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 December 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
Commission File Number 0-24660
LIBERTY TAX CREDIT PLUS II L.P.
(Exact name of registrant as specified in its charter)
Delaware 13-3458180
- - ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
625 Madison Avenue, New York, New York 10022
- - -------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212)421-5333
Indicate by check mark 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>
PART I - Financial Information
Item 1. Financial Statements
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
==========================
December 31, March 31,
1996 1996
------------ -----------
ASSETS
Property and equipment, net of
accumulated depreciation
of $54,682,942 and $48,743,758,
respectively ............................ $188,018,389 $192,479,831
Cash and cash equivalents .................. 4,964,659 4,498,565
Cash held in escrow ........................ 6,090,830 6,382,851
Deferred costs, net of accumulated
amortization of $3,006,810
and $2,877,861, respectively ............ 4,396,115 4,479,818
Other assets ............................... 4,570,073 4,988,601
------------ ------------
Total assets ............................ $208,040,066 $212,829,666
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities
Mortgage notes payable .................. $118,885,164 $119,895,307
Accounts payable and other
liabilities ............................ 9,641,525 8,477,781
Due to local general partners and
affiliates ............................. 10,870,462 10,632,221
Due to general partners and
affiliates ............................. 1,396,302 1,216,964
Due to selling partners ................. 3,664,289 3,658,664
------------ ------------
Total liabilities ....................... 144,457,742 143,880,937
------------ ------------
Minority interest .......................... 3,576,432 3,827,457
------------ ------------
Commitments and contingencies (Note 3)
Partners' capital
Limited partners (115,917.5 BACs
issued and outstanding) ................ 60,436,517 65,500,743
General partners ........................ (430,625) (379,471)
------------ ------------
Total partners' capital ................. 60,005,892 65,121,272
------------ ------------
Total liabilities and partners'
capital ................................ $208,040,066 $212,829,666
============ ============
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
======================== =========================
Three Months Ended Nine Months Ended
December 31, December 31,
------------------------ -------------------------
1996 1995* 1996 1995*
------------------------ -------------------------
Revenues
Rentals, net .... $ 6,522,495 $ 6,059,945 $18,626,485 $18,096,604
Other ........... 209,630 185,529 520,802 458,787
----------- ----------- ----------- -----------
6,732,125 6,245,474 19,147,287 18,555,391
----------- ----------- ----------- -----------
Expenses
General and
administrative . 1,527,376 1,590,941 4,633,115 4,583,287
General and
administrative-
related parties
(Note 2) ....... 252,985 265,428 735,294 825,521
Repairs and
maintenance .... 983,695 791,864 2,799,098 2,408,862
Operating and
other .......... 545,686 455,426 2,084,921 1,857,464
Real estate taxes 266,425 278,867 800,935 823,656
Insurance ....... 333,250 346,057 915,552 894,396
Interest ........ 2,159,823 2,048,886 6,369,805 6,247,582
Depreciation and
amortization ... 2,043,372 2,253,798 6,064,538 6,281,497
----------- ----------- ----------- -----------
8,112,612 8,031,267 24,403,258 23,922,265
----------- ----------- ----------- -----------
Minority interest
in loss of
subsidiaries .... 53,841 33,356 140,591 152,133
----------- ----------- ----------- -----------
Net loss ......... $(1,326,646) $(1,752,437) $(5,115,380) $(5,214,741)
=========== =========== =========== ===========
Net loss-
limited
partners ........ $(1,313,379) $(1,734,913) $(5,064,226) $(5,162,594)
=========== =========== =========== ===========
Number of BACs
outstanding ..... 115,917.5 115,917.5 115,917.5 115,917.5
=========== =========== =========== ===========
Net loss
per BAC ......... $ (11.33) $ (14.97) $ (43.69) $ (44.54)
=========== =========== =========== ===========
* Reclassified for comparative purposes
See Accompanying Notes to Consolidated Financial Statements
3
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statement of Changes in Partners' Capital
(Unaudited)
=======================================
Limited General
Total Partners Partners
---------------------------------------
Partners' capital -
April 1, 1996 $65,121,272 $65,500,743 $ (379,471)
Net loss (5,115,380) (5,064,226) (51,154)
---------- ---------- ---------
Partners' capital -
December 31,
1996 $60,005,892 $60,436,517 $ (430,625)
========== ========== =========
See Accompanying Notes to Consolidated Financial Statements
4
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase in Cash and Cash Equivalents
(Unaudited)
=============================
Nine Months Ended
December 31,
-----------------------------
1996 1995
-----------------------------
Cash flows provided by operating
activities:
Net loss ............................ $(5,115,380) $(5,214,741)
----------- -----------
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization ....... 6,064,538 6,281,497
Minority interest in loss of
subsidiaries ....................... (140,591) (152,133)
Decrease in other assets ............ 418,528 132,869
Decrease (increase) in cash held
in escrow .......................... 211,509 (187,011)
Increase in accounts payable and
other liabilities .................. 1,163,744 1,160,886
Increase in due to general partners
and affiliates ..................... 179,338 242,642
Increase in due to local general
partners and affiliates ............ 478,489 624,802
Decrease in due to local general
partners and affiliates ............ (240,248) (142,560)
----------- -----------
Total adjustments .................. 8,135,307 7,960,992
----------- -----------
Net cash provided by operating
activities ......................... 3,019,927 2,746,251
----------- -----------
Cash flows used in investing
activities:
Acquisition of property and
equipment .......................... (1,480,928) (1,123,563)
Decrease in cash held
in escrow .......................... 80,512 6,411
----------- -----------
Net cash used in investing activities (1,400,416) (1,117,152)
----------- -----------
Cash flows used in financing activities:
See Accompanying Notes to Consolidated Financial Statements
5
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase in Cash and Cash Equivalents
(continued)
(Unaudited)
=============================
Nine Months Ended
December 31,
-----------------------------
1996 1995
-----------------------------
Increase in deferred costs ........ (38,465) 0
Repayments of mortgage notes ...... (1,010,143) (1,016,439)
Increase in due to selling partners 5,625 5,625
Decrease in capitalization of
consolidated subsidiaries
attributable to minority
interest ......................... (110,434) (78,354)
----------- -----------
Net cash used in financing
activities ....................... (1,153,417) (1,089,168)
----------- -----------
Net increase in cash and
cash equivalents .................. 466,094 539,931
Cash and cash equivalents at
beginning of period ............... 4,498,565 4,374,218
----------- -----------
Cash and cash equivalents at
end of period ..................... $ 4,964,659 $ 4,914,149
=========== ===========
See Accompanying Notes to Consolidated Financial Statements
6
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of Liberty Tax Credit
Plus II (the "Partnership") and 27 subsidiary partnerships ("subsidiary
partnerships" or" Local Partnerships") in which the Partnership is the limited
partner. Through the rights of the Partnership and/or the General Partner, which
General Partner has a contractual obligation to act on behalf of the
Partnership, to remove the general partner of the subsidiary local partnerships
and to approve certain major operating and financial decisions, the Partnership
has a controlling financial interest in the subsidiary local partnerships.
Effective August 16, 1996, pursuant to an Agreement and Consent ("Agreement"),
Spring Creek Retail Associates, L.P. ("Retail") was merged with Spring Creek
Associates, L.P. ("Spring Creek") in which the Partnership has a limited
partnership interest. Before such merger the commercial net rental income from
Retail was accrued by Spring Creek on the basis of cash flow from Retail's
operations, pursuant to the terms of a net lease agreement. Effective upon the
merger, the partnership agreement of Spring Creek was amended and the net lease
agreement was cancelled.
The Partnership's fiscal quarter ends December 31. All subsidiary partnerships
have fiscal quarters ending September 30. Accounts of the subsidiary
partnerships have been adjusted for intercompany transactions from October 1
through December 31.
All intercompany accounts and transactions have been eliminated in
consolidation.
Increases (decreases) in the capitalization of consolidated subsidiary
partnerships attributable to minority interest arises from cash contributions
and cash distributions to the minority interest partners.
Losses attributable to minority interests which exceed the minority interests'
investment in a subsidiary partnership have been charged to the Partnership.
Such losses aggregated $83,000 and $323,000 and $160,000 and $425,000 for the
three and nine months ended December 31, 1996 and 1995, respectively. The
Partnership's investment in each subsidiary partnership is equal to the
respective subsidiary partnership's partners' equity less minority interest
capital, if any. In consolidation, all subsidiary partnership losses are
included in the Partnership's capital account except for losses allocated to
minority interest capital.
7
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Note 1 - General (continued)
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Asset and for Long-Lived Assets to Be Disposed Of".
Under SFAS No. 121, the Partnership is required to review long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
An impairment loss should be recognized whenever the review demonstrates that
the book value of a long-lived asset is not recoverable. Effective April 1,
1996, the Partnership adopted SFAS No. 121, consistent with the required
adoption period.
Property and equipment are carried at the lower of depreciated cost or estimated
amounts recoverable through future operations and ultimate disposition of the
property. Cost includes the purchase price, acquisition fees and expenses, and
any other costs incurred in acquiring the properties. As required by SFAS 121, a
provision for loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost. However, depreciated cost,
adjusted for such reductions in value, if any, may be greater than the fair
value. Property investments themselves are reduced to estimated fair value
(generally using discounted cash flows) when the property is considered to be
impaired and the depreciated cost exceeds estimate fair value. Through December
31, 1996, the Partnership has not recorded any provisions for loss on impairment
of assets or reduction to estimated fair value.
The books and records of the Partnership are maintained on the accrual basis in
accordance with generally accepted accounting principles. In the opinion of the
general partners of the Partnership (the "General Partners"), the accompanying
unaudited financial statements contain all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial position
of the Partnership as of December 31, 1996, the results of operations for three
and nine months ended December 31, 1996 and 1995 and cash flows for the nine
months ended December 31, 1996 and 1995. However, the operating results for the
nine months ended December 31, 1996 may not be indicative of the results for the
year.
8
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted or condensed. These consolidated financial statements should
be read in conjunction with the financial statements and notes thereto included
in the Partnership's Annual Report on Form 10-K for the year ended March 31,
1996.
Note 2 - Related Party Transactions
One of the General Partners has a 1% interest as a special limited partner in
each of the subsidiary partnerships. An affiliate of the General Partners also
has a minority interest in certain subsidiary partnerships.
The General Partners and their affiliates perform services for the Partnership.
The costs incurred for the three and nine months ended December 31, 1996 and
1995 are as follows:
Three Months Ended Nine Months Ended
December 31, December 31,
-------------------- -------------------
1996 1995* 1996 1995*
-------------------- -------------------
Partnership
management
fees (a) ...... $ 50,000 $ 83,000 $150,000 $249,000
Expense
reimburse-
ment (b) ...... 36,860 20,040 90,675 73,937
Property manage-
ment fees (c) . 153,625 153,388 457,619 477,584
Local adminis-
trative fee (d) 12,500 9,000 37,000 25,000
-------- -------- -------- --------
$252,985 $265,428 $735,294 $825,521
======== ======== ======== ========
* Reclassified for comparative purposes
(a) The General Partners are entitled to receive a partnership management fee,
after payment of all Partnership expenses, which together with the annual local
administrative fees will not exceed a maximum of 0.5% per annum of invested
assets (as defined in the Partnership Agreement), for administering the affairs
of the Partnership. The partnership management fee, subject to the foregoing
limitation, will be determined by the General Partners in their sole discretion
based upon their review of the Partnership's investments. Partnership management
fees owed to the General
9
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Note 2 - Related Party Transactions (continued)
Partners amounting to approximately $1,032,000 and $882,000 were accrued and
unpaid as of December 31, 1996 and March 31, 1996, respectively.
(b) The Partnership reimburses the General Partners and their affiliates for
actual Partnership operating expenses incurred by the General Partners and their
affiliates on the Partnership's behalf. The amount of reimbursement from the
Partnership is limited by the provisions of the Partnership Agreement. Another
affiliate of the General Partners performs asset monitoring for the Partnership.
These services include site visits and evaluations of the subsidiary
partnerships' performance.
(c) Property management fees incurred by subsidiary partnerships amounted to
$357,788 and $1,119,240 and $360,185 and $1,086,242 for the three and nine
months ended December 31, 1996 and 1995 respectively. Of these fees $153,625 and
$457,619 and $153,388 and $477,584 were incurred to affiliates of the subsidiary
partnerships' general partners. Included in amounts incurred to affiliates of
the subsidiary partnerships' general partners are $19,097 and $56,275 and
$30,060 and $91,418 for the three and nine months ended December 31, 1996 and
1995, respectively, which were also incurred to affiliates of the Partnership.
(d) Liberty Associates II L.P., a special limited partner of the subsidiary
partnerships, is entitled to receive a local administrative fee of up to $2,500
per year from each subsidiary partnership.
Note 3 - Commitments and Contingencies
The following disclosures include changes and/or additions to disclosures
regarding the subsidiary partnerships which were included in the Partnership's
Annual Report on Form 10-K for the period ended March 31, 1996.
Santa Juanita II Limited Partnership
- - ------------------------------------
A bank filed a suit against the Local Partnership Santa Juanita II Limited
Partnership ("Santa Juanita") for non-payment of the monthly installments
required by a second mortgage loan agreement. During February 1994, the court
issued a judgement against Santa Juanita demanding immediate payment of the
second mortgage note with an outstanding principal balance of $474,656, plus
accrued interest and legal expenses. A significant portion of Santa Juanita's
operating assets is pledged as collateral for this note and
10
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Note 3 - Commitments and Contingencies (continued)
foreclosure by the bank would seriously impair Santa Juanita's continued
existence. In May 1996, the special limited partner of Santa Juanita instituted
proceedings to formally remove the general partner of Santa Juanita. A hearing
has been scheduled for March 1997 for purposes of taking over management of
Santa Juanita. After such hearing the special limited partner and/or its
affiliates will attempt to negotiate a settlement of this judgment. In June
1996, the general partner of Santa Juanita filed a voluntary petition under
Chapter 11 of the United States Bankruptcy Code. It is management's opinion that
no accrual for potential losses is currently warranted in the financial
statements. The maximum loss which the Partnership would be liable for is its
net investment in Santa Juanita amounting to approximately $500,000 at December
31, 1996. The Partnership's investment in Santa Juanita at December 31, 1996 and
March 31, 1996 was approximately $500,000 and $568,000, respectively, and the
minority interest balance was zero at each date. Santa Juanita's loss after
minority interest amounted to approximately $23,000 and $68,000 and $17,000 and
$59,000 for the three and nine months ended December 31, 1996 and 1995,
respectively.
Rolling Green Limited Partnership
- - ---------------------------------
Rolling Green Limited Partnership ("Rolling Green") operates and is regulated by
the United States Department of Housing and Urban Development (HUD) under
Section 221(d)(3) of the National Housing Act. Rents received by the project are
subsidized by Section 8 Housing Assistance Payments. Rental income from such
Assistance Payments totaled $1,143,607 and $968,241 in 1995 and 1994,
respectively. In September 1996, two of the three Section 8 contracts expired
and were renewed through September 1997 at which time the third contract will
also expire. However, uncertainties regarding the future of HUD Programs exist.
It is not practical to estimate the impact upon Rolling Green's operations if
the rents were to be respectively changed to market value.
Williamsburg Residential, L.P.
- - ------------------------------
In January 1997 the underlying mortgage note of Williamsburg Residential, L.P.
("Williamsburg") was accelerated by the lender due to the non-payment of the
required monthly installments due for November 1996 through January 1997 and the
transfer of the general partnership interest which constituted events of
default. On January 27, 1997, Williamsburg entered into a forbearance agreement
with the lender to temporarily forestall or postpone the further exercising of
the lender's remedies while Williamsburg
11
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1996
(Unaudited)
Note 3 - Commitments and Contingencies (continued)
negotiates a workout agreement. The forbearance agreement which expires March
27, 1997 required a payment of $100,461 upon execution and requires payment by
the fifteenth of February and the fifteenth of March of all net operating income
for the preceding month (with certified rent rolls and certified operating
statements sent to the lender) which will be applied to amounts due and owing
under the loan agreement. At the end of the forbearance period if Williamsburg
has not paid in full all amounts due and owing under the loan documents or
entered into a written workout agreement with the lender, the lender may proceed
with lender's remedies without any notice or demand to Williamsburg. The
Partnership's investment in Williamsburg at December 31, 1996 and March 31, 1996
was approximately $946,000 and $1,037,000, respectively, and the minority
interest balance was zero at each date. Williamsburg's net loss after minority
interest amounted to approximately $25,000 and $91,000 and $46,000 and $144,000
for the three and nine months ended December 31, 1996 and 1995, respectively.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
- - -------------------------------
The Partnership's primary source of funds include (i) working capital reserves,
(ii) interest earned on the working capital reserves and (iii) cash
distributions from the operations of the Local Partnerships. All these sources
of funds are available to meet obligations of the Partnership.
As of December 31, 1996 the Partnership has invested all of the net proceeds in
twenty-seven Local Partnerships. Approximately $439,000 of the purchase price
remains to be paid (none of which is being held in escrow). During the nine
months ended December 31, 1996, $294,250 was paid (all of which was released
from escrow).
During the nine months ended December 31, 1996, cash and cash equivalents of the
Partnership and its 27 consolidated Local Partnerships increased approximately
$466,000. This increase was primarily due to cash provided by operating
activities ($8,135,000), and a decrease in cash held in escrow for investing
activities ($81,000) which exceeded acquisitions of property and equipment
($1,481,000), an increase in deferred costs ($38,000), repayments of mortgage
notes ($1,010,000) and a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($123,000). Included in the adjustments to
reconcile the net loss to cash provided by operating activities is depreciation
and amortization in the amount of approximately $6,065,000.
The Partnership established a working capital reserve of approximately
$3,500,000 (3% of gross equity raised) of which approximately $702,000 and
$402,000 was unused at December 31,1996 and March 31, 1996, respectively. The
General Partners believe that these reserves, plus any cash distributions
received from the operations of the Local Partnerships are sufficient to fund
the Partnership's ongoing operations for the foreseeable future. During the nine
months ended December 31, 1996 and 1995 respectively, amounts received from
operations of the Local Partnerships were approximately $621,000 and $7,000,
respectively.
For discussion of contingencies affecting certain Local Partnerships, see Note 3
to the financial statements. Since the maximum loss the Partnership would be
liable for is its net investment in the respective Local Partnerships, the
resolution of the existing contingencies is not anticipated to impact future
results of operations, liquidity or financial condition in a material way.
However, the
13
<PAGE>
Partnership's loss of its investment in a Local Partnership will eliminate the
ability to generate future tax credits from such Local Partnership and may also
result in recapture of tax credits if the investment is lost before the
expiration of the credit period.
Except as described above, management is not aware of any trends or events,
commitments or uncertainties which have not otherwise been disclosed, that will
or are likely to impact liquidity in a material way. Management believes the
only impact would be from laws that have not yet been adopted. The portfolio is
diversified by the location of the properties around the United States so that
if one area of the country is experiencing downturns in the economy, the
remaining properties in the portfolio may be experiencing upswings. However, the
geographic diversifications of the portfolio may not protect against a general
downturn in the national economy. The Partnership has fully invested the
proceeds of its offerings in 27 Local Partnerships, all of which fully have
their tax credits in place. The tax credits are attached to the project for a
period of ten years and are transferable with the property during the remainder
of the ten year period. If trends in the real estate market warranted the sale
of a property, the remaining tax credits would transfer to the new owner,
thereby adding significant value to the property on the market, which are not
included in the financial statement carrying amount.
Results of Operations
- - ---------------------
In March 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting for
the Impairment of Long-Lived Asset and for Long-Lived Assets to Be Disposed Of".
Under SFAS No. 121, the Partnership is required to review long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in
circumstances indicate that the book value of an asset may not be recoverable.
An impairment loss should be recognized whenever the review demonstrates that
the book value of a long-lived asset is not recoverable. Effective April 1,
1996, the Partnership adopted SFAS No. 121, consistent with the required
adoption period.
Property and equipment are carried at the lower of depreciated cost or estimated
amounts recoverable through future operations and ultimate disposition of the
property. Cost includes the purchase price, acquisition fees and expenses, and
any other costs incurred in acquiring the properties. As required by SFAS 121, a
provision for loss on impairment of assets is recorded when estimated amounts
recoverable through future operations and sale of the property on an
undiscounted basis are below depreciated cost.
14
<PAGE>
However, depreciated cost, adjusted for such reductions in value, if any, may
be greater than the fair value. Property investments themselves are reduced to
estimated fair value (generally using discounted cash flows) when the property
is considered to be impaired and the depreciated cost exceeds estimate fair
value. Through December 31, 1996, the Partnership has not recorded any
provisions for loss on impairment of assets or reduction to estimated fair
value.
Results of operations for the three and nine months ended December 31, 1996
consisted primarily of the results of the Partnership's investment in
twenty-seven Local Partnerships.
Rental income increased approximately 8% and 3% during the three and nine months
ended December 31, 1996 as compared to the corresponding periods in 1995
primarily due to the merger of Spring Creek Retail Associates, L.P. ("Retail")
with Spring Creek Associates, L.P. ("Spring Creek") effective August 16, 1996.
Before such merger the commercial rent was accrued by Spring Creek on the basis
of cash flow from Retail's operations, pursuant to the terms of a net lease
agreement. Excluding Spring Creek, rental income decreased approximately 2% and
increased less than 1% during the three and nine months ended December 31, 1996
as compared to the corresponding periods in 1995 primarily due to rental rate
increases amounting to approximately 1% and 2% which were offset and partially
offset, respectively, by decreases in occupancy at two Local Partnerships.
Other income increased approximately $24,000 and $62,000 for the three and nine
months ended December 31, 1996 as compared to the corresponding periods in 1995
primarily due to a real estate tax refund at one Local Partnership in the first
quarter and the renting of a roof for a microwave antenna at another Local
Partnership in the third quarter.
Total expenses excluding general and administrative-related parties, repairs and
maintenance and operating and other decreased 3% and less than 1% for the three
and nine months ended December 31, 1996, respectively, as compared to the
corresponding periods one year earlier.
General and administrative-related parties decreased approximately $90,000 for
the nine months ended December 31, 1996 as compared to the corresponding period
in 1995 primarily due to a decrease in partnership management fees.
15
<PAGE>
Repairs and maintenance increased approximately $192,000 and $390,000 for the
three and nine months ended December 31, 1996 as compared to the corresponding
periods in 1995 primarily due to increases at five Local Partnerships. There was
an increase at one Local Partnership due to the replacement of leaking deck
areas. The increase at the second Local Partnership was due to plumbing repairs
necessary due to frozen pipes as well as an increase in painting expenses. The
increase at the third Local Partnership was due to repairs necessary to make
units ready to show and ultimately lease in order to increase occupancy. There
was an increase at a fourth Local Partnership due to repairs to one unit which
was damaged by fire. The increase at the fifth Local Partnership was due to wall
repairs which were necessary due to water penetration.
Operating and other increased approximately $90,000 and $227,000 for the three
and nine months ended December 31, 1996 as compared to the corresponding period
in 1995 primarily due to an increase in utilities at two Local Partnerships.
16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings-The litigation described in the Partnership's Annual
Report on Form 10-K for the year ended March 31, 1996 is incorporated herein by
reference.
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
(a) Exhibits
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8K - No reports on Form 8-K were filed during the
quarter.
17
<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.
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
a General Partner
By: RELATED CREDIT PROPERTIES II INC.,
a General Partner
Date: February 13, 1997
By:/s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: February 13, 1997
By:/s/ Richard A. Palermo
----------------------
Richard A. Palermo,
Treasurer
(principal accounting officer)
By: LIBERTY G.P. II INC.,
a General Partner
Date: February 13, 1997
By:/s/ Paul L. Abbott
------------------
Paul L. Abbott,
Chairman of the Board, President,
Chief Operating Officer and Director
18
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the financial
statements for Liberty Tax Credit Plus II L. P. and is qualified in its entirety
by reference to such financial statements
</LEGEND>
<CIK> 0000832141
<NAME> Liberty Tax Credit Plus II L.P.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 11,055,489
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,966,188
<PP&E> 242,701,331
<DEPRECIATION> 54,682,942
<TOTAL-ASSETS> 208,040,066
<CURRENT-LIABILITIES> 21,908,289
<BONDS> 122,549,453
0
0
<COMMON> 0
<OTHER-SE> 63,591,631
<TOTAL-LIABILITY-AND-EQUITY> 208,040,066
<SALES> 0
<TOTAL-REVENUES> 19,147,287
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,033,453
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,369,805
<INCOME-PRETAX> (5,255,971)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,255,971)
<EPS-PRIMARY> (43.69)
<EPS-DILUTED> 0
</TABLE>
