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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, 2000
[ ] TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
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
(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. Condensed Financial Statements (UNAUDITED)
Condensed Balance Sheet at June 30, 2000 2
Condensed Statements of Income for the
Three and Six Months Ended
June 30, 2000 and 1999 3
Condensed Statement of Partners' Capital for
the Six Months Ended June 30, 2000 4
Condensed Statements of Cash Flows for
the Six Months Ended
June 30, 2000 and 1999 5
Notes to Condensed 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
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Balance Sheet
June 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 97,897
Restricted cash 57,645
Real estate taxes and other escrows 104,459
Deferred financing fees, net of accumulated amortization of $18,695 78,845
Other 12,741
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351,587
Investment in real estate, at cost:
Land 610,048
Buildings and improvements 4,863,459
Equipment 168,121
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5,641,628
Accumulated depreciation (573,513)
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5,068,115
Total assets $5,419,702
==================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 54,381
Accrued real estate taxes 141,600
Tenants' security deposits 17,103
Mortgage loan payable 4,594,225
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Total liabilities 4,807,309
Partners' capital, 11,513 limited partnership units issued and outstanding 612,393
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Total liabilities and partners' capital $5,419,702
==================
</TABLE>
SEE ACCOMPANYING NOTE.
2
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statements of Income
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUE
Rental $316,406 $315,978 $627,889 $631,862
Interest 1,400 987 3,316 2,474
Other 18,246 19,671 33,217 40,979
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Total revenue 336,052 336,636 664,422 675,315
EXPENSES
Property operations 80,737 100,039 138,829 166,282
Depreciation 68,865 68,865 137,730 137,730
Interest 82,775 58,125 165,759 116,250
General and administrative 67,041 63,415 170,179 148,996
Management fees - Affiliate 16,131 16,999 32,881 33,652
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Total expenses 315,549 307,443 645,378 602,910
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Net income $ 20,503 $ 29,193 $ 19,044 $ 72,405
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Net income allocated to general partners $ 2,050 $ 2,913 $ 1,904 $ 7,240
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Net income allocated to limited partners $ 18,453 $ 26,280 $ 17,140 $ 65,165
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Net income allocated to limited partners per
limited partnership units outstanding $ 1.60 $2.28 $1.49 $5.66
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Limited partnership units outstanding 11,513 11,513 11,513 11,513
===========================================================================
</TABLE>
SEE ACCOMPANYING NOTE.
3
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statement of Partners' Capital
Six months ended June 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL ACCOUNTS
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GENERAL PARTNERS LIMITED PARTNERS TOTAL
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<S> <C> <C> <C>
Balance at January 1, 2000 $44,927 $697,923 $742,850
Distributions (A) - (149,501) (149,501)
Net income 1,904 17,140 19,044
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Balance at June 30, 2000 $46,831 $565,562 $612,393
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(A) Summary of 2000 quarterly cash distributions paid per limited partnership
unit:
First quarter $6.53
Second quarter $6.46
.
SEE ACCOMPANYING NOTE.
</TABLE>
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 19,044 $ 72,405
Adjustments to reconcile net income to net cash flows provided by operating
activities:
Depreciation 137,730 137,730
Amortization 9,754
Net changes in operating assets and liabilities:
Increase in real estate taxes and other escrows (53,948) (45,807)
Increase in other assets (269) (252)
Increase in accounts payable and accrued expenses 53,534 33,314
Decrease in tenants' security deposits (855)
Decrease in due to affiliates (4,713) (3,541)
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Net cash flows provided by operating activities 160,277 193,849
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (40,432) (42,473)
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Cash flows used in investing activities (40,432) (42,473)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments (24,740)
Repurchase of limited partnership units - (5,120)
Distributions to limited partners (149,501) (201,380)
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Cash flows used in financing activities (174,241) (206,500)
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Net increase in cash and cash equivalents (54,396) (55,124)
Cash and cash equivalents, beginning of period 152,293 111,170
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Cash and cash equivalents, end of period $ 97,897 $ 56,046
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Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 156,005 $ 116,250
====================================
</TABLE>
SEE ACCOMPANYING NOTE.
5
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Note to Condensed 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 Chrisken Growth & Income
L.P. II's (the "Partnership") Annual Report on Form 10-KSB for the year ended
December 31, 1999.
10q 6
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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 June 30, 2000, the Partnership had cash and cash equivalents of
$97,897 compared to $152,293 at December 31, 1999. The decrease in cash and cash
equivalents during the six months ended June 30, 2000, is the result of
decreased accounts payable and mortgage principal and increased real estate tax
and insurance escrows, and investment in real estate. Restricted cash represents
operating and contingency reserves equal to approximately 1% of the gross
proceeds of the Offering ($57,645 as of June 30, 2000, and December 31, 1999)
which the General Partners believe is adequate to satisfy cash requirement
needs. Management has budgeted the following major repairs or improvements to
the property to be completed during 2000: seal coat entire property ($9,000),
sprinkler system ($8,500), electrical upgrades for 100 kitchens ($30,000), paint
and repair 21 porches ($8,400), and continued carpet ($37,000) and appliance
replacement ($18,900) as needed due to obsolescence.
The current mortgage indebtedness of $4,594,225, with an interest rate
of 6.77%, matures on August 31, 2004. Under the terms of the loan, the monthly
principal and interest payments are $30,124. In addition to providing current
beneficial financing terms, the General Partners believe the loan should be very
attractive to potential buyers of the Property, as it is assumable at a 1% fee,
subject to lender approval.
The source of future liquidity and cash distributions to the Partners
is dependent primarily upon the cash generated by the Property. At June 30,
2000, the Property was generating, and the General Partners believe that the
Property will continue to generate, sufficient cash flow from operations to
service the existing indebtedness.
RESULTS OF OPERATIONS
The Property was 96.5% occupied as of June 30, 2000, 97% as of December
31, 1999, and 97% as of June 30, 1999. Management believes that occupancy at the
Property will be approximately 95 - 98% for the remainder of 2000. The
Partnership had total revenues of $664,422 for the six months ended June 30,
2000, compared to total revenues of $675,315 for the six months ended June
30, 1999. Revenues decreased in 2000, from 1999 levels, mainly due to increased
employee and model unit expense offsetting slightly higher rental rates, as well
as a 19% decrease in sundry income. Management believes revenues will remain
relatively constant provided that occupancy remains stable. The Partnership had
total expenses of $645,378 for the six months ended June 30, 2000, compared to
$602,910 for the six months ended June 30, 1999. Total expenses increased due to
higher general and administrative and mortgage interest expense, partially
offset by decreased property operation expenses. Mortgage interest expense
increased due to the 1999 mortgage refinancing. In July 1999, the Partnership
refinanced its $3,000,000, 7.75% interest only mortgage with a new $4,635,000
loan with a 6.77% interest rate. Current mortgage indebtedness is discussed
under LIQUIDITY AND CAPITAL RESOURCES. Property operation expenses are lower in
2000, as compared
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to 1999, primarily due to lower grounds maintenance and supplies, water and
sewer, plumbing repairs and supplies, heating, ventilation and air conditioning,
swimming pool, carpet and painting and decorating expenditures, offset by higher
rubbish removal, structural repair, and maintenance costs. Depreciation and
amortization expense is higher in 2000 due to amortization of mortgage loan
fees, for which there is no comparable expense in the first six months of 1999.
General and administrative expenses increased in 2000, as compared to 1999, due
to higher accounting and tax service, marketing, medical insurance,
administrative salaries and payroll administration expense, partially offset by
decreased training, data processing, professional fees, and corporate suite
expenses. Management fees in 2000 are consistent with 1999 management fee
expense.
For the six months ended June 30, 2000, the Partnership had net income
of $19,044 compared to net income of $72,405 for the six months ended June 30,
1999, due to slightly lower revenue, and increased expenses for the six months
ended June 30, 2000, compared to the same period in 1999 as discussed above.
Net cash flows provided by operating activities for the six months
ended June 30, 2000, were $160,277 compared to net cash flows provided by
operating activities of $193,849 for the six months ended June 30, 1999. The
decrease in net cash flows provided by operating activities was attributable
primarily to a decrease in net income before depreciation expense and an
increase in real estate tax and other escrows, offset by a increase in accrued
real estate taxes. The Partnership paid distributions of $149,501 during the
six months ended June 30, 2000, as compared to $201,380 during the six months
ended June 30, 1999. The decrease in distributions in 2000, as compared to the
same period one year ago, is due in part to the reconciliation of distributions
paid in 1999 to distributable proceeds during the period and increased financing
costs as a result of the new mortgage loan. The General Partners anticipate that
the level of additional 2000 quarterly distributions to Limited Partners is
dependant on overall Property performance. Although the property is not
currently marketed for sale, the General Partners will continue to explore any
opportunity deemed advantageous to the Partnership, including the liquidation of
the asset.
Some statements in this Form 10-QSB 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) Exhibits.
Exhibit 27, Financial Data Schedule
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed during the quarter ended
June 30, 2000.
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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 10, 2000 By: /s/ John F. Kennedy
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John F. Kennedy
Director and President
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