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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 March 31, 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> <C>
Item 1. Financial Statements
Balance Sheet at March 31, 1996 2
Statements of Operations for the
Three Months Ended March 31,
1996 and 1995 3
Statement of Partners' Capital for
the Three Months Ended
March 31, 1996 4
Statements of Cash Flows for
the Three Months Ended
March 31, 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
March 31, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 123,210
Restricted cash 57,645
Real estate taxes and other escrows 47,806
Accounts receivable 3,707
Prepaid expenses 8,617
Deferred financing fees, net of accumulated amortization of $57,177 24,894
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265,879
Investment in real estate, at cost:
Land 315,334
Land improvements 372,881
Buildings and improvements 6,460,569
Equipment 395,300
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7,544,084
Accumulated depreciation (1,631,875)
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5,912,209
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Total assets $ 6,178,088
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 36,780
Accrued real estate taxes 139,560
Tenants' security deposits 23,162
Due to affiliates 26,303
Mortgage loan payable 3,000,000
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Total liabilities 3,225,805
Partners' capital, 11,529 limited partnership units issued and outstanding 2,952,283
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Total liabilities and partners' capital $ 6,178,088
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</TABLE>
See accompanying notes.
2
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1996 1995
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<S> <C> <C>
REVENUE
Rental $298,243 $283,688
Interest 1,182 1,652
Other 17,413 18,775
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Total revenue 316,838 304,115
EXPENSES
Property operations 59,076 58,003
Depreciation 76,276 75,708
Interest 62,229 62,229
General and administrative 77,857 86,869
Management fees -- Affiliate 15,600 14,790
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Total expenses 291,038 297,599
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Net income $ 25,800 $ 6,516
=========================
Net income allocated to general partners $ 2,580 $ 652
=========================
Net income allocated to limited partners $ 23,220 $ 5,864
=========================
Net income allocated to limited partners per limited partnership
unit outstanding $ 2.01 $ .51
=========================
Limited partnership units outstanding 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
Three months ended March 31, 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 December 31, 1995 $(25,414) $3,101,230 $(47,625) $3,028,191
Distributions (A) -- (101,708) -- (101,708)
Net income 2,580 23,220 -- 25,800
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Balance at March 31, 1996 $(22,834) $3,022,742 $(47,625) $2,952,283
=======================================================
</TABLE>
(A) Cash distributions paid per limited partnership unit were $8.82.
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>
THREE MONTHS ENDED
MARCH 31
1996 1995
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 25,800 $ 6,516
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 76,276 75,708
Amortization of deferred financing fees 4,104 4,104
Net changes in operating assets and liabilities:
Increase in real estate taxes and other escrows (30,405) (30,405)
(Increase) decrease in accounts receivable 3,707 4,314
Decrease in prepaid expenses 2,502 2,305
Increase in accounts payable and accrued expenses 12,474 20,040
Increase (decrease) in tenants' security deposits 115 (3,954)
--------------------------
Net cash provided by operating activities 87,159 78,628
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures - (9,000)
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Cash used in investing activities - (9,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (101,708) (94,444)
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Cash used in financing activities (101,708) (94,444)
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Net decrease in cash and cash equivalents (14,549) (24,816)
Cash and cash equivalents, beginning of period 137,759 210,943
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Cash and cash equivalents, end of period $ 123,210 $186,127
==========================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 58,125 $ 58,125
==========================
</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 Regulations
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. 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. The proceeds
of the Offering were used to acquire the Property.
Liquidity and Capital Resources
At March 31, 1996, the Partnership had cash and cash equivalents of
$123,210 compared to $137,759 at December 31, 1995. The reduction in cash and
cash equivalents during the three months ended March 31, 1996 is the result of
distributions being greater than net cash provided by operating activities.
Restricted cash represents operating and contingency reserves equal to
approximately 1% of the gross proceeds of the Offering ($57,645 as of March 31,
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 March 31,
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 98% occupied as of March 31, 1996, 98% as of December
31, 1995, and 96% as of March 31, 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
$316,838 for the three months ended March 31, 1996, compared to total revenues
of $304,115 for the three months ended March 31, 1995. Revenues increased in
1996 primarily as a result of a 2% increase in apartment rental rates and a
reduction in vacancy loss during the three months ended March 31, 1996 as
compared to the three months ended March 31, 1995. Management believes
revenues will remain relatively constant provided that occupancy remains
stable. The Partnership had total expenses of $291,038 for the three months
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ended March 31, 1996, compared to $297,599 for the three months ended March 31,
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 snow storm and higher
carpet replacement expenses which were capitalized during the quarter ended
March 31, 1995 partially offset by reduced rubbish removal, painting and
decorating costs, and one-time structural repair expenditures during the
quarter ended March 31, 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 bad debt expense and
professional fees offset by slightly higher office staff and real estate tax
expenses. Bad debt expense is lower due to the absence of bad debts in the
first quarter of 1996 are compared to the same period one year ago and the 1996
collection of previously written off receivables. Professional fees,
specifically audit and accounting, have been reduced as the result of the
change in accounting firms for the fiscal year ended December 31, 1994. Office
staff costs are higher due to personnel changes. On an accrual basis, real
estate taxes are estimated to be 4% higher in 1996 than in 1995. Management
fees increased due to increased revenue (5% of gross revenue).
For the three months ended March 31, 1996, the Partnership had net
income of $25,800 compared to a net income of $6,516 for the three months ended
March 31, 1995, due to increased revenue, partially offset by decreased
expenses for the three months ended March 31, 1996 compared to the same period
in 1995 as described above.
Net cash provided by operating activities for the three months ended
March 31, 1996 was $87,159 compared to net cash flow provided by operating
activities of $78,628 for the three months ended March 31, 1995. The increase
in net cash provided by operating activities was attributable primarily to
increases in net income, accounts payable and accrued expenses, offset by an
increase in real estate taxes and other escrows. The Partnership paid
distributions of $101,708 (none of which was return of capital) during the
three months ended March 31, 1996, as compared to $94,444 (approximately
$12,220 of which was return of capital) during the three months ended March 31,
1995. The increase in distributions in 1996 as compared to the same period one
year ago resulted from improved performance in 1996 over 1995 performance. The
General Partners anticipate that distributions to Limited Partners will remain
relatively stable throughout 1996, provided that revenues and expenditures also
remain stable.
8
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"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: May 14, 1996 By: /s/John F. Kennedy
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John F. Kennedy
Director and President
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 180,855
<SECURITIES> 0
<RECEIVABLES> 3,707
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 265,879
<PP&E> 7,544,084
<DEPRECIATION> 1,631,875
<TOTAL-ASSETS> 6,178,088
<CURRENT-LIABILITIES> 225,805
<BONDS> 3,000,000
<COMMON> 0
0
0
<OTHER-SE> 2,952,283
<TOTAL-LIABILITY-AND-EQUITY> 6,178,088
<SALES> 298,243
<TOTAL-REVENUES> 316,838
<CGS> 0
<TOTAL-COSTS> 291,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 25,800
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
