<PAGE>
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, 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)
(Former name, former address and formal fiscal year, if changed since last
report)
Check whether the issuer (1) filed all re-ports 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
<S> <C>
Item 1. Financial Statements (UNAUDITED)
Condensed Balance Sheet at March 31, 2000 2
Condensed Statements of Income for the
Three Months Ended March 31,
2000 and 1999 3
Condensed Statement of Partners' Capital for
the Three Months Ended
March 31, 2000 4
Condensed Statements of Cash Flows for
the Three Months Ended
March 31, 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
Item 1. Legal Proceedings 9
Item 2. Changes in Securities and Use of Proceeds 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 L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Balance Sheet
March 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and cash equivalents $ 104,272
Restricted cash 57,645
Real estate taxes and other escrows 77,485
Deferred financing fees, net of accumulated amortization of $13,818 83,722
Other 10,135
-------------------
333,259
Investment in real estate, at cost:
Land 610,048
Buildings and improvements 4,863,459
Equipment 153,295
-------------------
5,626,802
Accumulated depreciation (504,648)
-------------------
Total assets $ 5,455,413
===================
LIABILITIES AND PARTNERS' CAPITAL
Accounts payable $ 50,218
Accrued real estate taxes 114,770
Tenants' security deposits 17,493
Mortgage loan payable 4,606,699
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Total liabilities 4,789,180
Partners' capital, 11,516 limited partnership units issued and outstanding
666,233
-------------------
Total liabilities and partners' capital $ 5,455,413
===================
</TABLE>
SEE ACCOMPANYING NOTES.
2
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statements of Operations
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
------------------------------------
REVENUE
<S> <C> <C>
Rental $ 311,483 $ 315,884
Interest 1,916 1,487
Other 14,971 21,308
------------------------------------
Total revenue 328,370 338,679
EXPENSES
Property operations 58,092 66,243
Depreciation 73,742 68,865
Interest 78,107 58,125
General and administrative 103,137 85,581
Management fees - Affiliate 16,750 16,651
------------------------------------
Total expenses 329,828 295,465
====================================
Net income (loss) $ (1,458) $ 43,214
====================================
Net income (loss) allocated to general partners $ (146) $ 4,321
====================================
Net income (loss) allocated to limited partners $ (1,312) $ 38,893
====================================
Net income (loss) allocated to limited partners per limited
partnership units outstanding $ (.11) $ 3.37
====================================
Limited partnership units outstanding 11,516 11,529
====================================
</TABLE>
SEE ACCOMPANYING NOTES.
3
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statement of Partners' Capital
Three months ended March 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
PARTNERS' CAPITAL ACCOUNTS
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GENERAL LIMITED
PARTNERS PARTNERS TOTAL
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<S> <C> <C> <C>
Balance at January 1, 2000 $44,927 $697,923 $742,850
Distributions (A) - (75,159) (75,159)
Net income (loss) (146) (1,312) (1,458)
----------------------------------------------------------------
Balance at March 31, 2000 $44,781 $621,452 $666,233
================================================================
</TABLE>
(A) Cash distributions paid per limited partnership unit were $6.53.
SEE ACCOMPANYING NOTES.
4
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Condensed Statements of Cash Flows
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
2000 1999
------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (1,458) $ 43,214
Adjustments to reconcile net income (loss) to net cash flows
provided by operating activities:
Depreciation 68,865 68,865
Amortization 4,877 -
Net changes in operating assets and liabilities:
Increase in real estate taxes and other escrows (26,974) (16,648)
Decrease (increase) in other assets 2,337 (4,613)
Increase in accounts payable and accrued expenses 22,541 37,922
Decrease in tenants' security deposits (465) 210
Decrease in due to affiliates (4,713) (3,541)
------------------------------------
Net cash flows provided by operating activities 65,010 125,409
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to investment in real estate (25,606) (10,997)
------------------------------------
Cash flows used in investing activities (25,606) (10,997)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments (12,266) -
Distributions to limited partners (75,159) (101,800)
------------------------------------
Cash flows used in financing activities (87,425) (101,800)
------------------------------------
Net increase in cash and cash equivalents (48,021) 12,612
Cash and cash equivalents, beginning of period 152,293 111,170
------------------------------------
Cash and cash equivalents, end of period $ 104,272 $ 123,782
====================================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 78,107 $ 58,125
====================================
</TABLE>
SEE ACCOMPANYING NOTES.
5
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Chrisken Growth & Income L.P. II
(A DELAWARE LIMITED PARTNERSHIP)
Notes to Condensed Financial Statements
(UNAUDITED)
1. INTERIM ACCOUNTING POLICIES
The accompanying unaudited condensed 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.
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 March 31, 2000, the Partnership had cash and cash equivalents of
$104,272 compared to $152,293 at December 31, 1999. The decrease in cash and
cash equivalents during the three months ended March 31, 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 March
31, 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 $4,606,699, 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 new 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 March 31,
2000, 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, 2000, 97% as of December
31, 1999, and 98% as of March 31, 1999. Management believes that occupancy
at the Property will be approximately 95 - 98% for the remainder of 2000.
The Partnership had total revenues of $328,370 for the three months ended
March 31, 2000, compared to total revenues of $338,679 for the three months
ended March 31, 1999. Revenues decreased in 2000, from 1999 levels, mainly
due to increased vacancy and employee unit expense offsetting slightly higher
rental rates, as well as a 30% decrease in sundry income. Management
believes revenues will remain relatively constant provided that occupancy
remains stable. The Partnership had total expenses of $329,828 for the three
months ended March 31, 2000, compared to $295,465 for the three months ended
March 31, 1999. Total expenses increased due to higher general and
administrative and mortgage interest expense, partially offset by decreased
property operation expenses. Property operation expenses are lower in 2000,
as compared to 1999, primarily due to lower grounds maintenance and supplies,
water and sewer, plumbing repairs and supplies, and painting and decorating
expenditures offset by higher structural repair, and maintenance costs.
Depreciation and amortization expense is higher in 2000 due to the
7
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amortization of mortgage loan fees, for which there is no comparable expense
in the first quarter of 1999. General and administrative expenses increased
in 2000, as compared to 1999, due to higher accounting and tax service,
marketing, medical insurance and administrative expenses and administrative
salaries, partially offset by decreased training, insurance and corporate
suite expenses. Management fees in 2000 are consistent with 1999 management
fee expense.
For the three months ended March 31, 2000, the Partnership had net
loss of $1,458 compared to net income of $43,214 for the three months ended
March 31, 1999, due to slightly lower revenue, and increased expenses for the
three months ended March 31, 2000, compared to the same period in 1999 as
discussed above.
Net cash flows provided by operating activities for the three months
ended March 31, 2000, were $65,010 compared to net cash flows provided by
operating activities of $125,409 for the three months ended March 31, 1999.
The decrease in net cash flows provided by operating activities was
attributable primarily to decreases in net income before depreciation and
amortization expense and increased real estate tax and other escrows, offset
by an increase in accounts payable and accrued expenses. The Partnership
paid distributions of $75,159 during the three months ended March 31, 2000,
as compared to $101,800 during the three months ended March 31, 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.
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.
8
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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
March 31, 2000.
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 5, 2000 By: /s/John F. Kennedy
-------------------
John F. Kennedy
Director and President
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000850625
<NAME> CHRISKEN GROWTH & INCOME LP II
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 161,917
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 333,259
<PP&E> 5,626,802
<DEPRECIATION> 504,648
<TOTAL-ASSETS> 5,455,413
<CURRENT-LIABILITIES> 182,481
<BONDS> 4,606,699
0
0
<COMMON> 0
<OTHER-SE> 666,233
<TOTAL-LIABILITY-AND-EQUITY> 5,455,413
<SALES> 311,483
<TOTAL-REVENUES> 328,370
<CGS> 0
<TOTAL-COSTS> 251,721
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78,107
<INCOME-PRETAX> (1,458)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,458)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,458)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
