<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. c20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)
DIVALL INSURED INCOME PROPERTIES 2
LIMITED PARTNERSHIP
(Name of Subject Company)
DIVALL INSURED INCOME PROPERTIES 2
LIMITED PARTNERSHIP
(Name of Person(s) Filing Statement)
UNITS OF INTEREST
(Title of Class of Securities)
255017105
(CUSIP Number of Class of Securities)
Bruce A. Provo
The Provo Group, Inc.
101 W. 11th St., Ste. 1110
Kansas City, MO 64105
(816) 421-7444
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Person(s) Filing this Statement)
Copy to:
Robert T. Schendel, Esq.
Shughart Thomson & Kilroy, P.C.
12 Wyandotte Plaza
120 W. 12th Street, Suite 1800
Kansas City, Missouri 64105
(816) 421-3355
<PAGE>
Amendment No. 2 to Schedule 14D-9
This Amendment No. 2 to Schedule 14D-9 amends the Schedule 14D-9 (the
"Schedule 14D-9") originally filed by DiVall Insured Income Properties 2 Limited
Partnership (the "Partnership") with the Securities and Exchange Commission
("Commission") on March 31, 1998, as amended by Amendment No. 1 to Schedule
14D-9 filed with the Commission on April 27, 1998.
ITEM 4. THE SOLICITATION AND RECOMMENDATION
Item 4 is hereby amended to include the following document filed by the
Partnership with the Commission:
DiVall Insured Income Properties 2, L.P. Quarterly Newsletter for First
Quarter 1998.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 is hereby amended to include the following exhibit:
(a) DiVall Insured Income Properties 2, L.P. Quarterly Newsletter for
First Quarter 1998.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
DIVALL INSURED INCOME PROPERTIES 2
LIMITED PARTNERSHIP
By: The Provo Group, Inc.
General Partner
By:________________________________
Bruce A. Provo
President
Dated: May __, 1998
<PAGE>
[THE PROVO GROUP LOGO]
DiVall Insured Income Properties 2, L.P.
QUARTERLY NEWS
- --------------------------------------------------------------------------------
A publication of The Provo Group, Inc. FIRST QUARTER 1998
WHY ALL THE INTEREST ... IN MY INTERESTS?
Madison, Wisconsin
Recently you may have been subject to the "feeding" frenzy occurring for your
interests in the Partnership. A common question we are hearing is "why all the
interest in my interests?"
As we have communicated to you before, it's really quite simple -- the interests
you own in the Partnership offer immediate value to recent third-party tenderers
such as U.S. Restaurant Properties, Inc., Smithtown Bay, LLC, and Whitney Year
2030.
Should you be tendering your interests to any of these parties? As your General
Partner, we don't think so, particularly if you want to be the recipient of
"full" value. We believe you should be the one receiving the final return on
your long-term investment NOT someone who buys your interests at a discount for
future profit opportunities.
In accordance with the Agreement of Limited Partnership, we have requested your
consent to sell the properties in the Partnership -- which means that the
Partnership will be dissolved following the sale of the assets and final
distribution of the proceeds to you.
If a majority of Limited Partners are in agreement that the market conditions
are favorable for producing maximized value on your interests through
liquidation now, we will proceed with the sale of the properties and make a
final distribution to you.
Although the strong interest in your interests may be causing you concern or
confusion -- think of it this way, you have something they want, and you have
control over whether they can have it or not.
------------------------
OTHER NEWS INSIDE...
. Distributions More Than Budgeted........Distribution Highlights, pg 2
. First Quarter 1998 Property Sales...........Property Highlights, pg 3
<PAGE>
[THE PROVO GROUP LOGO]
Page 2 DiVall 2 1 Q 98
===========================
Distribution Highlights
. 8.0% (approx.) annualized return from operations and 5.0% (approx.) non-
annualized return of capital from a special distribution related to the two
(2) Denny's property sales and a land easement granted to a property based
on $33,000,000 ("net" remaining initial investment).
. $50.24 per unit (approx.) for the First Quarter 1998 from both cash flow
from operations and investing activities.
(NOTE: Original units were purchased for $1,000/unit.)
. $2,325,000 total amount distributed for the First Quarter 1998 which was
$175,000 more than projected.
The "higher" than budgeted distribution is primarily due to better than
expected collection of rents receivable, including percentage rents billed
during the First Quarter 1998.
. $913.00 to $715.00 range of distributions per unit from the first unit sold
to the last unit sold before the offering closed (February 1990),
respectively. (NOTE: Distributions are from both cash flow from operations
and "net" cash activity from financing and investing activities.)
===========================
Statements of Income and Cash Flow Highlights
. 7% increase in "total" operating revenues from projections.
. 21% increase in "total" expenses from projections.
. 2% increase in net income from projections.
. $87,000 more than budgeted operating revenues were received by the
Partnership for several reasons, from one month's rent collected on the
"sold" Denny's; higher than expected interest income received on these two
(2) property sales; previously written off equipment lease payments were
received on the Denny's lease; and vacancies did not occur as budgeted.
. Property appraisals in the amount of $58,000 were accrued at the quarter's
end in connection with the proposed liquidation of the partnership.
<PAGE>
[THE PROVO GROUP LOGO]
Page 3 DiVall 2 1 Q 98
===========================
Property Highlights
Vacancies
---------
. Denny's restaurant (Twin Falls, ID) was vacant at March 31, 1998. Management
is currently working with the tenant to relet this property.
(NOTE: This tenant continues to make rental payments.)
Rents Receivable
----------------
. Applebee's (Columbus, OH) was $9,700 delinquent in percentage rent at March
31, 1998. Scheduled rent is current.
. Popeye's (Park Forest, IL) was $25,000 delinquent in percentage rent only
at March 31, 1998. (NOTE: This tenant has since paid $10,000 toward this
delinquency.)
Property Sales
--------------
. Denny's restaurants located in Daytona Beach and New Smyrna, Florida,
were both sold during the First Quarter 1998.
===========================
Return of Capital
The following table has been updated to present the breakdown of distributions
since the Partnership's first quarterly distribution, for the period ended June
30, 1998 through March 31, 1998.
<TABLE>
<CAPTION>
Distribution Capital
Analysis Balance
------------- -----------
<C> <S> <S>
Original Capital Balance -- $46,280,300
Cash Flow From Operations Since Inception $24,526,890 --
Total Distributions Since Inception (37,838,868) --
------------
(Return) of Capital ($13,311,978) (13,311,978)
============ -----------
"Net" Remaining Initial Investment
by Original Partners -- $32,968,322
===========
</TABLE>
(NOTE: For a more individualized discussion of return of capital contact
Investor Relations.)
<PAGE>
[THE PROVO GROUP LOGO]
Page 4 DiVall 2 1 Q 98
===========================
Questions & Answers
. When can I expect my next distribution mailing?
Your distribution correspondence for the Second Quarter of 1998 is
scheduled to be mailed on
August 14, 1998.
* * *
================================================================================
For questions or additional information, please contact Investor Relations at:
1-800-547-7686 or 1-608-244-7661
All written inquiries may be mailed or faxed to:
The Provo Group, Inc.
Post Office Box 8673 1410 Northport Drive
Madison, Wisconsin 53708-8673 Madison, Wisconsin 53704
(FAX 608-244-7663)
================================================================================
<PAGE>
<TABLE>
<CAPTION>
DIVALL INSURED INCOME PROPERTIES 2 L.P.
STATEMENTS OF INCOME AND CASH FLOW CHANGES
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998
- ---------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
---------------------------------------
<S> <C> <C> <C>
1ST 1ST
QUARTER QUARTER BETTER
OPERATING REVENUES 3/31/98 3/31/98 (WORSE)
----------- ------------ ------------
Rental income $ 613,634 $ 674,321 $ 60,687
Interest income 26,550 38,838 12,288
Gain on sale of assets 556,227 556,227 0
Other income 12,001 25,955 13,954
----------- ------------ ------------
TOTAL OPERATING REVENUES $1,208,412 $ 1,295,341 $ 86,929
----------- ------------ ------------
OPERATING EXPENSES
Insurance $ 6,624 $ 5,793 $ 831
Management fees 44,965 44,757 208
Overhead allowance 3,627 3,611 16
Advisory Board 3,600 4,158 (558)
Administrative 26,364 30,977 (4,613)
Professional services 5,450 6,427 (977)
Appraisals 0 56,150 (56,150)
Disposition fees 66,000 66,000 0
Auditing 19,500 19,383 117
Legal 7,500 16,797 (9,297)
Defaulted tenants 2,850 (1,011) 3,861
----------- ------------ ------------
TOTAL OPERATING EXPENSES $ 186,480 $ 253,042 $ (66,562)
----------- ------------ ------------
GROUND RENT $ 31,200 $ 32,493 $ (1,293)
----------- ------------ ------------
INVESTIGATION AND RESTORATION EXPENSES $ 474 $ 414 $ 60
----------- ------------ ------------
NON-OPERATING EXPENSES
Depreciation $ 105,798 $ 105,797 $ 1
Amortization 2,313 2,313 0
----------- ------------ ------------
TOTAL NON-OPERATING EXPENSES $ 108,111 $ 108,110 $ 1
----------- ------------ ------------
TOTAL EXPENSES $ 326,265 $ 394,059 $ (67,794)
----------- ------------ ------------
NET INCOME $ 882,147 $ 901,282 $ 19,135
OPERATING CASH RECONCILIATION: VARIANCE
------------
Depreciation and amortization 108,111 108,110 (1)
Gain on sale of assets (556,227) (556,227) 0
(Increase) Decrease in current assets 95,280 205,205 109,925
Increase (Decrease) in current liabilities (87,391) 1,514 88,905
(Increase) Decrease in cash reserved for payables 42,871 800 (42,071)
Advance from current cash flows for future distributions (1,200) (1,200) 0
----------- ------------ ------------
Net Cash Provided From Operating Activities $ 483,591 $ 659,484 $ 175,893
----------- ------------ ------------
CASH FLOWS FROM (USED IN) INVESTING
AND FINANCING ACTIVITIES
Recoveries from former G.P. affiliates 0 0 0
Proceeds from property sales 1,666,675 1,665,625 (1,050)
----------- ------------ ------------
Net Cash Provided From Investing And Financing
Activities $1,666,675 $ 1,665,625 $ (1,050)
----------- ------------ ------------
Total Cash Flow For Quarter $2,150,266 $ 2,325,109 $ 174,843
Cash Balance Beginning of Period 1,322,532 1,449,785 127,253
Less 4th quarter distributions paid 2/98 (875,000) (875,000) 0
Change in cash reserved for payables or future distributions (41,671) 400 42,071
----------- ------------ ------------
Cash Balance End of Period $2,556,127 $ 2,900,294 $ 344,167
Cash reserved for 1st quarter L.P. distributions (2,150,000) (2,325,000) (175,000)
Cash reserved for payment of payables (125,000) (316,200) (191,200)
----------- ------------ ------------
Unrestricted Cash Balance End of Period $ 281,127 $ 259,094 $ (22,033)
=========== ============ ============
- ---------------------------------------------------------------------------------------------------------
PROJECTED ACTUAL VARIANCE
---------------------------------------
* Quarterly Distribution $2,150,000 $ 2,325,000 $ 175,000
Mailing Date 5/15/98 (enclosed) -
- ---------------------------------------------------------------------------------------------------------
* Refer to distribution letter for detail of quarterly distribution.
</TABLE>
<PAGE>
[INSERT LOGO]
TheProvoGroup
PROJECTIONS FOR
DISCUSSION PURPOSES
DIVALL INSURED INCOME PROPERTIES 2 LP
1998 PROPERTY SUMMARY
AND RELATED ESTIMATED RECEIPTS
PORTFOLIO (Note 1)
<TABLE>
<CAPTION>
------------------------------ -------------------------------------------------
REAL ESTATE EQUIPMENT
------------------------------ -------------------------------------------------
ANNUAL LEASE ANNUAL
- ------------------------------------ BASE % EXPIRATION LEASE %
CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN
- ------------------------------------ ------------------------------ -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
APPLEBEE'S COLUMBUS, OH 1,059,465 135,780 12.82% 84,500 0 0.00%
BLOCKBUSTER OGDEN, UT 646,425 100,554 15.56%
RED APPLE REST. CEDAR RAPIDS, IA 660,156 54,000 8.18%
DENNY'S (2) (3) PHOENIX, AZ 295,750 39,000 13.19% 224,376 0 0.00%
DENNY'S PHOENIX, AZ 972,726 65,000 6.68% 183,239 0 0.00%
DENNY'S (2) PHOENIX, AZ 865,900 86,000 9.93% 221,237 0 0.00%
DENNY'S TWIN FALLS, ID 699,032 83,200 11.90% 04/30/99 190,000 37,860 19.93%
DENNY'S (2) (3) PHOENIX, AZ 500,000 37,000 7.40% 14,259 0 0.00%
HARDEE'S (5) S MILWAUKEE, WI 808,032 64,000 7.92%
HARDEE'S (5) HARTFORD, WI 686,563 64,000 9.32%
HARDEE'S (5) MILWAUKEE, WI 1,010,045 76,000 7.52% (4) 260,000 0 0.00%
151,938 0 0.00%
HARDEE'S (5) FOND DU LAC, WI 849,767 88,000 10.36% (4) 290,469 0 0.00%
HARDEE'S (5) MILWAUKEE, WI 0 0 0.00% 780,000 0 0.00%
HOOTER'S R. HILLS, TX 1,246,719 95,000 7.62%
HOSTETTLER'S DES MOINES, IA 845,000 66,000 7.81% 52,813 0 0.00%
KFC SANTA FE, NM 451,230 60,000 13.30%
MIAMI SUBS PALM BEACH, FL 743,625 39,000 5.24%
- ------------------------------------ ------------------------------ -------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------
<S> <C>
ORIGINAL EQUITY $46,280,300
NET DISTRIBUTION OF
CAPITAL SINCE INCEPTION $13,311,978
-----------
CURRENT EQUITY $32,968,322
-----------
- --------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------- ----------
TOTAL % ON
32,968,322
ANNUAL EQUITY
COST RECEIPTS RETURN RAISE
- -------------------------------- ----------
<S> <C> <C> <C>
1,143,965 135,780 11.87%
646,425 100,554 15.56%
660,156 54,000 8.18%
520,126 39,000 7.50%
1,155,965 65,000 5.62%
1,087,137 86,000 7.91%
889,032 121,060 13.62%
514,259 37,000 7.19%
808,032 64,000 7.92%
686,563 64,000 9.32%
1,421,983 76,000 5.34%
1,140,236 88,000 7.72%
780,000 0 0.00%
1,246,719 95,000 7.62%
897,813 66,000 7.35%
451,230 60,000 13.30%
743,625 39,000 5.24%
- -------------------------------- ----------
</TABLE>
Note 1: This property summary includes only current property and equipment held
by the Partnership. Equipment lease receipts shown include a return of
capital.
2: Rent is based on 12.5% of monthly sales. Rent projected for 1998 is
based on 1997 sales levels.
3: The Partnership entered into a long-term ground lease in which the
Partnership is responsible for payment of rent. The annual base rent
shown is net of the underlying ground lease rent.
4: The lease was terminated and the equipment sold to Hardee's Food
Systems in conjunction with their assumption of the Terratron leases in
November 1996.
5: These leases were assumed by Hardee's Food Systems at a reduced rental
rate from that stated in the original leases.
Page 1 of 2
<PAGE>
[LOGO OF PROVO GROUP]
<TABLE>
<CAPTION>
-----------------------------------------
ORIGINAL EQUITY $46,280,300
PROJECTIONS FOR NET DISTRIBUTION OF
DISCUSSION PURPOSES DIVALL INSURED INCOME PROPERTIES 2 LP CAPITAL SINCE INCEPTION $13,311,978
1997 PROPERTY SUMMARY -----------
AND RELATED ESTIMATED RECEIPTS CURRENT EQUITY $32,968,322
===========
-----------------------------------------
------------------------------- --------------------------------------------
PORTFOLIO (Note 1) REAL ESTATE EQUIPMENT
------------------------------- --------------------------------------------
ANNUAL LEASE ANNUAL
- ------------------------------------- BASE % EXPIRATION LEASE %
CONCEPT LOCATION COST RENT YIELD DATE COST RECEIPTS RETURN
- ------------------------------------- ------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
POPEYE'S PARK FOREST, IL 580,938 77,280 13.30%
SUNRISE PS PHOENIX, AZ 1,084,503 127,920 11.80% 79,219 0 0.00%
19,013 0 0.00%
VILLAGE INN GRAND FORKS, ND 739,375 84,000 11.36%
WENDY'S AIKEN, SC 633,750 90,480 14.28%
WENDY'S CHARLESTON, SC 580,938 76,920 13.24%
WENDY'S N. AUGUSTA, SC 660,156 87,780 13.30%
WENDY'S AUGUSTA, GA 728,813 96,780 13.28%
WENDY'S CHARLESTON, SC 596,781 76,920 12.89%
WENDY'S AIKEN, SC 776,344 96,780 12.47%
WENDY'S AUGUSTA, GA 649,594 86,160 13.26%
WENDY'S CHARLESTON, SC 528,125 70,200 13.29%
WENDY'S MT. PLEASANT, SC 580,938 77,280 13.30%
WENDY'S MARTINEZ, GA 633,750 84,120 13.27%
CASH-A-CHECK HALLANDALE, FL 792,188 30,000 3.79%
- ------------------------------------- ------------------------------- --------------------------------------------
- ------------------------------------- ------------------------------- ----------------------------------
PORTFOLIO TOTALS (30 Properties) 21,906,628 2,315,154 10.57% 2,551,063 37,860 1.48%
- ------------------------------------- ------------------------------- ----------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------------------- ----------
TOTALS TOTAL % ON
--------------------------------- 32,968,322
- ------------------------------------- TOTAL EQUITY
CONCEPT LOCATION COST RECEIPTS RETURN RAISE
- ------------------------------------- --------------------------------- ----------
<S> <C> <C> <C> <C> <C>
POPEYE'S PARK FOREST, IL 580,938 77,280 13.30%
SUNRISE PS PHOENIX, AZ 1,182,735 127,920 10.82%
VILLAGE INN GRAND FORKS, ND 739,375 84,000 11.36%
WENDY'S AIKEN, SC 633,750 90,480 14.28%
WENDY'S CHARLESTON, SC 580,938 76,920 13.24%
WENDY'S N. AUGUSTA, SC 660,156 87,780 13.30%
WENDY'S AUGUSTA, GA 728,813 96,780 13.28%
WENDY'S CHARLESTON, SC 596,781 76,920 12.89%
WENDY'S AIKEN, SC 776,344 96,780 12.47%
WENDY'S AUGUSTA, GA 649,594 86,160 13.26%
WENDY'S CHARLESTON, SC 528,125 70,200 13.29%
WENDY'S MT. PLEASANT, SC 580,938 77,280 13.30%
WENDY'S MARTINEZ, GA 633,750 84,120 13.27%
CASH-A-CHECK HALLANDALE, FL 792,188 30,000 3.79%
- ------------------------------------- --------------------------------- ----------
24,457,691 2,353,015 9.62% 7.14%
- ------------------------------------- --------------------------------- ----------
PORTFOLIO TOTALS (30 Properties)
- -------------------------------------
</TABLE>
Note 1: This property summary includes only current property and equipment held
by the Partnership. Equipment lease receipts shown include a return of
capital.
Page 2 of 2
