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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 September 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
PART I Financial Information PAGE
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Item 1. Financial Statements
Balance Sheet at September 30, 1996 2
Statements of Operations for the
Three Months and Nine Months Ended
September 30, 1996 and 1995 3
Statement of Partners' Capital for
the Nine Months Ended
September 30, 1996 4
Statements of Cash Flows for
the Nine Months Ended
September 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
1
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Balance Sheet
September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 136,039
Restricted cash 57,645
Real estate taxes and other escrows 57,172
Deferred financing fees, net of accumulated amortization of $65,385 16,686
Other 3,918
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271,460
Investment in real estate, at cost:
Land 315,334
Land improvements 372,881
Buildings and improvements 6,460,569
Equipment 403,441
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7,552,225
Accumulated depreciation (1,784,427)
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5,767,798
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Total assets $ 6,039,258
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LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 43,156
Accrued real estate taxes 141,334
Tenants' security deposits 21,923
Mortgage loan payable 3,000,000
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Total liabilities 3,206,413
Partners' capital, 11,529 limited partnership units issued and
outstanding 2,832,845
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Total liabilities and partners' capital $ 6,039,258
===========
</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 NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
1996 1995 1996 1995
--------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Rental $296,304 $291,822 $890,755 $858,657
Interest 1,832 1,842 4,712 5,296
Other 22,870 19,291 58,604 57,616
--------------------------------------------------
Total revenue 321,006 312,955 954,071 921,569
EXPENSES
Property operations and maintenance 88,262 59,568 216,131 184,922
Depreciation 76,276 75,708 228,828 227,124
General and administrative 77,393 76,430 207,903 227,701
Interest 62,229 62,229 186,687 186,687
Management fees - affiliate 15,963 15,684 47,393 45,930
--------------------------------------------------
Total expenses 320,123 289,619 886,942 872,364
--------------------------------------------------
Net income $ 883 $ 23,336 $ 67,129 $ 49,205
==================================================
Net income allocated to general partners $ 88 $ 2,334 $ 6,713 $ 4,921
==================================================
Net income allocated to limited partners $ 795 $ 21,002 $ 60,416 $ 44,284
==================================================
Net income allocated to limited
partners per limited partnership unit
outstanding $ .07 $ 1.82 $ 5.24 $ 3.84
==================================================
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
Nine months ended September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
PARTNER CAPITAL (DEFICIT) ACCOUNTS
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GENERAL PARTNERS LIMITED PARTNERS DUE FROM 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) (310,100) (310,100)
Net income 6,713 60,416 67,129
Received from affiliates 47,625 47,625
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Balance at September 30, 1996 $(18,701) $2,851,546 $ 0 $2,832,845
===================================================================
</TABLE>
(A) Summary of 1996 quarterly cash distributions paid per limited partnership
unit:
First quarter $8.82
Second quarter 9.04
Third quarter 9.04
See accompanying notes.
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Statements of Cash Flows
(Unaudited)
NINE MONTHS ENDED
SEPTEMBER 30
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 67,129 $ 49,205
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 228,828 227,124
Amortization of deferred financing fees 12,312 12,312
Net changes in operating assets and liabilities:
Increase in real estate taxes and other escrows (39,771) (36,193)
Decrease in other assets 7,201 12,030
Increase in accounts payable and accrued expenses 20,624 24,854
Decrease in tenants' security deposits (1,124) (5,946)
Decrease in due to affiliates (26,303) (1,472)
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Net cash provided by operating activities 268,896 281,914
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (8,141) (36,000)
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Cash used in investing activities (8,141) (36,000)
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners (310,100) (294,542)
Received from affiliates 47,625 -
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Net cash used in financing activities (262,475) (294,542)
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Net decrease in cash and cash equivalents (1,720) (48,628)
Cash and cash equivalents, beginning of period 137,759 210,943
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Cash and cash equivalents, end of period 136,039 $ 162,315
=====================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 174,375 $ 174,375
=====================
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 September 30, 1996, the Partnership had cash and cash equivalents of
$136,039 compared to $137,759 at December 31, 1995. Restricted cash represents
operating and contingency reserves equal to 1% of the gross proceeds of the
Offering ($57,645 as of September 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 September 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 September 30, 1996, 98% as of December
31, 1995, and 94% as of September 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
$954,071 for the nine months ended September 30, 1996, compared to total
revenues of $921,569 for the nine months ended September 30, 1995. Revenues
increased in 1996 primarily as a result of a 2.7% increase in apartment rental
rates and a reduction in vacancy loss during the nine months ended September
30, 1996 as compared to the nine months
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ended September 30, 1995. Management believes revenues will remain relatively
constant provided that occupancy remains stable.
The Partnership had total expenses of $886,942 for the nine months ended
September 30, 1996, compared to $872,364 for the nine months ended September
30, 1995. Total expenses increased primarily due to higher property
operations, depreciation, and management fee expenses offset by lower general
and administrative expenses. Property operations are higher in 1996 as
compared to 1995 due to increased painting and decorating costs, higher carpet
replacement expenses, and higher general maintenance expenses. 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 administrative, real estate tax, and bad debt expenses and professional
fees offset by higher office staff and employer related costs. Administrative
expenses are lower during the first nine months of 1996 due to one-time legal
fees paid during 1995. 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 nine
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 nine months ended September 30, 1996, the Partnership had net
income of $67,129 compared to net income of $49,205 for the nine months ended
September 30, 1995, due to increased revenue partially offset by increased
expenses for the nine months ended September 30, 1996 compared to the same
period in 1995 as described more fully above.
Net cash provided by operating activities for the nine months ended
September 30, 1996 was $268,896 compared to net cash provided by operating
activities of $281,914 for the nine months ended September 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 $310,100 during the nine months ended
September 30, 1996, as compared to $294,542 during the nine months ended
September 30, 1995. The increase in distributions in 1996 as compared to the
same period one year ago resulted from improved
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performance in 1996 as compared to 1995. The General Partners anticipate that
distributions to Limited Partners will remain relatively stable 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: November 12, 1996 By: /s/John F. Kennedy
-------------------------
John F. Kennedy
Director and President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 193,684
<SECURITIES> 0
<RECEIVABLES> 760
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 271,460
<PP&E> 7,552,225
<DEPRECIATION> 1,784,427
<TOTAL-ASSETS> 6,039,258
<CURRENT-LIABILITIES> 206,413
<BONDS> 3,000,000
0
0
<COMMON> 0
<OTHER-SE> 2,832,845
<TOTAL-LIABILITY-AND-EQUITY> 6,039,258
<SALES> 890,755
<TOTAL-REVENUES> 954,071
<CGS> 0
<TOTAL-COSTS> 700,255
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 186,687
<INCOME-PRETAX> 67,129
<INCOME-TAX> 0
<INCOME-CONTINUING> 67,129
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 67,129
<EPS-PRIMARY> 5.24
<EPS-DILUTED> 5.24
</TABLE>
