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 March 31, 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>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
FORM 10-Q - MARCH 31, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - March 31, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended
March 31, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the three months ended
March 31, 1996
STATEMENTS OF CASH FLOWS - For the three months ended
March 31, 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
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Investment in mortgage loans (net of allowance for
loan losses of $10,618,380) ................... $ 16,900,166 $ 16,511,153
Cash and cash equivalents ........................ 2,825,738 2,835,755
------------ ------------
Total assets ............................. $ 19,725,904 $ 19,346,908
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses ............ $ 94,151 $ 100,578
------------ ------------
Commitments and contingencies
Partners' equity
Limited partners' equity (187,919 units issued
and outstanding) .............................. 19,874,741 19,498,954
General partners' deficit ........................ (242,988) (252,624)
------------ ------------
Total partners' equity .................... 19,631,753 19,246,330
------------ ------------
$ 19,725,904 $ 19,346,908
============ ============
</TABLE>
See notes to financial statements.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------
1996 1995
-------- --------
<S> <C> <C>
Revenues
Mortgage interest income ...................... $389,013 $349,579
Short term investment interest ................ 28,978 32,646
Other income .................................. 8,858 6,550
-------- --------
426,849 388,775
-------- --------
Costs and expenses
General and administrative expenses ........... 41,426 49,726
-------- --------
Net income ......................................... $385,423 $339,049
======== ========
Net income attributable to
Limited partners .............................. $375,787 $330,573
General partners .............................. 9,636 8,476
-------- --------
$385,423 $339,049
======== ========
Net income per unit of limited partnership
interest (187,919 units outstanding) .......... $ 2.00 $ 1.76
======== ========
</TABLE>
See notes to financial statements.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENT OF PARTNERS' EQUITY
<TABLE>
<CAPTION>
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 income for the three months ended
March 31, 1996 ................. 9,636 375,787 385,423
----------- ----------- -----------
Balance, March 31, 1996 ............. $ (242,988) $19,874,741 $19,631,753
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended
March 31,
--------------------------
1996 1995
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
Cash flows from operating activities
Net income ..................................... $ 385,423 $ 339,049
Adjustments to reconcile net income to
net cash used in operating activities
Non-cash revenue earned on mortgage loans (389,013) (349,579)
Changes in assets and liabilities
Accounts payable and accrued expenses ....... (6,427) 9,855
----------- -----------
Net cash used in operating activities ... (10,017) (675)
----------- -----------
Net decrease in cash and cash equivalents ........... (10,017) (675)
Cash and cash equivalents, beginning of period ...... 2,835,755 2,498,622
----------- -----------
Cash and cash equivalents, end of period ............ $ 2,825,738 $ 2,497,947
=========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
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 three months ended March 31, 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
March 31, 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.
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 months ended March 31, 1996, reimbursable
expenses to Wexford by the Partnership amounted to $13,326. 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 March 31, 1996 and
1995, the Managing General Partner and Associate General Partner were
allocated net income of $9,443 and $193, and $8,306 and $170,
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.
One of the properties, the Promenade Shops Shopping Center, to which
the Partnership has made a mortgage loan, defaulted on its first
mortgage. In June, 1992 the first mortgage holder concluded foreclosure
proceedings and took title to Promenade shops. Management had
previously fully reserved its loan relating to this property and has
not been accruing any interest income for this property since 1990. In
light of the aforementioned event, in 1992 the Partnership wrote off
this loan completely.
The property securing the Harborista loan is encumbered by a first
mortgage which matured in December 1995. Based on information about the
current cash flow from the building and the condition of the Boston
real estate market, and the likelihood that the public works
construction which has adversely affected the building would continue
for some time, there was a substantial likelihood that the owner of the
property would not be able to refinance the first mortgage when it
matured in December 1995. For these reasons, during 1993 management
determined that an allowance for loan losses in the amount of
$10,618,380 was necessary for the entire carrying value of the
Harborista loan. In December 1995 the first mortgage was extended, as
was the Partnership's mortgage, until December 1999.
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.
The Partnership has requested current appraisals from Twin Oak Plaza
Associates ("Twin Oak"), High Cash Partners, L.P. ("High Cash"), each
of whose general partners are affiliated with the Managing General
Partner of the Partnership. 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. The Twin Oak
and High Cash borrowers may not have sufficient assets available to
restore the 85% loan to value ratio. 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. 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.
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
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 be able to
make such payments.
Harborista loan
On December 13, 1991 a Summons and Complaint was issued by 470 Atlantic
Management Corp. ("470"), the master lessee of the Harbor Plaza Office
Building (the "Property"). The defendants in the lawsuit were
Harborista Associates L.P., the mortgagee ("Harborista Borrower"),
Harbor Plaza Property Credit Corp., an unsecured lender to Harborista
Associates, L.P., which is also an affiliate of Presidio and
Northwestern Mutual Life Insurance Co. ("Northwestern") the holder of
the first mortgage. The Partnership was not named as a defendant in
this lawsuit. In its complaint, 470 requested a declaratory judgment
that a Substantial Taking (as defined in the Master Lease) of the
Property had occurred, thus permitting 470 to terminate their Master
Lease.
Since June 1993, Northwestern and 470 had held private discussions with
the aim of settling this matter out of court. Court action had been
stayed pending these discussions.
In December 1995, this litigation was settled. As part of the
settlement, the Partnership received a payment of $341,038 in exchange
for, among other things, extending its mortgage until 1999 and
subordinating its lien to any new monies invested in the property.
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 are essentially the same as the
original loan. Currently, the Twin Oak borrower is negotiating with the
first mortgagor for a second extension. 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
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
Twin Oak loan (continued)
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.
McCrory petitioned the Court to terminate its lease and vacated the
premises in March 1995. This property is being closely monitored in
order to determine if a reserve is required. As of March 31, 1996, the
McCrory space is still vacant.
Management has determined no additional allowance for loan loss is
required for the quarter ended March 31, 1996.
Information with respect to the Partnerships' mortgage loans is
summarized as follows:
Interest recognized by year for each mortgage loan is as follows:
<TABLE>
<CAPTION>
March 31,
---------------------
Description 1996 1995
------------------------------ -------- ---------
<S> <C> <C>
Shopping Center
Sierra Marketplace (a), (b)
Reno, Nevada $389,013 $349,579
======== ========
</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>
RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
NOTES TO FINANCIAL STATEMENTS
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
<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, Mass (a)
Shopping Centers
Promenade (b) 12.950 Monthly 2nd 18-Apr-89 30-Apr-01 5,600,000 - 332,344
North Miami Beach, Florida
Sierra Marketplace (b) (c) 11.220 Monthly 1st 10-Feb-89 28-Feb-01 6,500,000 - 385,757
Reno, Nevada
Twin Oak (b) 12.280 Annually 2nd 3-Apr-90 1-May-02 1,200,000 - 71,218
Ft. Lauderdale, Florida
----------- ------- ----------
$23,300,000 $23,513 $1,384,186
=========== ======= ==========
<PAGE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
NOTES TO FINANCIAL STATEMENTS
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
Interest recognized
------------------- Carrying value
-------------------------
March 31, 1995 and Reserves/ March 31, March 31,
Description 1996 Prior Write-offs 1996 1995
- - ----------- ---- ----- ---------- ---- ----
<S> <C> <C> <C> <C> <C>
Office Building
Harbor Plaza $ - $ - $(10,618,380) $ - $ -
Boston, Mass (a)
Shopping Centers
Promenade (b) (e) 1,399,553 (7,331,897) - (e)
North Miami Beach, Florida
Sierra Marketplace (b) (c) 389,013 6,018,102 - 14,748,488 14,359,475
Reno, Nevada
Twin Oak (b) - 880,460 - 2,151,678 2,151,678
Ft. Lauderdale, Florida
-------- ---------- ------------ ----------- -----------
$389,013 $8,298,115 $(17,950,277) $16,900,166 $16,511,153
======== ========== ============ =========== ===========
<PAGE>
<CAPTION>
RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
NOTES TO FINANCIAL STATEMENTS
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
(d)
Contractual balance
---------------------------
March 31, March 31,
Description 1996 1995
- - ----------- ---- ----
<S> <C> <C>
Office Building
Harbor Plaza $25,703,000 $24,866,545
Boston, Mass (a)
Shopping Centers
Promenade (b) (e)
North Miami Beach, Florida
Sierra Marketplace (b) (c) 14,428,041 14,030,786
Reno, Nevada
Twin Oak (b) 2,401,220 2,329,981
Ft. Lauderdale, Florida
----------- -----------
$42,532,261 $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 given for informational purposes only.
(e) The first mortgage holder foreclosed on this property in June, 1992.
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
A summary of mortgage activity is as follows:
<TABLE>
<CAPTION>
March 31, 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 389,013 389,013 1,455,616 1,455,616
Allowance for loan losses - - - - - -
----------- ----------- ----------- ----------- ---------- -----------
Ending balace $ - $16,900,166 $16,900,166 $ - $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 June 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 June, 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 March 31, 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
March 31, 1996, the Partnership had working capital reserves of
approximately $2,800,000.
A portion of the Partnership's Proof of Claim 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 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. See
"Results of operations," below. The Managing General Partner is
evaluating whether or not to retain the funds in reserve. 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.
Results of operations
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 projection of future economic
events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying values as of
March 31, 1996. No additional reserves were necessary for the year
ended March 31, 1996.
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.
In December, 1991, 470 Atlantic Management Corp.("470") the Master
Lessee of the Harbor Plaza Office Building in Boston, Massachusetts
("Harbor Plaza"), issued a Summons and Complaint requesting a judgment
that the property be condemned due to recent municipal projects on the
site. Based upon information that the current cash flow from Harbor
Plaza was far below the amount of payments due under the Master Lease,
the condition of the Boston real estate market and the likelihood that
the public works construction which has adversely affected Harbor Plaza
would continue for some time, there was a substantial likelihood that
the Harborista Borrower would not be able to refinance the Mortgage
when it matured. For these reasons, in June, 1993 management decided to
cease accruing interest and to fully reserve the entire carrying value
of the Harborista loan. In February 1995, 470 and the Partnership
consummated an agreement which, among other things, provided the
Partnership with a cash payment of $341,038, required the Partnership
to subordinate its lien to any new monies invested in Harbor Plaza and
required that the first mortgage be extended until 1999.
Net income increased during the first quarter of 1996 in comparison
with the same period in the prior year. The increase is due to an
increase in revenues coupled with a decrease in expenses for the three
months ended March 31, 1996 compared to 1995.
<PAGE>
Revenues increased for the quarter ended March 31, 1996 versus 1995 as
a result of increases in other income and mortgage interest income,
partially offset by a decrease in short term investment interest
income. Other income increased primarily due to an increase in transfer
fee 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. Interest income decreased as compared to the prior year
primarily due to a decrease in interest rates for the quarter ended
March 31, 1996 compared to 1995.
Costs and expenses decreased for the quarter ended March 31, 1996
compared to 1995 due to a decrease in general and administrative
expenses. General and administrative expenses decreased primarily due
to a decrease in payroll costs for the first quarter of 1996 versus
1995.
Inflation
Inflation has not had a material effect on the Partnership's operations
or financial condition during the last three 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: May 15, 1996 By: /s/ Frederick Simon
-------------------
Frederick Simon
President
(Duly Authorized Officer)
Dated: May 15, 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 MARCH 31, 1996 FORM 10Q 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,825,738
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,825,738
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,725,904
<CURRENT-LIABILITIES> 94,151
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 19,631,763
<TOTAL-LIABILITY-AND-EQUITY> 19,725,904
<SALES> 0
<TOTAL-REVENUES> 426,849
<CGS> 0
<TOTAL-COSTS> 41,426
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 385,423
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 385,423
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
