FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to ___________
Commission file number: 0-20057
WNC HOUSING TAX CREDIT FUND II, L.P.
California 33-0391979
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
3158 Redhill Avenue, Suite 120, Costa Mesa, CA 92626
(714) 662-5565
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to section 12(g) of the Act:
UNITS OF LIMITED PARTNERSHIP INTEREST
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ____
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
1
<PAGE>
State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant.
INAPPLICABLE
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
NONE
2
<PAGE>
PART I
Item 1. Business
Organization
WNC Housing Tax Credit Fund II, L.P. ("the Partnership") is a California limited
partnership formed under the laws of the State of California on January 19,
1990. The Partnership was formed to acquire limited partnership interests in
other limited partnerships or limited liability companies ("Local Limited
Partnerships") which own multifamily housing complexes that are eligible for
low-income housing federal and in certain cases, California income tax credits
("Low Income Housing Credits").
The general partner of the Partnership is WNC Financial Group, L.P. (the
"General Partner"). The general partners of WNC Financial Group, L.P. are WNC &
Associates, Inc. ("Associates") and Wilfred N. Cooper, Sr. Wilfred N. Cooper,
Sr., through the Cooper Revocable Trust, owns 66.8% of the outstanding stock of
Associates. John B. Lester, Jr. was the original limited partner of the
Partnership and owns, through the Lester Family Trust, 28.6% of the outstanding
stock of Associates. The business of the Partnership is conducted primarily
through Associates, as the Partnership has no employees of its own.
Pursuant to a registration statement filed with the Securities and Exchange
Commission, on April 27, 1990, the Partnership commenced a public offering of
12,000 units of Limited Partnership Interest ("Units") at a price of $1,000 per
Unit. The General Partner concluded the sale of Units on December 31, 1992. A
total of 7,000 Units representing $7,000,000 had been sold. Holders of Units are
referred to herein as "Limited Partners."
Description of Business
The Partnership's principal business objective is to provide its Limited
Partners with Low Income Housing Credits. The Partnership's principal business
therefore consists of investing as a limited partner or non-managing member in
Local Limited Partnerships each of which will own and operate a multi-family
housing complex (the "Housing Complex") which will qualify for the Low Income
Housing Credit. In general, under Section 42 of the Internal Revenue Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
to reduce Federal taxes otherwise due in each year of a ten-year period. In
general, under Section 17058 of the California Revenue and Taxation Code, an
owner of low-income housing can receive the Low Income Housing Credit to be used
against California taxes otherwise due in each year of a four-year period. The
Housing Complex is subject to a fifteen-year compliance period (the "Compliance
Period"), and under state law may have to be maintained as low income housing
for 30 or more years.
In general, in order to avoid recapture of Low Income Housing Credits, the
Partnership does not expect that it will dispose of its interests in Local
Limited Partnerships ("Local Limited Partnership Interests") or approve the sale
by any Local Limited Partnership of its Housing Complex prior to the end of the
applicable Compliance Period. Because of (i) the nature of the Housing
Complexes, (ii) the difficulty of predicting the resale market for low-income
housing 15 or more years in the future, and (iii) the ability of government
lenders to disapprove of transfer, it is not possible at this time to predict
whether the liquidation of the Partnership's assets and the disposition of the
proceeds, if any, in accordance with the Partnership's Agreement of Limited
Partnership, as amended "by Supplement No.1 thru Supplement No.12 thereto" (the
"Partnership Agreement"), will be able to be accomplished promptly at the end of
the 15-year period. If a Local Limited Partnership is unable to sell its Housing
Complex, it is anticipated that the local general partner ("Local General
Partner") will either continue to operate such Housing Complex or take such
other actions as the Local General Partner believes to be in the best interest
of the Local Limited Partnership. Notwithstanding the preceding, circumstances
beyond the control of the General Partner or the Local General Partners may
occur during the Compliance Period, which would require the Partnership to
approve the disposition of an Housing Complex prior to the end thereof, possibly
resulting in recapture of Low Income Housing Credits.
3
<PAGE>
As of December 31, 1998, the Partnership had invested in twenty-seven Local
Limited Partnerships. Each of these Local Limited Partnerships owns a Housing
Complex that is eligible for the federal Low Income Housing Credit. Certain
Local Limited Partnerships may also benefit from government programs promoting
low- or moderate-income housing.
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the Low Income Housing Credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are subject to mortgage
indebtedness. If a Local Limited Partnership does not make its mortgage
payments, the lender could foreclose resulting in a loss of the Housing Complex
and Low Income Housing Credits. As a limited partner or non-managing member of
the Local Limited Partnerships, the Partnership will have very limited rights
with respect to management of the Local Limited Partnerships; and will rely
totally on the general partners or managing members of the Local Limited
Partnerships for management of the Local Limited Partnerships. The value of the
Partnership's investments will be subject to changes in national and local
economic conditions, including unemployment conditions, 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 Housing
Complexes and the Partnership. In addition, each Local Limited Partnership is
subject to risks relating to environmental hazards and natural disasters, which
might be uninsurable. Because the Partnership's 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 the anticipated Low Income
Housing Credits will be available to Limited Partners.
In addition, Limited Partners are subject to risks in that the rules governing
the Low Income Housing Credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the Low
Income Housing Credits. There are limits on the transferability of Units, and it
is unlikely that a market for Units will develop. All Partnership management
decisions are made by the General Partner.
As a limited partner or non-managing member, the Partnership's liability for
obligations of each Local Limited Partnership is limited to its investment. The
Local General Partners of each Local Limited Partnership retain responsibility
for developing, constructing, maintaining, operating and managing the Housing
Complexes.
Item 2. Properties
Through its investments in Local Limited Partnerships, the Partnership holds
limited partnership interests in the Housing Complexes. The following table
reflects the status of the twenty-seven Housing Complexes as of December 31,
1998 and for the periods indicated:
4
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
As of December 31, 1998
------------------------------------------------------------------------------------------------------------
Partnership's Estimated Low Encumbrances
General Number Total Investment Amount of Income Housing of Local
Partner of Units in Local Limited Investment Credits Limited
Partnership Name Location Name Occupancy Partnerships Paid to Date Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Airport Road Slidell, Clifford E. Olsen,
Associates, Limited Louisiana Olsen Securities
Corporation 40 90% $ 334,000 $ 334,000 $ 695,000 $ 1,450,000
Am-Kent Associates, Amite & Olsen Securities
Ltd. Kentwood, Corporation 32 100% 232,000 232,000 585,000 1,119,000
Louisiana
Arizona I Limited Showlow, Western States
Partnership Arizona Housing Corporation
and Joe W. Roberts
Company 42 93% 320,000 320,000 617,000 1,487,000
Ashland Investment Ashland, Ronald D.
Group, an Oregon Oregon Bettencourt 40 100% 300,000 300,000 666,000 1,390,000
Limited Partnership
Brantley Housing, Ltd. Brantley, Thomas H. Cooksey
Alabama and Apartment
Developers, Inc. 19 89% 108,000 108,000 287,000 575,000
Brian's Village Mannford, Robert W. Green and
Apartments, an Oklahoma Emerald Development
Oklahoma Limited Co., Inc. 28 100% 176,000 176,000 374,000 757,000
Partnership
Candleridge Apartments Perry, Eric A Sheldahl 23 100% 93,000 93,000 224,000 595,000
of Perry, L.P. Iowa
Candleridge Apartments Runnells, Eric A. Sheldahl 15 100% 58,000 58,000 141,000 377,000
of Runnells, L.P. Iowa
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
As of December 31, 1998
------------------------------------------------------------------------------------------------------------
Partnership's Estimated Low Encumbrances
General Number Total Investment Amount of Income Housing of Local
Partner of Units in Local Limited Investment Credits Limited
Partnership Name Location Name Occupancy Partnerships Paid to Date Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Casa Allegre Limited Las Vegas, Western States
Partnership New Mexico Housing
Corporation, ABO
Corporation and
Alan D. Nofsker 42 100% $ 318,000 $ 318,000 $ 635,000 $ 1,394,000
Castroville Village, Castroville, Doublekaye Corp and
Ltd. Texas Gary L. Kersch 40 98% 165,000 165,000 426,000 954,000
Cherokee Square, L.P. Rogersville, Douglas B. Parker
Tennessee and Billy D. Cobb 31 100% 202,000 202,000 418,000 978,000
Divall Midland Port Gary J. DiVall
Associates Limited Washington,
Partnership II Wisconsin 32 94% 234,000 234,000 489,000 1,159,000
Eclectic Housing, Ltd. Eclectic, Thomas H. Cooksey
Alabama and Apartment
Developers, Inc. 15 100% 74,000 74,000 216,000 414,000
Elizabeth Square Raceland, Olsen Securities
Associates, Ltd. Louisiana Corp. 48 94% 356,000 356,000 748,000 1,477,000
Emory Capital, L.P. Emory, 1600 Capital
Texas Company, Inc. 16 100% 85,000 85,000 175,000 369,000
Emory Manor, L.P. Emory, 1600 Capital
Texas Company, Inc. 24 100% 128,000 128,000 206,000 552,000
Idalou Manor, L.P. Idalou, 1600 Capital
Texas Company, Inc. 24 92% 122,000 122,000 290,000 619,000
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
As of December 31, 1998
------------------------------------------------------------------------------------------------------------
Partnership's Estimated Low Encumbrances
General Number Total Investment Amount of Income Housing of Local
Partner of Units in Local Limited Investment Credits Limited
Partnership Name Location Name Occupancy Partnerships Paid to Date Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Jefferson Capital, Jefferson, 1600 Capital
L.P. Texas Company, Inc. 30 87% $ 167,000 $ 167,000 $ 269,000 714,000
Jefferson Manor, Jefferson, 1600 Capital
L.P. Texas Company, Inc. 32 81% 179,000 179,000 362,000 763,000
Lakeview Limited Beaver Dam, Thomas G. Larson,
Partnership Wisconsin William H. Larson,
and Raymond L.
Tetzlaff 40 95% 264,000 264,000 528,000 1,240,000
Littlefield Manor, Littlefield, 1600 Capital
L.P. Texas Company, Inc. 24 91% 117,000 117,000 280,000 595,000
Perry County Uniontown, Thomas H. Cooksey
Housing, Ltd. Alabama and Apartment
Developers, Inc. 15 100% 82,000 82,000 215,000 440,000
Pine Hill Housing, Pine Hill, Thomas H. Cooksey
Ltd. Alabama and Apartment
Developers, Inc. 19 100% 105,000 105,000 267,000 564,000
Rociada Partners Hereford, Richard Lee (Rick)
Ltd. Texas Brown 28 96% 154,000 154,000 316,000 731,000
Wadley Housing, Wadley, Thomas H. Cooksey
Ltd. Alabama and Apartment
Developers, Inc. 15 93% 76,000 76,000 213,000 440,000
Whitewater Woods Whitewater, Thomas G. Larson,
Limited Partnership Wisconsin William H. Larson,
and Raymond L.
Tetzlaff 40 93% 301,000 301,000 603,000 1,297,000
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
As of December 31, 1998
------------------------------------------------------------------------------------------------------------
Partnership's Estimated Low Encumbrances
General Number Total Investment Amount of Income Housing of Local
Partner of Units in Local Limited Investment Credits Limited
Partnership Name Location Name Occupancy Partnerships Paid to Date Partnerships
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Willcox Investment Willcox, John P. Casper 30 100% $ 246,000 $ 246,000 $ 490,000 $ 1,060,000
Group, an Arizona Arizona --- --- --------- --------- ---------- ----------
Limited Partnership 784 96% $ 4,996,000 $ 4,996,000 $10,735,000 $23,510,000
=== === ========= ========= ========== ==========
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------
For the year ended December 31, 1998
------------------------------------------
Net Low Income Housing
Rental Income/ Credits Allocated
Partnership Name Income (Loss) to Partnership
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Airport Road Associates,
Limited $ 152,000 $ (39,000) 99%
Am-Kent Associates, Ltd. 123,000 (40,000) 99%
Arizona I Limited Partnership 129,000 (65,000) 99%
Ashland Investment Group, an
Oregon Limited Partnership 168,000 27,000 99%
Brantley Housing, Ltd. 54,000 (12,000) 99%
Brian's Village Apartments, an
Oklahoma Limited Partnership 102,000 (14,000) 99%
Candleridge Apartments of
Perry, L.P. 117,000 (9,000) 99%
Candleridge Apartments of
Runnells, L.P. 88,000 (5,000) 99%
Casa Allegre Limited
Partnership 172,000 20,000 99%
Castroville Village, Ltd. 146,000 (8,000) 99%
Cherokee Square, L.P. 87,000 (19,000) 99%
Divall Midland Associates
Limited Partnership II 126,000 (31,000) 99%
Eclectic Housing, Ltd. 41,000 (10,000) 99%
Elizabeth Square Associates,
Ltd. 158,000 (45,000) 99%
Emory Capital, L.P. 52,000 (12,000) 99%
Emory Manor, L.P. 77,000 (30,000) 99%
Idalou Manor, L.P. 75,000 (15,000) 99%
Jefferson Capital, L.P. 82,000 (11,000) 99%
Jefferson Manor, L.P. 78,000 (13,000) 99%
Lakeview Limited Partnership 142,000 (21,000) 99%
Littlefield Manor, L.P. 75,000 (15,000) 99%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------
For the year ended December 31, 1998
------------------------------------------
Net Low Income Housing
Rental Income/ Credits Allocated
Partnership Name Income (Loss) to Partnership
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Perry County Housing, Ltd. $ 50,000 $ (9,000) 99%
Pine Hill Housing, Ltd. 58,000 (10,000) 99%
Rociada Partners Ltd. 85,000 (21,000) 99%
Wadley Housing, Ltd. 43,000 (13,000) 99%
Whitewater Woods Limited
Partnership 146,000 (39,000) 99%
Willcox Investment Group, an
Arizona Limited Partnership 119,000 (3,000) 99%
---------- ---------
$ 2,745,000 $ (462,000)
========== =========
</TABLE>
10
<PAGE>
Item 3. Legal Proceedings
NONE.
Item 4. Submission of Matters to a Vote of Security Holders
NONE.
PART II.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
Item 5a.
(a) The Units are not traded on a public exchange but were sold through a
public offering. It is not anticipated that any public market will develop
for the purchase and sale of any Unit and none exists. Units can be
assigned only if certain requirements in the Partnership Agreement are
satisfied.
(b) At December 31, 1998, there were 574 Limited Partners.
(c) The Partnership was not designed to provide cash distributions to Limited
Partners in circumstances other than refinancing or disposition of its
investments in Local Limited Partnerships.
(d) No unregistered securities were sold by the Partnership during 1998.
Item 5b.
NOT APPLICABLE
Item 6. Selected Financial Data
Selected balance sheet information for the Partnership is as follows as of
December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
ASSETS
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ 175,192 $ 181,313 $ 208,303 $ 238,482 $ 237,739
Investments in limited
partnerships, net 1,533,952 1,828,770 2,005,382 2,606,673 3,289,100
Receivable from limited
partnerships - - - 52,726 -
Other asseets - - 587 931 3,202
--------- --------- --------- --------- ---------
$ 1,709,144 $ 2,010,083 $ 2,214,272 $ 2,898,812 $ 3,530,041
========= ========= ========= ========= =========
LIABILITIES
Accrued fees and expenses due
to general partner and
affiliates $ 1,019,071 $ 871,377 $ 758,827 $ 650,875 $ 504,892
PARTNERS' EQUITY 690,073 1,138,706 1,455,445 2,247,937 3,025,149
--------- --------- --------- --------- ---------
$ 1,709,144 $ 2,010,083 $ 2,214,272 $ 2,898,812 $ 3,530,041
========= ========= ========= ========= =========
</TABLE>
11
<PAGE>
Selected results of operations, cash flows, and other information for the
Partnership is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Loss from operations $ (181,052) $ (173,718) $ (224,004) $ (175,049) $ (172,493)
Equity in loss from limited
partnerships (267,581) (143,021) (568,488) (602,163) (544,630)
--------- --------- --------- --------- ---------
Net loss $ (448,633) $ (316,739) $ (792,492) $ (777,212) $ (717,123)
========= ========= ========= ========= =========
Net loss allocated to:
General partner $ (4,486) $ (3,167) $ (7,925) $ (7,772) $ (7,171)
========= ========= ========= ========= =========
Limited partners $ (444,147) $ (313,572) $ (784,567) $ (769,440) $ (709,952)
========= ========= ========= ========= =========
Net loss per limited partner
unit $ (63.45) $ (44.80) $ (112.08) $ (109.92) $ (101.42)
========= ========= ========= ========= =========
Outstanding weighted limited
partner units 7,000 7,000 7,000 7,000 7,000
========= ========= ========= ========= =========
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Net cash provided by
(used in):
Operating activities $ (12,006) $ (39,229) $ (41,630) $ (5,443) $ 40,620
Investing activities 5,885 12,239 11,451 6,186 (175,289)
--------- --------- --------- --------- ---------
Net change in cash and cash
equivalents (6,121) (26,990) (30,179) 743 (134,669)
Cash and cash equivalents,
beginning of period 181,313 208,303 238,482 237,739 372,408
--------- --------- --------- --------- ---------
Cash and cash equivalents,
end of period $ 175,192 $ 181,313 $ 208,303 $ 238,482 $ 237,739
========= ========= ========= ========= =========
</TABLE>
Low Income Housing Credit per Unit was as follows for the year ended December
31:
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Federal $ 145 $ 145 $ 145 $ 145 $ 146
State - - - - -
--------- --------- --------- --------- ---------
Total $ 145 $ 145 $ 145 $ 145 $ 146
========= ========= ========= ========= =========
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
Financial Condition
The Partnership's assets at December 31, 1998 consisted primarily of $175,000 in
cash and aggregate investments in the twenty-seven Local Limited Partnerships of
$1,534,000. Liabilities at December 31, 1998 primarily consisted of $1,016,000
of accrued annual management fees due to the General Partners.
12
<PAGE>
Results of Operations
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. The
Partnership's net loss for 1998 was $(449,000), reflecting an increase of
$132,000 from the net loss experienced in 1997. The increase in net loss is
primarily due to equity in losses from limited partnerships which increased to
$(268,000) in 1998 from $(143,000) in 1997.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. The
Partnership's net loss for 1997 was $(317,000), reflecting a decrease of
$475,000 from the net loss experienced in 1996. The decline in net loss is
primarily due to equity in losses from limited partnerships which declined to
$(143,000) in 1997 from $(568,000) in 1996, because the investments in certain
Local Limited Partnerships reached $0 during 1997. Losses from operations in
1997 were $(174,000) compared to $(224,000) in 1996. The reduction in losses
from operations were a result of operating expenses declining from $234,000 in
1996 to $180,000 in 1997.
Cash Flows
Year Ended December 31, 1998 Compared to Year Ended December 31, 1997. Net cash
used in 1998 was $(6,000), compared to net cash used in 1997 of $(27,000). The
change was due primarily to a decrease in operating costs paid to third parties
and a decline in distributions from Local Limited Partnerships.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996. Net cash
used in 1997 was $(27,000), compared to $(30,000) in 1996. The change was due
primarily to an increase in distributions from limited partnerships and a
decrease in operating expenses.
During 1998 accrued payables, which consist primarily of related party
management fees due to the General Partner, increased by $148,000. The General
Partner does not anticipate that these accrued fees will be paid until such time
as capital reserves are in excess of future forseeable working capital
requirements of the Partnership.
The Partnership expects its future cash flows, together with its net available
assets at December 31, 1998, to be sufficient to meet all currently forseeable
future cash requirements.
Impact of Year 2000
The General Partner has assessed the Partnership's exposure to date sensitive
computer systems that may not be operative subsequent to 1999. As a result of
this assessment, the General Partner has executed a plan to minimize the
Partnership's exposure to financial loss and/or disruption of normal business
operations that may occur as a result of Year 2000 non-compliant computer
systems.
Business Computer Systems
These systems include both computer hardware and software applications relating
to operations such as financial reporting. The Partnership does not maintain its
own systems and thus utilizes the computer systems of the General Partner. The
General Partner developed a compliance plan for each of its business computer
systems, with particular attention given to critical systems. The General
Partner contracted with an outside vendor to evaluate, test and repair such
systems. The assessment consisted of determining the compliance with Year 2000
of critical computer hardware and software. Incidences of non-compliance were
found with respect to computer software applications and were corrected. The
vendor found no instances of non-compliance with respect to computer hardware.
The amount expended and to be expended by the General Partner is nominal.
13
<PAGE>
The Local General Partners or property managers maintain the business computer
systems that relate to the operations of the Local Limited Partnerships. The
General Partner is in the process of obtaining completed questionnaires from
such Local General Partners and property management companies to assess their
respective Year 2000 readiness. The General Partner intends to identify those
Local General Partners and property management companies that have systems
critical to the operations of the Local Limited Partnerships that are not Year
2000 compliant. For those Local General Partners and property management
companies which have business computer systems which will not be Year 2000
compliant prior to the Year 2000 and where the lack of such compliance is
determined to have a potential material effect on the Partnership's financial
condition and results of operations, the General Partner intends to develop
contingency plans which may include changing property management companies.
Outside Vendors
The General Partner has obtained assurances from its suppliers of electrical
power and banking and telecommunication services that their critical systems are
all Year 2000 compliant. There exists, however, inherent uncertainty that all
systems of outside vendors or other third parties on which the General Partner,
and thus the Partnership, and the Local General Partners and property management
companies, and thus the Local Limited Partnerships rely will be Year 2000
compliant. Therefore, the Partnership remains susceptible to the consequences of
third party critical computer systems being non-compliant.
Personal Computers
The General Partner has determined that its personal computers and related
software critical to the operations of the Partnership are Year 2000 compliant.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
NOT APPLICABLE
Item 8. Financial Statements and Supplementary Data
14
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
with
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
15
<PAGE>
Report of Independent Certified Public Accountants
To the Partners
WNC Housing Tax Credit Fund II, L.P.
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
II, L.P. (a California Limited Partnership) (the "Partnership") as of December
31, 1998, and the related statements of operations, partners' equity (deficit)
and cash flows for the year then ended. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audit. We did not audit
the financial statements of the limited partnerships in which WNC Housing Tax
Credit Fund II, L.P. is a limited partner. These investments, as discussed in
Note 2 to the financial statements, are accounted for by the equity method. The
investments in these limited partnerships represented 90% of the total assets of
WNC Housing Tax Credit Fund II, L.P. at December 31, 1998. Substantially all of
the financial statements of the limited partnerships were audited by other
auditors whose reports have been furnished to us, and our opinion, insofar as it
relates to the amounts included for these limited partnerships, is based solely
on the reports of the other auditors.
We conducted our audit 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 audit and the reports of the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audit and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund II, L.P. (A California
Limited Partnership) as of December 31, 1998, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.
BDO SEIDMAN, LLP
Orange County, California
April 1, 1999
16
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Partners
WNC Housing Tax Credit Fund II, L.P.
We have audited the accompanying balance sheet of WNC Housing Tax Credit Fund
II, L.P. ( a California Limited Partnership) (the "Partnership") as of December
31, 1997, and the related statements of operations, partners' equity (deficit)
and cash flows for each of the years in the two-year period ended December 31,
1997. These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these financial
statements based on our audit. We did not audit the financial statements of the
limited partnerships in which WNC Housing Tax Credit Fund II, L.P. is a limited
partner. These investments, as discussed in Note 2 to the financial statements,
are accounted for by the equity method. The investments in these limited
partnerships represented 91% of the total assets of WNC Housing Tax Credit Fund
II, L.P. at December 31, 1997. The financial statements of the limited
partnerships were audited by other auditors whose reports have been furnished to
us, and our opinion, insofar as it relates to the amounts included for these
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 the other auditors provide a
reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of WNC Housing Tax Credit Fund II, L.P. (a California
Limited Partnership) as of December 31, 1997, and the results of its operations
and its cash flows for each of the years in the two-year period ended December
31, 1997, in conformity with generally accepted accounting principles.
CORBIN & WERTZ
Irvine, California
March 13, 1998
17
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
BALANCE SHEETS
December 31, 1998 and 1997
1998 1997
---- ----
ASSETS
Cash and cash equivalents $ 175,192 $ 181,313
Investments in limited
partnerships (Note 2) 1,533,952 1,828,770
--------------- ----------------
$ 1,709,144 $ 2,010,083
=============== ================
LIABILITIES AND PARTNERS'
EQUITY (DEFICIT)
Liabilities:
Accrued fees and expenses due to
general partner
and affiliates (Note 3) $ 1,019,071 $ 871,377
--------------- ----------------
Commitments and contingencies
Partners' equity (deficit):
General partner (52,641) (48,155)
Limited partners (12,000
units authorized;
7,000 units issued and
outstanding) 742,714 1,186,861
--------------- ---------------
Total partners' equity 690,073 1,138,706
--------------- ---------------
$ 1,709,144 $ 2,010,083
=============== ===============
See accompanying notes to financial statements
18
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF OPERATIONS
For The Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
---- ---- ----
Interest income $ 9,224 $ 5,785 $ 10,157
----------- ----------- ------------
Operating expenses:
Amortization (Note 3) 21,352 21,352 21,352
Asset management fees (Note 3) 144,903 144,903 144,903
Other 24,021 13,248 67,906
----------- ----------- ------------
Total operating expenses 190,276 179,503 234,161
----------- ----------- ------------
Loss from operations (181,052) (173,718) (224,004)
Equity in losses from
limited partnerships (Note 2) (267,581) (143,021) (568,488)
----------- ----------- ------------
Net loss $ (448,633) $ (316,739) $ (792,492)
=========== =========== ============
Net loss allocated to:
General partner $ (4,486) $ (3,167) $ (7,925)
=========== =========== ============
Limited partners $ (444,147) $ (313,572) $ (784,567)
=========== =========== ============
Net loss per limited partner
unit $ (63.45) $ (44.80) $ (112.08)
=========== =========== ============
Outstanding weighted limited
partner units 7,000 7,000 7,000
=========== =========== ============
See accompanying notes to financial statements
19
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For The Years Ended December 31, 1998, 1997 and 1996
General Partner Limited Partners Total
--------------- ---------------- -----
Partners' equity (deficit)
at January 1, 1996 $ (37,063) $ 2,285,000 $ 2,247,937
Net loss (7,925) (784,567) (792,492)
------------ ------------- -------------
Partners' equity (deficit)
at December 31, 1996 (44,988) 1,500,433 1,455,445
Net loss (3,167) (313,572) (316,739)
------------ ------------- -------------
Partners' equity (deficit)
at December 31, 1997 (48,155) 1,186,861 1,138,706
Net loss (4,486) (444,147) (448,633)
------------ ------------- -------------
Partners' equity (deficit)
at December 31, 1998 $ (52,641) $ 742,714 $ 690,073
============ ============= =============
See accompanying notes to financial statements
20
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
STATEMENTS OF CASH FLOWS
For The Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (448,633) $ (316,739) $ (792,492)
Write-off of receivables from limited partnerships - - 52,726
Adjustments to reconcile net loss to net cash used
in operating activities:
Amortization 21,352 21,352 21,352
Equity in losses from limited partnerships 267,581 143,021 568,488
Change in other assets - 587 344
Increase in accrued fees and expenses due to
general partner and affiliates 147,694 112,550 107,952
------------- ------------- --------------
Net cash used in operating activities (12,006) (39,229) (41,630)
------------- ------------- --------------
Cash flows provided by investing activities:
Distributions from limited partnerships 5,885 12,239 11,451
------------- ------------- --------------
Net decrease in cash and cash equivalents (6,121) (26,990) (30,179)
Cash and cash equivalents, beginning of year 181,313 208,303 238,482
------------- ------------- --------------
Cash and cash equivalents, end of year $ 175,192 $ 181,313 $ 208,303
============= ============= ==============
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Taxes paid $ 800 $ 800 $ 800
============= ============= ==============
</TABLE>
See accompanying notes to financial statements
21
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
WNC Housing Tax Credit Fund II, L.P., a California Limited Partnership (the
"Partnership"), was formed on January 19, 1990 under the laws of the State of
California. The Partnership was formed to invest primarily in other limited
partnerships (the "Local Limited Partnerships") which own and operate
multifamily housing complexes (the "Housing Complex") that are eligible for low
income housing tax credits. The local general partners (the "Local General
Partners") of each Local Limited Partnership retain responsibility for
maintaining, operating and managing the Housing Complex.
The general partner is WNC Financial Group, L.P., a California partnership (the
"General Partner") of the Partnership. WNC & Associates, Inc. ("WNC") is the
general partner of the General Partner. Wilfred N. Cooper, Sr., through the
Cooper Revocable Trust, owns 66.8% of the outstanding stock of WNC. John B.
Lester, Jr. is the original limited partner of the Partnership and owns, through
the Lester Family Trust, 28.6% of the outstanding stock of WNC.
The Partnership shall continue in full force and effect until December 31, 2045
unless terminated prior to that date pursuant to the partnership agreement or
law.
The financial statements include only activity relating to the business of the
Partnership, and do not give effect to any assets that the partners may have
outside of their interests in the Partnership, or to any obligations, including
income taxes, of the partners.
The Partnership Agreement authorized the sale of up to 12,000 units at $1,000
per Unit ("Units"). The offering of Units concluded on December 31, 1992 at
which time 7,000 Units representing subscriptions in the amount of $7,000,000
had been accepted. The General Partner has a 1% interest in operating profits
and losses, taxable income and loss and in cash available for distribution from
the Partnership. The limited partners will be allocated the remaining 99%
interest in proportion to their respective investments.
After the limited partners have received proceeds from a sale or refinancing
equal to their capital contributions and their return on investment (as defined
in the Partnership Agreement) and the General Partner has received a
subordinated disposition fee (as described in Note 3), any additional sale or
refinancing proceeds will be distributed 95% to the limited partners (in
proportion to their respective investments) and 5% to the General Partner.
Risks and Uncertainties
The Partnership's investments in Local Limited Partnerships are subject to the
risks incident to the management and ownership of low-income housing and to the
management and ownership of multi-unit residential real estate. Some of these
risks are that the low income housing credit could be recaptured and that
neither the Partnership's investments nor the Housing Complexes owned by the
Local Limited Partnerships will be readily marketable. To the extent the Housing
Complexes receive government financing or operating subsidies, they may be
subject to one or more of the following risks: difficulties in obtaining tenants
for the Housing Complexes; difficulties in obtaining rent increases; limitations
on cash distributions; limitations on sales or refinancing of Housing Complexes;
limitations on transfers of Local Limited Partnership Interests; limitations on
removal of Local General Partners; limitations on subsidy programs; and possible
changes in applicable regulations. The Housing Complexes are or will be subject
22
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
to mortgage indebtedness. If a Local Limited Partnership does not make its
mortgage payments, the lender could foreclose resulting in a loss of the Housing
Complex and low income housing credits. As a limited partner of the Local
Limited Partnerships, the Partnership will have very limited rights with respect
to management of the Local Limited Partnerships, and will rely totally on the
Local General Partners of the Local Limited Partnerships for management of the
Local Limited Partnerships. The value of the Partnership's investments will be
subject to changes in national and local economic conditions, including
unemployment conditions, 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 Housing Complexes and the
Partnership. In addition, each Local Limited Partnership is subject to risks
relating to environmental hazards and natural disasters which might be
uninsurable. Because the Partnership's 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 the anticipated low income housing
credits will be available to Limited Partners.
In addition Limited Partners are subject to risks in that the rules governing
the low income housing credit are complicated, and the use of credits can be
limited. The only material benefit from an investment in Units may be the low
income housing credits. There are limits in the transferability of Units, and it
is unlikely that a market for Units will develop. All management decisions will
be made by the General Partner.
Method of Accounting For Investments in Limited Partnerships
The Partnership accounts for its investments in limited partnerships using the
equity method of accounting, whereby the Partnership adjusts its investment
balance for its share of the Local Limited Partnership's results of operations
and for any distributions received. The accounting policies of the Local Limited
Partnerships are consistent with those of the Partnership. Costs incurred by the
Partnership in acquiring the investments are capitalized as part of the
investment account and are being amortized over 30 years (see Note 2).
Losses from Local Limited Partnerships allocated to the Partnership are not
recognized to the extent that the investment balance would be adjusted below
zero.
Offering Expenses
Offering expenses consist of underwriting commissions, legal fees, printing,
filing and recordation fees, and other costs incurred with selling limited
partnership interests in the Partnership. The General Partner is obligated to
pay all offering and organization costs in excess of 15% (including sales
commissions) of the total offering proceeds. Offering expenses are reflected as
a reduction of partners' capital and amounted to $1,036,840 as of December 31,
1998 and 1997.
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
the reported amounts of revenues and expenses during the reporting period.
Actual results could materially differ from those estimates.
Cash and Cash Equivalents
The Partnership considers all highly liquid investments with remaining
maturities of three months or less when purchased to be cash equivalents. As of
December 31, 1998 and 1997, the Partnership had cash equivalents totaling
$143,633 and $135,471, respectively.
23
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
Concentration of Credit Risk
At December 31, 1998, the Partnership maintained cash balances at certain
financial institutions in excess of the federally insured maximum.
Reclassifications
Certain prior year balances have been reclassified to conform to the 1998
presentation.
Net Loss Per Limited Partner Unit
Net loss per limited partnership unit is calculated pursuant to Statement of
Financial Accounting Standards No. 128, Earnings Per Share. Net loss per unit
includes no dilution and is computed by dividing net loss available to limited
partners by the weighted average number of units outstanding during the period.
Calculation of diluted net income per unit is not required.
Reporting Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 130, Reporting Comprehensive Income. This statement establishes
standards for reporting the components of comprehensive income and requires that
all items that are required to be recognized under accounting standards as
components of comprehensive income be included in a financial statement that is
displayed with the same prominence as other financial statements. Comprehensive
income includes net income as well as certain items that are reported directly
within a separate component of Partners' equity and bypass net income. The
Partnership adopted the provisions of this statement in 1998. For the years
presented, the Partnership has no elements of other comprehensive income, as
defined by SFAS No. 130.
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS
As of December 31, 1998, the Partnership had acquired limited partnership
interests in twenty-seven Local Limited Partnerships, each of which owns one
Housing Complex consisting of an aggregate of 784 apartment units. The
respective general partners of the Local Limited Partnerships manage the
day-to-day operations of the entities. Significant Local Limited Partnership
business decisions, as defined, require the approval of the Partnership. The
Partnership, as a limited partner, is generally entitled to 99%, as specified in
the Local Limited Partnership agreements, of the operating profits and losses of
the Local Limited Partnerships.
The Partnership's investment in Local Limited Partnerships shown in the balance
sheets at December 31, 1998 and 1997 are approximately $1,028,000 and $905,000,
respectively, greater than the Partnership's equity as shown in the Local
Limited Partnership's combined financial statements. This difference is
primarily due to unrecorded losses, as discussed below, acquisition, selection
and other costs related to the acquisition of the investments which have been
capitalized in the Partnership's investment account. Capitalized costs are being
amortized over 30 years.
Equity in losses of the Local Limited Partnerships is 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 are not
recognized. If the Local Limited Partnerships report net income in future years,
the Partnership will resume applying the equity method only after its share of
such net income equals the share of net losses not recognized during the
period(s) the equity method was suspended.
Distributions received by limited partners are accounted for as a reduction of
the investment balance. Distributions received after the investment has reached
zero are recognized as income.
24
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
At December 31, 1998, the investment accounts in certain limited partnerships
have reached a zero balance. Consequently, the Partnership's share of losses
during the year ended December 31, 1998 amounting to approximately $189,571 have
not been recognized. As of December 31, 1998, the aggregate share of net losses
not recognized by the Partnership amounted to $616,000.
The following is a summary of the equity method activity of the investments in
Local Limited Partnerships for the years ended December 31:
1998 1997
---- ----
Investments per balance sheet,
beginning of year $ 1,828,770 $ 2,005,382
Equity in losses from limited
partnerships (267,581) (143,021)
Distributions paid (5,885) (12,239)
Amortization of paid acquisition
costs and fees (21,352) (21,352)
--------------- ----------------
Investments per balance sheet,
end of year $ 1,533,952 $ 1,828,770
=============== ================
The financial information from the individual financial statements of the Local
Limited Partnerships include rental and interest subsidies. Rental subsidies are
included in total revenues and interest subsidies are generally netted in
interest expense. Approximate combined condensed financial information from the
individual financial statements of the Local Limited Partnerships as of December
31 and for the years then ended is as follows:
COMBINED CONDENSED BALANCE SHEETS
1998 1997
---- ----
ASSETS
Buildings and improvements,
net of accumulated
depreciation of $6,940,000
and $6,159,000 for 1998
and 1997, respectively $ 22,025,000 $ 22,715,000
Land 1,354,000 1,354,000
Other assets 2,023,000 1,812,000
--------------- ----------------
$ 25,402,000 $ 25,881,000
=============== ================
LIABILITIES
Mortgage loans payable $ 23,510,000 $ 23,195,000
Due to related parties 183,000 137,000
Other liabilities 445,000 846,000
--------------- ----------------
24,138,000 24,178,000
--------------- ----------------
PARTNERS' CAPITAL
WNC Housing Tax Credit
Fund II, L.P. 506,000 924,000
Other partners 758,000 779,000
--------------- ----------------
1,264,000 1,703,000
--------------- ----------------
$ 25,402,000 $ 25,881,000
=============== ================
25
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 2 - INVESTMENTS IN LIMITED PARTNERSHIPS, continued
COMBINED CONDENSED STATEMENTS OF OPERATIONS
1998 1997 1996
---- ---- ----
Total revenues, including
interest and rent
subsidies $ 3,273,000 $ 3,179,000 $ 3,068,000
------------ ------------ ------------
Expenses:
Operating expenses 1,951,000 1,984,000 1,837,000
Interest expense 953,000 920,000 937,000
Depreciation and
amortization 831,000 851,000 868,000
------------ ------------ ------------
Total expenses 3,735,000 3,755,000 3,642,000
------------ ------------ ------------
Net loss $ (462,000) $ (576,000) $ (574,000)
============ ============ ============
Net loss allocable
to the Partnership $ (457,000) $ (570,000) $ (568,000)
============ ============ ============
Net loss recorded by
the Partnership $ (268,000) $ (143,000) $ (568,000)
============ ============ ============
Certain Local Limited Partnerships incurred operating losses and have working
capital deficiencies. In the event these Local Limited Partnerships continue to
incur significant operating losses, additional capital contributions by the
Partnership and/or the Local General Partner may be required to sustain the
operations of such Local Limited Partnerships. If additional capital
contributions are not made when they are required, the Partnership's investment
in certain of such Local Limited Partnerships could be impaired.
NOTE 3 - RELATED PARTY TRANSACTIONS
Under the terms of the Partnership Agreement, the Partnership has paid or is
obligated to the General Partner or its affiliates for the following items:
Acquisition fees of up to 9% of the gross proceeds from the sale of
Units as compensation for services rendered in connection with the
acquisition of Local Limited Partnerships. As of December 31, 1998 and
1997, the Partnership incurred acquisition fees of $630,000.
Accumulated amortization of these capitalized costs was $160,730 and
$139,731 as of December 31, 1998 and 1997, respectively.
26
<PAGE>
WNC HOUSING TAX CREDIT FUND II, L.P.
(A California Limited Partnership)
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1998, 1997 and 1996
NOTE 3 - RELATED PARTY TRANSACTIONS, continued
Reimbursement of costs incurred by an affiliate of WNC in connection
with the acquisition of Local Limited Partnerships. These
reimbursements have not exceeded 1.7% of the gross proceeds. As of
December 31, 1998 and 1997, the Partnership incurred acquisition costs
of $10,581 which have been included in investments in limited
partnerships. Accumulated amortization was $3,149 and $2,796 as of
December 31, 1998 and 1997, respectively.
An annual management fee equal to 0.5% of the invested assets of the
Local Limited Partnerships, including the Partnership's allocable
share of the mortgages. Management fees of $144,903 were incurred
during 1998, 1997 and 1996, respectively, of which $0, $32,000 and
$35,000 were paid in 1998, 1997 and 1996, respectively.
A subordinated disposition fee in an amount equal to 1% of the sales
price of any real estate sold. Payment of this fee is subordinated to
the limited partners who receive a 6% preferred return (as defined in
the Partnership Agreement) and is payable only if the General Partner
or its affiliates render services in the sales effort.
The accrued fees and expenses due to General Partner and affiliates as of
December 31, 1998 and 1997 consist of the following:
1998 1997
---- ----
Advances from WNC $ 3,056 $ 263
Accrued asset management fees 1,016,015 871,114
--------------- ----------------
$ 1,019,071 $ 871,377
=============== ================
The General Partner does not anticipate that these accrued fees will be paid
until such time as capital reserves are in excess of future foreseeable working
capital requirements of the Partnership.
NOTE 4 - INCOME TAXES
No provision for income taxes has been recorded in the accompanying financial
statements as any liability for income taxes is the obligation of the partners
of the Partnership.
27
<PAGE>
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
(a)(1)
(i) On December 16, 1998, Corbin & Wertz, Irvine, California was dismissed as
the Partnership's principal independent accountant.
(ii) During the last two fiscal years of the Partnership, the reports of Corbin
& Wertz respecting the financial statements of the Partnership did not
contain an adverse opinion or a disclaimer of opinion, nor were any such
reports qualified or modified as to uncertainty, audit scope or accounting
principles.
(iii) The decision to change accountants was approved by the board of directors
of WNC & Associates, Inc., the general partner of the Partnership.
(iv) During the last two fiscal years and subsequent interim period of the
Partnership there were no disagreements between Corbin & Wertz and the
Partnership on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure of the nature
described in Item 304(a)(1)(iv) of Securities and Exchange Commission
Regulation S-K.
(v) During the last two fiscal years and subsequent interim period of the
Partnership there were no reportable events of the nature described in
Item 304(a)(1)(v) of Securities and Exchange Commission Regulation S-K.
(a)(2)
On December 16, 1998, BDO Seidman, LLP, Costa Mesa, California was engaged as
the Partnership's principal independent accountant. During the last two fiscal
years and subsequent interim period of the Partnership, the Partnership did not
consult BDO Seidman, LLP regarding (i) either, the application of accounting
principles to a specified transaction; or the type of audit opinion that might
be rendered on the Partnership's financial statements, or (ii) any matter that
was the subject of a disagreement (as defined in Item 304(a)(1)(iv) of
Securities and Exchange Commission Regulation S-K) or was a reportable event (as
defined in Item 304(a)(1)(v) of Securities and Exchange Commission Regulation
S-K).
PART III.
Item 10. Directors and Executive Officers of the Registrant
The Partnership has no directors or executive officers of its own. The following
biographical information is presented for the directors and executive officers
of Associates which has principal responsibility for the Partnership's affairs.
Directors and Executive Officers of WNC & Associates, Inc.
The directors of WNC & Associates, Inc. are Wilfred N. Cooper, Sr., who serves
as Chairman of the Board, John B. Lester, Jr., David N. Shafer, Wilfred N.
Cooper, Jr. and Kay L. Cooper. The principal shareholders of WNC & Associates,
Inc. are trusts established by Wilfred N. Cooper, Sr. and John B. Lester, Jr.
Wilfred N. Cooper, Sr., age 68, is the founder, Chief Executive Officer and a
Director of WNC & Associates, Inc., a Director of WNC Capital Corporation, and a
general partner in some of the programs previously sponsored by the Sponsor. Mr.
Cooper has been involved in real estate investment and acquisition activities
since 1968. Previously, during 1970 and 1971, he was founder and principal of
Creative Equity Development Corporation, a predecessor of WNC & Associates,
Inc., and of Creative Equity Corporation, a real estate investment firm. For 12
years prior to that, Mr. Cooper was employed by Rockwell International
Corporation, last serving as its manager of housing and urban developments where
he had responsibility for factory-built housing evaluation and project
management in urban planning and development. Mr. Cooper is a Director of the
28
<PAGE>
National Association of Home Builders (NAHB) and a National Trustee for NAHB's
Political Action Committee, a Director of the National Housing Conference (NHC)
and a member of NHC's Executive Committee and a Director of the National
Multi-Housing Council (NMHC). Mr. Cooper graduated from Pomona College in 1956
with a Bachelor of Arts degree.
John B. Lester, Jr., age 65, is President, a Director, Secretary and a member of
the Acquisition Committee of WNC & Associates, Inc., and a Director of WNC
Capital Corporation. Mr. Lester has 27 years of experience in engineering and
construction and has been involved in real estate investment and acquisition
activities since 1986 when he joined the Sponsor. Previously, he was Chairman of
the Board and Vice President or President of E & L Associates, Inc., a provider
of engineering and construction services to the oil refinery and petrochemical
industries, which he co-founded in 1973. Mr. Lester graduated from the
University of Southern California in 1956 with a Bachelor of Science degree in
Mechanical Engineering.
Wilfred N. Cooper, Jr., age 36, is Executive Vice President, a Director and a
member of the Acquisition Committee of WNC & Associates, Inc. He is President
of, and a registered principal with, WNC Capital Corporation, a member firm of
the NASD, and is a Director of WNC Management, Inc. He has been involved in
investment and acquisition activities with respect to real estate since he
joined the Sponsor in 1988. Prior to this, he served as Government Affairs
Assistant with Honda North America in Washington, D.C. Mr. Cooper is a member of
the Advisory Board for LIHC Monthly Report, a Director of NMHC and an Alternate
Director of NAHB. He graduated from The American University in 1985 with a
Bachelor of Arts degree.
David N. Shafer, age 46, is Senior Vice President, a Director, General Counsel,
and a member of the Acquisition Committee of WNC & Associates, Inc., and a
Director and Secretary of WNC Management, Inc. Mr. Shafer has been involved in
real estate investment and acquisition activities since 1984. Prior to joining
the Sponsor in 1990, he was practicing law with a specialty in real estate and
taxation. Mr. Shafer is a Director and President of the California Council of
Affordable Housing and a member of the State Bar of California. Mr. Shafer
graduated from the University of California at Santa Barbara in 1978 with a
Bachelor of Arts degree, from the New England School of Law in 1983 with a Juris
Doctor degree (cum laude) and from the University of San Diego in 1986 with a
Master of Law degree in Taxation.
Michael L. Dickenson, age 42, is Vice President and Chief Financial Officer, and
a member of the Acquisition Committee of WNC & Associates, Inc., and Chief
Financial Officer of WNC Management, Inc. He has been involved with acquisition
and investment activities with respect to real estate since 1985. Prior to
joining the Sponsor in March 1999, he was the Director of Financial Services at
TrizecHahn Centers Inc., a developer and operator of commercial real estate,
from 1995 to 1999, a Senior Manager with E&Y Kenneth Leventhal Real Estate
Group, Ernst & Young, LLP, from 1988 to 1995, and Vice President of Finance with
Great Southwest Companies, a commercial and residential real estate developer,
from 1985 to 1988. Mr. Dickenson is a member of the Financial Accounting
Standards Committee for the National Association of Real Estate Companies and
the American Institute of Certified Public Accountants, and a Director of
HomeAid Southern California, a charitable organization affiliated with the
building industry. He graduated from Texas Tech University in 1978 with a
Bachelor of Business Administration - Accounting degree, and is a Certified
Public Accountant in California and Texas.
Thomas J. Riha, age 44, is Vice President - Asset Management and a member of the
Acquisition Committee of WNC & Associates, Inc. and a Director and Chief
Executive Officer of WNC Management, Inc. Mr. Riha has been involved in
acquisition and investment activities with respect to real estate since 1979.
Prior to joining the Sponsor in 1994, Mr. Riha was employed by Trust Realty
Advisor, a real estate acquisition and management company, last serving as Vice
President - Operations. Mr. Riha graduated from the California State University,
Fullerton in 1977 with a Bachelor of Arts degree (cum laude) in Business
Administration with a concentration in Accounting and is a Certified Public
Accountant and a member of the American Institute of Certified Public
Accountants.
29
<PAGE>
Sy P. Garban, age 53, is Vice President - National Sales of WNC & Associates,
Inc. and has been employed by the Sponsor since 1989. Mr. Garban has been
involved in real estate investment activities since 1978. Prior to joining the
Sponsor he served as Executive Vice President of MRW, Inc., a real estate
development and management firm. Mr. Garban is a member of the International
Association of Financial Planners. He graduated from Michigan State University
in 1967 with a Bachelor of Science degree in Business Administration.
N. Paul Buckland, age 36, is Vice President - Acquisitions of WNC & Associates,
Inc. He has been involved in real estate acquisitions and investments since 1986
and has been employed with WNC & Associates, Inc. since 1994. Prior to that, he
served on the development team of the Bixby Ranch that constructed apartment
units and Class A office space in California and neighboring states, and as a
land acquisition coordinator with Lincoln Property Company where he identified
and analyzed multi-family developments. Mr. Buckland graduated from California
State University, Fullerton in 1992 with a Bachelor of Science degree in
Business Finance.
David Turek, age 44, is Vice President - Originations of WNC & Associates, Inc.
He has been involved with real estate investment and finance activities since
1976 and has been employed by WNC & Associates, Inc. since 1996. From 1995 to
1996, Mr. Turek served as a consultant for a national Tax Credit sponsor where
he was responsible for on-site feasibility studies and due diligence analyses of
Tax Credit properties. From 1990 to 1995, he was involved in the development of
conventional and tax credit multi-family housing. He is a Director with the
Texas Council for Affordable Rural Housing and graduated from Southern Methodist
University in 1976 with a Bachelor of Business Administration degree.
Kay L. Cooper, age 62, is a Director of WNC & Associates, Inc. Mrs. Cooper was
the founder and sole proprietor of Agate 108, a manufacturer and retailer of
home accessory products, from 1975 until 1998. She is the wife of Wilfred N.
Cooper, Sr., the mother of Wilfred N. Cooper, Jr. and the sister of John B.
Lester, Jr. Ms. Cooper graduated from the University of Southern California in
1958 with a Bachelor of Science degree.
Item 11. Executive Compensation
The Partnership has no officers, employees, or directors. However, under the
terms of the Partnership Agreement the Partnership is obligated to the General
Partner or Associates for the following fees:
(a) Annual Asset Management Fee. An annual asset management fee in an amount
equal to 0.5% of invested assets (the sum of the Partnership's Investment
in Local Limited Partnership Interests and the Partnership's allocable
share of the amount of the mortgage loans on and other debts related to,
the Housing Complexes owned by such Local Limited Partnerships). Fees of
$144,903 were incurred for 1998. The Partnership paid the General Partner
or its affiliates $0 of those fees in 1998.
(b) Subordinated Disposition Fee. A subordinated disposition fee in an amount
equal to 1% of the sale price received in connection with the sale or
disposition of a Housing Complex. Subordinated disposition fees will be
subordinated to the prior return of the Limited Partners' capital
contributions and payment of the Return on Investment to the Limited
Partners. "Return on Investment" means an annual, cumulative but not
compounded, "return" to the Limited Partners (including Low Income Housing
Credits) as a class on their adjusted capital contributions commencing for
each Limited Partner on the last day of the calendar quarter during which
the Limited Partner's capital contribution is received by the Partnership,
calculated at the following rate; 6% for the balance of the Partnership's
term. No disposition fees have been paid.
(c) Operating Expenses. The Partnership reimbursed the General Partner or its
affiliates for operating expenses of approximately $3,000 during the year
ended December 31, 1998.
(d) Interest in Partnership. The General Partners receive 1% of the
Partnership's allocated Low Income Housing Credits, which approximated
$10,000 for the General Partners for the year ended December 31, 1998. The
General Partners are also entitled to receive 1% of cash distributions.
There were no distributions of cash to the General Partners during the year
ended December 31, 1998.
30
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
No person is known to the General Partner to own beneficially in
excess of 5% of the outstanding units.
(b) Security Ownership of Management
Neither the General Partners, their affiliates, nor any of the officers
or directors of the Corporate General Partner or its affiliates own
directly or beneficially any Units in the Partnership.
(c) Changes in Control
The management and control of the Corporate General Partner may be
changed at any time in accordance with their respective organizational
documents, without the consent or approval of the Limited Partners. In
addition, the Partnership Agreement provides for the admission of one
or more additional and successor General Partners in certain
circumstances.
First, with the consent of any other General Partners and a
majority-in-interest of the Limited Partners, any General Partner may
designate one or more persons to be successor or additional General
Partners. In addition, any General Partner may, without the consent of
any other General Partner or the Limited Partners, (i) substitute in
its stead as General Partner any entity which has, by merger,
consolidation or otherwise, acquired substantially all of its assets,
stock or other evidence of equity interest and continued its business,
or (ii) cause to be admitted to the Partnership an additional General
Partner or Partners if it deems such admission to be necessary or
desirable so that the Partnership will be classified a partnership for
Federal income tax purposes. Finally, a majority-in-interest of the
Limited Partners may at any time remove the General Partner of the
Partnership and elect a successor General Partner.
Item 13. Certain Relationships and Related Transactions
The General Partners manage all of the Partnership's affairs. The transactions
with the General Partners are primarily in the form of fees paid by the
Partnership for services rendered to the Partnership and the General Partners'
interests in the Partnership, as discussed in Item 11 and in the notes to the
Partnership's financial statements.
31
<PAGE>
PART IV.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a)(1) Financial statements included in Part II hereof:
Report of Independent Certified Public Accountants
Independent Auditors' Report
Balance Sheets, December 31, 1998 and 1997
Statements of Operations for the years ended December 31, 1998, 1997
and 1996
Statements of Partners' Equity(Deficit) for the years ended December
31, 1998, 1997 and 1996
Statements of Cash Flows for the years ended December 31, 1998, 1997
and 1996
Notes to Financial Statements
(a)(2) Financial statement schedule included in Part IV hereof:
Report of Independent Certified Public Accountants on Financial
Statement Schedule
Schedule III - Real Estate Owned by Local Limited Partnerships
(b) Reports on Form 8-K.
1. A Form 8-K dated December 16, 1998 was filed on December 22, 1998
reporting the dismissal of the Partnership's former auditors and the
engagement of new auditors. No financial statements were included.
(c) Exhibits.
3.1 Articles of incorporation and by-laws: The registrant is not
incorporated. The Partnership Agreement dated as of January 19, 1990 is
included as Exhibit B to the Prospectus, filed as Exhibit 28.1 to Form
10 K for the year ended December 31, 1994 is hereby incorporated herein
as exhibit 3.1.
10.1 Amended and Restated Agreement of Limited Partnership of DiVall
Midland Associates Limited Partnership II filed as exhibit 10.1 on
Form 10-K dated December 31, 1992 is hereby incorporated herein as
exhibit 10.1.
10.2 Amended and Restated Agreement of Limited Partnership of Airport
Road Associates, Limited filed as exhibit 10.2 on Form 10-K dated
December 31, 1992 is hereby incorporated herein as exhibit 10.2.
10.3 Amended and Restated Agreement of Limited Partnership of Arizona I
Limited Partnership filed as exhibit 10.3 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.3.
10.4 Amended and Restated Agreement of Limited Partnership of Cherokee
Square, L.P. filed as exhibit 10.4 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.4.
10.5 Amended and Restated Agreement of Limited Partnership of Ashland
Investment Group filed as exhibit 10.5 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.5.
10.6 Amended and Restated Agreement of Limited Partnership of Brian's
Village Apartments filed as exhibit 10.6 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.6.
10.7 Amended and Restated Agreement of Limited Partnership of Emory
Capital, L.P. filed as exhibit 10.7 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.7.
10.8 Amended and Restated Agreement of Limited Partnership of Emory Manor,
L.P. filed as exhibit 10.8 on Form 10-K dated December 31, 1992 is
hereby incorporated herein as exhibit 10.8.
10.9 Amended and Restated Agreement of Limited Partnership of Jefferson
Capital, L.P. filed as exhibit 10.9 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.9.
32
<PAGE>
10.10 Amended and Restated Agreement of Limited Partnership of Jefferson
Manor, L.P. filed as exhibit 10.10 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.10.
10.11 Amended and Restated Agreement of Limited Partnership of Rociada
Partners, Ltd. filed as exhibit 10.11 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.11.
10.12 Amended and Restated Agreement of Limited Partnership of Wilcox
Investment Group filed as exhibit 10.12 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.12.
10.13 Amended and Restated Agreement of Limited Partnership of Casa Allegre
filed as exhibit 10.13 on Form 10-K dated December 31, 1992 is hereby
incorporated herein as exhibit 10.13.
10.14 Amended and Restated Agreement of Limited Partnership of Lakeview
Limited Partnership filed as exhibit 10.14on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.14.
10.15 Amended and Restated Agreement of Limited Partnership of Whitewater
Woods Limited Partnership filed as exhibit 10.15 on Form 10-K dated
December 31, 1992 is hereby incorporated herein as exhibit 10.15.
10.16 Amended and Restated Agreement of Limited Partnership of Castroville
Village, Ltd. filed as exhibit 10.16 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.16.
10.17 Amended and Restated Agreement of Limited Partnership of Idalou Manor,
L.P. filed as exhibit 10.17 on Form 10-K dated December 31, 1992 is
hereby incorporated herein as exhibit 10.17.
10.18 Amended and Restated Agreement of Limited Partnership of Littlefield
Manor, L.P. filed as exhibit 10.18 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.18.
10.19 Amended and Restated Agreement of Limited Partnership of Am-Kent
Associates, Ltd. filed as exhibit 10.19 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.19.
10.20 Amended and Restated Agreement of Limited Partnership of Brantley
Housing, Ltd. filed as exhibit 10.20 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.20.
10.21 Amended and Restated Agreement of Limited Partnership of Candleridge
of Perry, L.P. filed as exhibit 10.21 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.21.
10.22 Amended and Restated Agreement of Limited Partnership of Candleridge
of Runnells, L.P. filed as exhibit 10.22 on Form 10-K dated December
31, 1992 is hereby incorporated herein as exhibit 10.22.
10.23 Amended and Restated Agreement of Limited Partnership of Perry County
Housing, Ltd. filed as exhibit 10.23 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.23.
10.24 Amended and Restated Agreement of Limited Partnership of Eclectric
Housing, Ltd. filed as exhibit 10.24 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.24.
10.25 Amended and Restated Agreement of Limited Partnership of Pine Hill
Housing, Ltd. filed as exhibit 10.25 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.25.
10.26 Amended and Restated Agreement of Limited Partnership of Wadley
Housing, Ltd. filed as exhibit 10.26 on Form 10-K dated December 31,
1992 is hereby incorporated herein as exhibit 10.26.
(d) Financial statement schedule follows, as set forth in subsection (a)(2)
hereof.
33
<PAGE>
To the Partners
WNC Housing Tax Credit Fund II, L.P.
The audit referred to in our report dated April 1, 1999, relating to the 1998
financial statements of WNC Housing Tax Credit Fund II, L.P. (the
"Partnership"), which is contained in Item 8 of this Form 10-K, included the
audit of the accompanying financial statement schedule. The financial statement
schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based upon our audit.
In our opinion, such financial statement schedule presents fairly, in all
material respects, the financial information set forth therein.
BDO SEIDMAN, LLP
Orange County, California
April 1, 1999
34
<PAGE>
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
As of December 31, 1998
--------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Airport Road Slidell,
Associates, Limited Louisiana $ 334,000 $ 334,000 $ 1,450,000 $ 1,858,000 $ 580,000 $ 1,278,000
Am-Kent Associates, Amite &
Ltd. Kentwood,
Louisiana 232,000 232,000 1,119,000 1,585,000 424,000 1,161,000
Arizona I Limited Showlow,
Partnership Arizona 320,000 320,000 1,487,000 1,968,000 412,000 1,556,000
Ashland Investment Group, Ashland,
an Oregon Limited Oregon 300,000 300,000 1,390,000 1,824,000 351,000 1,473,000
Partnership
Brantley Housing, Ltd. Brantley,
Alabama 108,000 108,000 575,000 699,000 139,000 560,000
Brian's Village Apartments, Mannford,
an Oklahoma Limited Oklahoma 176,000 176,000 757,000 974,000 292,000 682,000
Partnership.
Candleridge Apartments of Perry, Iowa 93,000 93,000 595,000 747,000 180,000 567,000
Perry, L.P.
Candleridge Apartments of Runnells, 58,000 58,000 377,000 471,000 114,000 357,000
Runnells, L.P. Iowa
Casa Allegre Limited Las Vegas,
Partnership New Mexico 318,000 318,000 1,394,000 1,835,000 374,000 1,461,000
Castroville Village, Ltd. Castroville,
Texas 165,000 165,000 954,000 1,151,000 165,000 986,000
</TABLE>
35
<PAGE>
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------
As of December 31, 1998
-------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cherokee Square, L.P. Rogersville,
Tennessee $ 202,000 $ 202,000 $ 978,000 $ 1,225,000 $ 202,000 $ 1,023,000
Divall Midland Associates Port
Limited Partnership II Washington,
Wisconsin 234,000 234,000 1,159,000 1,483,000 425,000 1,058,000
Eclectic Housing, Ltd. Eclectic,
Alabama 74,000 74,000 414,000 499,000 108,000 391,000
Elizabeth Square Raceland,
Associates, Ltd. Louisiana 356,000 356,000 1,477,000 2,063,000 487,000 1,576,000
Emory Capital, L.P. Emory, Texas
85,000 85,000 369,000 486,000 150,000 336,000
Emory Manor, L.P. Emory, Texas
128,000 128,000 552,000 740,000 211,000 529,000
Idalou Manor, L.P. Idalou,
Texas 122,000 122,000 619,000 773,000 135,000 638,000
Jefferson Capital, L.P. Jefferson,
Texas 167,000 167,000 714,000 962,000 286,000 676,000
Jefferson Manor, L.P. Jefferson,
Texas 179,000 179,000 763,000 1,004,000 304,000 700,000
</TABLE>
36
<PAGE>
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------
As of December 31, 1998
----------------------------------------------------------------------------------------------
Total Investment Amount of Encumbrances of Net
in Local Limited Investment Local Limited Property and Accumulated Book
Partnership Name Location Partnerships Paid to Date Partnerships Equipment Depreciation Value
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cherokee Square, L.P. Rogersville,
Lakeview Limited Beaver Dam,
Partnership Wisconsin $ 264,000 $ 264,000 $ 1,240,000 $ 1,585,000 $ 325,000 $ 1,260,000
Littlefield Manor, L.P. Littlefield,
Texas 117,000 117,000 595,000 744,000 133,000 611,000
Perry County Housing, Ltd. Uniontown,
Alabama 82,000 82,000 440,000 523,000 107,000 416,000
Pine Hill Housing, Ltd. Pine Hill,
Alabama 105,000 105,000 564,000 668,000 125,000 543,000
Rociada Partners Ltd. Hereford,
Texas 154,000 154,000 731,000 922,000 195,000 727,000
Wadley Housing, Ltd. Wadley,
Alabama 76,000 76,000 440,000 521,000 102,000 419,000
Whitewater Woods Limited Whitewater,
Partnership Wisconsin 301,000 301,000 1,297,000 1,687,000 351,000 1,336,000
Willcox Investment Group, Willcox,
an Arizona Arizona 246,000 246,000 1,060,000 1,322,000 263,000 1,059,000
Limited Partnership -------- -------- ---------- ---------- -------- ----------
$ 4,996,000 $ 4,996,000 $ 23,510,000 $ 30,319,000 $6,940,000 $ 23,379,000
========== ========== =========== =========== ========= ===========
</TABLE>
37
<PAGE>
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Airport Road Associates, Limited $ 152,000 $ (39,000) 1990 Completed 27.5
Am-Kent Associates, Ltd. 123,000 (40,000) 1991 Completed 27.5
Arizona I Limited Partnership 129,000 (65,000) 1990 Completed 35
Ashland Investment Group, an Oregon
Limited Partnership 168,000 27,000 1990 Completed 50
Brantley Housing, Ltd. 54,000 (12,000) 1992 Completed 40
Brian's Village Apartments,
an Oklahoma Limited Partnership 102,000 (14,000) 1990 Completed 30
Candleridge Apartments of Perry, L.P. 117,000 (9,000) 1992 Completed 27.5
Candleridge Apartments of Runnells, L.P. 88,000 (5,000) 1992 Completed 27.5
Casa Allegre Limited Partnership 172,000 20,000 1990 Completed 40
Castroville Village, Ltd. 146,000 (8,000) 1991 Completed 50
Cherokee Square, L.P. 87,000 (19,000) 1990 Completed 50
Divall Midland Associates Limited
Partnership II 126,000 (31,000) 1990 Completed 27.5
Eclectic Housing, Ltd. 41,000 (10,000) 1992 Completed 40
Elizabeth Square Associates, Ltd. 158,000 (45,000) 1994 Completed 27.5
Emory Capital, L.P. 52,000 (12,000) 1990 Completed 27.5
</TABLE>
38
<PAGE>
WNC Housing Tax Credit Fund II
Schedule III
Real Estate Owned by Local Limited Partnerships
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------
For the year ended December 31, 1998
-------------------------------------------------------------------------------------
Year Investment Estimated Useful
Partnership Name Rental Income Net Income\(Loss) Acquired Status Life (Years)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Emory Manor, L.P. $ 77,000 $ (30,000) 1990 Completed 30
Idalou Manor, L.P. 75,000 (15,000) 1992 Completed 40
Jefferson Capital, L.P. 82,000 (11,000) 1990 Completed 50
Jefferson Manor, L.P. 78,000 (13,000) 1990 Completed 50
Lakeview Limited Partnership 142,000 (21,000) 1991 Completed 35
Littlefield Manor, L.P. 75,000 (15,000) 1991 Completed 40
Perry County Housing, Ltd. 50,000 (9,000) 1992 Completed 40
Pine Hill Housing, Ltd. 58,000 (10,000) 1992 Completed 40
Rociada Partners Ltd. 85,000 (21,000) 1990 Completed 40
Wadley Housing, Ltd. 43,000 (13,000) 1992 Completed 40
Whitewater Woods Limited Partnership 146,000 (39,000) 1991 Completed 35
Willcox Investment Group, an Arizona
Limited Partnership $ 119,000 $ (3,000) 1990 Completed 50
--------- ---------
$ 2,745,000 $ (462,000)
========= =========
</TABLE>
39
<PAGE>
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.
WNC HOUSING TAX CREDIT FUND II, L.P.
By: WNC Financial Group, L.P. General Partner of the Registrant
By: WNC & Associates, Inc. General Partner of WNC Financial Group, L.P.
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., President of WNC & Associates, Inc.
Date: June 21, 1999
By: /s/ Michael L. Dickenson
Michael L. Dickenson,
Vice-President - Chief Financial Officer of WNC & Associates, Inc.
Date: June 21, 1999
By: /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., General Partner
Date: June 21, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
By /s/ Wilfred N. Cooper, Sr.
Wilfred N. Cooper, Sr., Chairman of the Board of WNC & Associates, Inc.
Date: June 21, 1999
By: /s/ John B. Lester, Jr.
John B. Lester, Jr., Director of WNC & Associates, Inc.
Date: June 21, 1999
By: /s/ David N. Shafer
David N Shafer, Director of WNC & Associates, Inc.
Date: June 21, 1999
40
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000860331
<NAME> WNC HOUSING TAX CREDIT FUND II, L.P.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<EXCHANGE-RATE> 1
<CASH> 175,192
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 175,192
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,709,144
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 690,073
<TOTAL-LIABILITY-AND-EQUITY> 1,709,144
<SALES> 0
<TOTAL-REVENUES> 9,224
<CGS> 0
<TOTAL-COSTS> 190,276
<OTHER-EXPENSES> 267,581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (448,633)
<INCOME-TAX> 0
<INCOME-CONTINUING> (448,633)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (448,633)
<EPS-BASIC> (63.45)
<EPS-DILUTED> 0
</TABLE>
