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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, 1997
[ ] 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 (Unaudited)
Balance Sheet at March 31, 1997 2
Statements of Operations for the
Three Months Ended March 31,
1997 and 1996 3
Statement of Partners' Capital (Deficit) for
the Three Months Ended
March 31, 1997 4
Statements of Cash Flows for
the Three Months Ended
March 31, 1997 and 1996 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 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submissions of Matters to a Vote of
Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURE 10
</TABLE>
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Chrisken Growth & Income Fund L.P. II
(A Delaware Limited Partnership)
Balance Sheet
March 31, 1997
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash and cash equivalents $ 125,868
Restricted cash 57,645
Real estate taxes and other escrows 60,279
Other 11,394
Deferred financing fees, net of accumulated amortization of $73,591 8,480
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263,666
Investment in real estate, at cost:
Land 315,334
Land improvements 372,881
Buildings and improvements 6,461,025
Equipment 411,561
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7,560,801
Accumulated depreciation (1,939,305)
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5,621,496
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Total assets $5,885,162
============
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $41,950
Accrued real estate taxes 127,227
Tenants' security deposits 22,052
Due to affiliates 147
Mortgage loan payable 3,000,000
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Total liabilities 3,191,376
Partners' capital, 11,529 limited partnership units issued and
outstanding 2,693,786
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Total liabilities and partners' capital $5,885,162
============
</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
1997 1996
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<S> <C> <C>
REVENUE
Rental $298,640 $298,243
Interest 921 1,182
Other 16,567 17,413
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Total revenue 316,128 316,838
EXPENSES
Property operations 58,261 59,076
Depreciation 76,742 76,276
Interest 62,229 62,229
General and administrative 75,799 77,857
Management fees - Affiliate 15,887 15,600
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Total expenses 288,918 291,038
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Net income $ 27,210 $ 25,800
=========================
Net income allocated to general partners $ 2,721 $ 2,580
=========================
Net income allocated to limited partners $ 24,489 $ 23,220
=========================
Net income allocated to limited
partners per limited partnership unit
outstanding $ 2.12 $ 2.01
=========================
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 (Deficit)
Three months ended March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
PARTNER CAPITAL (DEFICIT) ACCOUNTS
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GENERAL LIMITED
PARTNERS PARTNERS TOTAL
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<S> <C> <C> <C>
Balance at January 1, 1997 $(13,897) $2,789,445 $2,775,548
Distributions (A) (108,972) (108,972)
Net income 2,721 24,489 27,210
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Balance at March 31, 1997 $(11,176) $2,704,962 $2,693,786
=================================================
</TABLE>
(A) Cash distributions paid per limited partnership unit were $9.45.
See accompanying notes.
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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
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 27,210 $ 25,800
Adjustments to reconcile net income to net cash
flows provided by operating activities:
Depreciation 76,742 76,276
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)
Decrease in accounts receivable - 3,707
(Increase) decrease in other assets (2,569) 2,502
Increase in accounts payable and accrued expenses 19,181 12,474
Increase in tenants' security deposits 360 115
Increase in due to affiliates 147 -
-----------------------
Net cash flows provided by operating activities 94,770 87,159
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (2,349) -
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Cash flows used in investing activities (2,349) -
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions (108,972) (101,708)
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Cash flows used in financing activities (108,972) (101,708)
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Net decrease in cash and cash equivalents (16,551) (14,549)
Cash and cash equivalents, beginning of period 142,419 137,759
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Cash and cash equivalents, end of period $125,868 $123,210
=======================
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
(Unaudited)
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, 1996.
2. MORTGAGE LOAN PAYABLE
The Partnership has a nonrecourse first mortgage loan payable of $3,000,000 to
an unaffiliated 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 on November 1,
1997. Principal prepayments are permitted, provided that: (a) the Partnership
pays 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. The Partnership, in the normal course
of business, expects to obtain an extension on the mortgage loan or to
refinance the mortgage loan with another lender. No provision for any gain or
loss that may result from the outcome of this uncertainty has been reflected in
the accompanying financial statements.
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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, 1997, the Partnership had cash and cash equivalents of
$125,868 compared to $142,419 at December 31, 1996. The decrease in cash and
cash equivalents during the three months ended March 31, 1997 is the result of
an increase in real estate tax and other escrows, additions to investment in
real estate and distributions in excess of net cash provided by operations.
Restricted cash represents operating and contingency reserves equal to
approximately 1% of the gross proceeds of the Offering ($57,645 as of March 31,
1997 and December 31, 1996) 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 1997.
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 current mortgage
indebtedness matures due November 1, 1997. The General Partners are currently
exploring refinancing alternatives and anticipate replacing the current loan
prior to or by November 1, 1997. There can be no assurance that the terms of
such loan will be on terms as favorable as those of the existing mortgage
indebtedness.
The source of future liquidity and cash distributions to the Partners is
dependent primarily upon the cash generated by the Property. At March 31, 1997
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 97% occupied as of March 31, 1997, 97% as of December 31,
1996, and 98% as of March 31, 1996. Management believes that occupancy at the
Property will be approximately 95 - 98% for the remainder of 1997, as a result
of stabilization in the market. The Partnership had total revenues of $316,128
for the three months ended March 31, 1997, compared to total revenues of
$316,838 for the three months ended March 31, 1996. Revenues remained at 1996
levels in 1997 because a 3% increase in apartment rental rates was offset by an
increase in vacancy loss during the three months ended March 31, 1997, as
compared to the three months ended March 31, 1996. Management believes
revenues will remain relatively constant provided that occupancy remains
stable. The Partnership had total expenses of $288,918 for the three months
ended March 31, 1997, compared to $291,038 for the three months ended March 31,
1996. Total expenses decreased primarily due to reduced property operations
and general and administrative expenses partially offset by marginally higher
depreciation and management fee expenses. Property operation expenses are
lower in 1997 as compared to 1996 primarily due to higher grounds maintenance
expense in 1996 as the result of a significant late winter snow storm and
reduced
7
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apartment carpet replacement in 1997. General and administrative expenses
are lower in 1997 as compared to 1996 due to lower advertising, corporate suite
overhead and real estate taxes. Depreciation expense is slightly higher due to
additions to investment in real estate during 1996. Management fees increased
due to increased revenue collected.
For the three months ended March 31, 1997, the Partnership had net income
of $27,210 compared to net income of $25,800 for the three months ended March
31, 1996, as the result of marginally decreased revenue offset by marginally
reduced expenses for the three months ended March 31, 1997 compared to the same
period in 1996 as described above.
Net cash flows provided by operating activities for the three months ended
March 31, 1997 were $94,770 compared to net cash flows provided by operating
activities of $87,159 for the three months ended March 31, 1996. The increase
in net cash flows provided by operating activities was attributable primarily
to increases in net income and accounts payable and accrued expenses, and
partially offset by an increase in other assets. The Partnership paid
distributions of $108,972 during the three months ended March 31, 1997, as
compared to $101,708 during the three months ended March 31, 1996. The
increase in distributions in 1997 as compared to the same period one year ago
resulted from improved performance in 1997 over 1996. The General Partners
anticipate that quarterly distributions to Limited Partners will remain at the
current level throughout 1997, 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.
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PART II
CHRISKEN GROWTH AND INCOME L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Items 1 through 5 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.
9
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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 8, 1997 By: /s/John F. Kennedy
----------------------
John F. Kennedy
Director and President
10
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000850625
<NAME> 0
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 183,513
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 263,666
<PP&E> 7,560,801
<DEPRECIATION> 1,939,305
<TOTAL-ASSETS> 5,885,162
<CURRENT-LIABILITIES> 191,376
<BONDS> 3,000,000
0
0
<COMMON> 0
<OTHER-SE> 2,693,786
<TOTAL-LIABILITY-AND-EQUITY> 5,885,162
<SALES> 298,640
<TOTAL-REVENUES> 316,128
<CGS> 0
<TOTAL-COSTS> 226,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 62,229
<INCOME-PRETAX> 27,210
<INCOME-TAX> 0
<INCOME-CONTINUING> 27,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,210
<EPS-PRIMARY> 2.12
<EPS-DILUTED> 2.12
</TABLE>
