<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended DECEMBER 31, 1999
Commission File Number
0-20610
NATIONAL TAX CREDIT INVESTORS II
A CALIFORNIA LIMITED PARTNERSHIP
I.R.S. Employer Identification No. 93-1017959
------------
9090 WILSHIRE BOULEVARD, SUITE 201, BEVERLY HILLS, CALIFORNIA 90211
Registrant's Telephone Number, Including Area Code (310) 278-2191
Securities Registered Pursuant to Section 12(b) or 12(g) of the Act:
NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed with the Commission by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve months (or 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
<PAGE> 2
PART I.
ITEM 1. BUSINESS:
National Tax Credit Investors II ("NTCI-II" or the "Partnership") is a limited
partnership formed under the laws of the State of California on January 12,
1990. The Partnership was formed to acquire limited partnership interests in
investee limited partnerships ("Local Partnerships") which own multifamily
apartment complexes that are eligible for low-income housing federal income tax
credits (the "Housing Tax Credit"). On April 23, 1990, the Partnership offered
100,000 Units of Limited Partnership Interests ("Units") at $1,000 per Unit
through a public offering managed by PaineWebber Incorporated (the "Selling
Agent").
The general partner of the Partnership is National Partnership Investments Corp.
("NAPICO"), a California corporation (the "General Partner"). The business of
the Partnership is conducted primarily by NAPICO.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The current members of NAPICO's Board of Directors are
Charles H. Boxenbaum, Bruce E. Nelson and Alan I. Casden.
In general, an owner of a low-income housing project is entitled to receive the
Housing Tax Credit in each year of a ten- year period (the "Credit Period"). The
apartment complexes ("Apartment Complex") are subject to a minimum compliance
period of not less than fifteen years (the "Compliance Period"). Tax Credits are
available to the limited partners to reduce their federal income taxes. The
ability of a limited partner to utilize such credits may be restricted by the
passive activity loss limitation and the general business tax credit limitation
rules. NTCI-II has made capital contributions to 37 Local Partnerships. Each of
these Local Partnerships owns an Apartment Complex that is eligible for the
Housing Tax Credit. Several of the Local Partnerships also benefit from
government programs promoting low or moderate income housing.
The Partnership's investments in Local Partnerships are subject to the risks
incident to the management and ownership of multifamily residential real estate.
Neither the Partnership's investments nor the Apartment Complexes owned by the
Local Partnerships will be readily marketable, and there can be no assurance
that the Partnership will be able to dispose of its Local Partnership Interests
or Apartment Complexes at the end of the Compliance Period. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including substantial unemployment, which could adversely
impact vacancy levels, rental payment defaults and operating expenses. This, in
turn, could substantially increase the risk of operating losses for the
Apartment Complexes and the Partnership. The Apartment Complexes are subject to
the risk of loss through foreclosure. In addition, each Local Partnership is
subject to risks relating to environmental hazards which might be uninsurable.
Because the Partnership's ability to control its operations will depend on these
and other factors beyond the control of the General Partner and the local
general partners, there can be no assurance that Partnership operations will be
profitable or that the anticipated Housing Tax Credits will be available to the
limited partners.
The Apartment Complexes owned by the Local Partnerships in which NTCI-II has
invested were developed by the local operating general partners (the "Local
Operating General Partners") who acquired the sites and applied for applicable
mortgages and subsidies, if any. NTCI-II became the principal limited partner in
these Local Partnerships pursuant to arm's-length negotiations with the Local
Operating General Partners. As a limited partner, NTCI-II's liability for
obligations of the Local Partnership is limited to its investment. The Local
Operating General Partner of the Local Partnership retains responsibility for
developing, constructing, maintaining, operating and managing the Project. Under
certain circumstances, an affiliate of NAPICO or NTCI-II may act as the Local
Operating General Partner. An affiliate, National Tax Credit Inc. II ("NTC-II")
is acting either as a special limited partner or non-managing administrative
general partner (the "Administrative General Partner") of each Local
Partnership.
<PAGE> 3
During 1999, the Apartment Complexes in which NTCI-II had invested were
substantially rented.
The following is a schedule of the status as of December 31, 1999, of the
Apartment Complexes owned by Local Partnerships in which NTCI-II is a limited
partner.
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH NTCI-II HAS AN INVESTMENT
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Units Occupied
as a Percentage
of Total Units
No. of Units Available for
Name & Location Units Occupied Occupancy
- --------------- ----- -------- ---------------
<S> <C> <C> <C>
Ashville Equity (Westview)
Ashville, OH 41 34 83%
Columbus Junction Park
Columbus Junction, IA 24 21 88%
Cottages of North St. Paul (Elderly)
North St. Paul, MN 94 93 99%
Cottonwood Park
Colorado Springs, CO 90 84 93%
Countryside
Howell Township, NJ 180 164 91%
East Ridge Apartments
St. Clair, MO 48 37 77%
Edgewood Apartments
Rogers, AR 108 103 95%
Fourth Street
Los Angeles, CA 44 42 95%
Germantown Apartments
Conway, AR 132 131 99%
Great Basin Associates
Reno, NV 28 24 86%
Grimes Park Apartments
Grimes, IA 16 14 88%
Jamestown Terrace
Jamestown, CA 56 53 95%
Jefferson Meadows Apartments
Detroit, MI 83 81 98%
Kentucky River Apartments
Winchester, KY 42 40 95%
Lincoln Grove Apartments
Greensboro, NC 116 110 95%
Meadowlakes Apartments
Searcy, AR 108 106 98%
Michigan Beach Apartments
Chicago, IL 240 214 89%
Nickel River (Wedgewood) Apartments
LaCrosse, WI 105 91 87%
Norwalk Park Apartments
Norwalk, IA 16 16 100%
</TABLE>
<PAGE> 4
SCHEDULE OF PROJECTS OWNED BY LOCAL LIMITED PARTNERSHIPS
IN WHICH NTCI-II HAS AN INVESTMENT (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Units Occupied
as a Percentage
of Total Units
No. of Units Available for
Name & Location Units Occupied Occupancy
- --------------- ----- -------- ---------------
<S> <C> <C> <C>
Oakview Apartments
Spartanburg, SC 106 103 97%
Palm Springs View
Palm Springs, CA 120 118 98%
Pam Apartments
Pampa, TX 96 92 96%
Paramount Apartments
Maple Heights, OH 99 70 71%
Parkwood Landing
Huntsville, AL 204 171 84%
Pensacola Affordable
Pensacola, FL 56 53 95%
Pineview Terrace
Katy, TX 120 112 93%
Quivera
Lenexa, KS 289 269 93%
Rancho Del Mar
Tucson, AZ 312 281 90%
Salem Park Apartments
Conway, AR 144 144 100%
Sheboygan Apartments
Sheboygan, WI 59 46 78%
Sitka III
Sitka, AK 16 11 69%
Soldotna (Northwood Senior) Apartments
Soldotna, AK 23 23 100%
Torres de Plata II
Toa Alto, PR 78 78 100%
Villa Real
Santa Fe, NM 120 112 93%
Virginia Park Meadows
Detroit, MI 83 76 92%
Wade Walton Apartments
Clarksdale, MI 108 79 73%
Westbridge Apartments
W. Columbia, SC 112 106 95%
----- ------
3,716 3,402 91%
===== =====
</TABLE>
<PAGE> 5
ITEM 2. PROPERTIES:
Through its investment in Local Partnerships, NTCI-II holds interests in
Apartment Complexes. See Item 1 and Schedule for information pertaining to these
Apartment Complexes.
ITEM 3. LEGAL PROCEEDINGS:
NTCI-II's General Partner is involved in various lawsuits. In addition, the
Partnership is involved in the following lawsuits arising from transactions in
the ordinary course of business. In the opinion of management and the General
Partner, these claims will not result in any material liability to the
Partnership.
Foreclosure proceedings were commenced against the Paramount local partnership
in November 1998 and a receiver was appointed in May 1999. The local partnership
is exploring various alternatives to satisfy its indebtedness.
The Wade Walton local partnership commenced proceedings under Chapter 11 of the
United States Bankruptcy Code on July 20, 1999.
As of December 31, 1999, NTCI-II's General Partner was a plaintiff or a
defendant in several lawsuits. In addition, the Partnership was involved in the
following lawsuits arising from transactions in the ordinary course of business.
In the opinion of management and the General Partner, these claims will not
result in any material liability to the Partnership.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
Not applicable.
PART II.
ITEM 5. MARKET FOR THE REGISTRANT'S PARTNERSHIP INTERESTS AND RELATED SECURITY
HOLDER MATTERS:
The Limited Partnership Interests are not traded on a public exchange but were
sold through a public offering managed by PaineWebber Incorporated. It is not
anticipated that any active public market will develop for the purchase and sale
of any Limited Partnership Interests. Limited Partnership Interests may not be
transferred but can be assigned only if certain requirements in the Partnership
Agreement are satisfied. At December 31, 1999, there were 3,696 registered
holders of units in NTCI-II. The Partnership was not designed to provide cash
distributions to Limited Partners in circumstances other than refinancing or
disposition of its investments in Local Partnerships. Distributions have not
been made from inception of the Partnership to December 31, 1999.
<PAGE> 6
ITEM 6. SELECTED FINANCIAL DATA:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Interest income $ 49,340 $ 33,049 $ 21,559 $ 25,136 $ 165,254
Operating expenses 1,063,748 1,080,349 1,060,595 1,037,055 1,291,664
Equity in loss of limited
partnerships and
amortization of
acquisition costs (3,198,976) (4,040,526) (4,222,167) (4,746,790) (4,684,182)
Write-off of Local Partnership -- -- -- (1,117,893) --
------------ ------------ ------------ ------------ ------------
Net loss $ (4,213,384) $ (5,087,826) $ (5,261,203) $ (6,876,602) $ (5,810,592)
============ ============ ============ ============ ============
Net loss per limited
limited partnership
interest $ (58) $ (70) $ (72) $ (94) $ (79)
============ ============ ============ ============ ============
Total assets $ 17,812,372 $ 21,915,847 $ 26,193,937 $ 30,691,137 $ 37,053,252
============ ============ ============ ============ ============
Investments
in limited
partnerships $ 16,153,744 $ 21,167,503 $ 25,724,722 $ 30,331,138 $ 36,116,847
============ ============ ============ ============ ============
Capital contributions
payable $ 1,076 $ 356,985 $ 356,985 $ 356,985 $ 356,985
============ ============ ============ ============ ============
</TABLE>
<PAGE> 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS:
CAPITAL RESOURCES
The Partnership raised $72,404,000 from investors by a public offering, the term
of which expired on April 22, 1992, that was used for the acquisition of
investments in Local Partnerships which own the Apartment Complexes. The
Partnership holds limited partnership interests in 37 Local Partnerships.
Normally, the capital contributions to the Local Partnerships are payable in
installments, with each contribution due on a specified date and/or provided
that certain conditions regarding construction operation and financing of the
project have been fulfilled. At December 31, 1999, $1,076 remains outstanding
for one Local Partnership.
It is not expected that any of the Local Partnerships in which the Partnership
invests will generate cash from operations sufficient to provide distributions
to the Limited Partners in any material amount. Such cash from operations, if
any, would first be used to meet operating expenses of the Partnership. The
Partnership's investments will not be readily marketable and may be affected by
adverse general economic conditions which, in turn, could substantially increase
the risk of operating losses for the Apartment Complexes, the Local Partnerships
and the Partnership. These problems may result from a number of factors, many of
which cannot be controlled by the General Partner.
The General Partner has the right to cause distributions received by the
Partnership from the Local Partnerships (that would otherwise be available for
distributions as cash flow) to be dedicated to the increase or replenishment of
reserves at the Partnership level. The reserves will generally be available to
satisfy working capital or operating expense needs of the Partnership (including
payment of partnership management fees) and will also be available to pay any
excess third-party costs or expenses incurred by the Partnership in connection
with the administration of the Partnership, the preparation of reports to the
Limited Partners and other investor servicing obligations of the Partnership. At
the discretion of the General Partner, reserves may be available for
contributions to the Local Partnerships.
The Partnership does not have the ability to assess Limited Partners for
additional capital contributions to provide capital if needed by the Partnership
or Local Partnerships. Accordingly, if circumstances arise that cause the Local
Partnerships to require capital in addition to that contributed by the
Partnership and any equity of the local general partners, the only sources from
which such capital needs will be able to be satisfied (other than the limited
reserves available at the Partnership level) will be (i) third-party debt
financing (which may not be available if, as expected, the Apartment Complexes
owned by the Local Partnerships are already substantially leveraged), (ii) other
equity sources (which could adversely affect the Partnership's interest in
operating cash flow and/or proceeds of sale or refinancing of the Apartment
Complexes which would result in adverse tax consequences to the Limited
Partners), or (iii) the sale or disposition of Apartment Complexes. There can be
no assurance that any of such sources would be readily available in sufficient
proportions to fund the capital requirements of the Local Partnerships. If such
sources are not available, the Local Partnerships would risk foreclosure on
their Apartment Complexes if they were unable to renegotiate the terms of their
first mortgages and any other debt secured by the Apartment Complexes, which
would have significant adverse tax consequences to the Limited Partners.
LIQUIDITY
Each Partnership acquisition is analyzed by the General Partner with respect to
its probable impact upon the Partnership's liquidity position. In this regard,
the General Partner takes into account projected cash flow generated from the
Apartment Complex, the anticipated debt service requirements of the existing
financing and any restructuring or refinancing of such Apartment Complex, and
the division of cash flow in excess of debt service between the Partnership and
the local general partner.
Following an acquisition, adverse business or financial developments could
negatively impact cash flow and the Partnership's liquidity position. The
General Partner may attempt to obtain operating deficit guarantees from certain
local general partners to fund operating deficits for limited periods of time.
See "Investment Objectives and Policies -
<PAGE> 8
Operating Deficit Guarantees" in the Prospectus. In addition, the Local
Partnerships are expected to maintain working capital reserves independent of
those maintained by the Partnership to the extent that (i) the terms of mortgage
debt encumbering the Apartment Complexes or the terms of any government
assistance program so require, or (ii) the Local General Partner determines that
such reserves are necessary or advisable. Although reserves are to be maintained
at both the Partnership and Local Partnership levels, if such reserves and other
available income, if any, are insufficient to cover the Partnership's or any
Local Partnership's operating expenses and liabilities, it may be necessary to
accumulate additional funds from distributions received from Local Partnerships
which would otherwise be available for distribution to the Limited Partners, or
to liquidate the Partnership's investment in one or more Local Partnerships.
Reserves of the Partnership and reserves of the Local Partnerships may be
increased or decreased from time to time by the general partner or the local
general partner, as the case may be, in order to meet anticipated costs and
expenses. The amount of cash flow available for distribution and/or sale or
refinancing proceeds, if any, which is available for distribution to the Limited
Partners may be affected accordingly.
RESULTS OF OPERATIONS
The Partnership was formed to provide various benefits to its Limited Partners
as discussed in Item 1. It is not expected that any of the Local Partnerships in
which the Partnership has invested will generate cash flow sufficient to provide
for distributions to Limited Partners in any material amount. The Partnership
accounts for its investments in the Local Partnerships on the equity method,
thereby adjusting its investment balance by its proportionate share of the
income or loss of the Local Partnerships.
In general, in order to avoid recapture of Housing Tax Credits, the Partnership
does not expect that it will dispose of its Local Partnership Interests or
approve the sale by a Local Partnership of any Apartment Complex prior to the
end of the applicable 15-year Compliance Period. Because of (i) the nature of
the Apartment Complexes, (ii) the difficulty of predicting the resale market for
low-income housing 15 or more years in the future, and (iii) the inability of
the Partnership to directly cause the sale of Apartment Complexes by local
general partners, but generally only to require such local general partners to
use their respective best efforts to find a purchaser for the Apartment
Complexes, it is not possible at this time to predict whether the liquidation of
substantially all of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the partnership agreement will be able to
be accomplished promptly at the end of the 15-year period. If a Local
Partnership is unable to sell an Apartment Complex, it is anticipated that the
local general partner will either continue to operate such Apartment Complex or
take such other actions as the local general partner believes to be in the best
interest of the Local Partnership. In addition, circumstances beyond the control
of the General Partner may occur during the Compliance Period which would
require the Partnership to approve the disposition of an Apartment Complex prior
to the end of the Compliance Period.
Except for interim investments in highly liquid debt investments, the
Partnership's investments are entirely interests in other Local Partnerships
owning Apartment Complexes. Funds temporarily not required for such investments
in projects are invested in these highly liquid debt investments earning
interest income as reflected in the statements of operations. These interim
investments can be easily converted to cash to meet obligations as they arise.
The Partnership, as a Limited Partner in the Local Partnerships in which it has
invested, is subject to the risks incident to the construction, management, and
ownership of improved real estate. The Partnership investments are also subject
to adverse general economic conditions, and accordingly, the status of the
national economy, including substantial unemployment and concurrent inflation,
could increase vacancy levels, rental payment defaults, and operating expenses,
which in turn, could substantially increase the risk of operating losses for the
Apartment Complexes.
The Partnership accounts for its investments in the local limited partnerships
on the equity method, thereby adjusting its investment balance by its
proportionate share of the income or loss of the Local Partnerships. Equity in
losses of limited partnerships is recognized in the financial statements until
the limited partnership investment account is reduced to a zero balance. Losses
incurred after the limited partnership investment account is reduced to zero are
not recognized. Limited partners are not liable for losses beyond their
contributed capital. The equity in loss of limited partnerships has
<PAGE> 9
been decreasing primarily as a result of the Partnership's investments in
certain local limited partnerships being reduced to zero during the three year
period ended December 31, 1999, after which point losses are not recognized. The
cumulative amount of unrecognized equity in losses of unconsolidated limited
partnerships is approximately $6,004,000 as of December 31, 1999.
Distributions received from limited partnerships are recognized as return of
capital until the investment balance has been reduced to zero or to a negative
amount equal to future capital contributions required. Subsequent distributions
received are recognized as income.
Operating expenses consist primarily of recurring general and administrative
expenses and professional fees for services rendered to the Partnership. In
addition, an annual partnership management fee in an amount equal to 0.5% of
invested assets is payable to the General Partner and Special Limited Partner.
The management fee represents the annual recurring fee which will be paid to the
General Partner for its continuing management of Partnership affairs.
The Michigan Beach property, a 240-unit apartment complex located in Chicago,
Illinois, has been operating at a substantial deficit since 1996. The deficit
has been attributable to a soft local rental market, high leverage and deferred
maintenance. In November 1996, the local partnership ceased making payments on
its first mortgage, and has commenced negotiations with the lender and the U.S.
Department of Housing and Urban Development, who insures the loan, in order to
cure the default. During 1998, the loan was restructured through a Partial
Payment of Claim ("PPC") with HUD. As a result, the first mortgage balance was
reduced from approximately $5.25 million to $2.84 million. The interest rate was
reduced from 10.125% to 7.625%. The PPC also resulted in a new second mortgage
of approximately $3.56 million payable only from "surplus cash" or proceeds from
sale of the property. The PPC cured the aforementioned default. However, as a
result of the default and the legal proceedings discussed in Item 3, the
carrying value of the investment of $1,117,893 was written off in 1996.
Foreclosure proceedings were commenced against the Paramount local partnership
in November 1998 and a receiver was appointed in May 1999. A decree of
foreclosure was entered in January 2000, although no foreclosure sale has been
set. The local partnership is exploring various alternatives to satisfy its
indebtedness. The Partnership has no investment balance related to this local
partnership.
Due to operating deficits, the Wade Walton local partnership which owns a
property in Clarksdale, Mississippi commenced a bankruptcy case in order to
reorganize under Chapter 11 of the United States Bankruptcy Code. The local
partnership has filed a reorganization plan which proposes to pay all creditors
in full. The Partnership has no investment balance related to this local
partnership.
The Partnership has received notification form the Internal Revenue Service
("IRS") in April, 1998, that the low income housing tax credits generated during
1992 and 1993 by the Wedgewood Commons local partnership were subject to
recapture due to the local partnership's alleged failure to properly comply with
federal tax credit guidelines. The Partnership has filed an administrative
appeal of the IRS notification. As of the closed of the reporting period,
however, the IRS has indicated that it has closed the audit and will not pursue
adjustments to the low income housing tax credits taken for the 1993 tax year.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE> 10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The Financial Statements and Supplementary Data are listed under Item 14.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE:
Not applicable.
<PAGE> 11
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
FINANCIAL STATEMENTS,
FINANCIAL STATEMENT SCHEDULES
AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1999
<PAGE> 12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
National Tax Credit Investors II
(A California limited partnership)
We have audited the accompanying balance sheets of National Tax Credit Investors
II (a California limited partnership) as of December 31, 1999 and 1998, and the
related statements of operations, partners' equity (deficiency) and cash flows
for each of the three years in the period ended December 31, 1999. Our audits
also included the financial statement schedules listed in the index in item 14.
These financial statements and financial statement schedules are the
responsibility of the management of the Partnership. Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits. We did not audit the financial statements of
certain limited partnerships, the investments in which are reflected in the
accompanying financial statements using the equity method of accounting. The
investments in these limited partnerships represent 23 percent and 32 percent of
total assets as of December 31, 1999 and 1998, respectively, and the equity in
loss of these limited partnerships represents 40 percent, 42 percent and 27
percent of the total net loss of the Partnership for the years ended December
31, 1999, 1998 and 1997, respectively, and represent a substantial portion of
the investee information in Note 2 and the financial statement schedules. The
financial statements of these investee limited partnerships were audited by
other auditors. Their reports have been furnished to us and our opinion, insofar
as it relates to the amounts included for those limited partnerships, is based
solely on the reports of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the reports of other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of National Tax Credit Investors II as of December 31,
1999 and 1998, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles. Also, in our opinion, based on our
audits and the reports of other auditors, such financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Los Angeles, California
March 31, 2000
<PAGE> 13
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
BALANCE SHEETS
DECEMBER 31, 1999 AND 1998
ASSETS
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
INVESTMENTS IN LIMITED PARTNERSHIPS
(Notes 1 and 2) $16,153,744 $21,167,503
CASH AND CASH EQUIVALENTS (Note 1) 1,296,513 515,522
OTHER ASSETS 120,479 --
RESTRICTED CASH (Note 3) 241,636 232,822
----------- -----------
TOTAL ASSETS $17,812,372 $21,915,847
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
LIABILITIES:
Accrued fees due to partners (Notes 5 and 8) $ 3,296,209 $ 2,831,597
Capital contributions payable (Note 4) 1,076 356,985
Accounts payable and accrued expenses 113,878 112,672
----------- -----------
3,411,163 3,301,254
----------- -----------
CONTINGENCIES (Note 7)
PARTNERS' EQUITY 14,401,209 18,614,593
----------- -----------
TOTAL LIABILITIES AND PARTNERS' EQUITY $17,812,372 $21,915,847
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 14
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME $ 49,340 $ 33,049 $ 21,559
----------- ----------- -----------
OPERATING EXPENSES:
Management fees - partners (Note 5) 764,612 764,612 764,612
General and administrative (Note 5) 99,723 94,641 136,311
Legal and accounting 199,413 221,096 159,672
----------- ----------- -----------
Total operating expenses 1,063,748 1,080,349 1,060,595
----------- ----------- -----------
LOSS FROM PARTNERSHIP OPERATIONS (1,014,408) (1,047,300) (1,039,036)
EQUITY IN LOSS OF LIMITED
PARTNERSHIPS AND AMORTIZATION
OF ACQUISITION COSTS (Note 2) (3,198,976) (4,040,526) (4,222,167)
----------- ----------- -----------
NET LOSS $(4,213,384) $(5,087,826) $(5,261,203)
=========== =========== ===========
NET LOSS PER LIMITED
PARTNERSHIP INTEREST (Note 1) $ (58) $ (70) $ (72)
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 15
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF PARTNERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
------------ ------------ ------------
<S> <C> <C> <C>
PARTNERS' EQUITY (DEFICIENCY),
January 1, 1997 $ (339,288) $ 29,302,910 $ 28,963,622
Net loss for 1997 (52,612) (5,208,591) (5,261,203)
------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1997 (391,900) 24,094,319 23,702,419
Net loss for 1998 (50,878) (5,036,948) (5,087,826)
------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1998 (442,778) 19,057,371 18,614,593
Net loss for 1999 (42,134) (4,171,250) (4,213,384)
------------ ------------ ------------
PARTNERS' EQUITY (DEFICIENCY),
December 31, 1999 $ (484,912) $ 14,886,121 $ 14,401,209
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 16
NATIONAL TAX CREDIT INVESTORS II
(A CALIFORNIA LIMITED PARTNERSHIP)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(4,213,384) $(5,087,826) $(5,261,203)
Adjustments to reconcile net loss to net cash
used in operating activities:
Equity in loss of limited partnerships
and amortization of acquisition costs 3,198,976 4,040,526 4,222,167
(Increase) decrease in other assets (120,479) 30,269 (30,269)
Increase (decrease) in:
Accounts payable and accrued expenses 1,206 45,124 (607)
Accrued fees due to partners 464,612 764,612 764,610
----------- ----------- -----------
Net cash used in operating activities (669,069) (207,295) (305,302)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments in limited partnerships:
Capital recoveries (contributions) 199,590 (669,677) 3,937
Decrease in capital contributions payable (355,909) -- --
Distributions recognized as a return of capital 1,615,193 1,186,370 380,312
Increase in restricted cash (8,814) (10,815) (9,878)
----------- ----------- -----------
Net cash provided by investing activities 1,450,060 505,878 374,371
----------- ----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 780,991 298,583 69,069
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 515,522 216,939 147,870
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 1,296,513 $ 515,522 $ 216,939
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 17
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
National Tax Credit Investors II (the Partnership) was formed under the
California Revised Limited Partnership Act and organized on January 12,
1990. The Partnership was formed to invest primarily in other limited
partnerships which own and operate multifamily housing complexes that
are eligible for low income housing tax credits. The general partner of
the Partnership (the "General Partner") is National Partnership
Investments Corp., a California corporation ("NAPICO"). The special
limited partner of the Partnership (the "Special Limited Partner") is
PaineWebber TC Partners L.P., a Virginia Limited Partnership.
The Partnership offered for sale up to 100,000 units of limited
partnership interests ("Units") at $1,000 per unit (including 50,000
units subject to the selling agent's option). The term of the offering
expired on April 22, 1992, at which date a total of 72,404 units had
been sold amounting to $72,404,000 in capital contributions. Offering
expenses of $9,412,868 were incurred in connection with the sale of such
limited partner interests.
The General Partner has a 1 percent interest in operating profits and
losses of the Partnership. The limited partners will be allocated the
remaining 99 percent interest in proportion to their respective
investments.
The Partnership shall continue in full force and effect until December
31, 2030, unless terminated earlier pursuant to the partnership
agreement or law.
Upon total or partial liquidation of the Partnership or the disposition
or partial disposition of a project or project interest and distribution
of the proceeds, the General Partner will be entitled to a property
disposition fee as mentioned in the partnership agreement. The limited
partners will have a priority item equal to their invested capital plus
6 percent priority return as defined in the partnership agreement. This
property disposition fee may accrue but shall not be paid until the
limited partners have received distributions equal to 100 percent of
their capital contributions plus the 6 percent priority return.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
<PAGE> 18
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Method of Accounting for Investment in Limited Partnerships
The investments in limited partnerships are accounted for on the equity
method. Acquisition, selection and other costs related to the
acquisition of the projects acquired are capitalized as part of the
investment accounts and are being amortized on a straight line basis
over the estimated lives of the underlying assets, which is generally 30
years.
Net Loss Per Limited Partnership Interest
Net loss per limited partnership interest was computed by dividing the
limited partners' share of net loss by the number of limited partnership
interests outstanding during the year. The number of limited partner
interests was 72,404 for all years presented.
Cash and Cash Equivalents
The Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
Impairment of Long-Lived Assets
The Partnership reviews long-lived assets to determine if there has been
any permanent impairment whenever events or changes in circumstances
indicate that the carrying amount of the asset may not be recoverable.
If the sum of the expected future cash flows is less than the carrying
amount of the assets, the Partnership recognizes an impairment loss.
During 1998, the Partnership recognized an impairment loss of $499,941
related to certain of the investments in local limited partnerships,
which has been included in equity in loss of limited partnerships.
2. INVESTMENTS IN LIMITED PARTNERSHIPS
The Partnership holds limited partnership interests in 37 local
partnerships (the "Local Partnerships"). As a limited partner of the
Local Partnerships, the Partnership does not have authority over
day-to-day management of the Local Partnerships or their properties (the
"Apartment Complexes"). The general partners responsible for management
of the Local Partnerships (the "Local Operating General Partners") are
not affiliated with the General Partner of the Partnership, except as
discussed below.
<PAGE> 19
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
At December 31, 1999, the Local Partnerships own residential projects
consisting of 3,716 apartment units.
The Partnership, as a limited partner, is generally entitled to 99
percent of the operating profits and losses of the Local Partnerships.
National Tax Credit, Inc. II ("NTC-II"), an affiliate of the General
Partner, serves either as a special limited partner or non-managing
administrative general partner in each Local Partnership, in which case
it receives .01 percent of operating profits and losses of the Local
Partnership. In addition, NTC-II is the Local Operating General Partner
of four Local Partnerships, in which case it is entitled to .09 percent
of the operating profits and losses of the Local Partnership.
The Partnership is generally entitled to receive 50 percent of the net
cash flow generated by the Apartment Complexes, subject to repayment of
any loans made to the Local Partnerships (including loans made by NTC-II
or an affiliate), repayment for funding of development deficit and
operating deficit guarantees by the Local Operating General Partners or
their affiliates (excluding NTC-II and its affiliates), and certain
priority payments to the Local Operating General Partners other than
NTC-II or its affiliates.
The Partnership's allocable share of losses from Local Partnerships are
recognized in the financial statements until the related investment
account is reduced to a zero balance. Losses incurred after the
investment account is reduced to zero will not be recognized. The
cumulative amount of unrecognized equity in losses of unconsolidated
limited partnerships is approximately $6,004,000 as of December 31,
1999.
Distributions received by the Partnership from the Local Partnerships
are accounted for as a return of capital until the investment balance is
reduced to zero or to a negative amount equal to further capital
contributions required. Subsequent distributions received will be
recognized as income.
<PAGE> 20
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
The following is a summary of the investments in and advances to Local
Partnerships and reconciliation to the Local Partnerships accounts:
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Investments balance, beginning of year $ 21,167,503 $ 25,724,722
Capital (recoveries) contributions (199,590) 669,677
Equity in loss of limited partnerships (2,727,055) (3,838,018)
Amortization of capitalized acquisition costs and fees (471,921) (202,508)
Distributions recognized as a return of capital (1,615,193) (1,186,370)
------------ ------------
Investments balance, end of year $ 16,153,744 $ 21,167,503
============ ============
</TABLE>
The difference between the investment per the accompanying balance
sheets at December 31, 1999 and 1998, and the equity per the Local
Partnerships' combined financial statements is due primarily to costs
capitalized to the investment account and the Partnership's recording of
capital contributions payable to the Local Partnerships in its
investment balance.
Michigan Beach
The Michigan Beach property, a 240-unit apartment complex located in
Chicago, Illinois, has been operating at a substantial deficit since
1996. The deficit has been attributable to a soft local rental market,
high leverage and deferred maintenance. In November 1996, the local
partnership ceased making payments on its first mortgage, and has
commenced negotiations with the lender and the U.S. Department of
Housing and Urban Development, who insures the loan, in order to cure
the default. As a result of the above and the legal proceedings
discussed in Note 7, the carrying value of the investment of $1,117,893
was written off in 1996. During 1998, the loan was restructured and the
aforementioned default was cured. In addition, all litigation has been
settled and the lawsuit has been dismissed.
Paramount
Foreclosure proceedings were commenced against the Paramount local
partnership in November 1998 and a receiver was appointed in May 1999. A
decree of foreclosure was entered in January 2000, although no
foreclosure sale has been set. The local partnership is exploring
various alternatives to satisfy its indebtedness. The Partnership has no
investment balance related to this local partnership.
<PAGE> 21
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Wade Walton
Due to operating deficits, the Wade Walton local partnership which owns
a property in Clarksdale, Mississippi commenced a bankruptcy case in
order to reorganize under Chapter 11 of the United States Bankruptcy
Code. The local partnership has filed a reorganization plan which
proposes to pay all creditors in full. The Partnership has no investment
balance related to this local partnership.
Selected financial information from the combined financial statements of
the Local Partnerships at December 31, 1999 and 1998 and for each of the
three years in the period ended December 31, 1999 is as follows:
Balance Sheets
<TABLE>
<CAPTION>
1999 1998
-------- --------
(in thousands)
<S> <C> <C>
Land and buildings, net $107,845 $121,455
======== ========
Total assets $119,343 $134,315
======== ========
Mortgages and construction loans payable
secured by real property $ 88,305 $ 88,330
======== ========
Total liabilities $101,672 $104,094
======== ========
Equity of National Tax Credit Investors II $ 6,306 $ 18,520
======== ========
Equity of other partners $ 11,365 $ 11,701
======== ========
</TABLE>
<PAGE> 22
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
2. INVESTMENTS IN LIMITED PARTNERSHIPS (CONTINUED)
Statements of Operations
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total revenues $ 19,221 $ 18,722 $ 18,303
======== ======== ========
Interest expense $ 6,401 $ 7,148 $ 7,245
======== ======== ========
Depreciation and amortization $ 5,131 $ 5,495 $ 5,551
======== ======== ========
Total expenses $ 31,145 $ 23,236 $ 23,016
======== ======== ========
Net loss $(11,923) $ (4,514) $ (4,713)
======== ======== ========
Net loss allocable to the Partnership $(11,834) $ (4,064) $ (4,510)
======== ======== ========
</TABLE>
Included in expenses for 1999 is an impairment loss of $8,190,000
related to one Local Partnership, in which the Partnership has a zero
investment balance.
An affiliate of the General Partner is the Local Operating General
Partner in four of the Local Partnerships included above, and another
affiliate receives property management fees of approximately 5 percent
of gross revenues from three of these four Local Partnerships and from
four other Local Partnership (Note 5) in which the affiliate is not the
General Partner. The following sets forth the significant combined data
for the Local Partnerships in which an affiliate of the General Partner
was the Local Operating General Partner:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
(in thousands)
<S> <C> <C> <C>
Total assets $ 11,734 $ 13,396
======== ========
Total liabilities $ 7,778 $ 9,026
======== ========
Equity of National Tax Credit Investors II $ 1,438 $ 1,812
======== ========
Equity of other partners $ 2,518 $ 2,558
======== ========
Total revenue $ 1,850 $ 1,789 $ 1,754
======== ======== ========
Net loss $ (296) $ (477) $ (376)
======== ======== ========
</TABLE>
<PAGE> 23
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
3. RESTRICTED CASH
Restricted cash represents funds in escrow to be used, to fund operating
deficits, if any, of one of the Local Partnerships, as defined in the
Local Partnership Agreement.
4. CAPITAL CONTRIBUTIONS PAYABLE
Capital contributions payable represents amounts which are due at
various times based on conditions specified in the respective Local
Partnership agreements. The capital contributions payable are unsecured
and non-interest bearing. These amounts are generally due upon the Local
Partnership achieving certain operating or financing benchmarks.
5. RELATED-PARTY TRANSACTIONS
Under the terms of the Amended and Restated Agreement of Limited
Partnership, the Partnership is obligated to the General Partner and the
Special Limited Partner for the following fees:
(a) An annual Partnership management fee in an amount equal to 0.5
percent of invested assets (as defined in the partnership
agreement) is payable to the General Partner and Special Limited
Partner. Partnership management fees in the amount of $764,612
were recorded as an expense in 1999, 1998 and 1997. As of
December 31, 1999 and 1998, management fees in the amount of
$3,296,209 and $2,831,597 respectively, were due to the General
Partner and the Special Limited Partner.
As of December 31, 1999, the fees and expenses due the General
Partner and Special Limited Partner exceeded the Partnership's
cash. The partners, during the forthcoming year, will not demand
payment of amounts due in excess of such cash or such that the
Partnership would not have sufficient operating cash; however,
the Partnership will remain liable for all such amounts.
(b) A property disposition fee is payable to the General Partner in
an amount equal to the lesser of (i) one-half of the competitive
real estate commission that would have been charged by
unaffiliated third parties providing comparable services in the
area where the apartment complex is located, or (ii) 3 percent of
the sale price received in connection with the sale or
disposition of the apartment complex or local partnership
interest, but in no event will the property disposition fee and
all amounts payable to unaffiliated real estate brokers in
connection with any such sale exceed in the aggregate,
<PAGE> 24
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
5. RELATED-PARTY TRANSACTIONS (CONTINUED)
the lesser of the competitive rate (as described above) or 6
percent of such sale price. Receipt of the property disposition
fee will be subordinated to the distribution of sale or
refinancing proceeds by the Partnership until the limited
partners have received distributions of sale or refinancing
proceeds in an aggregate amount equal to (i) their 6 percent
priority return for any year not theretofore satisfied (as
defined in the partnership agreement) and (ii) an amount equal to
the aggregate adjusted investment (as defined in the partnership
agreement) of the limited partners. No disposition fees have been
paid.
(c) The Partnership reimburses certain expenses to the General
Partner. The reimbursement paid to the General Partner was $0, $0
and $42,085 for the years ended December 31, 1999, 1998 and 1997,
respectively, and is included in general and administrative
expenses.
NTC-II is the Local Operating General Partner in four of the
Partnership's 37 Local Partnerships. In addition, NTC-II is either a
special limited partner or non-managing administrative general partner
in each Local Partnership.
An affiliate of the General Partner is responsible for the on-site
property management for seven Local Partnerships in 1999 and four Local
Partnerships in 1998 and 1997 (Note 2). The Local Partnerships paid the
affiliate property management fees of $182,781, $136,296 and $122,740 in
1999, 1998 and 1997, respectively.
6. INCOME TAXES
No provision has been made for income taxes in the accompanying
financial statements since such taxes, if any, are the liability of the
individual partners. The major differences in tax and financial
statement losses result from the use of different bases and depreciation
methods for the properties held by the Local Partnerships.
7. CONTINGENCIES
NTCI-II's General Partner is involved in various lawsuits. In addition,
the Partnership is involved in the following lawsuits arising from
transactions in the ordinary course of business. In the opinion of
management and the General Partner, these claims will not result in any
material liability to the Partnership.
<PAGE> 25
NATIONAL TAX CREDIT INVESTORS II
(a California limited partnership)
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1999
8. FAIR VALUE OF FINANCIAL INSTRUMENTS
Statement of Financial Accounting Standards No. 107, "Disclosure about
Fair Value of Financial Instruments," requires disclosure of fair value
information about financial instruments, when it is practicable to
estimate that value. The operations generated by the investee limited
partnerships, which accounts for the Partnership's primary source of
revenues, are subject to various government rules, regulations and
restrictions which make it impracticable to estimate the fair value of
the accrued fees due to partners. The carrying amount of other assets
and liabilities reported on the balance sheets that require such
disclosure approximates fair value due to their short-term maturity.
9. FOURTH-QUARTER ADJUSTMENT
The Partnership's policy is to record its equity in the loss of limited
partnerships on a quarterly basis using estimated financial information
furnished by the various local operating general partners. The equity in
loss reflected in the accompanying annual consolidated financial
statements is based primarily upon audited financial statements of the
investee limited partnerships. The increase, approximately $1,266,975
between the estimated nine-month equity in loss and the actual 1999 year
end equity in loss, has been recorded in the fourth quarter.
<PAGE> 26
SCHEDULE
NATIONAL TAX CREDIT INVESTORS II
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
---------------------------------------------------------------
BALANCE CAPITAL CAPITALIZED
LIMITED JANUARY 1, CONTRIBUTIONS ACQUISITION CASH
PARTNERSHIPS 1999 (RECOVERY) COSTS/FEES DISTRIBUTIONS
- ------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ 362,555 $ 23,000 $ $
Columbus Junction 49,060 (1,638)
Cottonwood Park 1,124,314
The Cottages I --
Countryside 1,802,706 (35,720)
Eastridge Apartments 471,699
Edgewood Apartments 1,092,162 (18,095)
Fourth Street 1,508,797
Germantown Apartments 1,227,404 (18,810)
Great Basin Associates -- 11,139
Grimes Park Apartments 47,307 (1,158)
Jamestown 323,393
Jefferson Meadows Apartments 251,690
Kentucky River Apartments 874,396
Lincoln Grove 796,165 (20,400)
Meadowlakes Apartments 1,098,046 (16,128)
Michigan Beach Apartments -- 19,789
Nickel River (Wedgewood) Apts 842,914 (4,080)
Norwalk Park Apartments 42,550 (1,088)
Oakview 784,765
Pam Apartments 33,501 (13,450)
Palm Springs View --
Paramount Apartments -- 17,647
Parkwood Landing 672,606 (271,165)
Pensacola Affordable 361,887 (15,287)
Pineview Terrace 395,756
Quivera 235,822 (27,996)
Rancho Del Mar 3,408,959 (83,000)
Salem Park Apartments 554,438 (11,667)
Sheboygan Apartments 470,953
Sitka III Apartments --
Soldotna (Northwood Senior) Apts 183,941 (1,848)
Torres De Plata II 60,624 (6,328)
Villa Real 1,850,135 (1,338,500)
Virginia Park Meadows 238,958
Wade Walton Apartments --
Westbridge Apartments --
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ 21,167,503 $ (199,590) $ -- $ (1,615,193)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------
EQUITY AMORTIZATION BALANCE CAPITAL
LIMITED INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS (LOSS) ACQ. COSTS 1999 PAYABLE
- ------------ ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ (153,541) $ (5,891) $ 226,123 $
Columbus Junction (17,874) (1,931) 27,617
Cottonwood Park (33,035) (8,012) 1,083,267
The Cottages I -- --
Countryside (327,610) (11,362) 1,428,014
Eastridge Apartments (72,635) (2,987) 396,077
Edgewood Apartments (113,326) (5,834) 954,907
Fourth Street (131,568) (7,053) 1,370,176
Germantown Apartments (128,673) (6,811) 1,073,110
Great Basin Associates (11,139) -- --
Grimes Park Apartments (11,958) (2,116) 32,075
Jamestown (79,670) (3,322) 240,401
Jefferson Meadows Apartments (204,661) (7,574) 39,455
Kentucky River Apartments (13,808) (4,719) 855,869
Lincoln Grove (69,548) (4,527) 701,690
Meadowlakes Apartments (67,915) (5,828) 1,008,175
Michigan Beach Apartments (19,789) -- --
Nickel River (Wedgewood) Apts (26,005) (7,170) 805,659
Norwalk Park Apartments (18,413) (1,416) 21,633
Oakview 127,046 (2,926) 908,885
Pam Apartments (17,215) (2,836) --
Palm Springs View -- -- 1,076
Paramount Apartments (17,647) -- --
Parkwood Landing (278,198) (13,783) 109,460
Pensacola Affordable (22,837) (3,401) 320,362
Pineview Terrace 34,611 (6,197) 424,170
Quivera (196,782) (11,044) --
Rancho Del Mar (209,693) (16,084) 3,100,182
Salem Park Apartments (113,312) (6,787) 422,672
Sheboygan Apartments (99,553) (3,550) 367,850
Sitka III Apartments -- --
Soldotna (Northwood Senior) Apts (15,931) (1,900) 164,262
Torres De Plata II (2,580) 51,716
Villa Real (204,623) (307,012) --
Virginia Park Meadows (211,753) (7,268) 19,937
Wade Walton Apartments -- --
Westbridge Apartments -- --
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ (2,727,055) $ (471,921) $ 16,153,744 $ 1,076
============ ============ ============ ============
</TABLE>
<PAGE> 27
SCHEDULE
NATIONAL TAX CREDIT INVESTORS II
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
-------------------------------------------------------------
BALANCE CAPITALIZED
LIMITED JANUARY 1, CAPITAL ACQUISITION CASH
PARTNERSHIPS 1998 CONTRIBUTIONS COSTS/FEES DISTRIBUTIONS
- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ 413,853 $ 101,869 $ $
Columbus Junction 52,477
Cottonwood Park 1,118,398
The Cottages I --
Countryside 2,155,571 (133,950)
Eastridge Apartments 529,585 17,000
Edgewood Apartments 1,265,063 (80,250)
Fourth Street 1,652,546
Germantown Apartments 1,346,628 (39,501)
Great Basin Associates --
Grimes Park Apartments 58,603
Jamestown 385,783
Jefferson Meadows Apartments 489,630
Kentucky River Apartments 912,289
Lincoln Grove 905,313 (20,400)
Meadowlakes Apartments 1,179,475 (17,594)
Michigan Beach Apartments -- 549,308 (23,727)
Nickel River (Wedgewood) Apts 882,426
Norwalk Park Apartments 62,141
Oakview 753,664
Pam Apartments 112,633 (12,902)
Palm Springs View 360,155
Paramount Apartments 412,304
Parkwood Landing 973,811
Pensacola Affordable 435,601 (47,476)
Pineview Terrace 439,624
Quivera 573,070 (177,996)
Rancho Del Mar 3,664,430 (37,500)
Salem Park Apartments 622,601 (12,048)
Sheboygan Apartments 582,167
Sitka III Apartments 19,538
Soldotna (Northwood Senior) Apts 208,878 (1,698)
Torres De Plata II 69,532 (6,328)
Villa Real 2,466,601 1,500 (575,000)
Virginia Park Meadows 501,471
Wade Walton Apartments 118,224
Westbridge Apartments 637
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ 25,724,722 $ 669,677 $ -- $ (1,186,370)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998
--------------------------------------------------------------
EQUITY AMORTIZATION BALANCE CAPITAL
LIMITED INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS (LOSS) ACQ. COSTS 1998 PAYABLE
- ------------ ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ (147,276) $ (5,891) $ 362,555 $
Columbus Junction (1,486) (1,931) 49,060
Cottonwood Park 13,928 (8,012) 1,124,314
The Cottages I -- -- --
Countryside (207,553) (11,362) 1,802,706
Eastridge Apartments (71,899) (2,987) 471,699
Edgewood Apartments (86,817) (5,834) 1,092,162
Fourth Street (136,696) (7,053) 1,508,797
Germantown Apartments (72,912) (6,811) 1,227,404
Great Basin Associates -- -- --
Grimes Park Apartments (9,180) (2,116) 47,307
Jamestown (59,068) (3,322) 323,393
Jefferson Meadows Apartments (230,366) (7,574) 251,690
Kentucky River Apartments (33,174) (4,719) 874,396
Lincoln Grove (84,221) (4,527) 796,165
Meadowlakes Apartments (58,007) (5,828) 1,098,046
Michigan Beach Apartments (525,581) -- --
Nickel River (Wedgewood) Apts (32,342) (7,170) 842,914
Norwalk Park Apartments (18,175) (1,416) 42,550
Oakview 34,027 (2,926) 784,765
Pam Apartments (63,394) (2,836) 33,501
Palm Springs View (350,166) (9,989) -- 1,081
Paramount Apartments (403,837) (8,467) --
Parkwood Landing (287,422) (13,783) 672,606 355,904
Pensacola Affordable (22,837) (3,401) 361,887
Pineview Terrace (37,671) (6,197) 395,756
Quivera (148,207) (11,045) 235,822
Rancho Del Mar (201,887) (16,084) 3,408,959
Salem Park Apartments (49,328) (6,787) 554,438
Sheboygan Apartments (107,664) (3,550) 470,953
Sitka III Apartments (17,634) (1,904) --
Soldotna (Northwood Senior) Apts (21,339) (1,900) 183,941
Torres De Plata II -- (2,580) 60,624
Villa Real (31,349) (11,617) 1,850,135
Virginia Park Meadows (255,245) (7,268) 238,958
Wade Walton Apartments (114,851) (3,373) --
Westbridge Apartments 1,611 (2,248) --
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ (3,838,018) $ (202,508) $ 21,167,503 $ 356,985
============ ============ ============ ============
</TABLE>
<PAGE> 28
SCHEDULE
NATIONAL TAX CREDIT INVESTORS II (Continued)
INVESTMENTS IN LIMITED PARTNERSHIPS
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997+F208
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------------------------------------------
BALANCE CAPITAL CAPITALIZED
LIMITED JANUARY 1, CONTRIBUTIONS ACQUISITION CASH
PARTNERSHIPS 1997 (RECOVERY) COSTS/FEES DISTRIBUTIONS
- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ 547,394 $ (10,000) $ $
Columbus Junction 66,224
Cottonwood Park 1,191,143 (84,205)
The Cottages I --
Countryside 2,349,779
Eastridge Apartments 570,282
Edgewood Apartments 1,347,769
Fourth Street 1,782,341 (12,300)
Germantown Apartments 1,461,515 (22,572)
Great Basin Associates 423,694
Grimes Park Apartments 71,852
Jamestown 468,284 (3,600)
Jefferson Meadows Apartments 720,729
Kentucky River Apartments 966,593
Lincoln Grove 1,034,225 (22,100)
Meadowlakes Apartments 1,285,960 (17,594)
Michigan Beach Apartments --
Nickel River (Wedgewood) Apts 956,867
Norwalk Park Apartments 73,569
Oakview 706,725
Pam Apartments 206,272 (16,950)
Palm Springs View 532,137
Paramount Apartments 485,798 6,063
Parkwood Landing 1,386,749
Pensacola Affordable 479,630
Pineview Terrace 537,860
Quivera 980,475 (44,327)
Rancho Del Mar 4,066,647 (113,573)
Salem Park Apartments 718,993 (12,500)
Sheboygan Apartments 683,245
Sitka III Apartments 71,698 (1,945)
Soldotna (Northwood Senior) Apts 235,509 (1,698)
Torres De Plata II 162,046 (6,328)
Villa Real 2,676,653 (20,620)
Virginia Park Meadows 736,278
Wade Walton Apartments 308,920
Westbridge Apartments 37,283
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ 30,331,138 $ (3,937) $ -- $ (380,312)
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------
EQUITY AMORTIZATION BALANCE CAPITAL
LIMITED INCOME OF CAPITALIZED DECEMBER 31, CONTRIBUTIONS
PARTNERSHIPS (LOSS) ACQ. COSTS 1997 PAYABLE
- ------------ ------------ -------------- ------------ -------------
<S> <C> <C> <C> <C>
Ashville Equity $ (117,650) $ (5,891) $ 413,853 $
Columbus Junction (11,816) (1,931) 52,477
Cottonwood Park 19,472 (8,012) 1,118,398
The Cottages I -- -- --
Countryside (182,846) (11,362) 2,155,571
Eastridge Apartments (37,710) (2,987) 529,585
Edgewood Apartments (76,872) (5,834) 1,265,063
Fourth Street (110,442) (7,053) 1,652,546
Germantown Apartments (85,504) (6,811) 1,346,628
Great Basin Associates (419,731) (3,963) --
Grimes Park Apartments (11,133) (2,116) 58,603
Jamestown (75,579) (3,322) 385,783
Jefferson Meadows Apartments (223,525) (7,574) 489,630
Kentucky River Apartments (49,585) (4,719) 912,289
Lincoln Grove (102,285) (4,527) 905,313
Meadowlakes Apartments (83,063) (5,828) 1,179,475
Michigan Beach Apartments -- -- --
Nickel River (Wedgewood) Apts (67,271) (7,170) 882,426
Norwalk Park Apartments (10,012) (1,416) 62,141
Oakview 49,865 (2,926) 753,664
Pam Apartments (73,853) (2,836) 112,633
Palm Springs View (161,993) (9,989) 360,155 1,081
Paramount Apartments (71,090) (8,467) 412,304
Parkwood Landing (399,155) (13,783) 973,811 355,904
Pensacola Affordable (40,628) (3,401) 435,601
Pineview Terrace (92,039) (6,197) 439,624
Quivera (352,033) (11,045) 573,070
Rancho Del Mar (272,560) (16,084) 3,664,430
Salem Park Apartments (77,105) (6,787) 622,601
Sheboygan Apartments (97,529) (3,549) 582,167
Sitka III Apartments (48,310) (1,905) 19,538
Soldotna (Northwood Senior) Apts (23,033) (1,900) 208,878
Torres De Plata II (83,606) (2,580) 69,532
Villa Real (177,815) (11,617) 2,466,601
Virginia Park Meadows (227,539) (7,268) 501,471
Wade Walton Apartments (187,323) (3,373) 118,224
Westbridge Apartments (34,398) (2,248) 637
Western (Ellis) Court --
------------ ------------ ------------ ------------
$ (4,015,696) $ (206,471) $ 25,724,722 $ 356,985
============ ============ ============ ============
</TABLE>
<PAGE> 29
SCHEDULE
(Continued)
NATIONAL TAX CREDIT INVESTORS II
INVESTMENTS IN, EQUITY IN EARNINGS OF, AND DISTRIBUTIONS
RECEIVED FROM LIMITED PARTNERSHIPS FOR THE
YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
NOTES: 1. Equity in income (loss) represents the Partnership's allocable
share of the net income (loss) from the Local Partnerships for
the year. Equity in loss of the Local Partnerships will be
recognized until the investment balance is reduced to zero or a
negative balance equal to further commitments by the
Partnership.
2. Cash distributions from the Local Partnerships are treated as a
return of the investment and reduce the investment balance until
such time as the investment is reduced to zero or a negative
balance equal to further commitments by the Partnership.
Distributions subsequently received will be recognized as
income.
<PAGE> 30
NATIONAL TAX CREDIT INVESTORS II
REAL ESTATE AND ACCUMULATED DEPRECIATION
OF PROPERTY HELD BY LOCAL LIMITED PARTNERSHIPS SCHEDULE III
DECEMBER 31, 1999
<TABLE>
<CAPTION>
BUILDINGS,
FURNISHINGS
& EQUIPMENT
NUMBER OUTSTANDING AMOUNT CARRIED
OF MORTGAGE AT CLOSE OF ACCUMULATED
PARTNERSHIP/LOCATION UNITS LOAN LAND PERIOD TOTAL DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASHVILLE EQUITY (WESTVIEW) 41 $ 964,763 $100,000 $1,774,617 $1,874,617 $ (683,641)
ASHVILLE, OH
COLUMBUS JUNCTION PARK 24 652,162 40,000 779,438 819,438 (213,297)
COLUMBUS JUNCTION, IA
COTTAGES OF NORTH ST. PAUL 94 4,005,000 616,092 5,198,568 5,814,660 (1,338,633)
NORTH ST. PAUL, MN
COTTONWOOD PARK 90 1,401,099 194,154 2,637,861 2,832,015 (679,629)
COLORADO SPRINGS, CO
COUNTRYSIDE PLACE 180 4,546,091 450,000 8,133,041 8,583,041 (2,471,993)
HOWELL TOWNSHIP, NJ
EASTRIDGE APARTMENTS 48 1,247,048 35,210 1,897,802 1,933,012 (349,907)
ST CLAIR, MO
EDGEWOOD APARTMENTS 108 1,752,961 157,500 3,895,081 4,052,581 (1,318,784)
ROGERS, AR
FOURTH STREET 44 1,026,255 241,979 4,205,938 4,447,917 (1,209,361)
LOS ANGELES, CA
GERMANTOWN APARTMENTS 132 2,514,115 210,000 4,588,793 4,798,793 (1,621,333)
CONWAY, AR
GREAT BASIN ASSOCIATES 28 628,103 143,000 1,408,600 1,551,600 (401,631)
RENO, NV
GRIMES PARK APARTMENTS 16 460,563 50,000 520,588 570,588 (148,577)
GRIMES, IA
JAMESTOWN TERRACE 56 2,873,929 298,000 3,485,683 3,783,683 (753,649)
JAMESTOWN, CA
JEFFERSON MEADOWS 83 3,063,566 85,500 4,896,437 4,981,937 (1,771,030)
DETROIT, MI
KENTUCKY RIVER 42 983,991 149,000 2,004,350 2,153,350 (493,610)
WINCHESTER, KY
LINCOLN GROVE 116 676,109 117,853 3,881,068 3,998,921 (930,541)
GREENSBORO, NC
MEADOWLAKES 108 1,484,305 136,352 3,893,937 4,030,289 (1,322,529)
SEARCY, AR
MICHIGAN BEACH 240 9,382,821 791,700 4,112,366 4,904,066 (1,353,330)
CHICAGO, IL
NICKEL RIVER (WEDGEWOOD) 105 1,909,294 140,157 3,048,811 3,188,968 (785,527)
LACROSSE, WI
NORWALK PARK APARTMENTS 16 429,907 50,600 482,876 533,476 (140,110)
NORWALK, IA
OAKVIEW APARTMENTS 106 2,270,000 80,800 3,612,188 3,692,988 (1,040,581)
SPARTANBURG, SC
PALM SPRINGS VIEW 120 5,227,399 901,137 7,645,424 8,546,561 (1,889,090)
PALM SPRINGS, CA
PAM APARTMENTS 96 1,620,000 50,000 2,616,029 2,666,029 (1,405,084)
PAMPA, TX
PARAMOUNT APARTMENTS 99 1,785,117 95,200 2,852,701 2,947,901 (962,867)
MAPLE HEIGHTS, OH
PARKWOOD LANDING 204 4,459,260 720,238 9,226,496 9,946,734 (2,989,451)
HUNTSVILLE, AL
PENSACOLA AFFORDABLE 56 1,366,327 251,630 1,845,425 2,097,055 (601,592)
PENSACOLA, FL
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
BUILDINGS,
FURNISHINGS
& EQUIPMENT
NUMBER OUTSTANDING AMOUNT CARRIED
OF MORTGAGE AT CLOSE OF ACCUMULATED
PARTNERSHIP/LOCATION UNITS LOAN LAND PERIOD TOTAL DEPRECIATION
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PINEVIEW TERRACE 120 1,638,079 82,264 2,789,451 2,871,715 (780,115)
KATY, TX
QUIVERA 289 3,996,395 100,000 12,338,648 12,438,648 (4,625,802)
LENEXA, TX
RANCHO DEL MAR 312 3,473,198 74,858 8,677,742 8,752,600 (2,727,237)
TUCSON, AZ
SALEM PARK APARTMENTS 144 2,726,315 210,000 4,275,460 4,485,460 (1,697,415)
CONWAY, AR
SHEBOYGAN 59 1,355,039 47,200 2,561,520 2,608,720 (904,348)
SHEBOYGAN, WI
SITKA III 16 1,167,070 41,868 1,439,976 1,481,844 (492,936)
SITKA, AK
SOLDOTNA (NORTHWOOD SENIOR) 23 1,479,426 59,248 1,880,038 1,939,286 (421,017)
SOLDOTNA, AK
TORRES DE PLATA II 78 3,077,237 158,175 3,820,814 3,978,989 (1,288,138)
TOA ALTA, PR
VILLA REAL 120 2,942,254 897,283 6,375,999 7,273,282 (1,724,488)
SANTA FE, NM
VIRGINIA PARK MEADOWS 83 3,009,472 78,500 4,887,727 4,966,227 (1,744,396)
DETROIT, MI
WADE WALTON APARTMENTS 108 4,000,000 102,020 3,911,173 4,013,193 (1,007,932)
CLARKSDALE, MI
WESTBRIDGE APARTMENTS 112 2,710,000 201,468 3,064,426 3,265,894 (691,201)
W. COLUMBIA, SC
--------------------------------------------------------------------------------------------
TOTAL 3,716 $ 88,304,670 $ 8,158,986 $144,667,092 $152,826,078 $(44,980,802)
============================================================================================
</TABLE>
<PAGE> 32
SCHEDULE III
(CONTINUED)
NATIONAL TAX CREDIT INVESTORS II
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL PARTNERSHIPS
IN WHICH NTCI-II HAS INVESTMENTS
DECEMBER 31, 1999
NOTES: 1. Each local partnership is developing or has developed, owns and
operates the Apartment Complex. Substantially all project costs,
including construction period interest expense, were capitalized
by the local partnerships.
2. Depreciation is provided for by various methods over the
estimated useful lives of the Apartment Complexes. The estimated
composite useful lives of the buildings are generally from 25 to
40 years.
3. Investments in property and equipment:
<TABLE>
<CAPTION>
Buildings,
Furnishings,
Land Equipment Total
------------- ------------- -------------
<S> <C> <C> <C>
Balance at January 1, 1997 $ 9,541,976 $ 152,196,512 $ 161,738,488
Net additions during the year
ended December 31, 1997 695 1,376,454 1,377,149
------------- ------------- -------------
Balance at December 31, 1997 9,542,671 153,572,966 163,115,637
Net additions during the year
ended December 31, 1998 (1,379) 239,734 238,355
------------- ------------- -------------
Balance at December 31, 1998 9,541,292 153,812,700 163,353,992
Net additions during the year
ended December 31, 1999 (1,382,306) (9,145,608) (10,527,914)
------------- ------------- -------------
Balance at December 31, 1999 $ 8,158,986 $ 144,667,092 $ 152,826,078
============= ============= =============
</TABLE>
<PAGE> 33
SCHEDULE III
(CONTINUED)
NATIONAL TAX CREDIT INVESTORS II
REAL ESTATE AND ACCUMULATED DEPRECIATION OF PROPERTY
HELD BY LOCAL PARTNERSHIPS
IN WHICH NTCI-II HAS INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Buildings,
Furnishings,
And
Equipment
------------
<S> <C>
Accumulated Depreciation:
Balance at January 1, 1997 $30,919,333
Net additions during
the year ended
December 31, 1997 5,561,910
-----------
Balance at December 31, 1997 36,481,243
Net additions during
the year ended
December 31, 1998 5,418,007
-----------
Balance at December 31, 1998 41,899,250
Net additions during
the year ended
December 31, 1999 3,081,552
-----------
Balance at December 31, 1999 $44,980,802
===========
</TABLE>
<PAGE> 34
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
NATIONAL TAX CREDIT INVESTORS II (the "Partnership") has no directors or
executive officers of its own.
Prior to December 30, 1998, NAPICO was a wholly owned subsidiary of Casden
Investment Corporation ("CIC"), which is wholly owned by Alan I. Casden. On
December 30, 1998, Casden Properties Operating Partnership, L.P. (the "Operating
Partnership"), a majority owned subsidiary of Casden Properties Inc., a real
estate investment trust organized by Alan I. Casden, purchased a 95.25% economic
interest in NAPICO. The following biographical information is presented for the
directors and executive officers of NAPICO with principal responsibility for the
Partnership's affairs.
CHARLES H. BOXENBAUM, 70, Chairman of the Board of Directors and Chief Executive
Officer of NAPICO.
Mr. Boxenbaum has been associated with NAPICO since its inception. He has been
active in the real estate industry since 1960, and prior to joining NAPICO was a
real estate broker with the Beverly Hills firm of Carl Rhodes Company.
Mr. Boxenbaum has been a guest lecturer at national and state realty
conventions, certified properties exchanger's seminars, Los Angeles Town Hall,
National Association of Home Builders, International Council of Shopping
Centers, Society of Conventional Appraisers, California Real Estate Association,
National Institute of Real Estate Brokers, Appraisal Institute, various mortgage
banking seminars, and the North American Property Forum held in London, England.
In 1963, he was the winner of the Snyder Award, the highest annual award offered
by the National Association of Real Estate Boards for Best Exchange. He is one
of the founders and a past director of the First Los Angeles Bank, organized in
November 1974. Mr. Boxenbaum was a member of the Board of Directors of the
National Housing Council. Mr. Boxenbaum received his Bachelor of Arts degree
from the University of Chicago.
BRUCE E. NELSON, 48, President and a director of NAPICO.
Mr. Nelson joined NAPICO in 1980 and became President in February 1989. He is
responsible for the operations of all NAPICO sponsored limited partnerships.
Prior to that he was primarily responsible for the securities aspects of the
publicly offered real estate investment programs. Mr. Nelson is also involved in
the identification, analysis, and negotiation of real estate investments.
From February 1979 to October 1980, Mr. Nelson held the position of Associate
General Counsel at Western Consulting Group, Inc., private residential and
commercial real estate syndicators. Prior to that time, Mr. Nelson was engaged
in the private practice of law in Los Angeles.
Mr. Nelson received his Bachelor of Arts degree from the University of Wisconsin
and is a graduate of the University of Colorado School of Law. He is a member of
the State Bar of California and is a licensed real estate broker in California
and Texas.
ALAN I. CASDEN, 54, Chairman of Casden Properties Inc., a director and member of
the audit committee of NAPICO, and chairman of the Executive Committee of
NAPICO.
Mr. Casden has been involved in approximately $3 billion of real estate
financings and sales and has been responsible for the development and
construction of more than 12,000 apartment units and 5,000 single-family homes
and condominiums.
Mr. Casden is a member of the American Institute of Certified Public Accountants
and of the California Society of Certified Public Accountants. Mr. Casden is a
member of the advisory board of the National Multi-Family Housing Conference,
the Multi-Family Housing Council, and the President's Council of the California
Building Industry Association. He also serves on the advisory board to the
School of Accounting of the University of Southern California.
<PAGE> 35
He holds a Bachelor of Science degree and a Masters in Business Administration
degree from the University of Southern California.
PAUL PATIERNO, 43, Chief Financial Officer.
Mr. Patierno joined NAPICO in 1998 and is responsible for its financial affairs,
as well as the limited partnerships sponsored by it. From 1995 until joining
NAPICO in September 1998, Mr. Patierno was a senior manager in the affordable
housing group of Altschuler, Melvoin and Glasser LLP, a national public
accounting firm. From 1990 to 1995, he practiced public accounting with a firm
specializing in real estate syndication. Mr. Patierno received his bachelor of
science degree in accounting from California State University at Northridge, and
is a member of the American Institute of Certified Public Accountants and the
California Society of Certified Public Accountants.
PATRICIA W. TOY, 70, Senior Vice President - Communications and Assistant
Secretary
Mrs. Toy joined NAPICO in 1977, following her receipt of an MBA from the
Graduate School of Management, UCLA. From 1952 to 1956, Mrs. Toy served as a
U.S. Naval Officer in communications and personnel assignments. She holds a
Bachelor of Arts Degree from the University of Nebraska.
MARK L. WALTHER, 39, Executive Vice President, General Counsel and Assistant
Secretary.
Mr. Walther joined NAPICO in 1987 and is responsible for the legal affairs of
the NAPICO sponsored limited partnerships. Prior to joining NAPICO, Mr. Walther
worked in the San Francisco law firm of Browne and Kahn which specialized in
construction litigation. Mr. Walther received his Bachelor of Arts Degree in
Political Science from the University of California, Santa Barbara and is a
graduate of the University of California, Davis, School of Law. He is a member
of the State Bar of Hawaii.
NAPICO and several of its officers, directors and affiliates, including Charles
H. Boxenbaum, Bruce E. Nelson and Alan I. Casden, consented to the entry, on
June 25, 1997, of an administrative cease and desist order by the U.S.
Securities and Exchange Commission (the "Commission"), without admitting or
denying any of the findings made by the Commission. The Commission found that
NAPICO and others had violated certain federal securities laws in connection
with transactions unrelated to the Partnership. The Commission's order did not
impose any cost, burden or penalty on any partnership managed by NAPICO and does
not impact NAPICO's ability to serve as the Partnership's Managing General
Partner.
<PAGE> 36
ITEM 11. MANAGEMENT RENUMERATION AND TRANSACTIONS:
National Tax Credit Investors II has no officers, employees, or directors.
However, under the terms of the Restated Certificate and Agreement of Limited
Partnership, the Partnership is obligated to the General Partner and Special
Limited Partner for the following fees:
(a) An Acquisition Fee in the amount equal to 6.0 percent of the gross
proceeds allocable to each of the Local Partnerships or Apartment
complexes is payable to the General Partner and Special Limited Partner.
Through December 31, 1997, acquisition fees of approximately $4,316,895
have been incurred and are included in the amount presented for
Investments in Limited Partnerships.
(b) An annual Partnership management fee in an annual amount equal to 0.5
percent of invested assets (as defined) is payable to the General
Partner and Special Limited Partner. Fees in amount of $764,612 were
incurred for each of the years ended December 31, 1999, 1998 and 1997.
(c) A Property Disposition Fee is payable to the General Partner in an
amount equal to the lesser of (i) one-half of the competitive real
estate commission that would have been charged by unaffiliated third
parties providing comparable services in the area where the Apartment
Complex is located, or (ii) 3 percent of the sale price received in
connection with the sale or disposition of the Apartment Complex or
Local Partnership Interest, but in no event will the Property
Disposition Fee and all amounts payable to unaffiliated real estate
brokers in connection with any such sale exceed in the aggregate the
lesser of the competitive rate (as described above) or 6 percent of such
sale price. Receipt of the Property Disposition Fee will be subordinated
to the distribution of Sale or Refinancing Proceeds by the Partnership
until the Limited Partners have received distributions of Sale or
Refinancing Proceeds in an aggregate amount equal to (i) their 6 percent
Priority Return for any year not theretofore satisfied and (ii) an
amount equal to the aggregate adjusted investment (as defined) of the
limited partners. No disposition fees have been paid.
(d) The Partnership reimburses certain expenses to the General Partner. For
the years ended December 31, 1999, 1998 and 1997, $0, $0 and $42,085,
respectively, has been paid.
(e) An affiliate of the General Partner is responsible for the on-site
property management for seven Local Partnerships in 1999 and four local
partnerships in 1998 and 1997. The Local Partnerships paid the affiliate
property management fees of $182,781, $136,296 and $122,740 in 1999,
1998 and 1997, respectively.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
(a) Security Ownership of Certain Beneficial Owners
The General Partner owns all of the outstanding general partnership
interests of NTCI-II; no person is known to own beneficially in excess
of 5 percent of the outstanding limited partnership interests.
(b) None of the officers or directors of the General Partner own directly or
beneficially any limited partnership interests in NTCI-II.
(c) Changes in Control
None.
<PAGE> 37
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The Partnership has no officers, directors, or employees of its own. All of its
affairs are managed by the General Partner, National Partnership Investments
Corp. The transactions with the General Partner are primarily in the form of
fees paid by the Partnership to the General Partner for services rendered to the
Partnership, as discussed in Item 11 and in the notes to the accompanying
financial statements.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K:
FINANCIAL STATEMENTS
Report of Independent Public Accountants.
Balance Sheets as of December 31, 1999 and 1998.
Statements of Operations for the years ended December 31, 1999, 1998 and 1997.
Statements of Partners' Equity (Deficiency) for the years ended December 31,
1999, 1998 and 1997.
Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997.
Notes to Financial Statements.
FINANCIAL STATEMENT SCHEDULES
APPLICABLE TO THE LIMITED PARTNERSHIPS IN WHICH NTCI-II HAS INVESTMENTS:
Schedule - Investments in Limited Partnerships, December 31, 1999, 1998 and
1997.
Schedule III - Real Estate and Accumulated Depreciation, December 31, 1999.
The remaining schedules are omitted because the required information is included
in the financial statements and notes thereto, or they are not applicable or not
required.
EXHIBITS
<TABLE>
<S> <C>
(3) Articles of incorporation and bylaws: The registrant is not
incorporated. The Partnership Agreement was filed with Form S-11
Registration #33-27658 incorporated herein by reference.
(10) Material contracts: The registrant is not party to any material
contracts, other than the Restated Certificate and Agreement of
Limited Partnership dated January 12, 1990, previously filed and which
is hereby incorporated by reference.
</TABLE>
REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the year ended December 31, 1999.
<PAGE> 38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Los Angeles,
State of California.
NATIONAL TAX CREDIT INVESTORS II
By: NATIONAL PARTNERSHIP INVESTMENTS CORP.
The General Partner
/s/ Charles H. Boxenbaum
- ----------------------------------------
Charles H. Boxenbaum
Chairman of the Board of Directors
and Chief Executive Officer
/s/ Bruce E. Nelson
- ----------------------------------------
Bruce E. Nelson
Director and President
/s/ Alan I. Casden
- ----------------------------------------
Alan I. Casden
Director
/s/ Paul Patierno
- ----------------------------------------
Paul Patierno
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
PARTNERSHIP'S STATEMENTS OF EARNINGS AND BALANCE SHEETS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,538,149
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,538,149
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 17,812,372
<CURRENT-LIABILITIES> 113,878
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 14,401,209
<TOTAL-LIABILITY-AND-EQUITY> 17,812,372
<SALES> 0
<TOTAL-REVENUES> 49,340
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,262,724
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,213,384)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,213,384)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,213,384)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
