FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1996
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of
Regulation S-K is not contained herein, and will not be contained, to the best
of
registrant's knowledge, in definitive proxy or information statements
incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
<PAGE>
PART I
Item 1. Business
Secured Investment Resources Fund, L.P. II ("Partnership") is a Delaware
limited partnership formed pursuant to the Delaware Revised Uniform Limited
Partnership Act on July 1, 1986. James R. Hoyt is the Individual General
Partner and Secured Investment Resources, II Inc., a Missouri corporation,
is the Corporate General Partner. The Partnership has no predecessors or
subsidiaries. The Partnership was formed with the intent to engage in the
business of acquiring, improving, developing, operating and holding for
investment, income-producing real properties with the objectives of (i)
preserving and protecting the Partnership's capital; (ii) providing cash
distributions from operations; (iii) providing capital growth through
property appreciation; and (iv) increasing equity in property ownership by
the reduction of mortgage loans on Partnership properties.
On September 24, 1988, the Partnership closed its offering, having received
gross proceeds of $26,830,500 from the sale of 53,661 units of limited
partnership interests.
The Partnership originally acquired eight properties, which included four
apartment communities, three shopping centers and a health care facility.
The General Partners feel that all of these properties met the
Partnership's investment criteria and objectives. Since the inception of
the Partnership, two properties (one apartment community and one shopping
center) have been sold.
As of December 31, 1996, the Partnership has made cash distributions to
Limited Partners of $4,724,456 for the period April 1, 1987 through
December 31, 1996. No distributions have been made since April 1990.
Future distributions will only be made from excess cash flow not needed for
working capital reserves.
As of December 31, 1996, the Partnership had no employees. Employees of
SPECS, Inc. provide services to the Partnership. The individual General
Partner is a shareholder in SPECS, Inc.
<PAGE>
Item 1. Business--Cont'd.
Competition
The real estate business is highly competitive and the Partnership competes
with numerous entities engaged in real estate activities, some of which
have greater financial resources than those of the Partnership. The
Partnership's management believes that success against such competition is
dependent upon the geographic location of the property, the performance of
property managers, the amount of new construction in the area and the
maintenance and appearance of the property. With respect to residential
property, competition is also based upon the design and mix of the units
and the ability to provide a community atmosphere for the tenants. The
Partnership's management believes that general economic circumstances and
trends and new properties in the vicinity of each of the Partnership's
properties will also be competitive factors.
Inflation
The effects of inflation on the Partnership's operations or investments are
not quantifiable. Revenues from property operations fluctuate
proportionately with increases and decreases in housing costs.
Fluctuations in the rate of inflation also affect the sales values of
properties and, correspondingly, the ultimate gains to be realized by the
Partnership from property sales.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 2. Properties.
The following table sets forth the investment portfolio of the Partnership
at December 31, 1996:
Average
Properties at Occupancy(*)
Property Description Initial Cost Date Acquired Percentage
1996 1995
Sunwood Village
Apartments 252 Units $10,954,651 May 15, 1987 96% 97%
Las Vegas, NV
Bayberry Crossing
Shopping Center 56,113 Sq.Ft. $ 4,175,012 Jun. 30, 1987 92% 91%
Lee's Summit, MO
Oak Terrace Active
Retirement
Center 129 Units $ 8,604,769 Aug. 31, 1988 96% 91%
Springfield, IL
Oak Terrace
Healthcare Center 98 Beds $ 3,980,340 Aug. 31, 1988 100% 100%
Springfield, IL
Thomasbrook
Apartments 196 Units $ 5,992,092 Aug. 26, 1988 89% 91%
Shawnee, KS
Forest Park
Shopping Center 19,980 Sq.Ft. $ 2,871,199 Nov. 23, 1988 100% 100%
St. Louis, MO
(*) Based upon vacancy amount (in dollars) as a percent
of gross possible rents.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for Registrant's Common Equity and Related Security Holder
Matters.
(A) There is no established public trading market for the Units of
the Partnership.
(B) There have been no distributions the last three years.
(C) As of December 31, 1996, the Partnership had admitted 2,722
Limited Partners who purchased 53,661 units.
(The remainder of this page intentionally left blank.)
<PAGE>
Item 6. Selected Financial Data.
Years Ended December 31,
OPERATING DATA 1996 1995 1994 1993 1992
(In Thousands)
Rents $ 5,917 $ 5,583 $ 5,435 $ 5,674 $ 6,102
Maintenance
Escalations and
Other Income 281 314 256 287 322
Property Operating
Expenses 3,101 3,021 2,878 2,960 3,308
Interest Expense (1) 2,242 2,429 2,322 2,725 3,426
Depreciation/
Amortization 1,461 1,388 1,380 1,957 2,264
Gain on sale
of Investment
Property --- --- --- (1,946) ---
Extraordinary
gain on debt
restructuring 413 890 --- 913 ---
Partnership Income
(Loss) $ (193) $ (51) $ (889) $ 1,178 $(2,574)
Partnership Income
(Loss) Per Limited
Partnership
Unit (2) $ (3.57) $ ( .95) $(16.40) $ 21.74 $(47.48)
Cash Distributions
Per Limited
Partnership
Unit $ --- $ --- $ --- $ --- $ ---
BALANCE SHEET DATA 1996 1995 1994 1993 1992
(In Thousands)
Total Assets $29,702 $30,294 $30,963 $32,012 $40,550
Mortgage Debt $27,474 $27,581 $28,556 $28,677 $38,361
(1) Certain reclassifications have been made from
interest expense to amortization to more accurately
reflect the change in the bond discount
amortization related to the Oak Terrace bond
financing. There was no income effect as a result
of these reclassifications.
<PAGE>
Item 6. Selected Financial Data--Cont'd.
(2) Partnership income (loss) per limited partnership
unit is computed by dividing the income (loss)
allocated to the Limited Partners by the weighted
average number of limited partnership units
outstanding. Per unit information has been
computed based on 53,661 weighted average limited
partnership units outstanding.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
When comparing 1996 and 1995 operations, total
revenues increased $300,000 (5.1%) primarily due to
increased occupancy on both residential and
commercial properties.
Interest expense decreased $187,000 (7.7%) to
$2,242,000 for 1996. Depreciation and amortization
went from $1,389,000 in 1995 to $1,461,000 in 1996,
an increase of $72,000 (5.2%).
Total operating expenses for 1996 increased $90,000
(3.5%) from 1995 levels. Professional services
decreased $16,000 (1.7%). Management fees
increased $6,000 (2.2%) while general and
administrative expenses remained stable. In 1996
the loss before extraordinary item decreased from
($942,000) in 1995 to ($606,000) in 1996 (35.7%).
When comparing 1995 and 1994 operations, total
revenues increased $206,000 (3.6%) primarily due to
increased occupancy on both residential and
commercial properties.
Interest expense increased $107,000 (4.6%) to
$2,429,000 for 1995. Depreciation and amortization
went from $1,381,000 in 1994 to $1,388,000 in 1995.
Total operating expenses for 1995 increased
$143,000 (5.0%) from 1994 levels. Professional
services decreased $7,000 (6.9%). Management fees
increased $8,000 (3.2%), while general and
administrative expenses increased $7,000 (5.3%).
In 1995 the loss before extraordinary items
increased from ($889,000) in 1994 to ($942,000) in
1995 (5.9%).
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Cont'd
Results of Operations--Cont'd.
In The Pines revenues for 1993 were $682,000, while
operating expenses were $315,000. Interest for
1993 was $369,000 and depreciation was $112,000.
The following comparisons between the Partnership's
1994 and 1993 operations do not include these
figures in order to provide a fair operational
comparison for 1994 and 1993.
The 1994 Partnership loss of $(889,000) is much
better than the 1993 amount of $(1,681,000), prior
to gains associated with debt restructuring and the
sale of In The Pines. When comparing 1994 and 1993
operations, total revenues increased $413,000
(7.8%) to $5,691,000. Of this increase $308,000
was from residential property and $105,000 was from
commercial property. These increases came about
due to higher average rental rates, decreased
rental concessions and improved occupancy levels.
The higher residential rental rates, resulted in
increased resident turnover and higher operating
expenses.
Operating expenses increased $233,000 (8.8%)
to $2,878,000. These increases were primarily in
the areas of repairs, supplies, payroll, and
utilities.
The General Partners anticipate 1997 operating
results will continue to improve over 1996 and 1995
as a result of the continued planned increase in
rental rates and decreased rental incentives. This
planned increase in net rental income will be
combined with continued efforts to reduce expenses.
Liquidity and Capital Resources
During 1996, the primary source of working capital
was provided by net cash provided by operating
activities of $1,029,000. Investing activities for
new equipment and additional bond reserves consumed
$378,000 and financing activities consumed an
additional $612,000. This resulted in an increase
of cash of $39,000 during the year. Accrued
interest decreased during the year by $4,000.
Thomasbrook Apartments' principal and interest is
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations--Cont'd
Liquidity and Capital Resources--Cont'd.
past due by $606,791 as of December 31, 1996. The cash
generated from operations for that property is
insufficient to service the mortgage under the current
payment requirements. The General Partner has had
ongoing negotiations with the lender concerning a
complete restructure of the mortgage and related debt
service.
On May 17, 1996 the Partnership refinanced the matured
first mortgage on Sunwood Village Apartments. The terms
of the new mortgage are interest at 8.625% with monthly
principal and interest payments of $63,000 through the
loan maturity date of June 1, 2001 (5 years). The
Partnership recognized a gain of $352,227 refinancing the
note due in 1996. All of the deferred interest relating
to the original note was forgiven by the Lender.
On November 21, 1996 the Partnership refinanced the first
and second mortgage on Bayberry Crossing Shopping Center.
The terms of the new mortgage are 8.25% interest with
monthly principal and interest payments of $21,571
through the loan maturity date of November 10, 1999
(three years).
The Partnership recognized a gain of $60,571 upon
refinancing of the notes due in 1996. All of the
deferred interest, accrued interest and late charges
relating to the original note were forgiven by the
lender.
During 1995, the primary source of working capital was
provided by net cash form operating activities of
$936,000. Investing activities for new equipment and
additional bond reserves consumed $363,000 and financing
activities consumed an additional $333,000. This
resulted in an increase of cash of $239,000 during the
year. Accrued interest increased during the year by
$435,000. Thomasbrook Apartments' mortgage is past due
by $540,296 as of December 31, 1995. The cash generated
from operations for that property is insufficient to
service the mortgage under the current payment
requirements.
During 1994, the primary source of working capital was
provided by operating activities. Operations generated
$541,000, while investing activities for new equipment
and additional bond reserves consumed
<PAGE>
Item 7. Management's Discussion and Analysis of Fiancnial
Condition and Results of Operations--Con't'd.
Liquidity and Capital Resources--Cont'd.
$229,000 and financing activities consumed an additional
$236,000, resulting in an increase of cash of $76,000
during the year. The increased cash flow from improved
rent receivable collections and improved operations,
allowed the partnership to reduce accounts payable to
$145,000. Accrued interest increased during the year by $78,000.
The General Partners believe that sufficient working
capital will be available during 1997 to fund known, on-
going operating and capital requirements of the Partnership.
In 1997, the Partnership anticipates cash flow from operations
will improve because management intends to 1) improve occupancy
on the commercial properties; 2) achieve rental rate increases;
3) decrease the amount of promotional rent discounts offered on
the residential properties; and 4) continue to maintain stringent
controls over expenses.
The General Partners intend to evaluate the property
portfolio to determine if it is prudent to offer one or
more properties for sale or possibly restructure the
related financing packages. Any unleveraged portion of
the net sales proceeds or favorable refinancing terms
will generate additional working capital.
The General Partners have determined it prudent to
discontinue cash distributions until such time that
adequate working capital reserves are available.
All statements contained herein that are not historical
facts including the Partnership's current business
strategy, the Partnership's projected sources and uses of
cash, and the Partnership's plans for future operations,
are based upon current expectations. These statements
are forward-looking in nature and involve a number of
risks and uncertainties. Actual results may differ
materially. Among the factors that could cause actual
results to differ materially are the following: the
availability of sufficient capital to finance the
Partnership's business plans on terms satisfactory to the
Partnership; competitive factors; changes in regulations
affecting the Partnership's business; general businesses
and economic conditions; and other factors described from
time to time in the Partnership's reports filed with the
Securities and Exchange Commission. The Partnership
cautions readers not to place undue reliance on any such
forward-looking statements, which statements are made
pursuant to the Private Litigation Reform Act of 1995
and, as such, speak only as of the date made.
<PAGE>
Item 8. Financial Statements and Supplementary Data.
SECURED INVESTMENT RESOURCES FUND, L.P. II
Index
Page
Independent Auditors' Report 12
Financial Statements:
Balance Sheets - December 31,
1996 and 1995 13-14
Statements of Operations - Years
Ended December 31, 1996, 1995
and 1994 15
Statements of Partnership Capital -
Years Ended December 31, 1996,
1995 and 1994 16
Statements of Cash Flows - Years
Ended December 31, 1996, 1995
and 1994 17-18
Notes to Financial Statements 19-29
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Partners
Secured Investment Resources Fund, L.P. II
Mission, KS
We have audited the accompanying balance sheets of Secured
Investment Resources Fund, L.P. II as of December 31, 1996 and
1995, and the related statements of operations, partnership capital
and cash flows for each of the three years in the period ended
December 31, 1996. We have also audited the schedules listed in
the accompanying index. These financial statements and schedules
are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial
statements and schedules based upon our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and schedules are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements and schedules. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the
financial statements and schedules. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Note C, the Partnership has a mortgage loan
that is delinquent on scheduled payments and real estate taxes.
The Partnership is in current negotiations with the mortgage holder
to extend or refinance this obligation.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
Secured Investment Resources Fund, L.P. II at December 31, 1996 and
1995, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 1996 in
conformity with generally accepted accounting principles.
Also in our opinion, the schedules present fairly, in all
material respects, the information set forth therein.
s/ BDO Seidman, LLP
St. Louis, Missouri
February 7, 1997
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS
December 31,
1996 1995
ASSETS
INVESTMENT PROPERTIES (Notes B and C)
Land and buildings $ 36,354,615 $ 36,217,082
Furniture, fixtures and equipment 1,983,816 1,797,522
38,338,431 38,014,604
Less accumulated depreciation
and allowance for losses 11,946,482 10,725,975
26,391,949 27,288,629
RESTRICTED DEPOSITS
Bond cash reserves (Note C) 1,510,000 1,510,000
Bond principal reduction reserves 455,125 429,924
Other 28,750 ---
1,993,875 1,939,924
OTHER ASSETS
Cash 561,667 522,835
Rents and other receivables, less
allowance of $54,600 in 1996 and
$45,475 in 1995 14,431 12,069
Due from related parties (Note D) 179,423 174,423
Prepaid expenses 96,982 111,061
Debt issuance costs, net of accumulated
amortization of $218,729 in 1996 and
$129,854 in 1995 365,585 89,487
Commercial commissions, deposits and
other 98,307 155,700
1,316,395 1,065,575
$ 29,702,219 $ 30,294,128
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
BALANCE SHEETS--CONT'D.
December 31,
1996 1995
LIABILITIES AND PARTNERSHIP CAPITAL
Mortgage debt (Note C) $ 27,473,556 $ 27,581,485
Deferred interest (Note C) 737,370 1,126,213
Accrued interest 684,139 688,468
Accounts payable and accrued
expenses (Note G) 471,568 398,997
Unearned revenue 36,302 14,358
Tenant security deposits 148,462 140,325
TOTAL LIABILITIES 29,551,397 29,949,846
PARTNERSHIP CAPITAL
General Partners
Capital contribution 1,000 1,000
Partnership deficit (187,521) (185,586)
(186,521) (184,586)
Limited Partners
Capital contributions 18,901,831 18,901,831
Partnership deficit (18,564,488) (18,372,963)
337,343 528,868
TOTAL PARTNERSHIP CAPITAL 150,822 344,282
$ 29,702,219 $ 30,294,128
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF OPERATIONS
Years Ended December 31,
1996 1995 1994
REVENUES
Rents $ 5,916,810 $ 5,583,063 $ 5,435,088
Interest 11,722 3,601 ---
Maintenance escalations 269,041 310,848 256,181
6,197,573 5,897,512 5,691,269
OPERATING AND ADMINISTRATIVE
EXPENSES
Property operating
expenses 2,604,239 2,514,846 2,379,688
General and administrative
expenses 136,698 136,511 129,607
Professional services (Note D) 80,728 96,400 103,593
Management fees (Note D) 279,374 273,304 264,876
3,101,039 3,021,061 2,877,764
NET OPERATING INCOME 3,096,534 2,876,451 2,813,505
NON-OPERATING EXPENSES
Interest 2,242,210 2,429,217 2,322,166
Depreciation and
amortization 1,460,582 1,388,895 1,380,517
3,702,792 3,818,112 3,702,683
Partnership income (loss)
before extraordinary item (606,258) (941,661) (889,178)
Extraordinary gain on
debt restructuring--
(Note C) 412,798 890,366 ---
PARTNERSHIP INCOME (LOSS) $ (193,460) $ (51,295) $ (889,178)
Allocation of income (loss)
General Partners $ (1,935) $ (513) $ (8,892)
Limited Partners (191,525) (50,782) (880,286)
$ (193,460) $ (51,295) $ (889,178)
Per Limited Partnership Unit
Income (loss) before
extraordinary item $ (11.19) $ (17.37) $ (16.40)
Extraordinary item 7.62 16.42 ---
Total per Limited
PartnershiUnit $ ( 3.57) $ (.95) $ (16.40)
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF PARTNERSHIP CAPITAL
Years Ended December 31, 1996, 1995 and 1994
General Limited
Partners Partners Total
Balances at January 1, 1994 $ (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 ( 513) ( 50,782) ( 51,295)
Balances at December 31, 1995 (184,586) 528,868 344,282
Partnership loss (1,935) (191,525) (193,460)
Balance at December 31, 1996 $ (186,521) $ 337,343 $ 150,822
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1996 1995 1994
OPERATING ACTIVITIES
Partnership loss $ ( 193,460) $ (51,295) $ (889,178)
Adjustments to reconcile
partnership loss to net cash
provided by operating activities:
Depreciation and amortization 1,460,582 1,388,895 1,380,517
Gain on debt restructuring (412,798) (890,366) ---
Provision for losses on rents
and other receivables 9,125 (24,638) (16,385)
Changes in assets and liabilities:
Rents and other receivables (11,487) 34,041 52,251
Prepaid expenses 14,079 19,611 48,381
Commercial commissions,
deposits and other 40,663 5,974 42,313
Accounts payable
and accrued expenses 96,526 7,009 (144,774)
Accrued interest (4,329) 435,431 78,117
Unearned revenue 21,944 346 (3,520)
Tenant security deposits 8,137 11,019 (6,187)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,028,982 936,027 541,535
INVESTING ACTIVITIES
Improvements to investment
properties (323,827) (358,069) (226,809)
Purchase of restricted bond
cash reserves (53,951) (5,460) (2,592)
NET CASH USED IN
INVESTING ACTIVITIES $ (377,778) $ (363,529) $ (229,401)
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
STATEMENTS OF CASH FLOWS--CONT'D.
Years Ended December 31,
1996 1995 1994
FINANCING ACTIVITIES
Deferral of interest payable $ --- $ 17,748 $ 38,154
Debt issuance costs (346,243) (964) (2,708)
Advanced (to) from related
parties (5,000) (427) 1,138
Principal payments on debt (259,129) (350,244) (273,009)
NET CASH USED IN
FINANCING ACTIVITIES (612,372) (333,887) (236,425)
INCREASE IN CASH 38,832 238,611 75,709
CASH BEGINNING OF YEAR 522,835 284,224 208,515
CASH END OF YEAR $ 561,667 $ 522,835 $ 284,224
See notes to financial statements.
<PAGE>
SECURED INVESTMENT RESOURCES FUND, L.P. II
NOTES TO FINANCIAL STATEMENTS
Note A--SIGNIFICANT ACCOUNTING POLICIES
Organization and Business--Secured Investment Resources Fund, L.P.
II (the Partnership) is a Delaware limited partnership formed
pursuant to the Delaware Revised Uniform Limited Partnership Act on
July 1, 1986. The General Partners' and Limited Partners' interest
in Partnership earnings or loss initially amounts to 1% and 99%,
respectively. The allocation of the 1% interest between the
General Partners is discretionary. At such point in time cash
distributions to the Limited Partners amount to their original
invested capital plus interest at a rate of the greater of 8% (10%
for those investors who subscribed for units on or before December
31, 1986) or the increase in the consumer price index per annum,
cumulative non-compounded on their adjusted invested capital,
earnings or loss will be allocated 15% to the General Partners and
85% to the Limited Partners.
Restricted Deposits--These restricted deposits are deposited into
Money Market Treasury Funds and Certificates of Deposits. The
Partnership expects to hold these until bond maturity. The
amortized cost value approximates market value.
Depreciation--Investment property is depreciated on a straight-line
basis over the estimated useful life of the property (30 years for
buildings and 5 years for furniture, fixtures and equipment).
Improvements are capitalized and depreciated over their estimated
useful lives. Maintenance and repair expenses are charged to
operations as incurred.
Income Taxes--Any tax liabilities or benefits arising from
Partnership operations are recognized individually by the
respective partners and, consequently, no provision will be made by
the Partnership for income taxes or income tax benefits.
Partnership Income or Loss Per Limited Partnership Unit--Partnership
operations are recognized individually by the respective partners and,
consequently, no provision will be made by the Partnership for income
taxes or income tax benefits.
Debt Issuance and Refinancing Costs--Loan costs in the amount of
$346,243, $964 and $2,708 were incurred and capitalized by the
Partnership in 1996, 1995 and 1994, respectively. These costs are
being amortized over the term of the related loans.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE A--SIGNIFICANT ACCOUNTING POLICIES--CONT'D
Reclassifications--Certain items in the 1996, 1995 and 1994
financial statements have been reclassified. No income effect
resulted from these reclassifications.
Accounting Estimates--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statement and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
New Accounting Standards--In March 1995, the FASB issued its
Statement of Financial Accounting Standards No. 121, Accounting for
the Impairment of Long-Lived Assets and For Long-Lived Assets to Be
Disposed Of ("SFAS 121"). SFAS 121 requires that long-lived assets
and certain intangibles to be held and used by an entity be
reviewed for impairment when events or changes in circumstances
indicate that the carrying amount may not be recoverable. In
addition, SFAS 121 requires long-lived assets and certain
intangibles to be disposed of to be reported at the lower of
carrying amount or fair value less costs to sell. SFAS 121 is
effective for fiscal years beginning after December 15, 1995. The
application of this pronouncement did not have a material effect on
the financial statements of the Partnership.
(The remainder of this page intentionally left blank.)
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE B--INVESTMENT PROPERTIES
Investment properties consists of the following:
December 31,
1996 1995
Cost (including capital
improvements subsequent
to acquisition):
Bayberry Crossing Shopping
Center $ 4,467,610 $ 4,451,962
Forest Park Shopping Center 2,946,998 2,944,655
Thomasbrook Apartments 6,660,081 6,579,745
Sunwood Village Apartments 11,369,101 11,285,696
Oak Terrace Healthcare Center 3,980,340 3,980,340
Oak Terrace Active Retirement
Center 8,905,822 8,763,727
Other equipment 8,479 8,479
38,338,431 38,014,604
Less
Accumulated depreciation 11,196,482 9,975,975
Allowance for losses on
investment properties 750,000 750,000
$ 26,391,949 $ 27,288,629
During 1991 and 1990, the Partnership reduced the carrying value of
its commercial property portfolio to reflect real estate market
conditions. This change is reflected in Allowance for Losses on
Investment Properties.
Depreciation expense was $1,220,507, $1,196,443 and $1,189,238 for
the year ended December 31, 1996, 1995 and 1994, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE DEBT
Mortgage debt consists of the following:
December 31,
1996 1995
Collateralized by Investment Property:
First Mortgages:
Bayberry Crossing Shopping Center $ 2,618,862 $ 831,023
Forest Park Shopping Center 1,201,571 1,288,958
Thomasbrook Apartments 4,984,179 4,984,179
Sunwood Village Apartments 8,070,786 8,136,792
Oak Terrace Active Retirement
Center (OTARC) and Oak Terrace
Healthcare Center (OTHCC) 12,800,000 12,800,000
Less bond discount (2,201,842) (2,353,042)
Second Mortgages:
Bayberry Crossing Shopping Center --- 1,893,575
$27,473,556 $27,581,485
Bayberry Crossing Shopping Center (Bayberry)
On November 21, 1996 the Partnership refinanced the first and second
mortgage on Bayberry Crossing Shopping Center. The terms of the new
mortgage are 8.25% interest with monthly principal and interest
payments of $21,571 through the loan maturity date of November 10,
1999 (three years).
The Partnership recognized a gain of $60,571 upon the refinancing of
the notes in 1996. All of the deferred interest, accrued interest and
late charges relating to the original note were forgiven by the
lender.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE DEBT--CONT'D.
Forest Park Shopping Center (Forest Park)
A bond financing agreement with a current balance of $1,201,571 is
collateralized by Forest Park. Principal and interest payments are
due monthly. Interest is calculated at 80% of the current prime rate
and adjusted annually. Monthly principal is due at an amortization
rate of 17 years, which fully amortizes the loan through the maturity
date of March, 2008. The bonds are callable on April 1, 1998 and
2003. The interest rates at the adjustment dates of April 1, 1996,
1995 and 1994 were 8.25%, 7.20%, and 6.25% respectively.
Thomasbrook Apartments (Thomasbrook)
A purchase money note with a current balance of $4,984,179 is
collateralized by Thomasbrook. Principal and interest payments are
due monthly in an amount necessary to amortize the principal over
thirty years. The interest rate is 9.5% through the maturity date of
September 1, 2000.
No principal payments were made in 1996 and as of December 31, 1996,
accrued interest for Thomasbrook Apartments is past due by $606,791
due to the negative cash flow status of the apartment complex. The
General Partner and the lender are engaged in ongoing negotiations
related to a restructure of this debt and it is anticipated that a
restructure will be completed in 1997. The Partnership is currently
paying debt service at $35,000 per month which represents the cash
flow of the property. It is anticipated those payments will continue
until a restructuring or refinancing is completed.
The net book value of this property was $4,531,000 as of December 31,
1996.
Sunwood Village Apartments (Sunwood)
On May 17, 1996 the Partnership refinanced the matured first mortgage
on Sunwood Village Apartments. The terms of the new mortgage are
interest at 8.625% with monthly principal and interest payments of
$63,000 through the loan maturity date of June 1, 2001 (5 years).
The Partnership recognized a gain of $352,227 upon refinancing of the
note in 1996. All of the deferred interest relating to the original
note was forgiven by the lender.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE--CONT'D.
Oak Terrace Active Retirement Center (OTARC) and Oak Terrace
Healthcare Center (OTHCC)
A bond financing agreement is collateralized by OTARC, OTHCC, and
interest earned on bond cash reserves and debt service reserves
invested in Money Market Mutual Funds ($1,510,000) and Certificates
of Deposits ($455,125). The original principal balance of $15,100,000
consisted of variable rate demand multi-family housing revenue bonds,
which mature serially from December 31, 1991 to December 2015. The
effective rate was fixed on the commencement date of the bonds based
on 20 Year U.S. Treasury Bonds futures contracts. The bonds contained
a financing agreement providing for the financial institution to
receive a fee to fix the interest rate at 6.2% on $10,700,000 of the
principal balance. The bond discount paid to obtain this agreement
is amortized over the life of the bonds using an effective interest
rate method. The remaining $4,400,000 of the original principal
balance bears interest at variable rates. This rate, which is
determined weekly by the Remarketing Agent, is based upon his opinion
as to the minimum rate necessary to sell the Bonds (at par) in a
secondary market. At December 31, 1996 the variable rate was 6.2%.
The current $12,800,000 balance of bonds consist of $4,400,000 at a
variable interest rate and $8,400,000 at the fixed interest rate.
The Partnership had the option to pay or defer payment on the
difference in the fixed rate 6.2% on the $10,700,000 bonds and the
reduced rate of 4.22%. On April 20, 1994 the fixed rate was reduced
to 4.22%. The balance of deferred interest calculated at that date
was the difference between the bonds floating rate and the fixed rate.
The resulting balance of deferred interest was $737,370.
Pursuant to the terms of the bond financing agreement, certain cash
reserves are required and are designated for scheduled principal
payments and replacement reserves. Interest earned on these reserves
is recorded as a reduction of interest expense and is considered in
the computation of the amortization of the bond discount. As of
December 31, 1996 and 1995, the unamortized balance of the bond
discount was $2,201,842 and $2,353,042.
In 1993, the Partnership reached an agreement with the lender whereby
the lender released $2,096,949 of bond cash reserves to the
Partnership in exchange for a principal paydown of $1,900,000 on the
variable rate portion of the bonds. The principal paydown was a
prepayment of scheduled principal reductions through December 31,
1998. Therefore, no additional principal payments are required until
December 1999.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE C--MORTGAGE--CONT'D.
Cash paid for interest totaled $2,636,889, $2,220,221 and $2,209,797
during 1996, 1995, and 1994, respectively.
Maturities of mortgage debt are as follows:
Year
1997 $ 5,169,328
1998 193,781
1999 2,705,013
2000 167,522
2001 7,875,119
Thereafter 1,180,375
29,675,398
Bond discount (2,201,842)
Net debt outstanding $27,473,556
NOTE D--RELATED PARTY TRANSACTIONS
Through December 31, 1994, property management services were
provided by The Hoyt Group, a Kansas Corporation in which the
individual general Partner had a majority interest. As of January
1, 1995, SPECS, Inc., a Kansas Corporation in which the individual
General Partner has an interest, receives property management fees
for providing property management services. SPECS, Inc. also
performs various professional services for the Partnership,
primarily tax accounting, audit preparation, SEC 10Q and 10K
preparation, and investor services. Amounts paid by the
Partnership to The Hoyt Group and SPECS, Inc. are as follows:
Years Ended December 31,
1996 1995 1994
Property management fees $279,374 $273,304 $264,876
Professional Services 48,668 48,000 ---
$328,042 $321,304 $264,876
These professional services were provided by an unrelated entity
previous to January 1, 1995.
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
exception for Forest Park whose Management Fee is equal to 3%, Oak
Terrace Health Care which pays 2% in Management Fees, and Sunwood
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE D--RELATED PARTY TRANSACTIONS
Village whose Management Fee is equal to 3%. There was no
management fee due for the years ended December 31, 1996, 1995 and
1994.
Amounts due from related parties consist of the following:
December 31,
1996 1995
Secured Investment Resources II, Inc. $ 174,423 $ 174,423
Secured Investment Resources Fund, L.P. $ 5,000 $ ---
The amount due from Secured Investment Resources II, Inc.
represents excess syndication costs. Because of many factors, the
Partnership did not raise the level of capital anticipated during
the initial offering period. As a result, syndication and
acquisition costs exceeded the amount allowed per the Partnership
Agreement. The General Partners are obligated to reimburse these
excess costs/fees.
NOTE E--CASH DISTRIBUTIONS
No distributions have been made since April 1990. Future
distributions will only be made from excess cash flow not needed
for working capital reserves.
NOTE F--PARTNERSHIP LIQUIDITY
The Partnership operates within the real estate industry and is
subject to its economic forces, which contributes additional
liquidity risk to the Partnership's investment portfolio. These
risks include, but are not limited to, changes in general or local
economic conditions, changes in interest rates and the availability
of permanent mortgage financing which may render the acquisition,
sale or refinancing of a property difficult or unattractive,
changes in real estate and zoning laws, increases in real estate
taxes, federal or local economic or rent controls, floods,
earthquakes and other acts of God and other factors beyond the
control of the Partnership's management. The illiquidity of real
estate investments generally may impair the ability of the
Partnership to respond promptly to changing economic conditions.
The General Partners believe that sufficient working capital will
be available to fund known, ongoing operating and capital
expenditure requirements of the Partnership during 1997. The
primary source of working capital is expected to be cash flow from
operations which is expected to improve over that of the previous
year due to improved operations.
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE F--PARTNERSHIP LIQUIDITY--CONT'D
Certain positive factors are expected to affect 1997 operations are
improved occupancy on the commercial properties, residential rental
rate increases and decreased usage of promotional rent discounts.
It is also expected that stringent controls over expenditures will
be maintained.
The availability of the liquidity sources and accomplishment of
these objectives are partially predicated on the real estate
economic conditions discussed above, which are beyond the control
of the Partnership, and will influence the achieved results.
NOTE G--ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consists of the following:
December 31,
1996 1995
Vendor accounts payable $ 60,718 $ 47,135
Real estate / property taxes 329,540 246,510
Professional fees 30,201 53,733
Utilities 25,093 23,652
Payroll reimbursement 26,016 27,967
$ 471,568 $ 398,997
As of December 31, 1996, delinquent real estate taxes and the
corresponding interest on the delinquent taxes are $189,458 and
consist of one-half of 1994 and all of 1995 and 1996 for
Thomasbrook Apartments.
(The remainder of this page intentionally left blank.)
<PAGE>
NOTES
TO FINANCIAL STATEMENTS--CONT'D.
NOTE H--INCOME TAXES
The Partners' capital accounts differ for financial reporting
purposes and federal income tax purposes. The primary differences
result from: 1) depreciation and amortization; 2) losses and
provision for losses on investment properties; and 3) provision for
doubtful accounts. The effect of these items is summarized as
follows:
December 31,
1996 1995
Financial reporting basis:
Total assets $ 29,702,219 $ 30,294,128
Total liabilities (29,551,397) (29,949,846)
Total Partners' capital $ 150,822 $ 344,282
Tax basis:
Total assets $ 37,294,801 37,895,516
Total liabilities (34,395,572) (34,718,036)
Total Partners' capital $ 2,899,229 $ 3,177,480
Years Ended December 31,
1996 1995 1994
Partnership loss --
financial reporting
purposes $ (193,460) $ (51,295) $ (889,178)
Book versus tax differences
due to:
Deferred Interest --- 129,977 (129,977)
Depreciation and
amortization (17,931) (44,713) (46,211)
Bond discount
amortization (98,010) (98,010) (139,719)
Unearned income 21,944 14,358 ---
Provision for doubtful
accounts 9,125 (1,805) (16,120)
Other 2,476 1,921 1,961
(82,396) 1,728 (330,066)
Partnership loss --
federal income
tax purposes $ (275,856) $ (49,567) $(1,219,244)
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONT'D.
NOTE I--LEASES
Rental income on investment properties is reported when earned. The
Partnership leases its commercial properties under non-cancelable
operating lease agreements. The Partnership's residential properties
are leased under short-term lease agreements. Future minimum rents
to be received as of December 31, 1996 are as follows:
1997 $ 408,732
1998 317,395
1999 216,706
2000 125,017
2001 88,486
Thereafter 17,392
TOTAL $1,173,728
NOTE J--SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Non-cash activity for the year ended December 31, 1995 follows:
1995
Purchase of Thomasbrook Apartments second mortgage:
Mortgage debt retired $ 775,000
Other liabilities 115,366
$ 890,366
NOTE K--DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying values reflected in the balance sheets at December 31,
1996, reasonably approximate the fair values for cash and cash
equivalents. The Partnership cannot estimate the fair value of its
fixed rate borrowings at December 31, 1996, as there is no readily
available market value for instruments with similar
characteristics.
<PAGE>
Item 9. Changes in and Disagreement with Registrant's Certifying
Accountants on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The General Partners of the Partnership are James R. Hoyt
and Secured Investment Resources II, Inc.
Secured Investment Resources II, Inc. (the Corporate
General Partner) was incorporated under the laws of the
state of Missouri on June 20, 1986 for the purpose of
acting as General Partner and Acquisition Agent of the
Partnership.
As of December 31, 1996, Mr. James R. Hoyt is the sole
officer and director.
James R. Hoyt (the Individual General Partner), age 59,
holds a Bachelor's Degree in Business Administration and
is a licensed real estate broker in two states. Mr. Hoyt
has been actively involved for more than the past twenty
years in various real estate endeavors including
development, syndication, property management and
brokerage.
Mr. Hoyt is the Individual General Partner and sponsor of
Secured Investment Resources Fund, L.P. and Secured
Investment Resources Fund, L.P. III. Since 1983, Mr.
Hoyt has also been involved as the Individual General
Partner in ten specified real estate private placement
offerings. As of December 31, 1996, these partnerships,
including Secured Investment Resources Fund, L.P. II,
have raised a total of $60,709,750.
<PAGE>
Item 11. Management Compensation
During 1996, the Partnership paid $279,374 in fees to
related parties for property management services.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
(a) Security Ownership of certain beneficial owners.
No individual or group as defined by Section
13(d)(3) of the Securities Exchange Act of 1934,
known to the registrant is the beneficial owner of
more than 5 percent of the registrant's securities.
(b) Security ownership of Management.
The General Partners own less than 1%.
(c) Change in Control.
None.
Item 13. Certain Relationships and Related Transactions.
See Notes to Financial Statements, Note D appearing in
Item 8.
(The remainder of this page intentionally left blank.)
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.
(a)(1) The following Financial Statements of Secured
Investment Resources Fund, L.P. II are included in
Item 8:
Page
(i) Independent Auditors' Report 12
(ii) Balance Sheets -
December 31, 1996 and 1995 13-14
(iii) Statements of Operations -
Years Ended December 31, 1996,
1995 and 1994 15
(iv) Statements of Partnership
Capital - Years Ended December 31,
1996, 1995 and 1994 16
(v) Statements of Cash Flows
Years Ended December 31, 1996,
1995 and 1994 17-18
(vi) Notes to Financial Statements 19-29
(a)(2) The following Financial Statement Schedules are
filed as part of this report:
(i) Schedule II - Allowance for Doubtful
Accounts 36
(ii) Schedule III - Real Estate and
Accumulated Depreciation 37-40
All schedules other than those indicated in the index have been
omitted as the required information is presented in the financial
statements, related notes or is inapplicable.
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K--Cont'd.
(a)(3) The following Exhibits are Incorporated by Reference and
are an integral part of this Form 10-K.
Exhibit Number Description
(1) (a) Amendment to Dealer Manager
Agreement dated April 30, 1987. (ix)
(3) (a) Amended and Restated Agreement of
Limited Partnership. (iii)
(b) Second Amendment to Restated
Certificate and Agreement of Limited
Partnership. (vii)
(c) Certificate of Limited Partnership.
(i)
(4) (a) Form of Subscription Agreement.
(iii)
(b) Form of Certificate evidencing
units. (i)
(c) See 3(a) & 3(b) above. (iii)
(d) See 3(c) above. (i)
(10) (a) Property Management Agreement
between the Partnership and The Hoyt
Group Limited Partnership. (i)
(b) Escrow Agreement between the
Partnership and The Mission Bank.
(ii)
(c) Administrative Services Agreement
between Secured Investment Resources
II, Inc. and the Partnership. (i)
(d) Real Estate Contract of Sale and
Exhibit for Sunwood Apartments. (iv)
(e) Deed of Trust, Promissory Note and
Exhibits for Sunwood Apartments.
(vi)
(f) Real Estate Contract of Sale and
Exhibits for Bayberry Crossing
Shopping Center. (v)
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K--Cont'd.
Exhibit Number Description
(g) Deed of Trust, Promissory Note and
Exhibits for Bayberry Crossing
Shopping Center. (vi)
(h) Real Estate Purchase Agreement and
Exhibits for Country Club Place
Shopping Center. (vi)
(i) Deed of Trust, Promissory Note and
Exhibits for Country Club Place
Shopping Center. (vi)
(j) Real Estate Purchase Agreement and
Exhibits for In The Pines
Apartments. (viii)
(k) Deed of Trust, Promissory Note and
Exhibits for In The Pines
Apartments. (viii)
(l) Asset Purchase Agreement and
Exhibits for Oak Terrace Active
Retirement Community. (x)
(m) Asset Purchase Agreement and
Exhibits for Oak Terrace Health Care
Center. (x)
(n) Lease for Oak Terrace Health Care
Center. (x)
(o) Loan Agreement for Bond Financing on
Oak Terrace Active Retirement
Community. (x)
(p) Real Estate Contract of Sale and
Exhibits for Forest Park Shopping
Center. (xi)
(q) Real Estate Contract of Sale and
Exhibits for Thomasbrook Apartments.
(xii)
(r) Loan Assumption Documents for
Thomasbrook Apartments. (xii)
(16) (a) Letter regarding Change in Certified
Accountant. (xi), (xiii)
(25) (a) Power of Attorney (i)
(28) (a) Guarantee of General Partners. (i)
<PAGE>
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K--Cont'd.
(i) Previously filed on July 17, 1986 as an Exhibit to the
Registration Statement on Form S-11 (file no. 33-7302)
such Exhibit and Registration Statement incorporated
herein by reference.
(ii) Previously filed on September 25, 1986 as an Exhibit to
Amendment #1 to the Registration Statement of Form S-11
such Exhibit and Registration Statement incorporated
herein by reference.
(iii) Previously filed on September 25, 1986 in the Prospectus
as part of Amendment #1 to Registration Statement and
incorporated herein by reference.
(iv) Previously filed as an exhibit to Form 8-K dated June 2,
1987 and incorporated herein by reference.
(v) Previously filed as an exhibit to Form 8-K dated June 5,
1987 and incorporated herein by reference.
(vi) Previously filed as an exhibit to Registration Statement
on Form S-11 (file No. 33-7302) dated August 13, 1987 and
incorporated herein by reference.
(vii) Previously filed as an Exhibit to the Supplement
Prospectus dated August 13, 1987 as part of Post-effective
Amendment No. 4 to the Registration Statement
on Form S-11 (file No. 33-7302) and incorporated herein
by reference.
(viii) Previously filed as an Exhibit to Form 8-K dated January
13, 1988 and incorporated herein by reference.
(ix) Previously filed as an Exhibit to Form 8, Amendment to
Form 8-K dated February 29, 1988 and incorporated herein
by reference.
(x) Previously filed as an Exhibit to Form 8-K dated
September 14, 1988 and incorporated herein by reference.
(xi) Previously filed as an Exhibit to Form 8-K dated December
7, 1988 and incorporated herein by reference.
(xii ) Previously filed as an Exhibit to Form 10-K dated March
30, 1989 and incorporated herein by reference.
(xiii) Previously filed as an Exhibit to Form 8-K dated December
4, 1989 and incorporated herein by reference.
(b) Report of Form 8-K filed during the fourth quarter
None.
<PAGE>
Secured Investment Resources Fund L.P. II
Schedule II - Allowance for Doubtful Accounts
December 31, 1996
Balance at Additions Bad Debt Write Balance at
Beginning of Charged to Offs Deducted End
Period Operations From Allowance of Period
For Years Ended December 31,
1994 $ 63,400 $(16,385) $ 267 $ 47,282
1995 $ 47,282 $(24,638) $ 22,831 45,475
1996 $ 45,475 $ 65,590 $ 56,465 $ 54,600
<PAGE>
<TABLE>
Secured Investment Resources Fund, L.P. II
Schedule III - Real Estate & Accumulated Depreciation
December 31, 1996
<CAPTION>
Initial Cost to Partnership (A) Subsequent to Acquisition
Buildings & Furniture Reduction
Encumbrances Land Improvements Equipment Improvements of Basis (B)
<S> <C> <C> <C> <C> <C> <C>
Other Equipment $ --- $ --- $ --- $ --- $ 8,479 $ ---
Garden Apartments:
Sunwood Apartments 8,070,786 1,375,448 9,706,178 123,000 434,365 (269,890)
Las Vegas, NV
Thomasbrook Apartments 4,984,179 655,327 5,305,193 --- 927,983 (228,422)
Shawnee, KS
Strip Shopping Centers
Bayberry Crossings 2,618,862 607,184 3,729,847 --- 371,474 (240,895)
Lee's Summit, MO
Forest Park 1,201,571 504,761 2,372,378 --- 113,070 (43,211)
St. Louis, MO
Retirement Center:
Oak Terrace Active
Retirement Center
Springfield, IL 11,744,225 258,269 8,174,500 172,000 301,053 ---
Nursing Home:
Oak Terrace Health
Care Center 1,055,775 273,834 3,412,956 293,550 --- ---
Springfield, IL
Less Bond Discount on
Oak Terrace Active
Retirement Center and (2,201,842) --- --- --- --- ---
Health Care Center
$27,473,556 $3,674,823 $32,701,052 $ 588,550 $2,156,424 $(782,418)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amount at Which
Carried at Close of Period
Buildings & Furniture Accumulated Date Depreciation
Land Improvements Equipment Total Depreciation(3) Acquired Life
<S> <C> <C> <C> <C> <C> <C> <C>
Other Equipment $ --- $ --- $ 8,479 $ 8,479 $ 8,479 5 Yrs <F2>
Garden Apartments:
Sunwood Apartments 1,340,364 9,552,542 476,195 11,369,101 3,354,809 15-May-87 30 Yrs <F1>
Las Vegas, NV 5 Yrs <F2>
Thomasbrook Apartments 451,058 5,714,861 494,162 6,660,081 2,129,345 26-Aug-88 30 Yrs <F1>
Shawnee, KS 5 Yrs <F1>
Strip Shopping Centers
Bayberry Crossings 574,761 3,615,679 277,170 4,467,610 1,275,091 30-Jun-87 30 Yrs <F1>
Lee's Summit, MO 5 Yrs <F2>
Forest Park Shopping Center 492,694 2,359,159 95,145 2,946,998 1,400,784 23-Nov-88 30 Yrs <F1>
St. Louis, MO 5 Yrs <F2>
Retirement Center:
Oak Terrace Active
Retirement Center
Springfield, IL 366,834 8,199,873 339,115 8,905,822 2,536,381 31-Aug-88 30 Yrs <F1>
5 Yrs <F2>
Nursing Home:
Oak Terrace Health
Care Center 273,834 3,412,956 293,550 3,980,340 1,241,593 31-Aug-88 30 Yrs <F1>
Springfield, IL 5 Yrs <F2>
$3,499,545 $32,855,070 $1,983,816 $38,338,431 $11,946,482
<PAGE>
<FN>
<F1> Estimated useful life of buildings.
<F2> Estimated useful life of furniture and fixtures.
<F3> Includes allowance for losses of $750,000.
NOTES:
(A) The initial cost to the Partnership represents the original purchase price of the properties,
including $205,582 and $145,578 of improvements incurred in 1988 and 1987, respectively, which
were contemplated at the time the property was acquired.
(B) Receipts received under the terms of certain guarantee agreements are recorded by the
Partnership as a reduction of the basis of the property to which the guaranteed income relates.
</TABLE>
<PAGE>
<TABLE>
Secured Investment Resources Fund, L.P. II
Schedule III - Real Estate & Accumulated Depreciation -- Continued
December 31, 1996
<CAPTION> Buildings & Furniture &
Total Land Improvements Equipment
<S> <C> <C> <C> <C>
(C) Reconciliation of Real Estate owned:
Balance at January 1, 1994 $37,429,726 $3,390,979 $32,742,546 $1,296,201
Additions during year:
Improvements 226,809 --- 34,117 192,692
Balance at December 31, 1994 37,656,535 3,390,979 32,776,663 1,488,893
Additions during year:
Improvements 358,069 --- 49,439 308,630
Balance at December 31, 1995 38,014,604 3,390,979 32,826,102 1,797,523
Additions during year:
Improvements 323,827 108,566 28,968 186,293
Balance at December 31, 1996 $38,338,431 $3,499,545 $32,855,070 $1,983,816
(D) Reconciliation of Accumulated Depreciation
Balance at January 1, 1994 8,340,293 --- 7,035,013 1,305,280
Additions during year:
Depreciation Expense 1,189,239 --- 1,100,507 88,732
Balance at December 31, 1994 9,529,532 --- 8,135,520 1,394,012
Additions during year:
Depreciation Expense 1,196,443 --- 877,397 319,046
Balance at December 31, 1995 10,725,975 --- 9,012,917 1,713,058
Additions during year:
Depreciation Expense 1,220,507 --- 1,090,203 130,304
Balance at December 31, 1996 $11,946,482 $ --- $10,103,120 $1,843,362
(E) The total gross amount of real estate at December 31, 1996 includes $3,085,450 of acquisition fees paid to affiliates.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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:
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By:
James R. Hoyt, President
Date:
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security
holders.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: /s/ James R. Hoyt
James R. Hoyt
as Individual General Partner
Date: April 14, 1997
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By: Secured Investment Resources II, Inc.
as Corporate General Partner
By: /s/ James R. Hoyt
James R. Hoyt, President
Date: April 14, 1997
Supplemental Information to be Furnished With Reports Filed
Pursuant to Section 15(d) of the Act by Registrants Which Have Not
Registered Securities Pursuant to Section 12 of the Act.
No annual report or proxy material has been sent to security
holders.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 561,667
<SECURITIES> 1,993,875
<RECEIVABLES> 69,031
<ALLOWANCES> 54,600
<INVENTORY> 0
<CURRENT-ASSETS> 1,316,395
<PP&E> 38,338,431
<DEPRECIATION> 11,946,482
<TOTAL-ASSETS> 29,702,219
<CURRENT-LIABILITIES> 2,077,841
<BONDS> 27,473,556
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 29,702,219
<SALES> 0
<TOTAL-REVENUES> 6,197,573
<CGS> 0
<TOTAL-COSTS> 3,101,039
<OTHER-EXPENSES> 1,460,582
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,242,210
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (193,460)
<EPS-PRIMARY> (3.57)
<EPS-DILUTED> 0
</TABLE>
