<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Act of 1934
For the Fiscal Year Ended Commission File Number
December 31, 1998 #33-19736-A
Condev Land Fund II, Ltd.
-------------------------
(Exact Name of Registrant as
specified in its charter)
Florida #59-2862457
- ------------------------------- ------------------------
(State or other jurisdiction (IRS Employer ID #)
of incorporation or
organization)
2479 Aloma Avenue
Winter Park, Florida 32792
- ------------------------------- ---------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (407) 679-1748
--------------
Securities registered pursuant to Section 12(b) of the Act:
None
----
Securities registered pursuant to Section 12(g) of the Act:
None
----
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 of 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_______
-------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant:
Not Applicable
--------------
<PAGE>
CONDEV LAND FUND II, LTD.
Table of Contents
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I
Item 1. Business 1
Item 2. Properties 2
Item 3. Legal Proceedings 3
Item 4. Submission of Matters to a Vote of Security Holders 3
Part II
Item 5. Market for Registrant's Common Equity and Related Security Holder Matters 4
Item 6. Selected Financial Data 4
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations 4
Item 8. Financial Statements and Supplementary Data 7
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 18
Part III
Item 10. Directors and Executive Officers of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain Beneficial Owners and Management 18
Item 13. Certain Relationships and Related Transactions 19
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K 20
Signatures 21
Annual Report to Limited Partners 22
</TABLE>
<PAGE>
PART I
Item l.
Business:
--------
Condev Land Fund II, Ltd. (the "Partnership") is a Florida limited
partnership formed on December 16, 1987 under the Florida Revised Uniform
Partnership Act. The Partnership was formed for the purpose of acquiring
and holding for investment pre-development land in Central Florida. The
Partnership registered with the Securities and Exchange Commission and sold
to investors a total of 29,798 units of limited partnership interest at an
initial offering price of $250 per unit. The Partnership had collected
$7,449,500 in Limited Partnership capital as of December 31, 1989.
As provided under the terms of the Partnership Agreement the Partnership
was to be in existence until December 31, 1995. In accordance with the
Florida Limited Partnership Law and the Partnership Agreement, after
December 31, 1995 the Partnership has been in liquidation with no change in
the status of the limited partners or General Partner.
The Partnership has purchased seven properties to be held for investment in
the Central Florida area. One parcel was purchased during 1988, five
parcels were purchased during 1989 and one parcel was purchased during
1990. Refer to Item 2. Properties for full details.
Since the Partnership is in liquidation, the primary objective of the
Partnership is to sell properties at current market prices and distribute
the net proceeds to partners. To this end, the General Partner is
constantly monitoring area developments which are likely to effect the
salability of each property. This includes area commercial and residential
development, comparable sales transactions, road and highway improvements,
requests for zoning or comprehensive land use changes, and changes in the
availability of utilities. The General Partner or its representatives
attend county commission meetings, planning and zoning hearings and
community information meetings as part of this endeavor. Properties are
priced after consideration is given to all of these factors.
Properties are marketed through a combination of direct advertising,
including "For Sale" signs located on each property, contact with the
local, national and international brokerage communities, and direct contact
with potential purchasers. Extensive marketing materials and relevant
development information is maintained and constantly updated for use by
potential buyers.
In addition to trying to sell the portfolio properties, the Partnership
must manage the properties in the best interest of the partners. This
includes traditional property maintenance such as insuring the property
against liability, paying and appealing for adjustment, when appropriate,
real estate taxes, mowing and trash removal. It also entails reacting
promptly to area developments to insure that vested development rights are
preserved or marketability of the property is enhanced. In some cases, it
is necessary to retain consultants to assist with this effort. In other
cases, expenditure of partnership reserves is required to keep the property
properly positioned for sale.
The Partnership has no employees. Messrs. Robert N. Gardner and Joseph J.
Gardner are the general partners of Condev Associates, a Florida general
partnership, which is the General Partner of the Partnership (the "General
Partner").
1
<PAGE>
Item 2.
Properties:
----------
Since its inception, the Partnership has purchased seven properties for
investment in the Central Florida area. During 1994, one entire property
and part of another property were sold. There were no sales of land during
1995. During 1996, three parcels were sold, and during 1997, one entire
parcel was sold. There were no sales of land during 1998. As of December
31, 1998, the Partnership owned or had an investment in two remaining
properties. At year end 1998, the Partnership had contracts for sale of
both of these properties.
The following is a summary of all properties acquired by the Partnership:
Parcel 1:
--------
This was originally a 12.04-acre parcel of vacant land located at the
northwest corner of Alafaya Trail and McCulloch Road in Seminole County,
Florida.
During the first quarter of 1994, the Florida Department of Transportation
(FDOT) condemned 2.81 acres of the 12.04-acre commercial parcel. The FDOT
paid $676,800 as compensation for the taking. Of the compensation awarded,
the Partnership received $608,635; the balance paid attorney's fees costs
and taxes.
The Partnership sued the FDOT for additional compensation for the taking of
the property. This suit was settled on September 27, 1994 by mediation
which resulted in an additional $388,200 cash payment by FDOT to the
Partnership. Of this amount, $97,050 was used to pay legal fees. As
provided by Florida State law, these legal fees were refunded to the
Partnership during the first quarter of 1995.
On November 19, 1996 the Partnership entered into an Agreement of Sale
relating to this parcel with a developer who intended to construct a retail
center on the site. The Agreement was subsequently restructured to provide
for the sale in two separate transactions. On July 31, 1997, the sale of
approximately 23,690 square feet of this site was concluded. The purchase
price was $350,000. In addition, the Partnership sold sewer capacity which
had been reserved for the site. After expenses of the sale, the Partnership
realized net proceeds of $312,120.
<TABLE>
<CAPTION>
Date of Purchase: August 31, 1988
<S> <C>
Purchase Price: $1,500,000
Additional Capitalized Costs: $ 133,136
Less: Sale of 2.81 acres to FDOT: ( 753,899)
----------
$ 879,237
Less: Sale of .54 acres ( 51,143)
----------
$ 828,094
</TABLE>
The remaining 8.659 acres at this location are under contract with a
developer who intends to erect a grocery store on the site. The tenant has
agreed to the site, and permitting is in process. This transaction is
expected to close in May, 1999.
Parcel 2:
--------
On February 6, 1989, the Partnership purchased, in joint venture with an
affiliated partnership, Condev Land Growth Fund '86, Ltd., a 19+ acre tract
-
located immediately north of the University of Central Florida for
$737,355.
On April 22, 1966, the joint venture sold this property to Royal Apartments
USA based in Champaign, Illinois. The purchase price for this parcel was
$1,190,000, which included $35,000 paid by the purchaser as additional
consideration to extend the closing date. After expenses of the sale, the
net proceeds realized by the Joint Venture were $1,104,330. A total of
$1,080,000 was distributed to limited partners in May, 1993, $540,000 to
limited partners of Condev Land Growth Fund '86, Ltd., and $540,000 to
limited partners of Condev Land Fund II, Ltd. The balance was added to
Partnership reserves.
After payment of all final expenses Condev/McCulloch Road Joint Venture was
terminated.
Parcel 3:
--------
This is a 15.938 acre, commercially zoned parcel located in Lake County,
Florida between Tavares and Leesburg on U.S. Highway 441. The Partnership
paid $1,275,000 for this parcel in March, 1989. Together with Parcel 4,
this property was sold in June, 1996. See Parcel 4 below.
2
<PAGE>
Parcel 4:
--------
This is a 1.85-acre commercial parcel which adjoins parcel 3 and squares
off the property. The property was acquired in June, 1989 for $395,000.
On June 14, 1996, the Partnership concluded the sale of this parcel, along
with parcel 3 described above, to Home Depot USA, Inc. The purchase price
for these two parcels was $2,750,000. After the expenses of the sale, the
net cash proceeds realized by the Partnership were $2,433,823. A total of
$2,425,000 was distributed to limited partners in July 1996. The balance
was added to partnership reserves.
Parcel 5:
--------
This parcel originally consisted of 4.6512 acres of commercially zoned
property located on the north side of U.S. Highway 27-441 in Lady Lake,
Lake County, Florida. The Partnership received an appraisal of $2.50 per
square foot or $535,000 for the property at the time of purchase.
On June 5, 1990 the Partnership sold 1.785 acres of the total 4.6512 acre
site to SunBank N.A. for $375,000.
On October 10, 1994, the Partnership sold the remaining portion of this
parcel to First Federal Savings Bank of Lake County for $475,000.
Parcel 6:
--------
This is a 111.64-acre parcel located on U. S. Highway 27 in Lake County
approximately one mile north of U.S. 192 and five miles from Walt Disney
World. The property is zoned as a Planned Development comprised of single-
family, multi-family and commercial uses.
<TABLE>
<CAPTION>
Date of Purchase: November 11, 1989
<S> <C>
Total Purchase Price: $1,574,761
Additional Capitalized Costs: 168,919
----------
$1,743,680
</TABLE>
In January, 1998, the Partnership entered into a Contract for Sale and
Purchase of 20 acres of this parcel zoned for multi-family development. The
buyer anticipates developing 358 apartment units on the site. Closing was
originally scheduled to occur shortly before year-end 1998. However delays
in obtaining the water, sewer and entrance road permits have delayed the
anticipated closing until the spring of 1999.
The 71 acre single family section of this property is currently under
contract with an investor who plans to develop single family lots for sale
to residential builders. Closing is currently scheduled for June 30, 1999.
The 20 acre commercially zoned parcel at this location is under contract
with a regional developer, with the inspection period ending on March 3,
1999. Closing on this contract will occur in September if the buyer elects
to proceed.
Parcel 7:
--------
Parcel 7 is a tract of land consisting of approximately 7 developable and
15.57+ total acres in the City of Maitland. The property was acquired in
-
June, 1990 for $375,000.
On August 30, 1997, the Partnership concluded the sale of the majority of
this parcel to Highwoods, Florida Holdings, L.P. The sale price was
$715,000. In addition the Partnership sold a small piece of this property
to a non-affiliated owner of a property abutting this property for $30,000,
making the total gross proceeds of the combined sale $745,000. After
expenses of the two sales, the net proceeds realized by the Partnership
were $696,342.57.
Item 3.
Legal Proceedings:
-----------------
As of December 31, 1998, the Partnership was not subject to any pending
legal proceedings.
Item 4.
Submission of Matters to a Vote of Security Holders:
---------------------------------------------------
No matter was submitted to Unit Holders for a vote during the fourth
quarter of the year ended December 31, 1998.
PART II
3
<PAGE>
Item 5.
Markets for Registrant's Common Equity and Related Security Holder Matters:
--------------------------------------------------------------------------
(a) There has not been a public secondary market and it is not anticipated
that a public secondary market for the Units will develop. In September, LP
Investors, LLC, an investment company based in Atlanta, Georgia, exercised
their rights as a limited partner and requested a list of all beneficial
owners and the number of units owned by each. As required by the
Partnership Agreement, this information was provided. LP Investors paid a
fee of $100 to the Partnership in reimbursement of the Partnership's costs
associated with providing the list. LP Investors subsequently wrote to each
beneficial owner offering to purchase their units for $62.50 per unit, less
the $25 transfer fee charged by the Partnership. Neither the Partnership,
the General Partner, nor any of its officers, employees or affiliates is in
any way connected with this offer.
(b) As of December 31, 1998, there were approximately 840 holders of
record of the Units of the Partnership.
(c) There are no regularly scheduled distributions to limited partners.
Distributions are made subsequent to sale of Partnership properties after
provision has been made for adequate reserves to cover anticipated future
expenses of the Partnership. Unit holders received cash distributions
totaling $-0-, $978,110, and $2,965,000 during the years ended December 31,
1998, 1997, and 1996.
Item 6.
Selected Financial Data:
-----------------------
Year Ended December 31,
-----------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Revenue $ 6,750 $ 589,654 $ 913,179 $ 19,549 $ 516,468
Net Income (Loss) (54,066) 517,779 842,315 (62,680) 422,902
Total Assets 2,681,594 2,692,772 3,151,702 5,271,404 5,335,562
Partnership
Capital 2,632,886 2,686,952 3,147,283 5,269,968 5,332,648
</TABLE>
The above selected financial data should be read in conjunction with the
financial statements and related notes appearing elsewhere in this annual
report.
Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
--------------------------------------------------------------------------
Operations:
----------
Year 2000
---------
The Partnership is heavily dependent upon a computer system to accurately
maintain limited partner records, including name and address information,
number of units owned, and distribution historical records. The Partnership
is utilizing a system which was specially designed for the Partnership in
1990, and it is possible that the system will be affected by the date
change which will occur at the end of 1999. The Partnership has engaged a
computer consultant to evaluate the potential problems, and make system
changes if necessary so the operation of the Partnership will not be
affected by the date change. Testing on the system is expected to be
completed by March, 1999. It is anticipated that the cost of evaluating the
current system and bringing it up to date to be year 2000 compliant will be
less than $1,000. The Partnership's computer records are backed up on a
weekly basis, so all of the stored information is available from a
secondary source. Even if the system were to be completely shut down by the
date change at the end of 1999, the data necessary to continue operation of
the Partnership is available and could readily be adapted to a new system
which is year 2000 compliant, so no significant interruption in the
operations of the Partnership is anticipated.
January 1, 1998 through December 31, 1998:
-----------------------------------------
For the year ended December 31, 1998, total revenues were $6,750. This
compares to total revenues of $589,654 for the year ended December 31,
1997. In 1997, gains on the sale of land totaled $536,132. There were no
sales of land during 1998. Other income in 1998 included interest on cash
and cash equivalents in the amount of $4,675, down from $10,022 in 1997,
reflecting an overall lower level of cash balances during 1998. In 1997 the
Partnership recognized income from forfeited deposits from potential buyers
of land amounting to $40,000.
4
<PAGE>
Expenses of the Partnership decreased from $71,875 for the year ended
December 31, 1997 to $60,816 for the year ended December 31, 1998. The
primary reason for the decrease was a decline in professional fees which
decreased from $32,738 in 1997 to $12,964 in 1998. Professional fees will
vary from year to year, depending on the engineering, architectural or
environmental requirements of each property. Other expenses remained
relatively constant from 1997 to 1998.
Total assets of the Partnership declined slightly from $2,692,772 at
December 31, 1997 to $2,681,594 at December 31, 1998. Total assets can be
expected to decline as properties are sold and the proceeds are distributed
to limited partners. Liquidity remained at an adequate level to meet
anticipated costs of managing the partnership. Cash and cash equivalents
were $168,989 at December 31, 1997, and decreased to $94,530 by year-end
1998. The General Partner may elect to augment liquid reserves to meet
future costs from the proceeds of anticipated land sales during 1999.
The business of the Partnership is to own, manage and sell, as market
conditions permit, pre-development land in the Central Florida area. Due
to the unpredictability of the commercial real estate market in the Central
Florida area, it is difficult to project when individual properties will
sell or when the entire portfolio will be liquidated. Because of these
uncertainties, the General Partner has established reserves to fund real
estate taxes, costs associated with maintaining the properties and other
required services such as partnership administration, accounting and legal.
The reserve will be replenished from future land sales as needed.
Financial projections - 1999
----------------------------
For 1999, the General Partner estimates that approximately $10,000 will be
required to pay real estate taxes on the remaining properties held by the
Partnership. In addition, the General Partner estimates that property
associated holding costs will total approximately $20,000 during 1999 and
the costs of administration, legal and accounting will require
approximately $20,000. These three categories of expense, totaling
$50,000, will be paid from Partnership reserves which were $94,530 at 1998
year-end. Interest and other income is projected at $5,000 for 1999.
Should the Partnership not successfully conclude a property sale in 1999,
reserves would fall to approximately $49,530 by year end 1999. At the
level of costs associated with the Partnership's business as set out above
the Partnership has reserves at year end 1998 to fund approximately one
year and nine months of costs. In the event the Partnership is unable to
generate adequate reserves through the sale of properties, the General
Partner is obligated to lend to the Partnership up to an aggregate amount
of $100,000 to fund operating expenses. See Item 13, Certain Relationships
and Related Transactions.
The General Partner estimates that three sales will occur in 1999, in spite
of the fact that there are contracts in place for four sales. History
dictates a conservative view when predicting the likelihood of sales. These
three sales should result in cash to the Partnership in the approximate
amount of $3,000,000. If concluded as estimated, the sale proceeds would
result in a distribution to the limited partners in the approximate amount
of $2,900,000, as the General Partner feels the majority of sale proceeds
could be distributed. If the sale and distribution are concluded as
estimated above, Partnership assets and Partners' Capital would fall to
approximately $500,000 by December 31, 1999.
In addition to the projected sales above, the General Partner reasonably
expects to conclude the sale of the remaining Partnership property in 2000.
After the final sale of the Partnership properties and repayment of any
outstanding debts, the General Partner will complete a final accounting of
the affairs of the Partnership and all remaining proceeds will be
distributed to partners in accordance with the Partnership Agreement.
January 1, 1997 through December 31, 1997:
------------------------------------------
For the year ended December 31, 1997, total revenues were $589,654. This
compares to total revenues of $913,179 for the year ended December 31,
1996. In 1997, gains on the sale of land totaled $536,132, down from
$737,235 in 1996. In addition, in 1996, the Partnership's joint venture,
Condev McCulloch Road Joint Venture, sold its property and reported a gain
of $146,799. Other income in 1997 included interest on cash and cash
equivalents in the amount of $10,022, essentially unchanged from $9,379 in
1996, and forfeited deposits from potential buyers of land amounted to
$40,000 in 1997 and $13,000 in 1996.
Expenses of the Partnership increased very slightly between 1996 and 1997,
rising from $70,864 to $71,875. However, the composition of expenses
incurred changed. Taxes and permits, which were $29,400 in 1996, declined
to $10,159 in 1997. Real estate taxes can be expected to decline as
portfolio properties are sold. Professional fees offset the decrease in
taxes and permits, rising from $11,197 in 1996 to $32,738 in 1997. This was
the result of the need for additional engineering work on the Partnership's
property in Lake County, plus the additional legal fees associated with
terminated contracts.
5
<PAGE>
Total assets of the Partnership declined from $3,151,702 at December 31,
1996 to $2,692,772 at December 31, 1997. This reflects net profit of the
Partnership for the year less distributions to limited partners in the
amount of $978,110 during the year. Liquidity remained at an adequate level
to meet anticipated costs of managing the partnership. Cash and cash
equivalents were $168,989 at December 31, 1997, compared to $169,876 a year
earlier.
January 1, 1996 through December 31, 1996:
-----------------------------------------
The Partnership continued to manage the affairs of the Partnership and the
portfolio properties. Emphasis was placed on positioning the portfolio
properties for sale and on preserving property development rights.
For the year ended December 31, 1996, the Partnership reported total income
of $913,179, including $737,235 gain on sale of land and $146,799 equity in
income of joint venture, and $29,145 in other revenues. This compares to
total income in 1995 of $19,549. The 1996 revenues reflect sale of the
Partnership's land in Leesburg (Parcel #s 3 and 4) and Condev/McCulloch
Road Joint Venture's sale of its 19.10 acre parcel in Seminole County
(Parcel #2). There were no sales of land by the Partnership in 1995.
Operating expenses totaled $70,864 for the year ended December 31, 1996,
compared to $82,229 in 1995. The primary reason for the decrease was a
reduction in taxes and permits, which decreased from $46,031 in 1995 to
$29,400 in 1996. This is a result of properties being sold during the
year. The other decrease was the elimination of the $5,124 equity loss in
the joint venture in 1995. These decreases were partially offset by slight
increases in professional fees and office expenses in 1996, and by
amortization of organizational expenses totaling $4,905. There was no
amortization of organizational expenses in 1995 because no properties were
sold.
The net profit reported for the year ended December 31, 1996 was $842,315,
compared to a net loss of $62,680 for the year ended December 31, 1995.
At year-end 1996, total assets of the Partnership were $3,151,702, compared
with $5,271,404 at year-end 1995. This decrease reflects the sale of two
properties during the year and the net operating costs of managing the
Partnership. Liabilities at December 31, 1996 were $4,419, compared to
total liabilities of $1,436 at December 31, 1995. Partners' capital
declined from $5,269,968 at December 31, 1995 to $3,147,283 at December 31,
1996. This decline resulted from the net profit for the year less the
$2,965,000 in distributions to limited partners during the year.
6
<PAGE>
Item 8.
Financial Statements and Supplementary Data:
-------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 8
FINANCIAL STATEMENTS
Balance sheets 9
Statements of operations 10
Statements of partners' capital 11
Statements of cash flows 12
Notes to financial statements 13 - 17
7
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
The Partners
Condev Land Fund II, Ltd.
Winter Park, Florida
We have audited the accompanying balance sheets of Condev Land Fund II, Ltd.
(a Florida Limited Partnership) as of December 31, 1998 and 1997, and the
related statements of operations, partners' capital, and cash flows for each of
the three years in the period ended December 31, 1998. These financial
statements are the responsibility of the General Partner. Our responsibility is
to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Condev Land Fund II, Ltd. as
of December 31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
OSBURN, HENNING AND COMPANY
Orlando, Florida
January 15, 1999
8
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
BALANCE SHEETS
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 94,530 $ 168,989
Accounts receivable 3,347 -
Prepaid expense 867 -
Land, at cost (Note 2) 2,571,774 2,515,801
Loan costs, less accumulated amortization
of $5,940 and $-0- in 1998 and 1997,
respectively 3,094 -
Organization costs, less accumulated
amortization of $10,390 in 1998 and 1997 7,982 7,982
---------- ----------
$2,681,594 $2,692,772
========== ==========
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Accounts payable $ 14,874 $ 5,820
Mortgage note payable (Note 3) 33,834 -
---------- ----------
48,708 5,820
Partners' capital (deficit):
General partner (3,190) (2,649)
Limited partners 2,636,076 2,689,601
---------- ----------
Total partners' capital 2,632,886 2,686,952
---------- ----------
$2,681,594 $2,692,772
========== ==========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
9
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF OPERATIONS
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Revenue:
Gain on land sale $ - $536,132 $737,235
Equity in income of joint venture - - 146,799
Interest income 4,675 10,022 9,379
Forfeited deposits - - 13,000
Other income 2,075 43,500 6,766
-------- -------- --------
6,750 589,654 913,179
-------- -------- --------
Expenses:
Taxes and permits 14,065 10,159 29,400
Office expenses 18,547 18,746 18,819
Professional fees 12,964 32,738 11,197
Amortization 5,940 1,326 5,904
Interest expense 724 - -
Other expenses 8,576 8,906 5,544
-------- -------- --------
60,816 71,875 70,864
-------- -------- --------
Net income (loss) $(54,066) $517,779 $842,315
======== ======== ========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
10
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF PARTNERS' CAPITAL
Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
--------- ------------ ------------
<S> <C> <C> <C>
Balances, December 31, 1995 3,342 5,266,626 5,269,968
Distributions - (2,965,000) (2,965,000)
Net income (loss) (5,807) 848,122 842,315
------- ----------- -----------
Balances, December 31, 1996 (2,465) 3,149,748 3,147,283
Distributions - (978,110) (978,110)
Net income (loss) (184) 517,963 517,779
------- ----------- -----------
Balances, December 31, 1997 $(2,649) $ 2,689,601 $ 2,686,952
Net income (loss) (541) (53,525) (54,066)
------- ----------- -----------
Balances, December 31, 1998 $(3,190) $ 2,636,076 $ 2,632,886
======= =========== ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
11
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1998 1997 1996
---------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (54,066) $ 517,779 $ 842,315
Adjustments to reconcile net income
(loss) to net cash used in
operating activities:
Gain on land sale - (536,132) (737,235)
Equity in (income) loss of joint
venture - - (146,799)
Amortization 5,940 1,326 5,904
(Increase) decrease in accounts
receivable (3,347) 105 (105)
(Increase) decrease in prepaid
expense (867) - -
Increase (decrease) in
accounts payable 9,054 1,401 2,983
--------- ---------- -----------
Net cash used in operating
activities (43,286) (15,521) (32,937)
--------- ---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized land related costs (55,973) (15,719) (7,406)
Proceeds from land sale, net of
closing costs - 1,008,463 2,444,875
Distribution from joint venture - - 549,200
Investment in joint venture - - (3,139)
--------- ---------- -----------
Net cash provided by
(used in) investing
activities ( 55,973) 992,744 2,983,530
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners - (978,110) (2,965,000)
Advances on mortgage note payable 24,800 - -
--------- ---------- -----------
Net cash provided by
(used in) financing
activities 24,800 (978,110) (2,965,000)
--------- ---------- -----------
Net (decrease) in cash (74,459) (887) (14,407)
CASH AND CASH EQUIVALENTS, BEGINNING 168,969 169,876 184,283
--------- ---------- -----------
CASH AND CASH EQUIVALENTS, ENDING $ 94,530 $ 168,969 $ 169,876
========= ========== ===========
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING ACTIVITIES
Loan costs added to note payable
financing $ 9,034 $ - $ -
========== ========= ===========
</TABLE>
The Notes to Financial Statements are an integral part of these statements.
12
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Organization
------------
Condev Land Fund II, Ltd. (the Partnership) was formed on December 16,
1987 pursuant to the provisions of the Florida Revised Uniform Limited
Partnership Act for the purpose of acquiring and holding unimproved
land in Central Florida for investment. The Partnership was formed
with an initial capital contribution of $1,000 from the general
partner, Condev Associates, and the issuance of 29,798 units of
limited partnership interest at $250 per unit.
The terms of the partnership agreement provided that the Partnership
was to continue in existence until December 31, 1995. However, the
Partnership's operation will continue until all investments of the
Partnership are sold and proceeds distributed to the partners.
Use of Estimates
----------------
In preparing the financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets
and liabilities as of the date of the financial statements and
revenues and expenses for the period. Actual results could differ
significantly from those estimates.
Organization Costs
------------------
The Partnership has capitalized all organization costs. Upon sale of
land, each parcel is allocated a portion of these costs based on the
ratio of total acquisition cost to the net proceeds of the offering
available to purchase properties for investment. No amortization of
organization costs was recorded during the year ended December 31,
1998, as no sales occurred. In connection with the sales of land
during the years ended December 31, 1997 and 1996, amortization of
organization costs amounted to $1,326 and $5,904 which is reflected in
the accompanying statements of operations.
Land
----
Land, held for investment, is stated at the lower of cost or fair
value. Land is assessed for impairment when the Partnership believes
that events or changes in circumstances indicate that its carrying
amount may not be recoverable. Costs that clearly relate to land
development projects are capitalized. Interest costs, real estate
taxes and insurance are capitalized while development is in progress.
When development is complete, these costs are expensed.
CONTINUED ON NEXT PAGE
13
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies - (Continued)
Loan Costs
-----------
Loan costs are amortized over the period of the mortgage note payable.
Investments in Joint Venture
----------------------------
Investments in joint ventures are accounted for using the equity
method.
Income Taxes
------------
The Partnership functions as a conduit for income tax purposes. As
such, the Partnership files an information tax return on which it
allocates its revenue and expenses among the partners as required by
the partnership agreement. The partners are required to report such
items on their individual income tax returns.
Cash and Cash Equivalents
-------------------------
For purposes of the statement of cash flows, the Partnership considers
all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
Note 2. Land
At December 31, 1998 and 1997, land consisted of the following:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
8.659 acre parcel, in 1998 and 1997,
(zoned commercial) in southeast
Seminole County, Florida $ 828,094 $ 825,734
111.64 acre parcel in 1998 and 1997
(zoned PUD) in Lake County, Florida 1,743,680 1,690,067
---------- ----------
$2,571,774 $2,515,801
========== ==========
</TABLE>
The Partnership has contracts for all remaining parcels of land totaling
$5,545,726, which are scheduled to close in 1999.
Subsequent to year end, the Partnership committed to bring sewer and
water to one of the parcels of land at a cost of $542,000.
CONTINUED ON NEXT PAGE
14
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 3. Mortgage Note Payable
The Partnership established a $500,000 line of credit with Citrus Bank
during the year ended December 31, 1998. This line of credit, which is
secured by the land and its improvements in Lake County, Florida, is
due on demand, and interest on borrowings is charged at a variable
rate of prime plus .5%, and is payable monthly. At December 31, 1998,
the Partnership had a balance of $33,834 on this line of credit.
The interest expensed on the line of credit for the year ended
December 31, 1998 was $724.
Note 4. Investment in Joint Venture
The Partnership owned a 49.9% interest (which was acquired in 1989) in
Condev/McCulloch Road Joint Venture (a Florida Joint Venture) (the
Joint Venture) whose purpose was to acquire and hold a 19 acre parcel
of land in Seminole County, Florida for investment purposes. Condev
Land Growth Fund '86, Ltd., an affiliate of the Partnership's general
partner, owned the remaining 50.1% interest. During the year ended
December 31, 1996, the Joint Venture sold its parcel of land and
recognized a gain of $300,900. The Joint Venture made a complete
distribution to its venturers of $1,100,602, of which the Partnership
received $549,200, thereby terminating the Joint Venture.
The Partnership's investment in the Joint Venture as of December 31,
and its equity in loss of the Joint Venture for the years then ended
are as follows:
EQUITY IN
YEAR INVESTMENT (INCOME) LOSS
---- ---------- -------------
1996 $ - $(146,799)
The Joint Venture had revenue of $300,900 during the year ended
December 31, 1996 and net income for the year was $295,826.
Note 5. Allocations and Distributions to Partners
Operations (excluding land sales)
--------------------------------
Pursuant to the partnership agreement, cash flow and profits and
losses from operations are allocated and distributed 99% to the
limited partners and 1% to the general partner. No distributions
attributable to cash flow were made during the years ended
December 31, 1998, 1997 or 1996.
CONTINUED ON NEXT PAGE
15
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 5. Allocations and Distributions to Partners - (Continued)
Land sales
----------
With respect to disposition of parcels of land, the allocations
and distributions shall be made as follows:
1. To the limited partners, an amount equal to the Partnership's
cost of the parcel disposed of.
2. To the limited partners, an amount equal to real estate taxes,
and organization and syndication expenses allocable to the
parcel disposed of.
3. To the limited partners, an amount equal to 10% per year non-
compounded return on such distributions minus previous
distributions of cash flows.
4. To the general partner and limited partners, 20% and 80%,
respectively, of the net cash proceeds after the above
distributions.
For purposes of making the above described computations, the
Partnership books will be deemed to close as of the month-end
closest to the date of sale.
The limited partners received distributions of $-0-, $978,110,
and $2,965,000 attributable to net cash proceeds from the sales
of land during the years ended December 31, 1998, 1997 and 1996,
respectively.
Note 6. Related Party Transactions
The partnership agreement permits the general partner or its
affiliates to receive an acquisition fee or a real estate commission
from sellers in an amount not to exceed 5% of the gross purchase price
of land purchased by the Partnership, so long as the total acquisition
fee, including that paid to unaffiliated parties, does not exceed 10%
of the gross purchase price. No acquisition fees were paid during the
years ended December 31, 1998, 1997 or 1996, as no properties were
purchased.
CONTINUED ON NEXT PAGE
16
<PAGE>
CONDEV LAND FUND II, LTD.
(A Florida Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
Note 6. Related Party Transactions - (Continued)
When properties are sold, an affiliate of the general partner may be
paid real estate commissions in amounts customarily charged by others
rendering similar services, with such commissions, plus commissions
paid to nonaffiliates, not to exceed 10% of the gross sales price. No
real estate commissions were paid during 1998 with respect to sales,
as no sales occurred. In connection with the two land sales in 1997,
commissions paid to nonaffiliates amounted to 10% and 5%,
respectively. In connection with the two land sales during 1996,
commissions paid to nonaffiliates amounted to 10% and 5.8%,
respectively.
The general partner is obligated to loan up to $100,000 to the
Partnership during its term to meet working capital requirements. No
such loans were made to the Partnership during the years ended
December 31, 1998, 1997 or 1996.
The general partner earned certain fees for administration and
management services provided, pursuant to the partnership agreement.
Such fees amounted to $12,084 for the years ended December 31, 1998
and 1997, respectively, and $11,676 for the year ended December 31,
1996.
17
<PAGE>
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial
-------------------------------------------------------------------------
Disclosure:
----------
There were no disagreements on accounting and financial disclosures
required to be disclosed by Item 304 of Regulation S-K.
PART III
Item 10.
Directors and Executive Officers of the Registrant
--------------------------------------------------
(a) The Registrant does not have a Board of Directors. Condev
Associates, A Florida general partnership consisting of Messrs. Robert N.
Gardner and Joseph J. Gardner, is the General Partner of the Partnership.
(b), (c), (d) and (e)
Robert N. Gardner and Joseph J. Gardner are brothers. The background and
experience of the partners of the General Partner are as follows:
Robert N. Gardner, age 64 has been president, a director and shareholder
-----------------
of Condev Corporation and it's predecessors since 1961. A Florida
licensed real estate broker and Class A Contractor, he serves on the
boards of directors of NationsBank of Central Florida, N.A., and
Schroeder-Manatee, Inc.
Joseph J. Gardner, age 61 has been an officer, a director and shareholder
-----------------
of Condev Corporation and its predecessors since 1961. Prior to joining
Condev Corporation, he was employed in the land department of Continental
Oil Company. Mr. Gardner is a director of Protection One, Inc. and is a
licensed real estate broker.
Condev Corporation, which has its offices located at the same address of
the General Partner and Partnership, has been operating in the Florida
real estate market since 1961. It has two active affiliates. PCD, Inc. is
a development company specializing in horizontal land development. Condev
Realty, Inc. is a Florida licensed real estate broker which concentrates
on site acquisition, land assemblage and land investment.
Item 11.
Executive Compensation
----------------------
(a), (b), (c) and (d)
The Registrant has not paid and does not plan to pay any executive
compensation to the General Partners or their affiliates (other than
described in Item 13 below).
Item 12.
Security Ownership of Certain Beneficial Owners and Management:
--------------------------------------------------------------
(a) The following is a list of persons who are known to the Registrant
to be the beneficial owners of more than 5% of the total units
outstanding as of December 31, 1998:
NONE
(b) The following is a list of units beneficially owned by all partners
of the General Partner as of December 31, 1998:
NONE
(c) There are no arrangements known to the registrant, including any
pledge by any person of security of the registrant or any of its parents
or affiliates, the operation of which may at a subsequent date result in
a change in control of the registrant.
18
<PAGE>
Item 13.
Certain Relationships and Related Transactions
----------------------------------------------
(a) and (b)
The Partnership Agreement provides for the reimbursement to the General
Partner for direct administrative expenses incurred in the operation of
the Partnership. Such fees amounted to $12,084 for the years ended
December 31, 1998 and 1997, respectively, and $11,676 for the year ended
December 31, 1996.
The Partnership Agreement permits the general partner or an affiliate to
receive an acquisition fee or a real estate commission from sellers in
an amount not to exceed 5% of the gross purchase price of land purchased
by the Partnership so long as the total acquisition fee, including that
paid to unaffiliated parties, does not exceed 10% of the gross purchase
price. No acquisition fees were paid to the General Partner during 1998,
1997, or 1996, as no properties were acquired during these years.
When properties are sold, under certain circumstances, an affiliate of
the General Partner may be paid real estate commissions in amounts
customarily charged by others rendering the same services not to exceed
10% of the gross sales price. No real estate commissions were paid to
the General Partner or any affiliate of the General Partner during the
years ended December 31, 1998, 1997 or 1996.
The General Partner is obligated to loan up to $100,000 to the
Partnership during its term to meet working capital requirements. No
such loans were made to the Partnership during the years ended December
31, 1998, 1997, or 1996.
(c) No management person is indebted to the Registrant.
(d) Not applicable.
19
<PAGE>
PART IV
Item 14.
Exhibits, Financial Statement Schedules and Reports on Form 8-K:
---------------------------------------------------------------
(a)(1) The following financial statements and supplementary data are
included in Part II Item 8:
Page
Independent Auditor's Report 8
Financial Statements
Balance Sheets - December 31, 1998 and 1997 9
Statements of Operations - Years ended
December 31, 1998, 1997 and 1996 10
Statements of Partners' Capital -
Years ended December 31, 1998, 1997 and 1996 11
Statements of Cash Flows -
Years ended December 31, 1998, 1997 and 1996 12
Notes to Financial Statements 13-17
(3) Exhibits included herein:
13 - Annual Report to Limited Partners 22
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant during the
last quarter of the period covered by this report.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CONDEV ASSOCIATES, General Partner
Date: February 24, 1999 By: /s/ Robert N. Gardner
-------------------- ----------------------------
Robert N. Gardner, Partner
Date: February 24, 1999 By: /s/ Joseph J. Gardner
-------------------- ----------------------------
Joseph J. Gardner, Partner
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
CONDEV ASSOCIATES, General Partner
/s/ Robert N. Gardner February 24, 1999
- --------------------------------- --------------------------
Robert N. Gardner, Partner Date
/s/ Joseph J. Gardner February 24, 1999
- --------------------------------- --------------------------
Joseph J. Gardner, Partner Date
21
<PAGE>
February 8, 1999
Condev Land Fund II, Ltd.
1998 Annual Report
Dear Limited Partner:
Enclosed is your Schedule K-1 (Form 1065) relating to the Fund's operations for
the year ended December 31, 1998. If your investment is held by a custodian, the
K-1 is for information purposes only. A copy of this form has been sent to your
custodian.
The financial statement, on the reverse side hereof, shows a net loss for the
year ended December 31, 1998 of $54,066. This represents normal income less
costs of operating the partnership and managing the portfolio properties. There
were no sales of property during the year. However, all of the property owned by
the Partnership was under contract for sale as of year-end. At December 31,
1998, the net asset value per unit (book value) of limited partner interest was
$88.46. The following is a brief description of the status of each of the
partnership's remaining properties:
Alafaya Trail/McCulloch Road. This property is under contract with a developer
- ----------------------------
who intends to erect a grocery-anchored retail development on the site. A
commitment has been received from the main tenant, and the buyer is in the
process of obtaining the necessary development permits. Closing on this contract
is scheduled for June, 1999.
Glenbrook P.U.D.. This property consists of three separate parcels: multi-
- ----------------
family, commercial, and single-family. The multi-family parcel is under contract
with a developer of affordable apartments. Originally scheduled to close in
December, this contract has been extended to allow the general partner time to
complete the required sewer, water and other off-site improvements pursuant to
the terms of the sales contract. The 71-acre single family site is under
contract with a closing date of June 30, 1999 scheduled. On December 3, 1998,
the Partnership entered into a contract for sale of the commercial parcel with
an experienced developer of anchored shopping centers. Terms of the contract
call for an inspection period until March 3, 1999, and closing 120 days
thereafter.
We hope that the remaining parcels will be sold during 1999. If that is the
case, there will be a final distribution to limited partners and the Partnership
will be terminated. We appreciate the patience of the limited partners while we
work to sell the remaining properties consistent with our objective of obtaining
reasonable returns for the investors.
Sincerely yours,
CONDEV ASSOCIATES
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> DEC-31-1998 DEC-31-1997
<CASH> 94,530 168,989
<SECURITIES> 0 0
<RECEIVABLES> 3,347 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 2,571,774 2,515,801
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 2,681,594 2,692,772
<CURRENT-LIABILITIES> 48,708 5,820
<BONDS> 0 0
0 0
0 0
<COMMON> 0 0
<OTHER-SE> 2,632,886 2,686,952
<TOTAL-LIABILITY-AND-EQUITY> 2,681,594 2,692,772
<SALES> 0 0
<TOTAL-REVENUES> 6,750 589,654
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 60,816 71,875
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (54,066) 517,779
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (54,066) 517,779
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (54,066) 517,779
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0
</TABLE>
