FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1995 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: 1-10022
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Delaware 47-0717849
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
Suite 400, 1004 Farnam Street, Omaha, Nebraska 68102
(Address of principal executive offices) (Zip Code)
(402) 444-1630
(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
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
Sept. 30, 1995
(Unaudited) Dec. 31, 1994
--------------- ---------------
<S> <C> <C>
Assets
Cash and temporary cash investments, at cost which
approximates market value $ 759,233 $ 885,027
Investment in mortgage-backed securities (Note 5) 18,177,600 19,741,212
Investment in preferred real estate participations (PREPs),
net of valuation allowance (Note 6) - 37,384
Interest receivable 111,005 119,434
Other assets 68,228 70,588
--------------- ---------------
$ 19,116,066 $ 20,853,645
=============== ===============
Liabilities and Partners' Capital
Liabilities
Accounts payable (Note 7) $ 66,934 $ 71,915
Distribution payable (Note 4) 393,984 421,745
--------------- ---------------
460,918 493,660
--------------- ---------------
Partners' Capital
General Partner 100 100
Beneficial Unit Certificate Holders
($11.46 per BUC in 1995 and $12.09 in 1994) 18,655,048 20,359,885
--------------- ---------------
18,655,148 20,359,985
--------------- ---------------
$ 19,116,066 $ 20,853,645
=============== ===============
</TABLE>
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the For the For the Nine For the Nine
Quarter Ended Quarter Ended Months Ended Months Ended
Sept. 30, 1995 Sept. 30, 1994 Sept. 30, 1995 Sept. 30, 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Income
Mortgage-backed securities income $ 329,035 $ 310,800 $ 1,023,408 $ 893,496
Equity in earnings of property partnerships 55,627 31,953 118,667 95,961
Interest income on temporary cash investments 9,161 8,844 21,617 58,921
Gain on sale of mortgage-backed securities - - 3,023 -
--------------- --------------- --------------- ---------------
393,823 351,597 1,166,715 1,048,378
Expenses
General and administrative expenses (Note 7) 72,444 67,528 214,280 209,246
--------------- --------------- --------------- ---------------
Net income $ 321,379 $ 284,069 $ 952,435 $ 839,132
=============== =============== =============== ===============
Net income allocated to:
General Partner $ 5,925 $ 6,445 $ 18,184 $ 19,537
BUC Holders 315,454 277,624 934,251 819,595
--------------- --------------- --------------- ---------------
$ 321,379 $ 284,069 $ 952,435 $ 839,132
=============== =============== =============== ===============
Net income per BUC $ .1934 $ .1648 $ .5696 $ .4867
=============== =============== =============== ===============
Weighted average number of BUCs outstanding 1,630,854 1,683,904 1,640,154 1,683,904
=============== =============== =============== ===============
The accompanying notes are an integral part of the financial statements.
</TABLE>
<PAGE>
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
STATEMENT OF PARTNERS' CAPITAL
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Beneficial Unit
Certificate Holders
General
Partner # of BUCs Amount Total
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Partners' Capital (excluding net unrealized
holding losses)
Balance at December 31, 1994 $ 100 1,683,904 $ 20,359,885 $ 20,359,985
Net income 18,184 - 934,251 952,435
Cash distributions paid or accrued (Note 4) (18,184) - (1,800,177) (1,818,361)
Purchase of units - (56,550) (669,744) (669,744)
--------------- --------------- --------------- ---------------
100 1,627,354 18,824,215 18,824,315
--------------- --------------- --------------- ---------------
Net unrealized holding losses
Balance at December 31, 1994 - - - -
Net change - - (169,167) (169,167)
--------------- --------------- --------------- ---------------
- - (169,167) (169,167)
--------------- --------------- --------------- ---------------
Balance at September 30, 1995 $ 100 1,627,354 $ 18,655,048 $ 18,655,148
=============== =============== =============== ===============
</TABLE>
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1995 Sept. 30, 1994
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 952,435 $ 839,132
Adjustments to reconcile net income to
net cash provided by operating activities
Equity in earnings of property partnerships (118,667) (95,961)
Gain on sale of mortgage-backed securities (3,023) -
Amortization of discount on mortgage-backed securities (15,380) (19,697)
Decrease in interest receivable 8,429 24,270
Decrease in other assets 2,360 3,525
Decrease in accounts payable (4,981) (6,364)
--------------- ---------------
Net cash provided by operating activities 821,173 744,905
--------------- ---------------
Cash flows from investing activities
Mortgage principal payments received 830,710 986,131
Sale of mortgage-backed securities 582,138 -
Distributions received from PREPs 156,051 192,105
Investment in PREPs - (18,981)
Acquisition of mortgage-backed securities - (1,102,559)
--------------- ---------------
Net cash provided by investing activities 1,568,899 56,696
--------------- ---------------
Cash flows from financing activities
Distributions paid (1,846,122) (1,958,772)
Purchase of units (669,744) -
--------------- ---------------
Net cash used in financing activities (2,515,866) (1,958,772)
--------------- ---------------
Net decrease in cash and temporary cash investments (125,794) (1,157,171)
Cash and temporary cash investments at beginning of period 885,027 1,859,750
--------------- ---------------
Cash and temporary cash investments at end of period $ 759,233 $ 702,579
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(UNAUDITED)
1. Organization
America First PREP Fund 2 Limited Partnership (the Partnership) was formed on
May 28, 1987, under the Delaware Revised Uniform Limited Partnership Act for
the purpose of acquiring a portfolio of federally-insured multifamily
mortgages and other investments including preferred real estate participations
(PREPs). PREPs consist of equity interests which are intended to provide the
Partnership with a participation in the net cash flow and net sale or
refinancing proceeds of the properties collateralizing the mortgage loans.
The Partnership began operations with the first escrow closing on March 25,
1988, and will continue in existence until December 31, 2017, unless
terminated earlier under the provisions of the Partnership Agreement. The
General Partner of the Partnership is America First Capital Associates Limited
Partnership Six (AFCA 6).
2. Summary of Significant Accounting Policies
A) Financial Statement Presentation
The financial statements of the Partnership are prepared without audit on
the accrual basis of accounting in accordance with generally accepted
accounting principles. In the opinion of management, all normal and
recurring adjustments necessary to present fairly the financial position
at September 30, 1995, and results of operations for all periods presented
have been made.
B) Investment in Mortgage-Backed Securities
On January 1, 1994, the Partnership adopted Statement of Financial
Accounting Standard No. 115 "Accounting for Certain Investments in Debt and
Equity Securities" (FAS 115). FAS 115 requires that investment securities
be classified as held-to-maturity, available-for-sale, or trading. Under
FAS 115, investments classified as held-to-maturity are carried at
amortized cost. Investments classified as available-for-sale are reported
at fair value with any unrealized gains or losses excluded from earnings
and reflected as a separate component of partners' capital. Subsequent
increases and decreases in the net unrealized gain/loss on the
available-for-sale securities will be reflected as adjustments to the
carrying value of the portfolio and adjustments to the component of
partners' capital. The Partnership does not have investment securities
classified as trading. FAS 115 had no impact to partners' capital or
earnings prior to June 30, 1995, since all investment securities were
classified as held-to-maturity. As described in Note 5, on June 30, 1995,
the Partnership reclassified certain investment securities from the
held-to-maturity category to the available-for-sale category.
C) Investment in PREPs
The investment in PREPs consists of interests in limited partnerships
which own properties underlying the mortgage-backed securities and are
accounted for using the equity method. The investments have been reduced
to zero and earnings are recorded to the extent of distributions received.
D) Allowance for Losses on Investments in PREPs
The allowance for losses on investments in PREPs is a valuation reserve
which has been established at a level that management feels is adequate to
absorb potential losses on investments in PREPs. The allowance is based
upon management's estimates of discounted future cash flows; however, the
ultimate realized values may vary from current estimates. These estimates
are periodically reviewed and, as adjustments become necessary, they are
reported in the period in which they become known.
E) Income Taxes
No provision has been made for income taxes since Beneficial Unit
Certificate (BUC) Holders are required to report their share of the
Partnership's income for federal and state income tax purposes.
F) Temporary Cash Investments
Temporary cash investments are invested in short-term debt securities
purchased with an original maturity of three months or less.
<PAGE>
G) Net Income Per BUC
Net income per BUC has been calculated based on the weighted average
number of BUCs outstanding during each period presented.
3. Partnership Reserve Account
The Partnership maintains a reserve account which consisted of the following
at September 30, 1995:
<TABLE>
<S> <C>
Cash and temporary cash investments $ 422,643
GNMA Certificates 3,732,860
FNMA Certificates 3,499,917
---------------
Balance at September 30, 1995 $ 7,655,420
===============
The reserve account was established to maintain working capital for the
Partnership and is available to supplement distributions to investors and for
any contingencies related to the ownership of the investments and the
operation of the Partnership. On December 12, 1994, and February 6, 1995,
management announced its intent to utilize a portion of the reserve account to
purchase up to a total of 100,000 BUCs of the Partnership in open-market
transactions. As of September 30, 1995, 56,550 BUCs had been acquired at a
total cost of $669,744.
4. Partnership Income, Expenses and Cash Distributions
The Partnership Agreement contains provisions for distributing the cash
available for distribution and for the allocation of income and expenses for
tax purposes among AFCA 6 and BUC Holders. Cash distributions included in
the financial statements represent the actual cash distributions made during
each period, and the cash distributions accrued at the end of each period.
5. Investment in Mortgage-Backed Securities
The mortgage-backed securities held by the Partnership represent Government
National Mortgage Association (GNMA) Certificates and Federal National
Mortgage Association (FNMA) Certificates. The GNMA Certificates are backed by
first mortgage loans on multifamily housing properties and pools of
single-family properties. The FNMA Certificates are backed by pools of
single-family properties. The GNMA Certificates are debt securities issued by
a private mortgage lender and are guaranteed by GNMA as to the full and timely
payment of principal and interest on the underlying loans. The FNMA
Certificates are debt securities issued by FNMA and are guaranteed as to the
full and timely payment of principal and interest on the underlying loans.
During the quarter ended June 30, 1995, the Partnership sold a portion of the
securities in the held-to-maturity portfolio. The total amortized cost,
realized gain and realized loss for sales from securities classified as
held-to-maturity were $579,115, $3,411 and $388, respectively. In addition,
on June 30, 1995, the Partnership transferred all securities held in the
reserve account from the held-to-maturity classification to the
available-for-sale classification.
At September 30, 1995 the total amortized cost, gross unrealized holding
gains, gross unrealized holding losses, and aggregate fair value for
available-for-sale securities are $7,401,944, $11,027, $180,194, $7,232,777
respectively. The total amortized cost, gross unrealized holding gains, gross
unrealized holding losses, and aggregate fair value for held-to-maturity
securities are $10,944,823, $233,730, $502,560 and $10,675,993
respectively.
<PAGE>
Descriptions of the Partnership's mortgage-backed securities at September 30,
1995, are as follows:
</TABLE>
<TABLE>
<CAPTION>
Number Interest Maturity Carrying
Type of Security and Name Location of Units Rate Date Amount
- - - ------------------------------- ------------------- ---------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Held-to-Maturity
GNMA Certificates:
Ashwood Apartments Tulsa, OK 144 9.25% 07/15/2023 $ 1,485,111
Broadmoor Court Colorado Springs, CO 46 9.25% 10/15/2029 1,544,531
Owings Chase Apartments Pikesville, MD 234 6.75%(1) 12/15/2023 5,583,999
Pools of single-family properties N/A 8.74%(2) 2016 to 2018 2,331,182
--------------
10,944,823
--------------
Available-for-Sale
GNMA Certificates:
Pools of single-family properties N/A 6.03%(2) 2008 3,384,232(3)
Pools of single-family properties N/A 7.58%(2) 2007 to 2009 348,628(3)
FNMA Certificates:
Pools of single-family properties N/A 5.52%(2) 2000 3,499,917(3)
--------------
7,232,777
--------------
Balance at September 30, 1995 $ 18,177,600
==============
</TABLE>
(1) The Partnership restructured the security during the first quarter of 1994
which lowered the interest rate from 9.25%.
(2) Represents yield to the Partnership.
(3) Reserve account asset - see Note 3.
Reconciliation of the carrying amount of the mortgage-backed securities is as
follows:
<TABLE>
<S> <C>
Balance at December 31, 1994 $ 19,741,212
Addition
Amortization of discount on mortgage-backed securities 15,380
Deductions
Mortgage principal payments received (830,710)
Sale of mortgage-backed securities (579,115)
Net unrealized holding losses on available-for-sale securities (169,167)
---------------
Balance at September 30, 1995 $ 18,177,600
===============
</TABLE>
6. Investment in PREPs
The Partnership's PREPs consist of interests in limited partnerships which own
multifamily properties financed by the Partnership. The limited partnership
agreements originally provided for the payment of a base return on the equity
provided to the limited partnerships and for the payment of additional amounts
out of a portion of the net cash flow or net sale or refinancing proceeds of
the properties subject to various priority payments. Certain of the
agreements have been amended to defer payment of the base return.
<PAGE>
Descriptions of the PREPs at September 30, 1995, are as follows:
<TABLE>
<CAPTION>
Carrying
Name Location Partnership Name Amount
- - - ---------------------------- ----------------------- ------------------------------------------ ---------------
<S> <C> <C> <C>
Broadmoor Court Colorado Springs, CO Stazier Associates Colorado Springs, Ltd. $ 141,523
Owings Chase Apartments Pikesville, MD Owings Chase Limited Partnership 200,000
Ashwood Apartments Tulsa, OK 129th Street Limited Partnership -
Laurel Park Apartments Riverdale, GA Gold Key Venture -
---------------
$ 341,523
Less valuation allowance (341,523)
---------------
$ -
===============
</TABLE>
Reconciliation of the carrying amount of the PREPs is as follows:
<TABLE>
<S> <C>
Balance at December 31, 1994 $ 37,384
Addition
Equity in earnings of property partnerships 118,667
Deduction
Distributions received from PREPs (156,051)
--------------
Balance at September 30, 1995 $ -
==============
</TABLE>
The following summarizes the activity in the valuation allowance:
<TABLE>
<S> <C>
Balance at December 31, 1994 $ 670,160
Write-off(1) (328,637)
--------------
Balance at September 30, 1995 $ 341,523
==============
</TABLE>
(1) During the second quarter of 1995, the Partnership withdrew as a limited
partner of the operating partnership which owns the Villages at Moonraker.
Therefore, the valuation allowance which had previously been established for
the full amount of this equity investment was written off.
7. Transactions With Related Parties
Substantially all the Partnership's general and administrative expenses are
paid by AFCA 6 or an affiliate and reimbursed by the Partnership. The amount
of such expenses reimbursed to AFCA 6 during 1995 was $178,891 ($48,242 for
the quarter ended September 30, 1995). The reimbursed expenses are presented
on a cash basis and do not reflect adjustments made at quarter end.
AFCA 6 is entitled to an administrative fee of .35% per annum of the
outstanding principal amounts invested in mortgage-backed securities, PREPs,
and temporary cash investments to be paid by the Partnership to the extent
such amount is not paid by property owners. During 1995, AFCA 6 earned
administrative fees of $39,816 ($13,178 for the quarter ended September 30,
1995). Of this amount, $35,190 ($11,639 for the quarter ended September 30,
1995) was paid by the Partnership and the remainder was paid by property
owners.
The general partner of the partnership which owns Owings Chase Apartments is
principally owned by an affiliate of AFCA 6. Such employee has a nominal
interest in the affiliate. Affiliates of AFCA 6 also own small interests in
the general partner. The general partner has an interest in the property
partnership's profits and losses, and cash flow which is subordinate to the
limited partners.
An affiliate of AFCA 6 has been retained to provide property management
services for Laurel Park Apartments and Owings Chase Apartments. The fees for
services provided represent the lower of (i) costs incurred in providing
management of the property, or (ii) customary fees for such services
determined on a competitive basis and amounted to $56,062 in 1995 ($18,937 for
the quarter ended September 30, 1995).
<PAGE>
Item 2.
AMERICA FIRST PREP FUND 2 LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Liquidity and Capital Resources
The Partnership originally acquired: (i) five mortgage-backed securities
guaranteed as to principal and interest by the Government National Mortgage
Association (GNMA) collateralized by first mortgage loans on multifamily
housing properties located in four states, GNMA Certificates backed by pools
of single-family mortgages (the GNMA Certificates); and (ii) limited
partnership interests (PREPs) in five limited partnerships which own the
multifamily housing properties financed by the GNMA Certificates. The
Partnership has been repaid by GNMA on the mortgage-backed securities
collateralized by the Villages at Moonraker and Laurel Park Apartments.
During the second quarter of 1995, the Partnership withdrew as a limited
partner of the operating partnership which owns the Villages at Moonraker.
Therefore, the Partnership no longer has an equity interest in this property.
The Partnership continues to hold its equity interest in Laurel Park
Apartments. Collectively, the remaining GNMA Certificates and the PREPs are
referred to as the Permanent Investments.
The following table shows the occupancy levels of the properties financed by
the Partnership at September 30, 1995:
<TABLE>
<CAPTION>
Number Percentage
Number of Units of Units
Property Name Location of Units Occupied Occupied
- - - --------------------------------- ------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Ashwood Apartments Tulsa, OK 144 132 92%
Broadmoor Court Colorado Springs, CO 46 46 100%
Laurel Park Apartments Riverdale, GA 387 367 95%
Owings Chase Apartments Pikesville, MD 234 229 98%
---------- ---------- -----------
811 774 95%
========== ========== ===========
</TABLE>
Distributions
Cash distributions paid or accrued per Beneficial Unit Certificate (BUC) were
as follows:
<TABLE>
<CAPTION>
For the Nine For the Nine
Months Ended Months Ended
Sept. 30, 1995 Sept. 30, 1994
--------------- ---------------
<S> <C> <C>
Regular monthly distributions
Income $ .5696 $ .4867
Return of capital .5279 .6619
--------------- ---------------
$ 1.0975 $ 1.1486
=============== ===============
Distributions
Paid out of cash flow (including mortgage principal payments) $ 1.0975 $ 1.1294
Paid out of reserves - .0192
--------------- ---------------
$ 1.0975 $ 1.1486
=============== ===============
</TABLE>
<PAGE>
Regular monthly distributions to investors consist primarily of interest and
principal received on GNMA and Federal National Mortgage Association (FNMA)
Certificates. Additional cash for distributions is received from PREPs and
temporary cash investments. The Partnership may draw on reserves to pay
operating expenses or to supplement cash distributions to BUC Holders. The
Partnership is permitted to replenish its reserves through the sale or
refinancing of assets. During the nine months ended September 30, 1995, the
Partnership added a net amount of $2,168 ($121,382 for the quarter ended
September 30, 1995) to reserves. In addition, the Partnership withdrew
$669,744 from reserves to purchase 56,550 BUCs during the nine months ended
September 30, 1995 ($61,347 to purchase 5,250 BUCs for the quarter ended
September 30, 1995). The total amount held in reserves at September 30, 1995,
was $7,655,420 of which $7,232,777 was invested in GNMA and FNMA
Certificates.
Asset Quality
The Partnership continues to receive the full amount of monthly principal and
interest payments on its GNMA and FNMA Certificates. The GNMA and FNMA
Certificates are fully guaranteed as to principal and interest by GNMA and
FNMA, respectively. The obligations of GNMA are backed by the full faith and
credit of the United States government.
PREPs, however, are not insured or guaranteed. The value of these investments
is a function of the value of the real estate underlying the PREPs. On a
regular basis, management reviews the real estate underlying the PREPs in
order to assess the net realizable value of each property. It is the policy
of the Partnership to provide a valuation reserve, if necessary, for potential
losses on the Partnership's investment in PREPs. Internal property valuations
and reviews performed during the nine months ended September 30, 1995,
indicated that the PREPs recorded on the balance sheet at September 30, 1995,
required no adjustments to their current carrying amounts.
The overall status of the Partnership's other Permanent Investments has
remained relatively constant since June 30, 1995.
Results of Operations
The tables below compares the results of operations for each period shown.
<TABLE>
<CAPTION>
For the For the Increase
Quarter Ended Quarter Ended (Decrease)
Sept. 30, 1995 Sept. 30, 1994 From 1994
--------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage-backed securities income $ 329,035 $ 310,800 $ 18,235
Equity in earnings of property partnerships 55,627 31,953 23,674
Interest income on temporary cash investments 9,161 8,844 317
-------------- --------------- ---------------
393,823 351,597 42,226
General and administrative expenses (72,444) (67,528) 4,916
-------------- --------------- ---------------
Net income $ 321,379 $ 284,069 $ 37,310
============== =============== ===============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Nine For the Nine Increase
Months Ended Months Ended (Decrease)
Sept. 30, 1995 Sept. 30, 1994 From 1994
-------------- --------------- ---------------
<S> <C> <C> <C>
Mortgage-backed securities income $ 1,023,408 $ 893,496 $ 129,912
Equity in earnings of property partnerships 118,667 95,961 22,706
Interest income on temporary cash investments 21,617 58,921 (37,304)
Gain on sale of mortgage-backed securities 3,023 - 3,023
-------------- --------------- ---------------
1,166,715 1,048,378 118,337
General and administrative expenses (214,280) (209,246) 5,034
-------------- --------------- ---------------
Net income $ 952,435 $ 839,132 $ 113,303
============== =============== ===============
</TABLE>
Mortgage-backed securities income increased for the quarter and nine months
ended September 30, 1995, compared to the same periods in 1994 primarily as a
result of an increase of interest received from Owings Chase Apartments due to
a reduction in self-charged interest eliminated in 1995, since the
Partnership's equity in the property has been reduced to zero. Equity in
earnings of property partnerships increased for the quarter and nine months
ended September 30, 1995, compared to the same periods in 1994. This
increase was primarily a result of an increase in equity in earnings from
Broadmoor Court in 1995 which was partially offset by a decrease in equity in
earnings from Owings Chase as previously discussed.
The increase in interest on temporary cash investments for the quarter ended
September 30, 1995, compared to the same period in 1994 was primarily
attributable to the increase in cash reserves as undistributed principal was
placed in reserves during the third quarter 1995. The decrease in interest on
temporary cash investments for the nine months ended September 30, 1995,
compared to the same period in 1994 was primarily attributable to the decrease
in cash reserves as a result of the purchase of GNMA and FNMA Certificates
during 1994 and to the purchase of BUCs during 1995.
General and administrative expenses increased for the quarter and nine
months ended September 30, 1995, compared to the same periods in 1994. These
increases were primarily due to increases in salaries and related expenses and
insurance expense which were partially offset by decreases in printing and
investor servicing expenses.
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
4(a) Agreement of Limited Partnership dated May 25, 1988
(incorporated herein by reference to Form 10-Q dated
March 31, 1988 filed pursuant to Section 13 or 15(d) of
the Securities Act of 1934 by America First PREP Fund 2
Limited Partnership (Commission File No. 33-13407)).
4(b) Form of Certificate of Beneficial Unit Certificate
(incorporated herein by reference to Form 10-Q dated
March 31, 1988 filed pursuant to Section 13 or 15(d) of
the Securities Act of 1934 by America First PREP Fund 2
Limited Partnership (Commission File No. 33-13407)).
(b) Form 8-K
The registrant did not file a report on Form 8-K during the
quarter for which this report is filed.
<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.
Dated: November 13, 1995 AMERICA FIRST PREP FUND 2
LIMITED PARTNERSHIP
By America First Capital
Associates Limited
Partnership Six, General
Partner
By America First Companies L.L.C.,
General Partner
By /s/ Michael Thesing
Michael Thesing
Vice President, Secretary,
Treasurer and Chief Financial
Officer (Vice President and Principal
Financial Officer of Registrant)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 759,233
<SECURITIES> 18,177,600
<RECEIVABLES> 111,005
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 870,238
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 19,116,066
<CURRENT-LIABILITIES> 460,918
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 18,655,148
<TOTAL-LIABILITY-AND-EQUITY> 19,116,066
<SALES> 0
<TOTAL-REVENUES> 1,166,715
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 214,280
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 952,435
<INCOME-TAX> 0
<INCOME-CONTINUING> 952,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 952,435
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
