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 June 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>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
FORM 10-Q - JUNE 30, 1996
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
BALANCE SHEETS - June 30, 1996 and December 31, 1995
STATEMENTS OF OPERATIONS - For the three months ended June 30, 1996 and
1995 and the six months ended June 30, 1996 and 1995
STATEMENT OF PARTNERS' EQUITY - For the six months ended June 30, 1996
STATEMENTS OF CASH FLOWS - For the six months ended June 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>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
ASSETS
<S> <C> <C>
Investment in mortgage loans (net of allowance for
loan losses of $12,133,380 and $10,618,380) ...... $ 15,784,718 $ 16,511,153
Cash and cash equivalents ........................... 2,824,214 2,835,755
------------ ------------
$ 18,608,932 $ 19,346,908
============ ============
LIABILITIES AND PARTNERS' EQUITY
Liabilities
Accounts payable and accrued expenses ............... $ 99,750 $ 100,578
------------ ------------
Commitments and contingencies
Partners' equity
Limited partners' equity (187,919 units issued
and outstanding) ................................. 18,780,235 19,498,954
General partners' deficit
(271,053) (252,624)
Total partners' equity ....................... 18,509,182 19,246,330
------------ ------------
$ 18,608,932 $ 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 For the six months ended
June 30, June 30,
----------------------------- -----------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues
Mortgage interest income ............................... $ 399,552 $ 359,048 $ 788,565 $ 708,627
Short term investment interest ......................... 23,529 27,376 52,507 60,022
Other income ........................................... 7,590 5,100 16,448 11,650
----------- ----------- ----------- -----------
430,671 391,524 857,520 780,299
----------- ----------- ----------- -----------
Costs and expenses
Write-down for loan losses ............................. 1,515,000 -- 1,515,000 --
General and administrative expenses .................... 38,242 49,323 79,668 99,049
1,553,242 49,323 1,594,668 99,049
----------- ----------- ----------- -----------
Net (loss) income ........................................... $(1,122,571) $ 342,201 $ (737,148) $ 681,250
=========== =========== =========== ===========
Net (loss) income attributable to
Limited partners ....................................... $(1,094,507) $ 333,646 $ (718,719) $ 664,219
General partners ....................................... (28,064) 8,555 (18,429) 17,031
----------- ----------- ----------- -----------
$(1,122,571) $ 342,201 $ (737,148) 681,250
=========== =========== =========== ===========
Net (loss) income per unit of limited partnership
interest (187,919 units outstanding) ................... $ (5.82) $ 1.78 $ (3.82) $ 3.53
=========== =========== =========== ===========
</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 loss for the six months ended
June 30, 1996 .............. (18,429) (718,719) (737,148)
------------ ------------ -----------
Balance, June 30, 1996 .......... $ (271,053) $ 18,780,235 $ 18,509,182
=========== ============ ============
</TABLE>
See notes to financial statements.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months ended
June 30,
--------------------------
1996 1995
----------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
<S> <C> <C>
Cash flows from operating activities
Net (loss) income ............................ $ (737,148) $ 681,250
Adjustments to reconcile net income to
net cash used in operating activities
Non-cash revenue earned on mortgage loans (788,565) (708,627)
Write-down for loan losses .............. 1,515,000 --
Changes in assets and liabilities
Accounts payable and accrued expenses ..... (828) 22,833
----------- -----------
Net cash used in operating activities ... (19,131) (4,544)
----------- -----------
Net decrease in cash and cash equivalents ......... (19,131) (4,544)
Cash and cash equivalents, beginning of period .... 2,835,755 2,498,622
----------- -----------
Cash and cash equivalents, end of period .......... $ 2,824,214 $ 2,494,078
=========== ===========
</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 six months ended June 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 (continued)
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 June
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. No allowance was required for the quarter
ended June 30, 1995, (see Note 4).
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 six months ended June 30, 1996,
reimbursable expenses to Wexford by the Partnership amounted to $13,326
and $26,652, respectively. During the three months ended June 30, 1996,
reimbursable expenses to Wexford 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 June 30, 1996 and
1995, the Managing General Partner and Associate General Partner were
allocated net (loss) income of $(27,503) and $(561), and $8,384 and
$171, 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 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
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 June 30, 1996, the McCrory
space is still vacant.
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 an extension 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
<PAGE>
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
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 to approximately $640,000.
Interest recognized for the Partnership's Sierra mortgage loan is as
follows:
<TABLE>
<CAPTION>
Six months ended June 30,
Description 1996 1995
------------------------------ ---------- ----------
<S> <C> <C>
Shopping Center
Sierra Marketplace (a), (b)
Reno, Nevada $ 788,565 $ 708,627
========= =========
</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.
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, 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
------------------------------
June 30, 1995 and Reserves/ June 30, December 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) (e)
North Miami Beach, Florida
Sierra Marketplace (b) (c) 788,565 7,473,718 - 15,148,040 14,359,475
Reno, Nevada
Twin Oak (b)
Ft. Lauderdale, Florida - 880,460 (1,515,000) 636,678 2,151,678
----------- ------------ ------------ ------------- --------------
$ 788,565 $ 9,753,731 $(19,465,277) $ 15,784,718 $ 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
-----------------------------
June 30, December 31,
Description 1996 1995
- ----------- ---- ----
<S> <C> <C>
Office Building
Harbor Plaza $ 26,567,591 24,866,545
Boston, Mass (a)
Shopping Centers
Promenade (b) (e) (e)
North Miami Beach, Florida
Sierra Marketplace (b) (c) 14,836,544 14,030,786
Reno, Nevada
Twin Oak (b) 2,543,699 2,329,981
Ft. Lauderdale, Florida ------------ -----------
$ 43,947,834 $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 June, 1992.
<PAGE>
RESOURCES ACCRUED MORTGAGE INVESTORS 2 L.P.
NOTES TO FINANCIAL STATEMENTS
15
4 INVESTMENTS IN MORTGAGE LOANS AND ALLOWANCE FOR LOAN LOSSES (continued)
A summary of mortgage activity is as follows:
<TABLE>
<CAPTION>
June 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 - 788,565 788,565 - 1,455,616 1,455,616
Allowance for loan losses - (1,515,000) (1,515,000) - - -
----------- ----------- ----------- ----------- ---------- -------
Ending balance $ - $15,784,718 $15,784,718 $ - $16,511,153 $16,511,153
=========== =========== =========== =========== =========== ===========
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
15
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 June 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
June 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 projection of future economic
events which are inherently subjective, the amounts ultimately realized
at disposition may differ materially from the carrying values as of
June 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 June 30, 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 an extension 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 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.
<PAGE>
Results of operations
The Partnership experienced a net loss for both the three and six
months ended June 30, 1996 compared to net income for the same periods
in 1995 primarily due to the allowance for loan losses recorded on the
Twin Oak loan during the second quarter 1996, as discussed above.
Revenues increased for the three and six months ended June 30, 1996
compared to the same periods in 1995. The increase in both periods was
a result of increases in mortgage interest income and other income
partially offset by decreases in short term investment 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. Short term
investment income decreased as a result of a decrease in interest
rates.
Costs and expenses increased for the three and six months ended June
30, 1996 compared to the same periods in 1995 primarily due to the
allowance for loan losses recorded on the Twin Oak loan, partially
offset by decreases in general and administrative expenses. General and
administrative expenses decreased in both periods primarily due to
decreases in 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
15
(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: August 14, 1996 By: /s/ Frederick Simon
-------------------
Frederick Simon
President
(Duly Authorized Officer)
Dated: August 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 June 30, 1996 Form 10Q of Resources Accrued Mortgage
Investors 2 L.P. and is qualified in its entirety by reference for such
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,824,214
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,824,214
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 18,608,932
<CURRENT-LIABILITIES> 99,750
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 18,509,182
<TOTAL-LIABILITY-AND-EQUITY> 18,608,932
<SALES> 0
<TOTAL-REVENUES> 430,671
<CGS> 0
<TOTAL-COSTS> 38,242
<OTHER-EXPENSES> 1,515,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,122,571)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,122,571)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
