UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
_X_ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
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)
============ ============
September 30, March 31,
1997 1997
------------ ------------
ASSETS
Property and equipment, net of
accumulated depreciation
of $60,268,092 and $56,299,580,
respectively $176,774,006 $180,610,721
Cash and cash equivalents 4,319,548 4,956,628
Cash held in escrow 7,113,390 6,304,514
Deferred costs, net of accumulated
amortization of $3,086,706
and $2,966,900, respectively 4,318,705 4,273,139
Other assets 4,354,759 4,124,261
------------ ------------
Total assets $196,880,408 $200,269,263
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Mortgage notes payable $117,942,553 $118,783,431
Accounts payable and other
liabilities 9,338,817 9,331,939
Due to local general partners and
affiliates 11,197,706 10,926,397
Due to general partners and
affiliates 3,479,927 2,785,541
Due to selling partners 3,433,613 3,429,863
------------ ------------
Total liabilities 145,392,616 145,257,171
------------ ------------
Minority interest 4,334,270 3,297,946
------------ ------------
Commitments and contingencies
(Note 5)
Partners' capital
Limited partners (115,917.5 BACs
issued and outstanding) 47,712,670 52,227,688
General partners (559,148) (513,542)
------------ ------------
Total partners' capital 47,153,522 51,714,146
------------ ------------
Total liabilities and partners'
capital $196,880,408 $200,269,263
============ ============
See Accompanying Notes to Consolidated Financial Statements
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
========================== ============================
Three Months Ended Six Months Ended
September 30, September 30,
-------------------------- ----------------------------
1997 1996 1997 1996
-------------------------- ----------------------------
Revenues
Rentals, net $ 6,248,923 $ 6,007,567 $ 12,573,875 $ 12,103,990
Other 140,835 145,626 262,717 311,172
Gain on partial
sale of investment
in subsidiary
partnerships
(Note 3) 0 0 154,577 0
----------- ------------ ------------ ------------
6,389,758 6,153,193 12,991,169 12,415,162
----------- ------------ ------------ ------------
Expenses
General and
administrative 1,647,584 1,598,585 3,317,721 3,105,739
General and
administrative-
related parties
(Note 2) 689,186 235,475 1,323,156 482,309
Repairs and
maintenance 1,031,149 998,871 1,953,090 1,815,403
Operating 668,156 615,681 1,652,018 1,539,235
Taxes 257,774 282,665 552,435 534,510
Insurance 306,867 291,899 592,384 582,302
Interest 2,098,627 2,124,847 4,149,876 4,209,982
Depreciation
and
amortization 2,080,822 1,985,781 4,088,318 4,021,166
----------- ------------ ------------ ------------
8,780,165 8,133,804 17,628,998 16,290,646
----------- ------------ ------------ ------------
Minority interest
in loss of
subsidiaries 38,787 26,010 77,205 86,750
----------- ------------ ------------ ------------
Net loss $(2,351,620) $ (1,954,601) $ (4,560,624) $ (3,788,734)
=========== ============ ============ ============
Net loss-
limited
partners $(2,328,104) $ (1,935,055) $ (4,515,018) $ (3,750,847)
=========== ============ ============ ============
Number of
BACs
outstanding 115,917.5 115,917.5 115,917.5 115,917.5
=========== ============ ============ ============
Net loss
per BAC $ (20.08) $ (16.70) $ (38.95) $ (32.36)
=========== ============ ============ ============
See Accompanying Notes to Consolidated Financial Statements
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<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, 1997 $ 51,714,146 $ 52,227,688 $(513,542)
Net loss (4,560,624) (4,515,018) (45,606)
------------ ------------ ---------
Partners' capital -
September 30, 1997 $ 47,153,522 $ 47,712,670 $(559,148)
============ ============ =========
See Accompanying Notes to Consolidated Financial Statements
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
==========================
Six Months Ended
September 30,
--------------------------
1997 1996
--------------------------
Cash flows from operating activities:
Net loss $(4,560,624) $(3,788,734)
----------- -----------
Adjustments to reconcile net loss
to net cash (used in) provided
by operating activities:
Gain on partial sale of investment in
subsidiary partnerships (Note 3) (154,577) 0
Depreciation and amortization 4,088,318 4,021,166
Minority interest in loss of
subsidiaries (77,205) (86,750)
(Increase) decrease in other assets (230,498) 322,825
(Increase) decrease in cash held
in escrow (148,607) 14,772
Increase in accounts
payable and other liabilities 6,878 773,299
Increase in due to general partners
and affiliates 694,386 104,005
Increase in due to local general
partners and affiliates 367,004 426,150
Decrease in due to local general
partners and affiliates (95,695) (24,131)
----------- -----------
Total adjustments 4,450,004 5,551,336
----------- -----------
Net cash (used in) provided by
operating activities (110,620) 1,762,602
----------- -----------
Cash flows from investing activities:
Proceeds from partial sale of investment
in subsidiary partnerships 1,400,000 0
Improvements to property and
equipment (131,797) (1,271,950)
(Increase) decrease in cash held
in escrow (660,269) 18,274
----------- -----------
Net cash provided by (used in)
investing activities 607,934 (1,253,676)
----------- -----------
See Accompanying Notes to Consolidated Financial Statements
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(continued)
(Unaudited)
============================
Six Months Ended
September 30,
----------------------------
1997 1996
----------------------------
Cash flows from financing activities:
Increase in deferred costs (165,372) (25,009)
Repayments of mortgage notes (4,840,878) (749,204)
Proceeds from mortgage notes 4,000,000 0
Increase in due to selling partners 3,750 3,750
Decrease in capitalization
of consolidated subsidiaries
attributable to minority
interest (131,894) (110,433)
----------- -----------
Net cash used in
financing activities (1,134,394) (880,896)
----------- -----------
Net decrease in cash and
cash equivalents (637,080) (371,970)
Cash and cash equivalents at
beginning of period 4,956,628 4,498,565
----------- -----------
Cash and cash equivalents at
end of period $ 4,319,548 $ 4,126,595
=========== ===========
Components of partial sale of investment
in subsidiary partnerships:
Increase in capitalization of
consolidated subsidiaries
attributable to minority
interest $ 1,245,423 $ 0
See Accompanying Notes to Consolidated Financial Statements
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
Note 1 - General
The consolidated financial statements include the accounts of Liberty Tax Credit
Plus II L.P. (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 a General Partner, which
General Partner has a contractual obligation to act on behalf of the
Partnership, to remove the general partner of the subsidiary partnerships and to
approve certain major operating and financial decisions, the Partnership has a
controlling financial interest in the subsidiary partnerships.
The Partnership's fiscal quarter ends September 30. All subsidiary partnerships
have fiscal quarters ending June 30. Accounts of the subsidiary partnerships
have been adjusted for intercompany transactions from July 1 through September
30.
All intercompany accounts and transactions have been eliminated in
consolidation.
Increases (decreases) in the capitalization of consolidated subsidiary
partnerships attributable to minority interest arise from cash contributions
from 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 $116,000 and $110,000 and $247,000 and $240,000 for the
three and six months ended September 30, 1997 and 1996, 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.
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 finan-
-7-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
cial statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position of the
Partnership as of September 30, 1997, the results of operations for the three
and six months ended September 30, 1997 and 1996 and cash flows for the six
months ended September 30, 1997 and 1996. However, the operating results for the
six months ended September 30, 1997 may not be indicative of the results for the
year.
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,
1997.
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.
-8-
<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
The costs incurred to related parties for the three and six months ended
September 30, 1997 and 1996 were as follows:
Three Months Ended Six Months Ended
September 30, September 30,
-------------------- ----------------------
1997 1996 1997 1996
-------- -------- ---------- --------
Partnership
management
fees (a) $374,000 $ 50,000 $ 748,000 $100,000
Expense
reimburse-
ment (b) 36,208 21,937 81,549 53,815
Property
management
fees (c) 265,978 151,038 467,607 303,994
Local
administrative
fee (d) 13,000 12,500 26,000 24,500
-------- -------- ---------- --------
$689,186 $235,475 $1,323,156 $482,309
======== ======== ========== ========
(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 Partners amounting to approximately $3,126,000 and
$2,378,000 were accrued and unpaid as of September 30, 1997 and March 31, 1997,
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 Related General Partner performs asset monitoring for the
Partnership. These services include site visits and evaluations of the
subsidiary partnerships' performance.
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
(c) Property management fees incurred by subsidiary partnerships amounted to
$414,701 and $387,760 and $756,009 and $761,452 for the three and six months
ended September 30, 1997 and 1996, respectively. Of these fees $265,978 and
$151,038 and $467,607 and $303,994 were incurred to affiliates of the subsidiary
partnerships' general partners. Included in amounts incurred to affiliates of
the subsidiary partnerships' general partners are $134,035 and $18,779 and
$203,330 and $37,178 for the three and six months ended September 30, 1997 and
1996, 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 - Partial sale of Investment in Subsidiary Partnerships
Campeche Isle Apartments, L.P. ("Campeche") filed a voluntary petition under
Chapter 11 during March 1996. Although current on its debt service up to and
including the January 1, 1996 payment, the property was unable to fully fund all
operating expenses plus debt service following a 1% increase in the interest
rate on the property's mortgage in June of 1994. Debt service had been kept
current through advances by the subsidiary partnership's general partner, RCC
Pineview, Inc., and the Partnership totaling $302,222 as of December 31, 1996.
In addition, Campeche has not paid its managing agent in excess of $100,000 of
management fees.
In an effort to reduce the property's debt service burden, negotiations with the
holder of the property's first mortgage, Sun America Life Insurance Company (the
"Mortgagee") had been ongoing during January and February of 1996. The Mortgagee
rejected Campeche's proposals and commenced a foreclosure action during the
latter part of February. In order to preserve Campeche's ownership of the
property, a Chapter 11 filing was made during March 1996 and the Mortgagee was
stayed from proceeding with its foreclosure. Campeche had presented a Plan of
Reorganization to the Bankruptcy Court and the property was being operated under
a Cash Collateral order issued by the Court. On June 19, 1997 Campeche completed
a restructuring of its mortgage debt wherein the mortgage debt was settled for
$4,200,000, through the following transactions: Bank of Boston made a $4,000,000
loan to Campeche
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
and the Partnership as co-borrowers. Such loan is secured by a first mortgage on
Campeche Isle Apartments, a pledge of the Partnership's interest in Spring Creek
and recourse guarantees of the Partnership, Campeche, Campeche's general partner
and one of the General Partners. In addition to paying off the mortgage, the
restructuring agreement requires Campeche to make approximately $800,000 of
required repairs to the project. The Partnership raised approximately $1,400,000
by selling a portion of its limited partnership interest in two subsidiary
partnerships to Related Glenport Associates, an affiliate of the General
Partner. The Partnership sold 24.99% of its limited partnership interest in
United-Glenarden I Limited Partnership for $600,000 resulting in a gain of
$224,482 and sold 32.32% of its limited partnership interest in Property
Development Associates, L.P. for $800,000 resulting in a loss of $69,905. A
portion of the proceeds were used to repay the Mortgagee, pay closing costs on
the new loan and to fund debt service and an escrow account for repairs. Monthly
debt service on the new loan will be paid by the net income of Campeche and the
balance by the Partnership. In addition, any distributions received by the
Partnership from Spring Creek must be placed in escrow at Bank of Boston. The
new loan matures on December 31, 1998. On or prior to the maturity of the new
loan a refinancing will be completed which will have a term of at least equal to
the remaining compliance period of the project which ends in 2004. On July 24,
1997 the Chapter 11 filing was dismissed. As of September 30, 1997, total
advances to Campeche from the Partnership totaled approximately $1,451,000.
Note 4 - Mortgage Notes Payable
Williamsburg Residential, L.P.
- - ------------------------------
In November 1996, the general partner of Williamsburg Residential, L.P.
("Williamsburg") stopped making the mortgage note payments which constituted an
event of default. The general partner also communicated to the limited partners
its desire to withdraw as general partner and property manager in an effort to
eliminate the need for it to further secure loans from its affiliated entities
to keep the project going. The limited partners retained a national property
management firm to operate the property effec-
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
tive January 1, 1997 and replaced the general partner effective January 16,
1997.
The new general partner, which is an affiliate of the Related General Partner,
had been in contact with the lender, Federal National Mortgage Association
("FNMA"), since shortly after the default. Williamsburg entered into a
Forbearance Agreement with FNMA on January 27, 1997. The agreement called for
back payments to be made and provided Williamsburg 60 days to work out a loan
agreement. A subsequent extension of the forbearance agreement ran through July
25, 1997 at which time the loan was modified. The general framework of the loan
modification agreement calls for: 1. Williamsburg to deposit an amount
approximately equal to $165,000 into a debt service escrow fund to be utilized
as needed; 2. Payments of interest only on the loan for 36 months; 3. The
waiving of replacement reserve escrow payments during 1997; 4. Excess net
operating income to be turned over to the loan servicer monthly. FNMA's standard
modification documentation was used and FNMA will not exercise further remedies
relating to the default.
Note 5 - 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, 1997 (see Notes 3 and
4 for discussions of the resolution of the contingencies regarding Campeche Isle
Apartments, L.P. and Williamsburg Residential, L.P., respectively.)
Santa Juanita II Limited Partnership
- - ------------------------------------
A bank filed a suit against the 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 judgment
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 foreclosure by the bank would seriously
impair Santa Juanita's continued existence. In May 1996, the special limited
partner of
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<PAGE>
LIBERTY TAX CREDIT PLUS II L.P.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1997
(Unaudited)
Santa Juanita and 4C instituted proceedings to formally remove the general
partner of Santa Juanita and in June 1996, the general partner of Santa Juanita
filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code
("Chapter 11"). In June 1997 the court ordered that Santa Juanita's Amended and
Restated Agreement of Limited Partnership and Management Agreement should not be
part of the general partner's bankruptcy. As such, the court ordered the general
partner to surrender the books and records of Santa Juanita to Liberty
Associates II L.P., the special limited partner and in July, the case was
dismissed in the Bankruptcy Court. Liberty Associates II L.P. amended Santa
Juanita's Amended and Restated Agreement of Limited Partnership which removed
the former general partner as general partner and management agent and admitted
a new general partner and management agent. Management of Santa Juanita is
currently pursuing a workout agreement with the lenders with respect to Santa
Juanita's mortgage debt. The Partnership's investment in Santa Juanita at
September 30, 1997 and March 31, 1997 was approximately $466,000 and $478,000,
respectively, and the minority interest balance was zero at each date. Santa
Juanita's net loss after minority interest amounted to approximately $22,000 and
$22,000 and $45,000 and $45,000 for the three and six months ended September 30,
1997 and 1996, respectively.
Rolling Green Limited Partnership
- - ---------------------------------
Rolling Green Limited Partnership ("Rolling Green") operates and is regulated by
U.S. Department of Housing and Urban Development ("HUD") under Section 221(d)(3)
of the National Housing Act. Rents received by Rolling Green are subsidized by
Section 8 Housing Assistance Payments. Rental income from such Assistance
Payments totaled $1,198,880 and $1,143,607 in the 1996 and 1995 Fiscal Years,
respectively. In September 1997 two of the three Section 8 contracts expired and
were renewed for 1 year. However, uncertainties regarding the future of HUD
Programs exist.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Liquidity and Capital Resources
- - -------------------------------
The Partnership's primary sources of funds are the cash distributions from the
operations of the Local Partnerships in which the Partnership has invested.
These sources are available to meet obligations of the Partnership. During the
six months ended September 30, 1997 and 1996 respectively, amounts received from
operations of the Local Partnerships were approximately $7,910 and $621,476,
respectively.
As of September 30, 1997 the Partnership has invested all of the net proceeds in
twenty-seven Local Partnerships. Approximately $405,000 of the purchase price
remains to be paid (none of which is being held in escrow). During the six
months ended September 30, 1997, approximately $34,000 was paid.
During the six months ended September 30, 1997, cash and cash equivalents of the
Partnership and its 27 consolidated Local Partnerships decreased approximately
$637,000. This decrease was primarily due to cash used in operating activities
($111,000), improvements to property and equipment ($132,000), mortgage notes
($841,000), a decrease in capitalization of consolidated subsidiaries
attributable to minority interest ($132,000), an increase in deferred costs
($165,000), and an increase in cash held in escrow relating to investing
activities ($660,000), which exceeded proceeds from partial sale of
investment in subsidiary partnerships (1,400,000). Included in the adjustments
to reconcile the net loss to cash used in operating activities is gain on
partial sale of investment in subsidiary partnerships ($155,000) and
depreciation and amortization ($4,088,000).
The Partnership established a working capital reserve of approximately
$3,500,000 (3% of gross equity raised) of which approximately $0 and $520,000
was unused at September 30, 1997 and March 31, 1997, respectively.
Partnership management fees owed to the General Partners amounting to
approximately $3,126,000 and $2,378,000 were accrued and unpaid as of
September 30, 1997 and March 31, 1997, respectively.
For discussion of contingencies affecting certain Local Partnerships, see Note 5
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 Partnership's loss of its investment in a Local Partnership will
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<PAGE>
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 compliance period.
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 such ten year period.
If the General Partners determined that a sale of a property is warranted, the
remaining tax credits would transfer to the new owner, thereby adding value to
the property on the market, which are not included in the financial statement
carrying amount.
Results of Operations
- - ---------------------
Results of operations for the three and six months ended September 30, 1997
consisted primarily of the results of the Partnership's investment in
twenty-seven Local Partnerships.
Rental income increased approximately 4% for both the three and six months ended
September 30, 1997 as compared to the corresponding periods in 1996 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, which
resulted in an increase of approximately 1% and an increase in occupancy at
another Local Partnership, which resulted in an increase of approximately 1%.
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 these two Local Partnerships, rental income increased
approximately 2% for both the three and six months ended September 30, 1997 as
compared to the corresponding periods in 1996 primarily due to rental rate
increases.
Other income decreased approximately $48,000 for the six months ended September
30, 1997 as compared to the corresponding period in 1996 primarily due to the
receipt of a real estate tax refund at one Local Partnership in the first
quarter of 1996.
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<PAGE>
Total expenses excluding general and administrative-related parties remained
fairly consistent with increases of approximately 2% and 3% for the three and
six months ended September 30, 1997 as compared to the corresponding periods in
1996.
General and administrative-related parties increased approximately $454,000 and
$841,000 for the three and six months ended September 30, 1997 as compared to
the corresponding periods in 1996 primarily due to an increase in partnership
management fees payable to the General Partners and an increase in property
management fees resulting from the change at two Local Partnerships from an
unaffiliated property manager to one which is an affiliate.
A gain on partial sale of investment in subsidiary partnerships in the amount of
approximately $155,000 was recorded for the six months ended September 30, 1997
(see Note 3 to the financial statements).
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<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
The litigation described in Note 5 to the financial statements
contained in Part I, Item 1 of this quarterly report on Form 10-Q 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
Paul L. Abbott ceased to serve as President, Chief Executive Officer
and Chief Financial Officer of Liberty GP II Inc., effective September 1, 1997.
Effective September 1, 1997, Doreen D. Odell was elected President, Chief
Executive Officer and Chief Financial Officer of Liberty GP II Inc.
Affiliates of Related Credit Properties II L.P. and Liberty GP II Inc.,
general partners of the Partnership, have entered into a Purchase Agreement
pursuant to which Liberty GP II Inc. agreed to sell and an affiliate of Related
Credit Properties II L.P. agreed to purchase 100% of the stock of Liberty GP II
Inc. (the "Transfer"). Pursuant to the Partnership Agreement, the consent of
Limited Partners is not required to approve the Transfer. The Partnership,
Related Credit Properties II L.P. and Liberty GP II Inc. intend to consummate
the Transfer no later than December 31, 1997. There can be no assurance,
however, when or if the Transfer will be consummated.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the
quarter.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
LIBERTY TAX CREDIT PLUS II L.P.
-------------------------------
(Registrant)
By: RELATED CREDIT PROPERTIES II L.P.,
General Partner
By: RELATED CREDIT PROPERTIES II INC.,
General Partner
Date: November 13, 1997
By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: November 13, 1997
By: /s/ Richard A. Palermo
----------------------
Richard A. Palermo,
Treasurer
(principal accounting officer)
By: LIBERTY GP II INC.,
General Partner
Date: November 13, 1997
By: /s/ Doreen D. Odell
-------------------
Doreen D. Odell,
President, Chief Executive Officer
and Chief Financial Officer
<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> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 11,432,938
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,354,759
<PP&E> 237,042,098
<DEPRECIATION> 60,268,092
<TOTAL-ASSETS> 196,880,408
<CURRENT-LIABILITIES> 24,016,450
<BONDS> 121,376,166
0
0
<COMMON> 0
<OTHER-SE> 51,487,792
<TOTAL-LIABILITY-AND-EQUITY> 196,880,408
<SALES> 0
<TOTAL-REVENUES> 12,991,169
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 13,479,122
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,149,876
<INCOME-PRETAX> (4,637,829)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,637,829)
<EPS-PRIMARY> (38.95)
<EPS-DILUTED> 0
</TABLE>
