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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-16856
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3368726
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
411 West Putnam Avenue Greenwich, CT 06830
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(203) 862-7000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by checkmark 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 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>
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RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
================================================================================
FORM 10-Q - SEPTEMBER 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - September 30, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended September 30,
1996 and 1995 and the nine months ended September 30, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the nine months ended September 30,
1996
STATEMENTS OF CASH FLOWS - For the nine months ended September 30, 1996
and 1995
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
BALANCE SHEETS
September 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Investment in mortgage loans (net of allowance for
loan losses of $12,133,380 and $10,618,380) ... $ 16,195,094 $ 16,511,153
Cash and cash equivalents ........................ 2,847,666 2,835,755
------------ ------------
$ 19,042,760 $ 19,346,908
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses ............ $ 113,213 $ 100,578
------------ ------------
Commitments and contingencies
Partners' equity
Limited partners' equity (187,919 units issued
and outstanding) .............................. 19,190,091 19,498,954
General partners' deficit ........................ (260,544) (252,624)
------------ ------------
Total partners' equity .................... 18,929,547 19,246,330
------------ ------------
$ 19,042,760 $ 19,346,908
============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF OPERATIONS
For the three months ended For the nine months ended
September 30, September 30,
--------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Mortgage interest income ................... $ 410,376 $ 368,776 $ 1,198,941 $ 1,077,403
Short term investment interest ............. 34,872 31,795 87,379 91,817
Other income ............................... 12,940 4,800 29,388 16,450
----------- ----------- ----------- -----------
458,188 405,371 1,315,708 1,185,670
----------- ----------- ----------- -----------
Costs and expenses
Write-down for loan losses ................. -- -- 1,515,000 --
General and administrative expenses ........ 37,823 49,323 117,491 148,372
----------- ----------- ----------- -----------
37,823 49,323 1,632,491 148,372
----------- ----------- ----------- -----------
Net income (loss) ............................... $ 420,365 $ 356,048 $ (316,783) $ 1,037,298
=========== =========== =========== ===========
Net income (loss) attributable to
Limited partners ........................... $ 409,856 $ 347,147 $ (308,863) $ 1,011,366
General partners ........................... 10,509 8,901 (7,920) 25,932
----------- ----------- ----------- -----------
$ 420,365 $ 356,048 $ (316,783) $ 1,037,298
=========== =========== =========== ===========
Net income (loss) per unit of limited partnership
interest (187,919 units outstanding) ....... $ 2.18 $ 1.85 $ (1.64) $ 5.38
=========== =========== =========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENT OF PARTNERS' EQUITY
General Limited Total
Partners' Partners' Partners'
Deficit Equity Equity
------------ ------------ ------------
<S> <C> <C> <C>
Balance, January 1, 1996 ......... $ (252,624) $ 19,498,954 $ 19,246,330
Net loss for the nine months ended
September 30, 1996 .......... (7,920) (308,863) (316,783)
------------ ------------ ------------
Balance, September 30, 1996 ...... $ (260,544) $ 19,190,091 $ 18,929,547
============ ============ ============
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF CASH FLOWS
For the nine months ended
September 30,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net (loss) income ........................................ $ (316,783) $ 1,037,298
Adjustments to reconcile net (loss) income to
net cash provided by (used in) operating activities
Non-cash revenue earned on mortgage loans ......... (1,198,941) (1,077,403)
Write-down for loan losses ........................ 1,515,000 --
Changes in assets and liabilities
Accounts payable and accrued expenses ................. 12,635 26,942
----------- -----------
Net cash provided by (used in) operating activities 11,911 (13,163)
----------- -----------
Net increase (decrease) in cash and cash equivalents .......... 11,911 (13,163)
Cash and cash equivalents, beginning of period ................ 2,835,755 2,498,622
----------- -----------
Cash and cash equivalents, end of period ...................... $ 2,847,666 $ 2,485,459
=========== ===========
See notes to financial statements.
</TABLE>
<PAGE>
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RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
================================================================================
NOTES TO FINANCIAL STATEMENTS
1 INTERIM FINANCIAL INFORMATION
The summarized financial information contained herein is unaudited;
however, in the opinion of management, all adjustments (consisting only
of normal recurring accruals) necessary for a fair presentation of such
financial information have been included. The accompanying financial
statements, footnotes and discussion should be read in conjunction with
the financial statements, related footnotes and discussions contained
in the Resources Accrued Mortgage Investors 2 L.P. (the "Partnership")
annual report on Form 10-K for the year ended December 31, 1995. The
results of operations for the nine months ended September 30, 1996 are
not necessarily indicative of the results to be expected for the full
year.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investments in mortgage loans
The Partnership principally invested in "zero coupon" senior and junior
mortgage loans on properties owned or acquired by limited partnerships
originally sponsored by affiliates of the General Partners. These loans
generally contained provisions whereby the Partnership may be entitled
to additional interest represented by participation in the appreciation
of the underlying property.
The Partnership accounts for its investments in mortgage loans under
the following methods:
Investment method
Mortgage loans representing transactions in which the Partnership
is considered to have substantially the same risks and potential
rewards as the borrower are accounted for as investments in real
estate rather than as loans. Although the transactions are
structured as loans, due to the terms of the zero coupon mortgage,
it is not readily determinable at inception that the borrower will
continue to maintain a minimum investment in the property. Under
this method of accounting, the Partnership will recognize as
revenue the lesser of the amount of interest as contractually
provided for in the mortgage loan, or its pro rata share of the
actual cash flow from operations of the underlying property
inclusive of depreciation and interest expense on any senior
indebtedness. None of the Partnership's mortgage loans are
currently recognizing revenue under the investment method.
Interest method
Under this method of accounting, the Partnership recognizes
revenue as interest income over the term of the mortgage loan so
as to produce a constant periodic rate of return. Interest income
will not be recognized as revenue during periods where there are
concerns about the ultimate realization of the interest or loan
principal.
<PAGE>
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for loan losses
An allowance for loan losses is established based upon a quarterly
review of each of the mortgages in the Partnership's portfolio. In
performing this review, management considers the estimated net
realizable value of the mortgage loan or collateral as well as other
factors, such as the current occupancy, the amount and status of any
senior debt, the prospects for the property and the economic situation
in the region where the property is located. Because this determination
of net realizable value is based upon projections of future economic
events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying value as of
September 30, 1996.
The allowance is inherently subjective and is based upon management's
best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide for additional losses in
subsequent years and such provisions could be material. A $1,515,000
allowance for loan losses was recorded on the Twin Oak loan for the
quarter ended June 30, 1996 (see Note 4). No allowance was required for
the quarters ended September 30, 1996 and 1995.
3 CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Managing General Partner of the Partnership, RAM Funding, Inc., is
a wholly-owned subsidiary of Presidio Capital Corp. ("Presidio"). As of
February 28, 1995, the Associate General Partner of the Partnership is
Presidio AGP Corp., a Delaware Corporation ("Presidio AGP"), which is
also a wholly-owned subsidiary of Presidio. The general partners and
certain affiliates of the general partners, are general partners in
several other limited partnerships which are also affiliated with
Presidio, and which are engaged in businesses that are, or may be in
the future, in direct competition with the Partnership. Wexford
Management LLC, a company controlled by certain officers and directors
of Presidio, performs management and administrative services for
Presidio and its direct and indirect subsidiaries as well as the
Partnership. During the three and nine months ended September 30, 1996,
reimbursable expenses to Wexford by the Partnership amounted to $13,326
and $39,978, respectively. Wexford Management LLC is engaged to perform
similar services for other similar entities that may be in competition
with the Partnership.
The Partnership has invested principally in mortgage loans on
properties owned or acquired by privately syndicated limited
partnerships which are controlled by Presidio. Transactions entered
into between the Partnership and such entities are subject to inherent
conflicts of interest.
The General Partners are allocated 2.5% of the net income or loss of
the Partnership and are entitled to 2.5% of distributions. The 2.5%
shall be apportioned 98% to the Managing General Partner and 2% to the
Associate General Partner. For the quarters ended September 30, 1996
and 1995, the Managing General Partner and Associate General Partner
were allocated net income of $10,299 and $210, and $8,723 and $178,
respectively.
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES
The Partnership invests in zero-coupon, nonrecourse senior and junior
mortgage loans. Collection of the amounts due on the Partnership's
junior mortgage loans is solely dependent upon the sale or refinancing
of the underlying properties at amounts sufficient to satisfy the
Partnership's mortgage notes after payment of the senior mortgage notes
owned by unaffiliated third parties.
All of the Partnership's mortgage notes, with the exception of the
Harborista Loan, contain a provision which requires the borrowers to
provide current appraisals based upon certain conditions or in some
cases upon request. Additionally, all of the loans, with the exception
of the Harborista Loan, contain a provision that requires that if the
appraisal indicates that the value of all indebtedness senior to and
including the Partnership's loan, taking into account principal plus
accrued interest in excess of 5% per annum, exceeds 85% of the then
current appraisal, the borrower must repay the indebtedness to a point
where the 85% loan to value ratio is restored. While there are risks
inherent in a zero-coupon nonrecourse senior or junior mortgage loan
portfolio, the above described provisions were intended to provide some
mitigation of these risks.
However, in the event a borrower is required to make a payment under
such loan provisions, there can be no assurance that the borrower will
have sufficient assets available to restore the 85% loan to value.
The Twin Oak borrower is currently failing this test. The Partnership
will not take action against Twin Oak at this time, as there is not an
adequate remedy. By the Partnership calling its loan, Twin Oak would
most likely seek protection under Chapter 11 of the United States
Bankruptcy Code, necessitating the Partnership to expend legal and
administrative funds. Since the estimated market value of the property
is currently approximately equal to the first mortgage plus the
carrying value of the Partnership's mortgage, by calling its loan, the
Partnership would jeopardize its potential for realizing the full
contractual value of the Twin Oak loan.
Twin Oak loan
The first mortgage on this property, which is held by an unaffiliated
third party, was due to mature on July 1, 1993, however, during 1993,
this loan was extended for three years until July 1, 1996. The terms
and conditions of the extension were essentially the same as the
original loan. Currently, the Twin Oak borrower is negotiating a
restructure and refinance with the first mortgagor. It is not possible
to predict what the impact to the Partnership will be if Twin Oak is
not able to successfully negotiate this extension. In January 1995, the
Partnership ceased accruing interest on this loan due to the fact that
McCrory, a tenant occupying approximately 13% of the space, filed a
voluntary petition for reorganization under Chapter 11 of the
Bankruptcy Code and vacated the premises in March 1995. As of September
30, 1996, the McCrory space is still vacant.
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
For the quarter ended June 30, 1996, a $1,515,000 allowance for loan
losses was recorded on the Twin Oak loan. As a result of the continued
vacancy of the former McCrory space and uncertainties regarding its
lease up, a decline in the standard of living in the surrounding area
of the Twin Oak Shopping Center and negotiations with the first
mortgage lender regarding a restructure and refinancing of its loan
which matured on July 1, 1996, cash flow projections were performed
which indicated the estimated fair market value of the Twin Oak
property to be approximately $4,530,000 at June 30, 1996. The
contractual balance of the first mortgage at June 30, 1996 was
approximately $3,890,000, necessitating a write-down of $1,515,000 to
reduce the carrying value of the loan at June 30, 1996 to approximately
$640,000.
Interest recognized for the Partnership's Sierra mortgage loan is as
follows:
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
Description 1996 1995
----------- ---- ----
<S> <C> <C>
Shopping Center
Sierra Marketplace (a), (b)
Reno, Nevada $1,198,941 $1,077,403
========== ==========
</TABLE>
( a ) This loan is accounted for under the interest method.
( b ) The Partnership may be entitled to additional interest in the
appreciation of this property which is subordinated to a specified
return to the Borrower. It is unlikely that the Partnership will
realize any additional interest from this loan.
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
Information with respect to the Partnership's investments in mortgage
loans is as follows:
<TABLE>
<CAPTION>
Mortgage Mortgage Mortgage
Interest Compound Loan Maturity Amount Purchased Placement
Description Rate % Period Type Date Date Advanced Interest Fees
- ----------- ------ ------ ---- ---- ---- -------- -------- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Office Building
Harbor Plaza 13.307 Monthly 2nd 13-Feb-89 1-Dec-98 $10,000,000 $ 23,513 $ 594,867
Boston, MA (a)
Shopping Centers
Promenade (b) 12.950 Monthly 2nd 18-Apr-89 30-Apr-01 5,600,000 - 332,344
North Miami Beach, FL
Sierra Marketplace (b)(c) 11.220 Monthly 1st 10-Feb-89 28-Feb-01 6,500,000 - 385,757
Reno, NV
Twin Oak (b) 12.280 Annually 2nd 3-Apr-90 1-May-02 1,200,000 - 71,218
Ft. Lauderdale, FL
----------- ----------- ------------
$23,300,000 $ 23,513 $ 1,384,186
=========== =========== ============
</TABLE>
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
NOTES TO FINANCIAL STATEMENTS
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
<TABLE>
<CAPTION>
(d)
Interest recognized Carrying value Contractual Balance
------------------- -------------- -------------------
Sept. 30, 1995 and Reserves/ Sept. 30, Dec. 31, Sept. 30, Dec. 31,
Description 1996 Prior Write-offs 1996 1995 1996 1995
- ----------- ---- ----- ---------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Office Building
Harbor Plaza $ - $ - $(10,618,380) $ - $ - $ 27,461,266 $24,866,545
Boston, MA (a)
Shopping Centers
Promenade (b) - 1,399,553 (7,331,897) (e) (e) (e) (e)
North Miami Beach, FL
Sierra Marketplace (b)(c) 1,198,941 7,473,718 - 15,558,416 14,359,475 15,256,612 14,030,786
Reno, NV
Twin Oak (b) - 880,460 (1,515,000) 636,678 2,151,678 2,543,699 2,329,981
Ft. Lauderdale, FL
----------- ----------- ------------ ------------ ------------ ------------ -----------
$ 1,198,941 $ 9,753,731 $(19,465,277) $ 16,195,094 $ 16,511,153 $ 45,261,577 $41,227,312
=========== =========== ============ ============ ============ ============ ===========
</TABLE>
(a) This loan is accounted for under the investment method.
(b) These loans are accounted for under the interest method.
(c) The Partnership may be entitled to additional interest in the
appreciation of the property which is subordinated to a specified
return to the borrower. It is unlikely that the Partnership will
realize any additional interest from this loan.
(d) Contractual balance represents the amount that would be paid by the
borrower if the loan was liquidated (principal plus accrued interest
earned to date). These amounts are provided for informational purposes
only.
(e) The first mortgage holder foreclosed on this property in September,
1992.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
A summary of mortgage activity is as follows:
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
---------------------------------------------- -----------------------------------------------
Investment Interest Investment Interest
Method Method Total Method Method Total
------- ----------- ----------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Opening balance $ - $ 16,511,153 $ 16,511,153 $ - $ 15,055,537 $ 15,055,537
Income recognized - 1,198,941 1,198,941 - 1,455,616 1,455,616
Allowance for loan losses - (1,515,000) (1,515,000) - - -
------- ----------- ----------- ------- ------------ ------------
Ending balance $ - $ 16,195,094 $ 16,195,094 $ - $ 16,511,153 $ 16,511,153
======= ============ ============ ======= ============ ============
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Partnership invested the net proceeds of its public offering in
"zero coupon" first and junior mortgage loans secured by properties
owned principally by privately and publicly syndicated limited
partnerships originally sponsored by affiliates of the general
partners. The initial admission of limited partners occurred on
September 1, 1988 and as of the termination of its offering on
September 20, 1989 the Partnership had raised gross proceeds of
$46,979,750. Since all gross proceeds that were raised had not been
invested or committed for investment, the Partnership was obligated
under the terms of the Prospectus to return such uninvested funds. The
Managing General Partner distributed these proceeds in the amount of
$19,263,445 in August, 1990. This represented a return of capital of
$90.06 per unit and an allocation of interest earned on uninvested
gross proceeds, ranging from $6.42 per unit to $17.90 per unit
depending on the date of admission. Additionally, the Partnership made
a second related distribution of $606,978, or $3.23 per unit, on
October 30, 1990.
The Partnership invested in four Mortgage Loans aggregating
approximately $23,300,000 in principal. In September, 1992 the
Partnership lost its investment in the Promenade Loan with original
loan proceeds of $5,600,000 leaving an aggregate of original
investments of approximately $17,700,000 at September 30, 1996.
The Partnership uses working capital reserves provided from the
proceeds of its public offering and subsequent settlement amounts, and
interest earned thereon as its primary measure of liquidity. The
Partnership does not anticipate making any distributions from cash flow
during its first 8 to 12 years of operations, or until such time as the
mortgage loans mature or are prepaid. Working capital reserves are
invested in short-term instruments and are expected to be sufficient to
pay administrative expenses during the term of the Partnership. As of
September 30, 1996, the Partnership had working capital reserves of
approximately $2,800,000.
A portion of the Partnership's Proof of Claim in the Integrated
bankruptcy was allowed by the Bankruptcy Court in the amount of
$691,791. A cash distribution of approximately 35.8 percent or $247,613
was made to the Partnership in full settlement of this claim. The
Managing General Partner has added this amount to the Partnership's
working capital reserves.
In February 1995, the Partnership entered into an agreement in
principle which was consummated in accordance with its terms in
December 1995, resulting in a payment to the Partnership of
approximately $341,038 from the master lessee of Harbor Plaza. The
Managing General Partner has added this amount to working capital
reserves. Except as discussed above, management is not aware of any
other known trends, events, commitments, or uncertainties that will
have a significant impact on liquidity.
<PAGE>
Real Estate Market
The real estate market continues to suffer from the effects of the
recession which included a substantial decline in the market value of
existing properties. Market values have been slow to recover, and while
the pace of new construction has slowed, high vacancy rates continue to
exist in many areas. These factors may continue to reduce rental rates.
As a result, the Partnership's potential for realizing the full value
of its investment in mortgages is considered unlikely.
Allowance for loan losses
An allowance for loan losses is established based upon a quarterly
review of each of the mortgage loans in the Partnership's portfolio. In
performing the review, management considered the estimated net
realizable value of the property or collateral as well as other
factors, such as the current occupancy, the amount and status of senior
debt, if any, the prospects for the property and the economic situation
in the region where the property is located. Because this determination
of net realizable value is based upon projections of future economic
events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying values as of
September 30, 1996.
For the quarter ended June 30, 1996, a $1,515,000 allowance for loan
losses was recorded on the Twin Oak loan. No allowance was recorded for
the quarter ended September 30, 1996 or September 1995. As a result of
the continued vacancy of the former McCrory space and uncertainties
regarding its lease up, a decline in the standard of living in the
surrounding area of the Twin Oak Shopping Center and negotiations with
the first mortgage lender regarding a restructure and refinancing of
its loan which was due July 1, 1996, cash flow projections were
performed which indicated the estimated fair market value of the Twin
Oak property to be approximately $4,530,000 at June 30, 1996. The
contractual balance of the first mortgage at June 30, 1996 was
approximately $3,890,000, necessitating a write-down of $1,515,000 to
reduce the carrying value of the loan at June 30, 1996 to approximately
$640,000.
The allowance is inherently subjective and is based on management's
best estimate of current conditions and assumptions about expected
future conditions. The Partnership may provide additional losses in
subsequent years and such provisions could be material.
Results of operations
The Partnership experienced net income for the three months and a net
loss for the nine months ended September 30, 1996 compared to net
income for the same periods in 1995. The net loss for the nine months
ended September 30, 1996 was primarily due to the allowance for loan
losses recorded on the Twin Oak loan during the second quarter of 1996,
as discussed above.
<PAGE>
Revenues increased for the three and nine months ended September 30,
1996 compared to the same periods in 1995. The increase in both periods
was primarily a result of increases in mortgage interest income and
other income. Mortgage interest income increased as a result of the
increase in the contractual value of the Sierra loan (due to the
deferral of interest) on which the mortgage interest income is
calculated. Other income increased as a result of an increase in
transfer fee income.
Costs and expenses increased for the nine months and decreased for the
three months ended September 30, 1996 compared to the same periods in
1995. The increase for the nine months was primarily due to the
allowance for loan losses recorded on the Twin Oak loan, partially
offset by a decrease in general and administrative expenses. The
decrease for the three months was due to a decrease in general and
administrative expenses. General and administrative expenses decreased
in both periods primarily as a result of decreased payroll costs.
Inflation has not had a material effect on the Partnership's operations
or financial condition during the last two years and is not expected to
have a material effect in the future.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: None
(b) Reports on Form 8-K: None
<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.
RESOURCES ACCRUED MORTGAGE
INVESTORS 2 L.P.
By: RAM Funding, Inc.
Managing General Partner
Dated: November 14, 1996 By: /s/ Frederick Simon
-------------------
Frederick Simon
President
(Duly Authorized Officer)
Dated: November 14, 1996 By: /s/ Jay L. Maymudes
-------------------
Jay L. Maymudes
Vice President, Secretary and
Treasurer
(Principal Financial and
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary information extracted from the financial
statements of the September 30, 1996 Form 10-Q of Resources Accrued Mortgage
Investors 2 L.P. and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,847,666
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,847,666
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,042,760
<CURRENT-LIABILITIES> 113,213
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,929,547
<TOTAL-LIABILITY-AND-EQUITY> 19,042,760
<SALES> 0
<TOTAL-REVENUES> 1,315,708
<CGS> 0
<TOTAL-COSTS> 117,491
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,515,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (316,783)
<INCOME-TAX> 0
<INCOME-CONTINUING> (316,783)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (316,783)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
