<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission File Number 0-17556
Brauvin High Yield Fund L.P. II
(Exact name of registrant as specified in its charter)
Delaware 36-3580153
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
150 South Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 443-0922
(Registrant's telephone number, including area code)
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 .
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BRAUVIN HIGH YIELD FUND L.P. II
INDEX
Page
PART I Financial Information
Item 1. Consolidated Financial Statements. . . . . . . . . . . . 3
Consolidated Balance Sheets at September 30, 1996
and December 31, 1995. . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations for the
nine months ended September 30, 1996 and 1995. . . . . . 5
Consolidated Statements of Operations for the three
months ended September 30, 1996 and 1995 . . . . . . . . 6
Consolidated Statements of Partners' Capital for
the periods January 1, 1995 to September 30, 1996. . . . 7
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1996 and 1995 . . . . . . . . 8
Notes to Consolidated Financial Statements . . . . . . . 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . 18
PART II Other Information
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 26
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . 29
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . 29
Item 4. Submissions of Matters to a Vote of Security
Holders. . . . . . . . . . . . . . . . . . . . . . . . . 29
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . 30
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . 30
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Except for the December 31, 1995 Consolidated Balance Sheet, the
following Consolidated Balance Sheet as of September 30, 1996,
Consolidated Statements of Operations for the nine months ended
September 30, 1996 and 1995, Consolidated Statements of Operations for
the three months ended September 30, 1996 and 1995, Consolidated
Statements of Partners' Capital for the periods January 1, 1995 to
September 30, 1996 and Consolidated Statements of Cash Flows for the
nine months ended September 30, 1996 and 1995 for Brauvin High Yield
Fund L.P. II (the "Partnership") are unaudited and have not been
examined by independent public accountants but reflect, in the opinion
of the management, all adjustments necessary to present fairly the
information required. All such adjustments are of a normal recurring
nature.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Partnership's 1995 Annual Report on Form 10-K.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1996 1995
ASSETS
Investment in real estate, at cost:
Land $11,126,124 $11,126,124
Buildings 24,825,040 24,825,040
35,951,164 35,951,164
Less: accumulated depreciation (5,176,951) (4,635,384)
Net investment in real estate 30,774,213 31,315,780
Cash and cash equivalents 2,128,742 1,374,779
Rent receivable 38,352 56,975
Deferred rent receivable 325,649 274,978
Due from General Partners (Note 4) 140,000 150,175
Other assets 29,882 34,321
Total Assets $33,436,838 $33,207,008
LIABILITIES AND PARTNERS' CAPITAL
LIABILITIES:
Accounts payable and accrued
expenses $ 232,977 $ 61,759
Rent received in advance 95,182 58,344
Total Liabilities 328,159 120,103
MINORITY INTEREST IN
BRAUVIN HIGH YIELD VENTURE 32,727 33,746
MINORITY INTEREST IN
BRAUVIN FUNDS JOINT VENTURE 2,456,289 2,472,647
PARTNERS' CAPITAL:
General Partners 319,429 319,429
Limited Partners 30,300,234 30,261,083
Total Partners' Capital 30,619,663 30,580,512
Total Liabilities and
Partners' Capital $33,436,838 $33,207,008
See accompanying notes to consolidated financial statements.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30,
1996 1995
INCOME:
Rental $3,134,566 $3,108,335
Interest 63,922 43,373
Other 2,216 7,530
Total income 3,200,704 3,159,238
EXPENSES:
General and administrative 185,209 142,797
Transaction costs 287,477 --
Valuation fees 90,780 --
Management fees (Note 3) 32,094 31,496
Amortization of other assets 2,197 4,046
Depreciation 541,567 541,566
Total expenses 1,139,324 719,905
Income before minority interests 2,061,380 2,439,333
MINORITY INTEREST'S SHARE OF NET INCOME:
Brauvin High Yield Venture (4,381) (4,296)
Brauvin Funds Joint Venture (218,842) (219,668)
Net income $1,838,157 $2,215,369
Net income allocated to the
Limited Partners $1,838,157 $2,215,369
Net income per Unit outstanding (a) $ 45.58 $ 55.36
(a) Net income per Unit was based on the average Units outstanding
during the period since they were of varying dollar amounts and
percentages based upon the dates Limited Partners were admitted to the
Partnership and additional Units were purchased through the distribution
reinvestment plan (the "Plan").
See accompanying notes to consolidated financial statements.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended September 30,
1996 1995
INCOME:
Rental $1,045,689 $1,025,537
Interest 23,407 15,439
Other 1,828 5,248
Total income 1,070,924 1,046,224
EXPENSES:
General and administrative 63,463 54,276
Transaction costs 273,294 --
Valuation fees 3,880 --
Management fees (Note 3) 10,474 10,650
Amortization of other assets 300 1,881
Depreciation 180,523 174,928
Total expenses 531,934 241,735
Income before minority interests 538,990 804,489
MINORITY INTEREST'S SHARE OF NET INCOME:
Brauvin High Yield Venture (1,482) (1,438)
Brauvin Funds Joint Venture (73,572) (73,727)
Net income $ 463,936 $ 729,324
Net income allocated to the
Limited Partners $ 463,936 $ 729,324
Net income per Unit outstanding (a) $ 11.50 $ 18.22
(a) Net income per Unit was based on the average Units outstanding
during the period since they were of varying dollar amounts and
percentages based upon the dates Limited Partners were admitted to the
Partnership and additional Units were purchased through the Plan.
See accompanying notes to consolidated financial statements.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
For the periods from January 1, 1995 to September 30, 1996
General Limited
Partners Partners* Total
Balance, January 1, 1995 $ 319,429 $30,417,672 $30,737,101
Contributions, net -- 446,338 446,338
Selling commissions and other
offering costs (Note 1) -- (60,173) (60,173)
Net income -- 3,039,738 3,039,738
Cash distributions -- (3,582,492) (3,582,492)
Balance, December 31, 1995 319,429 30,261,083 30,580,512
Contributions, net -- 30,965 30,965
Selling commissions and other
offering costs (Note 1) -- (15,203) (15,203)
Net income -- 1,838,157 1,838,157
Cash distributions -- (1,814,768) (1,814,768)
Balance, September 30, 1996 $ 319,429 $30,300,234 $30,619,663
* Total Units outstanding at September 30, 1996 and December 31, 1995
were 40,347 and 40,316, respectively. Cash distributions to Limited
Partners per Unit were $45.00 and $89.36 for the nine months ended
September 30, 1996 and the year ended December 31, 1995, respectively.
Cash distributions to Limited Partners per Unit are based on the average
Units outstanding during the year since they were of varying dollar
amounts and percentages based upon the dates Limited Partners were
admitted to the Partnership and additional Units were purchased through
the Plan.
See accompanying notes to consolidated financial statements.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine months Ended September 30,
1996 1995
Cash flows from operating activities:
Net income $1,838,157 $2,215,369
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 543,764 545,612
Minority interest's share of income
from Brauvin High Yield Venture 4,381 4,296
Minority interest's share of income
from Brauvin Funds Joint Venture 218,842 219,668
Decrease in rent receivable 18,623 53,486
Increase in deferred rent receivable (50,671) (50,671)
(Increase) decrease in other assets (654) 3,374
Increase (decrease) in accounts payable
and accrued expenses 171,218 (51,913)
Increase (decrease)in rent received
in advance 36,838 (198,473)
Increase in due to affiliates -- 1,260
Net cash provided by operating activities 2,780,498 2,742,008
Cash flows from financing activities:
Sale of Units, net of selling commissions
and other offering costs 18,658 256,652
Cash distributions to Limited Partners (1,814,768) (2,678,128)
Cash distribution to minority interest-
Brauvin High Yield Venture (5,400) (4,650)
Cash distribution to minority interest-
Brauvin Funds Joint Venture (235,200) (208,250)
Decrease in due from affiliates 10,175 4,644
Net cash used in financing activities (2,026,535) (2,629,732)
Net increase in cash and cash equivalents 753,963 112,276
Cash and cash equivalents at
beginning of period 1,374,779 1,106,917
Cash and cash equivalents at end of period $2,128,742 $1,219,193
See accompanying notes to consolidated financial statements.
<PAGE>
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
BRAUVIN HIGH YIELD FUND L.P. II (the "Partnership") is a
Delaware limited partnership organized for the purpose of acquiring
debt-free ownership of existing, free-standing, income-producing
retail, office or industrial real estate properties predominantly
all of which will involve "triple-net" leases. The General
Partners of the Partnership are Brauvin Realty Advisors II, Inc.,
Jerome J. Brault and David M. Strosberg. Brauvin Realty Advisors
II, Inc. is owned primarily by Mr. Brault (beneficially) and Mr.
Cezar M. Froelich. Mr.Cezar M. Froelich resigned as an individual
General Partner effective as of September 17, 1996. Brauvin
Securities, Inc., an affiliate of the General Partners, is the
selling agent of the Partnership.
The Partnership was formed on May 3, 1988 and filed a
Registration Statement on Form S-11 with the Securities and
Exchange Commission which became effective on June 17, 1988. The
minimum of $1,200,000 of limited partnership interests of the
Partnership (the "Units") necessary for the Partnership to commence
operations was achieved on July 26, 1988. The offering was
anticipated to close on June 16, 1989 but was extended until and
closed on September 30, 1989. A total of $38,923,000 of Units were
subscribed for and issued between June 17, 1988 and September 30,
1989, pursuant to the Partnership's public offering. Through
September 30, 1996 and December 31, 1995 the Partnership has sold
$42,982,178 and $42,837,384 of Units, respectively. These totals
include $4,059,178 and $3,914,384 of Units, respectively, purchased
by Limited Partners who utilized their distributions of Operating
Cash Flow to purchase Units through the distribution reinvestment
plan (the "Plan"). Units valued at $2,886,915 and $2,773,086 have
been purchased by the Partnership from Limited Partners liquidating
their investment in the Partnership and have been retired as of
September 30, 1996 and December 31, 1995, respectively. As of
September 30, 1996, the Participants have acquired Units under the
Plan which approximate 9% of the total Units outstanding.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
The Partnership has acquired the land and buildings underlying
14 Ponderosa restaurants, two Taco Bell restaurants, three
Children's World Learning Centers, three Hardee's restaurants,three
Avis Lube Oil Change Centers, one Blockbuster Video store and three
Chi-Chi's restaurants.
Also acquired were 99% and 51% equity interests in two joint
ventures with an affiliated entity, which ventures purchased the
land and buildings underlying six Ponderosa restaurants and a
Scandinavian Health Spa respectively. The Partnership's
acquisition process is now completed except to the extent funds
raised through the Plan are sufficient to purchase additional
properties.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Management's Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Accounting Method
The accompanying financial statements have been prepared using
the accrual method of accounting.
Rental Income
Rental income is recognized on a straight line basis over the
life of the related leases. Differences between rental income
earned and amounts due per the respective lease agreements are
credited or charged, as applicable, to deferred rent receivable.
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Consolidation of Joint Ventures
The Partnership owns a 99% equity interest in a joint venture,
Brauvin High Yield Venture, which owns six Ponderosa restaurants,
and a 51% equity interest in another joint venture, Brauvin Funds
Joint Venture, which owns a Scandinavian Health Spa. The
accompanying financial statements have consolidated 100% of the
assets, liabilities, operations and partners' capital of these
ventures. All significant intercompany accounts have been
eliminated.
Federal Income Taxes
Under the provisions of the Internal Revenue Code, the
Partnership's income and losses are reportable by the partners on
their respective income tax returns. Accordingly, no provision is
made for Federal income taxes in the financial statements.
However, in certain instances, the Partnership has been required
under applicable state law to remit directly to the tax authorities
amounts representing withholding from distributions paid to
partners.
Investment in Real Estate
The operating properties acquired by the Partnership are stated
at cost including acquisition costs, net of an allowance for
impairment. Depreciation expense is computed on a straight-line
basis over approximately 35 years.
Prior to 1995, the Partnership provided an allowance for
impairment to reduce the cost basis of real estate to its estimated
net realizable value when the real estate was judged to have
suffered an impairment in value that is other than temporary. For
purposes of this analysis, the cost basis of real estate included
deferred rent receivable and accumulated depreciation. Net
realizable value is inherently subjective and is based on
management's best estimate of current conditions and assumptions
about expected future conditions. Estimated net realizable value
was calculated based on undiscounted estimated operating cash flows
of the property over an expected holding period, with a sales price
at the end of the holding period calculated by applying an expected
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BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
capitalization rate to the stabilized net operating income of the
property, less associated sales costs.
In 1995 the Partnership adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets" (SFAS 121). In conjunction with the adoption of SFAS 121,
the Partnership performed an analysis of its long-lived assets, and
the Partnership's management determined that there were no events
or changes in circumstances that indicated that the carrying amount
of the assets may not be recoverable at September 30, 1996 and
December 31, 1995. Accordingly, no impairment loss has been
recorded in the accompanying financial statements for the nine
months ended September 30, 1996 and the year ended December 31,
1995.
Cash and Cash Equivalents
Cash and cash equivalents include all highly liquid debt
instruments with an original maturity within three months of
purchase.
Estimated Fair Value of Financial Instruments
Disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of
Financial Accounting Standards No. 107, "Disclosures About Fair
Value of Financial Instruments." The estimated fair value amounts
have been determined by using available market information and
appropriate valuation methodologies. However, considerable
judgement is necessarily required in interpreting market data to
develop estimates of fair value.
The fair value estimates presented herein are based on
information available to management as of September 30, 1996 and
December 31, 1995, but may not necessarily be indicative of the
amounts that the Partnership could realize in a current market
exchange. The use of different assumptions and/or estimation
methodologies may have a material effect on the estimated fair
value amounts. Although management is not aware of any factors
that would significantly affect the estimated fair value amounts,
such amounts have not been comprehensively revalued for purposes
<PAGE>
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
of these financial statements since that date, and current
estimates of fair value may differ significantly from amounts
presented herein.
The carrying amounts of the following items are a reasonable
estimate of fair value: cash and cash equivalents; due from General
Partners; accounts payable and accrued expenses; and rent received
in advance.
Reclassifications
Certain reclassifications have been made to the 1995 financial
statements to conform to classifications adopted in 1996.
(2) PARTNERSHIP AGREEMENT
Distributions
All Operating Cash Flow, as defined in the Partnership Agreement
(the "Agreement"), shall be distributed: (a) first, to the Limited
Partners until the Limited Partners receive an amount equal to
their 10% Current Preferred Return, as such term is defined in the
Agreement; and (b) thereafter, any remaining amounts will be
distributed 97.5% to the Limited Partners and 2.5% to the General
Partners.
The net proceeds of a sale or refinancing of a Partnership
property shall be distributed as follows:
first, to the Limited Partners until the Limited Partners have
received an amount equal to the 10% Cumulative Preferred
Return, as such term is defined in the Agreement;
second, to the Limited Partners until the Limited Partners
have received an amount equal to the amount of their Adjusted
Investment, as such term is defined in the Agreement; and
third, 95% to the Limited Partners and 5% to the General
Partners.
<PAGE>
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Profits and Losses
Net profits and losses from operations of the Partnership
[computed without regard to any allowance for depreciation or cost
recovery deductions under the Internal Revenue Code of 1986, as
amended (the "Code")] for each taxable year of the Partnership
shall be allocated between the Limited Partners and the General
Partners in accordance with the ratio of aggregate distributions
of Operating Cash Flow attributable to such tax year, although if
no distributions are made in any year, net losses (computed without
regard to any allowance for depreciation or cost recovery
deductions under the Code) shall be allocated 99% to the Limited
Partners and 1% to the General Partners. Notwithstanding the
foregoing, all depreciation and cost recovery deductions allowed
under the Code shall be allocated 2.5% to the General Partners and
97.5% to the Taxable Class Limited Partners, as defined in the
Agreement.
The net profit of the Partnership from any sale or other
disposition of a Partnership property shall be allocated (with
ordinary income being allocated first) as follows: (a) first, an
amount equal to the aggregate deficit balances of the Partners'
Capital Accounts, as such term is defined in the Agreement, shall
be allocated to each Partner who or which has a deficit Capital
Account balance in the same ratio as the deficit balance of such
Partner's Capital Account bears to the aggregate of the deficit
balances of all Partners' Capital Accounts; (b) second, to the
Limited Partners until the Limited Partners have been allocated an
amount of profits equal to their 10% Cumulative Preferred Return
as of such date; (c) third, to the Limited Partners until the
Limited Partners have been allocated an amount of profit equal to
the amount of their Adjusted Investment; and (d) thereafter, 95%
to the Limited Partners and 5% to the General Partners. The net
loss of the Partnership from any sale or other disposition of a
Partnership property shall be allocated as follows: (a) first, an
amount equal to the aggregate positive balances in the Partners'
Capital Accounts, to each Partner in the same ratio as the positive
balance in such Partner's Capital Account bears to the aggregate
of all Partners' positive Capital Account balances; and (b)
thereafter, 95% to the Limited Partners and 5% to the General
Partners.
<PAGE>
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
(3) TRANSACTIONS WITH RELATED PARTIES
An affiliate of the General Partners manages the Partnership's
real estate properties for an annual property management fee equal
to up to 1% of gross revenues derived from the properties. The
property management fee is subordinated, annually, to receipt by
the Limited Partners of a 9% non-cumulative, non-compund, return
on their Adjusted Investment.
The General Partners and Mr. Cezar M. Froelich (a former
individual General Partner) combined currently owe the Partnership
approximately $140,000 relating to the Distribution Guaranty
Reserve.
The Partnership pays affiliates of the General Partners selling
commissions of 8-1/2% of the capital contributions received for
Units sold by the affiliates.
An affiliate of one of the shareholders of the Corporate General
Partner provided securities and real estate counsel to the
Partnership.
Fees, commissions and other expenses paid or payable to the
General Partners or its affiliates for the nine months ended
September 30, 1996 and 1995 were as follows:
1996 1995
Selling commissions $12,307 $40,737
Management fees 32,094 31,496
Reimbursable operating expenses 120,271 54,000
Legal fees 3,471 11,543
(4) WORKING CAPITAL RESERVES
The Partnership has made distributions to Limited Partners for
calendar years 1993, 1994, 1995 and the first quarter of 1996 (the
final payment for each year from 1993-1995 is made the following
February 15). As contemplated in the Prospectus, the distributions
prior to full property specification exceeded the amount of
<PAGE>
BRAUVIN HIGH YIELD FUND L.P. II
(a Delaware limited partnership)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Operating Cash Flow, as such term is defined in the Agreement,
available for distribution. The Partnership set aside 1% of the
gross proceeds of its offering in a reserve (the "Distribution
Guaranty Reserve"). The Distribution Guaranty Reserve was
structured so as to enable the Partnership to make quarterly
distributions of Operating Cash Flow equal to at least 9.25% per
annum on Adjusted Investment during the period from the Escrow
Termination Date (February 28, 1989), as such term is defined in
Section H.3 of the Agreement, through the earlier of: (i) the
first anniversary of the Escrow Termination Date
(February 28, 1990); or (ii) the expenditure of 95% of the proceeds
available for investment in properties, which date was July 26,
1989. The General Partners guaranteed payment of any amounts in
excess of the Distribution Guaranty Reserve and were entitled to
receive any amounts of the Distribution Guaranty Reserve not used
to fund distributions.
The Partnership's acquisition process was not completed until
March 1991 due to an unusually high number of properties being
declined during the due diligence process because of the General
Partners' unwillingness to lower the Partnership's investment
standards. As a result, the Partnership had a substantial amount
of cash invested in short-term investments, as opposed to
properties, and during 1990 did not generate sufficient Operating
Cash Flow to fully support the distributions to Limited Partners.
In order to continue to maintain the 9.25% per annum
distribution through December 31, 1990, the General Partners agreed
to continue the Distribution Guaranty up to the net $140,000 of
Distribution Guaranty previously paid to them. At September 30,
1996 and December 31, 1995, a combined $140,000 was due from the
General Partners and Mr. Cezar M. Froelich (a former individual
Genral Partner) related to the Distribution Guaranty.
Furthermore, since at December 31, 1990, the Partnership had not
yet completed its acquisition process and Operating Cash Flow
together with the Distribution Guaranty Reserve was as yet
insufficient to fund distributions, the General Partners committed
to advance an additional $136,000 to maintain the 9.25% per annum
distribution through December 31, 1990 and ensure that
distributions would not be paid out of Capital Contributions, as
defined in the Prospectus. The cumulative deficit produced has
been reduced from $136,000, at December 31, 1990, to $0 at
December 31, 1995, as Operating Cash Flow has exceeded
distributions since December 31, 1990.
(5) SUBSEQUENT EVENTS
Investment in Joint Ventures
On October 31, 1996, the Partnership purchased a 26% interest
in a joint venture with affiliated real estate limited partnerships
(the "Bay County Venture"). The Bay County Venture acquired the
land and building underlying a 6,466 square foot Blockbuster Video
Store located in Callaway, FL from an unaffiliated seller for
approximately $1,015,000 plus closing costs and related fees.
Vote of Limited Partners
On Friday, November 8, 1996 there was a Special Meeting of
Limited Partners of Brauvin High Yield Fund L.P. II. At this
Special Meeting, the Limited Partners holding a majority of the
Units approved the merger of the Partnership with and into Brauvin
Real Estate Funds L.L.C., a Delaware limited liability company (the
"Purchaser"), which approval automatically resulted in the adoption
of an amendment to the Partnership Agreement, to allow the
Partnership to sell or lease property to affiliates. In addition,
at the Special Meeting, Limited Partners holding a majority of the
Units approved the adoption of an amendment to the Partnership
Agreement to allow the majority vote of the Limited Partners to
determine the outcome of the transaction with the Purchaser without
the vote of the General Partners of the Partnership.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Liquidity and Capital Resources
The Partnership commenced an offering to the public on June 17,
1988 of 25,000 Units (subject to increase to 40,000 units). The
offering was anticipated to close on June 16, 1989 but was extended
and closed on September 30, 1989.
The Partnership raised $38,923,000 through its initial offering
and an additional $4,059,178 as of September 30, 1996, through
Units purchased by certain Limited Partners investing their
distributions of Operating Cash Flow in additional Units through
the distribution reinvestment plan (the "Plan"). As of September
30, 1996, Units valued at $2,886,915, have been purchased by the
Partnership from Limited Partners liquidating their original
investment in the Partnership and such units have been retired.
The Partnership has no funds available to purchase additional
property, excluding those raised through the Plan.
The Partnership purchased the land and buildings underlying
seven Ponderosa restaurants in 1988, and owns a 99% equity interest
in an affiliated joint venture formed in 1988 which purchased the
land and buildings underlying six Ponderosa restaurants. In 1989,
the Partnership purchased the land and buildings underlying two
Taco Bell restaurants, formed a 51% equity interest in an
affiliated joint venture which purchased a Scandinavian Health Spa
and purchased the land and buildings underlying seven additional
Ponderosa restaurants. In 1990, the Partnership purchased the land
and buildings underlying a Children's World Learning Center, three
Hardee's restaurants, three Avis Lubes, a Blockbuster Video store
and two Children's World Learning Centers. The Partnership
purchased three Chi-Chi's restaurants in 1991. The Partnership's
acquisition process is now completed with the exception of
acquisitions made with funds raised through the Plan.
On October 31, 1996, the Partnership purchased a 26% interest
in a joint venture with affiliated real estate limited partnerships
(the "Bay County Venture"). The Bay County Venture acquired the
land and building underlying a 6,466 square foot Blockbuster Video
Store located in Callaway, FL from an unaffiliated seller for
approximately $1,015,000 plus closing costs and related fees.
On August 16, 1996 the Partnership's property located in Sweden, New
York had a fire. As a result of this casualty Ponderosa has informed the
Partnership that it intends to terminate its lease obligations at this
property as of December 31, 1996. The Partnership is contesting this
lease termination.
As previously discussed in the December 31, 1995 10-K,
beginning in September 1990, the Partnership did not receive rental
payments from the tenant at the Hardee's Albion, Michigan and St.
Johns, Michigan properties (the "Properties"). During the period
from March 1991 to April 1992, the Partnership operated the
Properties through an affiliated lessee. During that period the
operating expenses and management fees exceeded the revenues
generated from the restaurant by $398,915, which deficit was funded
by the Partnership. The Partnership's receivable from the
affiliated lessee was written off in 1994. The Partnership re-leased
these Properties to Jasaza, Inc., in January 1994, which
terminated its lease at the Properties in April, 1994. In the
third quarter of 1994, the Partnership recorded an allowance for
impairment of $500,000 related to an other than temporary decline
in the value of real estate for the Properties. In the fourth
quarter of 1994 the Partnership executed a lease with a Dairy Queen
franchisee to lease the St. Johns property at a monthly amount
lower than rent from the previous tenant. The Partnership
continues to actively market the Albion property.
In April 1994, the lessee of the Rock Hill, Missouri property
defaulted on its payment obligations and vacated the property. The
Partnership has continued to receive rent payments from the
guarantor, Avis Lube, Inc. Avis Lube, Inc. subleased the property
through March 1996 to an unaffiliated sublessee, Clarkson Investors
II, an auto/oil repair operator. The Partnership has signed a new
lease with the sublessee to operate the property after the initial
lease expired. The lease is for 42 months commencing March 26,
1996 and provides for annual base rent of $55,000. The new lease
rent is lower than the previous rent.
In February 1995, the Chi-Chi's restaurant in Clarksville, TN
closed due to poor sales. During the third quarter of 1995 the
Chi-Chi's restaurants in Charlotte, NC and Richmond, VA were
closed. The corporate obligor continues to make timely and
complete lease payments, per the terms of the lease, while actively
seeking subtenants.
In order to enhance the Partnership's diversity and overall
financial performance, the General Partners have recently agreed
to the following change within the Partnership's Ponderosa
portfolio. Ponderosa Unit #728 in Orchard Park, New York was
"swapped" with a Tony Roma's restaurant in Mesquite, Texas.
Metromedia Steakhouses will remain liable under the current lease
and Tony Roma's will sublease the property. The Partnership will
benefit from an immediate base rent increase as well as future base
rent and percentage rent increases not anticipated from the Orchard
Park property.
The Partnership has made distributions to Limited Partners for
calendar years 1993, 1994, 1995 and the first quarter of 1996 (the
final payment for each year from 1993-1995 being made the following
February 15). As contemplated in the Prospectus, the distributions
prior to full property specification exceeded the amount of
Operating Cash Flow, as such term is defined in the Agreement,
available for distribution. As described in Footnote 8 to the
section of the Prospectus on pages 8 and 9 entitled "Estimated Use
of Proceeds of Offering", the Partnership set aside 1% of the gross
proceeds of the Offering in a reserve (the "Distribution Guaranty
Reserve"). The Distribution Guaranty Reserve was structured so as
to enable the Partnership to make quarterly distributions of
Operating Cash Flow equal to at least 9.25% per annum on Adjusted
Investment during the period from the Escrow Termination Date
(February 28, 1989), as such term is defined in Section H.3 of the
Agreement, through the earlier of: (i) the first anniversary of
the Escrow Termination Date (February 28, 1990); or (ii) the
expenditure of 95% of the proceeds available for investment in
properties, which date was July 26, 1989. The General Partners
guaranteed payment of any amounts in excess of the Distribution
Guaranty Reserve and were entitled to receive any amounts of the
Distribution Guaranty Reserve not used to fund distributions.
The Partnership's acquisition process was not completed until
March 1991 due to an unusually high number of properties being
declined during the due diligence process because of the General
Partners' unwillingness to lower the Partnership's investment
standards. As a result, the Partnership had a substantial amount
of cash invested in short-term investments, as opposed to
properties, and during 1990 did not generate sufficient Operating
Cash Flow to fully support the distributions to Limited Partners.
In order to continue to maintain the 9.25% per annum
distribution through December 31, 1990, the General Partners agreed
to continue the Distribution Guaranty up to the net $140,000 of
Distribution Guaranty previously paid to them. At September 30,
1996, a combined $140,000 was due from the General Partners and Mr.
Cezar M. Froelich (a former individual General Partner) related to
the Distribution Guaranty.
Below is a table summarizing the historical data for
distribution per Unit invested:
Distribution
Date 1996 1995 1994 1993 1992 1991
February 15 $22.3597 $22.3597 $22.3597 $22.3597 $21.7386 $22.9808
May 15 22.3597 22.3597 22.3597 22.3597 21.7386 22.9808
August 15 -- 22.3597 22.3597 22.3597 21.7386 21.7386
November 15 22.3597 26.1121 22.3597 21.7386 21.7386
The Partnership has entered into an agreement and plan of
merger dated as of June 14, 1996 (the "Merger Agreement") with
Brauvin Real Estate Funds L.L.C., a Delaware limited liability
company (the "Purchaser"). Pursuant to the terms of the Merger
Agreement, the Partnership proposes to merge with and into the
Purchaser through a merger (the "Merger") of its limited
partnership interests. In connection with the Merger, the
beneficial owners (the "Limited Partners") of the limited
partnership interests of the Partnership (the "Units") will receive
approximately $779.22 per Unit in cash. Promptly upon consummation
of the Merger, the Partnership will cease to exist and the
Purchaser, as the surviving entity will succeed to all of the
assets and liabilities of the Partnership. The affirmative vote of
the Limited Partners holding a majority of the Units is necessary
to approve the Merger.
The Partnership drafted a proxy statement, which required
prior review and comment by the Securities and Exchange Commission
(the "Commission"), to solicit proxies for use at a special meeting
of the Limited Partners (the "Special Meeting") originally to be
held at the offices of the Partnership on September 24, 1996. As
a result of the various pending legal issues, the Special Meeting
was adjourned to November 8, 1996 at 9:30 a.m. The purpose of the
Special Meeting was to vote upon the Merger and certain other
matters as described herein.
The Special Meeting of Interest Holders of Brauvin High Yield
Fund L.P.II was held on Friday, November 8, 1996 at 9:30 a.m. At
this Special Meeting, the Interest Holders holding a majority of
the Units approved the merger of the Partnership with and into the
Purchaser. At the Special Meeting, Interest Holders holding a
majority of the Units approved the adoption of an amendment to the
Partnership Agreement to allow the majority vote of the Interest
Holders to determine the outcome of the transaction with the
Purchaser without the vote of the General Partners of the
Partnership.
By approving the Merger, the Limited Partners also approved an
amendment of the Restated Limited Partnership Agreement of the
Partnership, as amended (the "Partnership Agreement") allowing the
Partnership to sell or lease property to affiliates (this
amendment, together with the Merger shall be referred to herein as
the "Transaction"). In addition, the Delaware Revised Uniform
Limited Partnership Act (the "Act") provides that a merger must
also be approved by the general partners of a partnership, unless
the limited partnership agreement provides otherwise. The
Partnership Agreement does not address this matter. Neither the Act
nor the Partnership Agreement provide the Limited Partners not
voting in favor of the Transaction with dissenters' appraisal
rights.
The actual redemption price will be based on the fair market
value of the properties of the Partnership (the "Assets") as
determined by an independent appraiser at such time as is specified
in the certificate of merger (the "Effective Time"), plus all
remaining cash of the Partnership (which will not include earnings
after July 31, 1996, which due to the wind up and litigation costs
of the Partnership are expected to be nominal), less the
Partnership's actual costs incurred and accrued through the
Effective Time, including reasonable reserves in connection with:
(i) the proxy solicitation; (ii) the Transaction (as detailed in
the Merger Agreement); and (iii) the winding up of the Partnership,
including preparation of the final audit, tax return and K-1s
(collectively, the "Transaction Costs") and less all other
Partnership obligations.
Cushman & Wakefield Valuation Advisory Services ("Cushman &
Wakefield"), the largest real estate valuation and consulting
organization in the United States, was engaged by the Partnership
to prepare an appraisal of the Assets. Cushman & Wakefield was
subsequently engaged to provide an opinion as to the fairness of
the Transaction to the Limited Partners from a financial point of
view. Cushman & Wakefield has preliminarily determined that the
fair market value of the Assets of the Partnership is $30,183,300,
which is approximately $748.09 per Unit. In addition, Cushman &
Wakefield has finalized and issued its opinion as to the fairness
of the Transaction to the Limited Partners from a financial point
of view.
The General Partners are Jerome J. Brault, the managing
general partner of the Partnership (the "Managing General
Partner"), Brauvin Realty Advisors II, Inc., the corporate general
partner of the Partnership (the "Corporate General Partner") and
David M. Strosberg. Mr. Cezar M. Froelich (a former individual
Genral Partner) gave notice of his intent to resign as a General
Partner of the Partnership on May 23, 1996. Pursuant to the terms
of the Partnership Agreement, Mr. Froelich's resignation became
effective on on September 17, 1996. The General Partners will not
receive any payment in exchange for the redemption of their general
partnership interests nor will they receive any fees from the
Partnership in connection with the Transaction.
The Managing General Partner and his son, James L. Brault, an
executive officer of the Corporate General Partner, will have a
minority ownership interest in the Purchaser. Therefore, the
Braults have an indirect economic interest in consummating the
Transaction that is in conflict with the economic interests of the
Limited Partners. Messrs. Froelich and Strosberg have no
affiliation with the Purchaser.
The Transaction is one of a series of related transactions
whereby the Purchaser seeks to acquire the Assets of the
Partnership and the assets, through purchase or merger, of Brauvin
High Yield Fund L.P., Brauvin Income Plus L.P. III and Brauvin
Corporate Lease Program IV L.P., Delaware limited partnerships
affiliated with the Partnership.
The General Partners have temporarily suspended all
distributions to Limited Partners and liquidations pending
consummation of the Transaction.
Results of Operations - Nine months ended September 30, 1996 and
1995
Results of operations for the Partnership for the nine months
ended September 30, 1996 reflected net income of $1,838,157
compared to net income of $2,215,369 for the nine months ended
September 30, 1995, a decrease of approximately $377,200. The
decrease in net income is a result of an increase in expense as a
result of the Transaction and the Partnership hiring an independent
real estate company to conduct property valuations. The increase
in expenses was partially offset by increases in rental and
interest income.
Total income for the nine months ended September 30, 1996 was
$3,200,704 as compared to $3,159,238 for the period ended September
30, 1995, an increase of approximately $41,500. The increase in
total income is primarily due to the increases in rental and
interest income. Rental income increased as a result of increased
percentage rent earned at certain of the Partnerships properties.
Interest income increased as a result of higher cash balances
during 1996.
Total expenses for the nine months ended September 30, 1996
were $1,139,324 as compared to $719,905 for the period ended
September 30, 1995, an increase of approximately $419,400. The
increase in expenses is primarily the result of an increase in
Transaction costs due to legal and other professional fees paid or
accrued as a result of the Transaction. Total expenses also
increased in 1996 as compared to 1995 as a result of the
Partnership hiring an independent real estate company to conduct
property valuations pursuant to the terms of the Prospectus.
Results of Operations - Three months ended September 30, 1996 and
1995
Results of operations for the Partnership for the three months
ended September 30, 1996 reflected net income of $463,936 compared
to net income of $729,324 for the three months ended September 30,
1995, a decrease of approximately $265,400. The decrease in net
income is a result of an increase in expenses as a result of the
Transaction and the Partnership hiring an independent real estate
company to conduct property valuations. The increases in expenses
was partially offset by an increase in rental income.
Total income for the three months ended September 30, 1996 was
$1,070,924 as compared to $1,046,224 for the period ended September
30, 1995, an increase of approximately $24,700. The increase in
total income is primarily due to the increase in rental income,
which was the result of increased percentage rent earned at certain
of the Partnerships properties.
Total expenses for the three months ended September 30, 1996
were $531,934 as compared to $241,735 for the period ended
September 30, 1995, an increase of approximately $290,200. The
increase in expenses is primarily the result of an increase in
Transaction costs due to legal and other professional fees paid or
accrued as a result of the Transaction. Total expenses also
increased in 1996 as compared to 1995 as a result of the
Partnership hiring an independent real estate company to conduct
property valuations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings.
Two legal actions, as hereinafter described, were
recently filed against certain of the General
Partners of the Partnership and affiliates of such
General Partners, as well as, in one instance,
against the Partnership on a nominal basis. Each of
these actions was brought by limited partners of the
partnership. The Partnership, and/or these certain
General Partners and their affiliates deny all
allegations set forth in the complaints and are
vigorously defending against such claims.
A. The Florida Lawsuit
On September 17, 1996, a lawsuit was filed in the
Circuit Court of the Seventeenth Judicial Circuit in
and for Broward County, Florida, styled Rebecca
Scialpi and Helen Friedlander v. Jerome J. Brault,
Brauvin Realty Advisors, Inc., Brauvin Realty
Advisors II, Inc., Brauvin Realty Advisors III,
Inc., and Brauvin Realty Advisors IV, Inc., James L.
Brault, and Brauvin Real Estate Funds, L.L.C. and
Brauvin High Yield Fund L.P., High Yield Fund II,
L.P., Brauvin Income Plus L.P. III, and Brauvin
Corporate Lease Program IV, L.P., Docket No.
96012807. The Partnership, along with the other
partnerships proposed to be party to a merger or
sale with Brauvin Real Estate Funds, L.L.C., a
Delaware limited liability company (the
"Purchaser"), is named as a "Nominal Defendant" in
a lawsuit. Jerome J. Brault, the Managing General
Partner of the Partnership, and Brauvin Realty
Advisors II, Inc., the Corporate General Partner of
the Partnership, as well as certain corporate
general partners of the other partnerships
affiliated with the Partnership (the "Affiliated
Partnerships"), have been named as Defendants.
James L. Brault, an officer of the Corporate General
Partner and the son of Jerome J. Brault, is also
named as a Defendant.
Plaintiffs filed an amended complaint on October 8,
1996. The amended complaint alleges a purported
class action consisting of claims for breach of
fiduciary duties, fraud, breach of the Partnership
Agreement, and civil racketeering. The amended
complaint seeks injunctive relief, as well as
compensatory and punitive damages, relating to the
proposed transaction with the Purchaser. The
Defendants have answered plaintiffs' amended
complaint, and have denied each of the plaintiffs'
allegations of wrongful conduct.
On October 2, 1996, the plaintiffs in this action
requested that the Circuit Court enjoin the Special
Meetings of the Limited Partners and the proposed
transactions with the Purchaser. This motion was
denied by the Circuit Court on October 8, 1996, and
the Florida appellate court denied plaintiffs'
appeal of the Circuit Court's October 8, 1996
ruling.
B. The Illinois Lawsuit
On September 18, 1996, a class action lawsuit was
filed in the United States District Court for the
Northern District of Illinois, styled M. Barbara
Christman, Joseph Forte, Janet M. Toolson, John
Archbold, and Ben O. Carroll v. Brauvin Realty
Advisors, Inc., Brauvin Realty Advisors II, Inc.,
Brauvin Realty Advisors III, Inc., Brauvin Realty
Advisors IV, Inc., Jerome J. Brault; Brauvin Real
Estate Funds, L.L.C., Docket No. 96C6025. The
Partnership is not named as a Defendant in the
lawsuit. Jerome J. Brault and the Corporate General
Partner of the Partnership, as well as the corporate
general partners of the other Affiliated
Partnerships, are named as Defendants.
The plaintiffs filed an amended complaint on October
8, 1996, which alleges claims for breach of
fiduciary duties, breaches of the Partnership
Agreement, and violation of the Illinois Deceptive
Trade Practices Act, 815 ILCS 505 et seq. The
amended complaint seeks injunctive relief, as well
as compensatory and punitive damages, relating to
the proposed transaction with the Purchaser.
On September 20, 1996, the District Court entered an
order postponing until October 9, 1996 the Special
Meeting of the Limited Partners of the Partnership
and of the other partnerships to vote on the
proposed transactions with the Purchaser, which
meetings had been scheduled for September 24, 1996.
On October 2, 1996, the District Court certified
plaintiffs' proposed class as all of the Limited
Partners of the Partnership and of the Affiliated
Partnerships, and appointed plaintiffs' counsel, The
Mills Firm, as counsel for the class. On October
2, 1996, the District Court also conducted a hearing
on plaintiffs' motion to preliminarily enjoin the
Special Meetings of the Limited Partners and the
proposed transaction with the Purchaser. The
District Court denied plaintiffs' motion for a
preliminary injunction at the conclusion of the
October 2, 1996 hearing.
On September 27, 1996, counsel for plaintiffs, The
Mills Firm, mailed a solicitation to all of the
Limited Partners, requesting that they revoke their
previously-mailed proxies in favor of the proposed
transaction with the Purchaser. On September 30,
1996, Jerome J. Brault and the Corporate General
Partner (collectively, the "Operating General
Partners") moved the District Court to invalidate
revocations of proxies procured by The Mills Firm's
September 27, 1996 letter on the basis that The
Mills Firm's September 27, 1996 letter was
materially misleading in violation of the federal
securities laws and SEC proxy rules.
On October 11, 1996, the Operating General Partners
of the Partnership filed a counterclaim against
plaintiffs and their counsel, The Mills Firm,
alleging that plaintiffs and The Mills Firm violated
the federal securities laws and SEC proxy rules by
sending their September 27, 1996 letter to the
Limited Partners.
On October 10 and 11, 1996, the District Court
conducted an evidentiary hearing on the motion of
the Operating General Partners to invalidate
revocations of proxies procured as a result of The
Mills Firm's September 27, 1996 letter. In that
evidentiary hearing, The Mills Firm admitted that it
violated the SEC proxy rules by sending its
September 27, 1996 letter to the Limited Partners
without filing such letter with the SEC in violation
of SEC requirements. At the conclusion of the
hearing on October 10 and 11, the District Court
found that the Operating General Partners have a
likelihood of succeeding on the merits with respect
to their claim that the September 27, 1996 letter
sent to the Limited Partners by plaintiffs and The
Mills Firm is false or misleading in several
significant respects.
Notwithstanding this finding, the District Court did
not invalidate the revocations of proxies resulting
from The Mills Firm's September 27, 1996 letter
because it did not believe it possessed the
authority to do so under present law. This ruling
has been appealed to the Seventh Circuit Court of
Appeals. The Court of Appeals has granted the
request of the Operating General Partenrs for an
expedited hearing and the Court of Appeals has
scheduled oral arguments for January 1997.
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.
Exhibit 27. Financial Data Schedule
Form 8-K. Item 5. Notification of the partners of
the law suits filed against the Partnership and
certain General Partners of the Partnership
regarding the Transaction. This Form 8-K was dated
September 17, 1996 and filed on September 23, 1996.
<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.
BY: Brauvin Realty Advisors II, Inc.
Corporate General Partner of
Brauvin High Yield Fund L.P. II
BY: /s/ Jerome J. Brault
Jerome J. Brault
Chairman of the Board of Directors,
President and Chief Executive Officer
DATE: November 18, 1996
BY: /s/ B. Allen Aynessazian
B. Allen Aynessazian
Chief Financial Officer and Treasurer
DATE: November 18, 1996
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,128,742
<SECURITIES> 0
<RECEIVABLES> 364,001
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 35,951,164 <F1>
<DEPRECIATION> 5,176,951
<TOTAL-ASSETS> 33,436,838
<CURRENT-LIABILITIES> 0
<BONDS> 2,489,016 <F2>
0
0
<COMMON> 30,619,663 <F3>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 33,436,838
<SALES> 0
<TOTAL-REVENUES> 3,200,704 <F4>
<CGS> 0
<TOTAL-COSTS> 1,139,324 <F5>
<OTHER-EXPENSES> 223,223 <F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,838,157
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<F1> "PP&E" REPRESENTS INVESTMENT IN REAL ESTATE [LAND AND
BUILDING]
<F2> "BONDS" REPRESENTS MINORITY INTEREST IN JOINT VENTURES
<F3> "COMMON" REPRESENTS TOTAL PARTNERS CAPITAL
<F4> "TOTAL REVENUES" REPRESENTS RENTAL, INTEREST, AND OTHER
INCOME
<F5> "TOTAL COSTS" REPRESENTS TOTAL EXPENSES
<F6> "OTHER EXPENSES" REPRESENTS MINORITY INTEREST SHARE OF
NET INCOME
</FN>
</TABLE>
