONT'D.
Related to the Thomasbrook Apartments the second mortgage of $850,000
was paid in full on May 25, 1995 for the discounted amount of $75,000.
That payment fully retired the principal amount of $850,000 as well as
accrued interest in the amount of $40,366 resulting in a gain to the
partnership of $890,366.
The Partnership has the option to currently pay or defer payment of
interest due on the hedged portion ($8,400,000) of the Oak Terrace
Active Retirement Center and Healthcare Center bond financing. As
of June 30, 1995 and December 31, 1994, $737,370 of deferred interest
has been accrued and is reflected in long-term accrued interest.
Cash paid for interest totaled $1,152,575 and $1,124,830 during
the first half of 1995 and 1994, respectively.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Revenues for the first six months of 1995 increased by $102,000
(3.6%) compared to the same period of last year. The stronger
apartment markets allowed the Partnership to continue increasing
rental rates, discontinue rent concessions and maintain high
occupancy levels. The commercial property remained strong at
Forest Park Center in St Louis, the rental income at Bayberry
Center increased due to several new leases being completed in the
first six months. The Partnership has also increased the rental
rates at Oak Terrace, resulting in higher revenue, but also higher
vacancy rates. The Partnership feels that the strong apartment
market will continue through 1995 into 1996.
Operating and Administrative expenses increased $66,000 (5.6%)
when comparing the first six months of 1995 with the same period
of 1994. Higher property operating expenses are primarily due to
higher resident turnover, professional services declined $35,000
(50%) from the same period in 1994.
Interest expense for the first six months increased $79,000 (7.1%)
over the 1994 first six months expense. This is due primarily to
higher interest rates, and increased bond collateral fees.
The Partnership anticipates that operating results for the first
six months will be representative of the results for the remainder
of the year.
Liquidity and Capital Reserves
During the six months $683,000 of cash was provided by operating
activities, $171,000 was used for investing activities and $221,000
was used to reduce long term debt.
The second mortgage on Thomasbrook Apartments was paid in full on
May 25, 1995. The partnership paid the principal balance of $850,000
and accrued interest of $40,366 in full for a single payment of $75,000.
Although the cash position has improved, the Partnership is past due on
the Thomasbrook Apartment first mortgage. The General Partners believe
that working capital will be available during the remainder of the year
to reduce this past due balance and fund known, on-going operating and
capital requirements. The General Partners also anticipate that 1995
cash flow from operations will continue to improve because of strong
occupancy, continued rental rate increases, and stabilized expenses.
It is the General Partners' intent to evaluate the Partnership's
portfolio to determine if it is prudent to offer one or more
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.-- Cont'd.
Liquidity & Capital Reserves -- Cont'd.
properties for sale or possible restructure of the related financing
packages. Any unleveraged portion of the net sale proceeds or
favorable refinancing terms could generate additional working capital.
At the present time, contract negotiations are continuing with a
potential buyer for Sunwood Village Apartments.
The General Partners have determined it prudent to discontinue cash
distributions until such time that adequate working capital and capital
improvement reserves are in place.
(The remainder of this page intentionally left blank.)
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
Inapplicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS
Inapplicable.
Item 5. OTHER INFORMATION
Inapplicable.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed
during the quarter ended June 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.
SECURED INVESTMENT RESOURCES FUND, L.P. II
A Delaware Limited Partnership
(Registrant)
By:
James R. Hoyt
as Individual General Partner
Date: August 15, 1995
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date: August 15, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Unaudited.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 574,916
<SECURITIES> 1,939,174
<RECEIVABLES> 68,445
<ALLOWANCES> 47,980
<INVENTORY> 0
<CURRENT-ASSETS> 1,152,362
<PP&E> 37,822,764
<DEPRECIATION> 10,117,546
<TOTAL-ASSETS> 30,796,753
<CURRENT-LIABILITIES> 2,254,979
<BONDS> 27,635,096
<COMMON> 0
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30,796,753
<SALES> 0
<TOTAL-REVENUES> 2,905,303
<CGS> 0
<TOTAL-COSTS> 1,406,075
<OTHER-EXPENSES> 683,647
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,194,846
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 511,101
<EPS-PRIMARY> 9.43
<EPS-DILUTED> 0
</TABLE>
