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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-20129
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Chrisken Growth & Income L.P. II
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(Exact name of small business issuer as Specified in its
certificate of Limited partnership)
Delaware 36-3644609
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
345 North Canal Street, Chicago, Illinois 60606
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(Address of principal executive offices) (Zip Code)
(312) 454-1626
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(Issuer's telephone number)
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(Former name, former address and formal fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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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CHRISKEN GROWTH & INCOME L.P. II
INDEX
<TABLE>
<CAPTION>
PART I Financial Information PAGE
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<S> <C>
Item 1. Financial Statements
Balance Sheet at June 30, 1996 2
Statements of Operations for the
Three Months and Six Months Ended
June 30, 1996 and 1995 3
Statement of Partners' Capital for
the Six Months Ended June 30, 1996 4
Statements of Cash Flows for
the Six Months Ended
June 30, 1996 and 1995 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis
or Plan of Operation 7
PART II. Other Information
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Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submissions of Matters to a Vote of
Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE
</TABLE>
1
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Balance Sheet
June 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $157,793
Restricted cash 57,645
Real estate taxes and other escrows 26,767
Deferred financing fees, net of accumulated amortization of $61,281 20,790
Other 8,080
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271,075
Investment in real estate, at cost:
Land 315,334
Land improvements 372,881
Buildings and improvements 6,460,569
Equipment 399,109
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7,547,893
Accumulated depreciation (1,708,151)
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5,839,742
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Total assets $6,110,817
============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 45,036
Accrued real estate taxes 106,000
Tenants' security deposits 23,623
Mortgage loan payable 3,000,000
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Total liabilities 3,174,659
Partners' capital, 11,529 limited partnership units issued and
outstanding 2,936,158
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Total liabilities and partners' capital $6,110,817
============
</TABLE>
See accompanying notes.
2
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1996 1995 1996 1995
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<S> <C> <C> <C> <C>
REVENUE
Rental $296,208 $283,147 $594,451 $566,835
Interest 1,698 1,802 2,880 3,454
Other 18,321 19,550 35,734 38,325
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316,227 304,499 633,065 608,614
EXPENSES
Property operations 68,793 67,351 127,869 125,354
Depreciation 76,276 75,708 152,552 151,416
General and administrative 52,653 64,402 130,510 151,271
Interest 62,229 62,229 124,458 124,458
Management fees - Affiliate 15,830 15,456 31,430 30,246
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Total expenses 275,781 285,146 566,819 582,745
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Net income $ 40,446 $ 19,353 $ 66,246 $ 25,869
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Net income allocated to general partners $ 4,045 $ 1,935 $ 6,625 $ 2,587
===============================================
Net income allocated to limited partners $ 36,401 $ 17,418 $ 59,621 $ 23,282
===============================================
Net income allocated to limited
partners per limited partnership unit
outstanding $ 3.16 $ 1.51 $ 5.17 $ 2.02
===============================================
Limited partnership units outstanding 11,529 11,529 11,529 11,529
===============================================
</TABLE>
See accompanying notes.
3
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Statement of Partners' Capital (Deficit)
Six months ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
PARTNER CAPITAL (DEFICIT) ACCOUNTS
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GENERAL LIMITED DUE FROM
PARTNERS PARTNERS AFFILIATES TOTAL
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<S> <C> <C> <C> <C>
Balance at January 1, 1996 $(25,414) $3,101,230 $ (47,625) $3,028,191
Distributions (A) - (205,904) - (205,904)
Net income 6,625 59,621 - 66,246
Received from affiliates - - 47,625 47,625
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Balance at June 30, 1996 $(18,789) $2,954,947 $0 $2,936,158
=============================================================
</TABLE>
(A) Summary of 1996 quarterly cash distributions paid per limited partnership
unit:
<TABLE>
<S> <C>
First quarter $8.82
Second quarter 9.04
</TABLE>
See accompanying notes.
4
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $66,246 $25,869
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 152,552 151,416
Amortization of deferred financing fees 8,208 8,208
Net changes in operating assets and liabilities:
Increase in real estate taxes and other escrows (9,366) (5,788)
Decrease in other assets 3,039 9,262
Increase (decrease) in accounts payable and accrued
expenses (12,830) 3,030
Increase (decrease) in tenants' security deposits 576 (5,425)
Increase (decrease) in due to affiliates (26,303) (1,470)
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Net cash provided by operating activities 182,122 185,102
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (3,809) (23,000)
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Cash used in investing activities (3,809) (23,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (205,904) (193,940)
Received from affiliates 47,625 -
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Net cash used in financing activities (158,279) (193,940)
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Net increase (decrease) in cash and cash equivalents 20,034 (31,838)
Cash and cash equivalents, beginning of period 137,759 210,943
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Cash and cash equivalents, end of period $157,793 $179,105
=======================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $116,250 $116,250
=======================
</TABLE>
See accompanying notes.
5
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Notes to Financial Statements
1. INTERIM ACCOUNTING POLICIES
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and 310(b) of Regulation
of S-B. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The financial statements are the representation of the General
Partners and reflect all adjustments which are, in the opinion of the General
Partners, necessary for a fair presentation of the financial position and
results of operations of the Partnership. The General Partners believe that
all such adjustments are normal and recurring. For further information, refer
to the financial statements and notes thereto included in the Partnership's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
2. MORTGAGE LOAN PAYABLE
The Partnership has a first mortgage loan payable of $3,000,000 to an insurance
company, which is collateralized by the Partnership's real estate. The loan is
payable in monthly installments of interest only at a rate of 7.75% per annum.
Principal and unpaid interest are due November 1, 1997. Principal prepayments
are permitted, provided that: (a) the Partnership pay a prepayment penalty of
3% of the outstanding principal amount; (b) notice of prepayment be given to
the lender 90 days prior to remittance; and (c) prepayments be in multiples of
$10,000.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Chrisken Growth & Income L.P. II (the "Partnership") is a Delaware
limited partnership formed in 1989, with Chrisken Income Properties, Inc. II
(Managing General Partner) and Chrisken Limited Partnership II as the General
Partners. The Partnership owns and operates a 144 unit residential rental
complex known as Barrington Estates (the "Property") located in Indianapolis,
Indiana. Pursuant to a public offering (the "Offering") the Partnership sold
11,529 limited partnership units at $500 for each unit. The proceeds of the
Offering were used to acquire the Property.
Liquidity and Capital Resources
At June 30, 1996, the Partnership had cash and cash equivalents of
$157,793 compared to $137,759 at December 31, 1995. The increase in cash and
cash equivalents during the six months ended June 30, 1996 is the result of a
reduction in accounts receivable offset by a reduction in accounts payable.
Restricted cash represents operating and contingency reserves equal to 1% of
the gross proceeds of the Offering ($57,645 as of June 30, 1996 and December
31, 1995) which the General Partners believe is adequate to satisfy cash
requirement needs. Management has not budgeted any significant major repairs
or improvements to the property during 1996.
The General Partners believe that because the Partnership currently
has mortgage indebtedness of only $3,000,000 after substantial renovation of
the Property, the Property could be refinanced or secondary financing could be
obtained if necessary to provide additional funds.
The source of future liquidity and cash distributions to the Partners
is dependent primarily upon the cash generated by the Property. At June 30,
1996 the Property was generating, and the General Partners believe that the
Property will continue to generate, sufficient cash flow from operations to
service existing indebtedness.
Results of Operations
The Property was 99% occupied as of June 30, 1996, 98% as of December
31, 1995, and 98% as of June 30, 1995. Management believes that occupancy at
the Property will be approximately 95 - 98% for the remainder of 1996, as a
result of stabilization in the market. The Partnership had total revenues of
$633,065 for the six months ended June 30, 1996, compared to total revenues of
$608,614 for the six months ended June 30, 1995. Revenues increased in 1996
primarily as a result of a 2.5% increase in apartment rental rates and a
reduction in vacancy loss during the six months ended June 30, 1996 as compared
to the six months ended June 30, 1995. Management believes revenues will
remain relatively constant
7
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provided that occupancy remains stable. The Partnership had total expenses of
$566,819 for the six months ended June 30, 1996, compared to $582,745 for the
six months ended June 30, 1995. Total expenses decreased primarily due to
decreased general and administrative expenses partially offset by marginally
higher property operations, depreciation and management fee expenses. Property
operations are slightly higher in 1996 as compared to 1995 due to increased
grounds maintenance costs caused by a significant late winter snowstorm, higher
painting and decorating costs and higher carpet replacement expenses, partially
offset by reduced rubbish removal, utility costs, and one-time structural
repair expenditures during the six months ended June 30, 1995. Depreciation
expense is slightly higher due to capitalized expenditures during 1995. General
and administrative expenses are lower in 1996 as compared to 1995 due to
reduced marketing, real estate tax, and bad debt expenses, and professional
fees offset by slightly higher office staff and employer related costs.
Marketing expenses are lower during the first six months of 1996 due to the
higher occupancy during 1996 as compared to the same period one year ago. Real
estate tax expense is lower in 1996 due to an overstated estimate as of
December 31, 1995 of 1995 taxes payable in 1996 and a reduction in cash
disbursements for taxes for 1995 payable in 1996 as compared to 1994 taxes
payable in 1995. Bad debt expense is lower during the first six months of 1996
as compared to the same period one year ago due to the recovery of previously
written off receivables in an amount greater than current period losses.
Professional fees, specifically audit and accounting, have been reduced as the
result of a change in accounting firms for the fiscal year ended December 31,
1994. Office staff and employer related costs are higher due to personnel
changes. Management fees increased due to increased revenue (5% of gross
revenue).
For the six months ended June 30, 1996, the Partnership had net income
of $66,246 compared to net income of $25,869 for the six months ended June 30,
1995, due to increased revenue and decreased expenses for the six months ended
June 30, 1996 compared to the same period in 1995 as described more fully
above.
Net cash provided by operating activities for the six months ended
June 30, 1996 was $182,122 compared to net cash provided by operating
activities of $185,102 for the six months ended June 30, 1995. The decrease in
net cash provided by operating activities was attributable primarily to
increases in net income, offset by decreases in accounts payable and accrued
expenses, and an increase in real estate tax and other escrows. The
Partnership paid distributions of $205,904 during the six months ended June 30,
1996, as compared to $193,940 during the six months ended June 30, 1995. The
increase in distributions in 1996 as compared to the same period one year ago
resulted from improved performance in 1996 as compared to 1995. The General
Partners anticipate that distributions to Limited Partners will remain
relatively stable
8
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throughout 1996, provided that revenues and expenditures also remain stable.
"Safe Harbor" statement under the U.S. Private Securities Litigation
Reform Act of 1995: Some statements in this Form 10-Q are forward looking and
actual results may differ materially from those stated. As discussed herein,
among the factors that may affect actual results are changes in rental rates,
occupancy levels in the market place in which Barrington Estates competes
and/or unanticipated changes in expenses or capital expenditures.
9
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PART II
CHRISKEN GROWTH AND INCOME L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Items 1 through 6.b are omitted because of the absence of conditions
under which they are required.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No exhibits are being filed with this Report.
10
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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 thereto duly authorized.
Chrisken Growth & Income L.P. II
--------------------------------
(Registrant)
By: Chrisken Income Properties
Inc., II Managing General
Partner
Date: August 8, 1996 By: /s/John F. Kennedy
----------------------
John F. Kennedy
Director and President
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 215,438
<SECURITIES> 0
<RECEIVABLES> 1,722
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 271,075
<PP&E> 7,547,893
<DEPRECIATION> 1,708,151
<TOTAL-ASSETS> 6,110,817
<CURRENT-LIABILITIES> 174,659
<BONDS> 3,000,000
<COMMON> 0
0
0
<OTHER-SE> 2,936,158
<TOTAL-LIABILITY-AND-EQUITY> 6,110,817
<SALES> 594,451
<TOTAL-REVENUES> 633,065
<CGS> 0
<TOTAL-COSTS> 442,361
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 124,458
<INCOME-PRETAX> 66,246
<INCOME-TAX> 0
<INCOME-CONTINUING> 66,246
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,246
<EPS-PRIMARY> 5.17
<EPS-DILUTED> 5.17
</TABLE>
