SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
Commission File Number 33-37704
INDEPENDENCE TAX CREDIT PLUS L.P. II
------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3646846
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
625 Madison Avenue, New York, New York 10022
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 421-5333
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 ____
---
<PAGE>
PART I
Item 1. Financial Statements
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
<S> <C> <C>
Property and equipment at cost, net of accumulated depreciation
of $4,274,788 and $2,959,862, respectively $84,824,596 $80,526,910
Construction in progress 17,753,201 19,121,823
Cash and cash equivalents 8,101,607 13,646,746
Cash held in escrow 2,991,365 2,653,919
Deferred costs, net of accumulated amortization of $113,671 and
$84,906, respectively 528,904 544,330
Other assets 388,901 434,794
------------ ------------
Total assets $114,588,574 $116,928,522
============ ============
LIABILITIES AND PARTNERS' CAPITAL
Liabilities:
Mortgage notes payable $41,724,602 $37,687,695
Construction loan payable 17,834,220 18,214,849
Accounts payable and other liabilities 3,982,241 5,569,729
Due to local general partners and affiliates 3,617,803 6,565,952
Due to general partner and affiliates 111,078 48,755
------------ ------------
Total liabilities 67,269,944 68,086,980
------------ ------------
Minority interest 574,082 750,595
------------ ------------
Commitments and contingencies (Note 3)
Partners' capital:
Limited partners (58,928 BACs issued and outstanding) 46,801,052 48,133,987
General partner (56,504) (43,040)
------------ ------------
Total partners' capital 46,744,548 48,090,947
------------ ------------
Total liabilities and partners' capital $114,588,574 $116,928,522
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
----------------------------- ------------------------------
1996 1995 1996 1995
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 1,459,663 $ 1,088,067 $ 2,812,148 $ 2,004,091
Other income 87,915 163,498 204,314 644,646
----------- ----------- ------------ -----------
Total revenues 1,547,578 1,251,565 3,016,462 2,648,737
----------- ----------- ------------ -----------
Expenses
General and administrative 397,732 550,251 740,120 869,521
General and administrative -
related parties (Note 2) 101,339 209,775 197,548 401,335
Repairs and maintenance 284,528 187,133 522,652 289,928
Operating and other 153,234 118,620 325,862 248,283
Real estate taxes 203,269 207,513 339,859 328,960
Insurance 84,116 17,368 211,811 42,998
Financial, principally interest 339,443 311,093 686,221 411,166
Depreciation and amortization 786,796 338,232 1,343,979 673,925
----------- ----------- ------------ -----------
Total expenses 2,350,457 1,939,985 4,368,052 3,266,116
----------- ----------- ------------ -----------
Net loss before minority interest (802,879) (688,420) (1,351,590) (617,379)
Minority interest in loss of
subsidiary partnerships 2,886 3,455 5,191 2,746
----------- ----------- ------------ -----------
Net loss $ (799,993) $ (684,965) $ (1,346,399) $ (614,633)
=========== =========== ============ ===========
Net loss - limited partners $ (791,993) $ (678,115) $ (1,332,935) $ (608,487)
=========== =========== ============ ===========
Number of BAC's outstanding 58,928 58,928 58,928 58,928
=========== =========== ============ ===========
Net loss per BAC $ (13.44) $ (11.51) $ (22.62) $ (10.33)
=========== =========== ============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
<TABLE>
<CAPTION>
Total Limited Partners General Partner
<S> <C> <C> <C>
Partners' capital - April 1, 1996 $48,090,947 $48,133,987 $ (43,040)
Net loss (1,346,399) (1,332,935) (13,464)
----------- ----------- ------------
Partners' capital - September 30, 1996 $46,744,548 $46,801,052 $ (56,504)
=========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended September 30,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,346,399) $ (614,633)
Adjustments to reconcile net loss to net cash (used in) provided by operating
activities:
Depreciation and amortization 1,343,979 673,925
Minority interest in loss of subsidiaries (5,191) (2,746)
Decrease in accounts payable and other liabilities (1,138,761) (321,769)
(Increase) decrease in cash held in escrow (77,827) 1,051,359
Decrease in other assets 45,893 18,212
Increase in due to local general partners and affiliates 1,040,656 198,308
Decrease in due to local general partners and affiliates (1,354,422) (857,419)
Increase (decrease) in due to general partner and affiliates 62,323 (41,117)
----------- -----------
Total adjustments (83,350) 718,753
----------- -----------
Net cash (used in) provided by operating activities (1,429,749) 104,120
----------- -----------
Cash flows used in investing activities:
Acquisition of property and equipment (242,828) (1,521,550)
Increase in construction in progress (4,001,162) (14,565,802)
(Increase) decrease in cash held in escrow (259,619) 535,275
Increase in deferred costs 0 (29,559)
Increase in due to local general partners and affiliates 0 161,254
Decrease in due to local general partners and affiliates (2,634,383) (608,137)
Decrease in accounts payable and other liabilities (448,727) (1,141,710)
----------- -----------
Net cash used in investing activities (7,586,719) (17,170,229)
----------- -----------
Cash flows from financing activities:
Proceeds from mortgage notes 159,360 942,885
Principal payments of mortgage notes (1,148,075) (147,931)
Proceeds from construction loans 4,644,993 9,137,925
Increase in deferred costs (13,627) (5,000)
Increase in due to general partner and affiliates 0 26,342
(Decrease) increase in capitalization of consolidated subsidiaries
attributable to minority interest (171,322) 26,296
----------- -----------
Net cash provided by financing activities 3,471,329 9,980,517
----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
DECREASE IN CASH AND CASH EQUIVALENTS
(continued)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended September 30,
------------------------------
1996 1995
----------- ------------
<S> <C> <C>
Net decrease in cash and cash equivalents (5,545,139) (7,085,592)
Cash and cash equivalents at beginning of period 13,646,746 29,045,148
---------- -----------
Cash and cash equivalents at end of period $8,101,607 $21,959,556
========== ===========
Supplemental disclosure of noncash investing and financing activities:
Capitalization of deferred acquisition costs $ 0 $ 817,887
Property and equipment reclassified from construction in progress 5,369,784 13,200,586
Conversion of construction notes payable to mortgage notes payable 5,025,622 0
</TABLE>
See accompanying notes to consolidated financial statements.
-6-
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
NOTE 1 - General
Independence Tax Credit Plus L.P. II (the "Partnership") was
organized on February 11, 1992, and commenced its public offering on January 19,
1993. The general partner of the Partnership is Related Independence Associates
L.P., a Delaware limited partnership (the "General Partner").
The Partnership's business is to invest in other partnerships
("Local Partnerships", "subsidiaries" or "subsidiary partnerships") owning
leveraged apartment complexes that are eligible for the low-income housing tax
credit ("Housing Tax Credit") enacted in the Tax Reform Act of 1986, some of
which complexes may also be eligible for the historic rehabilitation tax credit
("Historic Tax Credit"; together with Housing Tax Credits, "Tax Credits").
As of September 30, 1996, the Partnership has acquired an interest
in fifteen Local Partnerships. The Partnership does not intend to acquire
additional properties. Through the rights of the Partnership and/or an affiliate
of the General Partner, which affiliate has a contractual obligation to act on
behalf of the Partnership, to remove the general partner of the subsidiary local
partnerships and to approve certain major operating and financial decisions, the
Partnership has a controlling financial interest in the subsidiary local
partnerships.
The Partnership was authorized to issue a total of 100,000
($100,000,000) Beneficial Assignment Certificates ("BACs") which have been
registered with the Securities and Exchange Commission for sale to the public.
Each BAC represents all of the economic and virtually all of the ownership
rights attributable to a limited partnership interest. As of April 7, 1994 (the
date on which the offering was terminated), the Partnership raised a total of
$58,928,000 (before volume discounts of $2,000) representing 58,928 BACs.
The terms of the Amended and Restated Agreement of the Limited
Partnership provide, among other things, that, net profits or losses and
distributions of cash flow are, in general, allocated 99% to the limited
partners and BACs holders and 1% to the General Partner.
The Partnership's fiscal quarter ends September 30. All
subsidiaries have fiscal quarters ending June 30. Accounts of the subsidiaries
have been adjusted for intercompany transactions from July 1 through September
30.
All intercompany accounts and transactions with the subsidiary
partnerships have been eliminated in consolidation.
Increases (decreases) in the capitalization of consolidated
subsidiaries attributable to minority interest arise from cash contributions and
cash distributions to the minority interest partners.
Losses attributable to minority interests which exceed the
minority interests' investment in a subsidiary have been charged to the
Partnership. Such losses aggregated approximately $5,000 and $1,000 and $7,000
and $1,000 for the three and six months ended September 30, 1996 and 1995,
respectively. The Partnership's investment in each subsidiary is equal to the
respective subsidiary's partners' equity less minority interest capital, if any.
In consolidation, all subsidiary partnership losses are included in the
Partnership's capital account except for losses allocated to minority interest
capital.
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Partnership is required to review long-lived assets
and
-7-
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
NOTE 1 - General (continued)
certain identifiable intangibles for impairment whenever events or changes
in circumstances indicate that the book value of an asset may not be
recoverable. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective April 1, 1996, the Partnership adopted SFAS No. 121, consistent with
the required adoption period.
Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. As
required by SFAS 121, a provision for loss on impairment of assets is recorded
when estimated amounts recoverable through future operations and sale of the
property on an undiscounted basis are below depreciated cost. However,
depreciated cost, adjusted for such reductions in value, if any, may be greater
than the fair value. Property investments themselves are reduced to estimated
fair value (generally using discounted cash flows) when the property is
considered to be impaired and the depreciated cost exceeds estimated fair value.
Through September 30, 1996, the Partnership has not recorded any provisions for
loss on impairment of assets or reduction to estimated fair value.
Certain information and note disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been omitted or condensed. These condensed financial statements
should be read in conjunction with the financial statements and notes thereto
included in Partnership's Annual Report on Form 10-K for the period ended March
31, 1996.
The books and records of the Partnership are maintained on the
accrual basis of accounting in accordance with generally accepted accounting
principles. In the opinion of the General Partners of the Partnership, the
accompanying unaudited financial statements contain all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the financial
position of the Partnership as of September 30, 1996, the results of operations
for the three and six months ended September 30, 1996 and 1995 and changes in
cash flows for the six months ended September 30, 1996 and 1995. However, the
operating results for the six months ended September 30, 1996 may not be
indicative of the results for the year.
NOTE 2 - Related Party Transactions
An affiliate of the General Partner has a .01% interest as a
special limited partner, in each of the Local Partnerships.
The General Partner and its affiliates perform services for the
Partnership. The costs incurred to related parties for the three and six months
ended September 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
----------------------------- ----------------------------
1996 1995 1996 1995
----------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Partnership management
fees (a) $ 25,000 $ 135,921 $ 50,000 $ 271,842
Expense reimbursement (b) 23,627 13,927 50,616 45,544
Property management fees (c) 49,712 55,927 90,932 75,949
Local administrative fee (d) 3,000 4,000 6,000 8,000
--------- --------- --------- ---------
$ 101,339 $ 209,775 $ 197,548 $ 401,335
========= ========= ========= =========
</TABLE>
-8-
<PAGE>
INDEPENDENCE TAX CREDIT PLUS L.P. II
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(Unaudited)
NOTE 2 - Related Party Transactions (continued)
(a) The General Partner is entitled to receive a partnership
management fee, after payment of all Partnership expenses, which together with
the annual local administrative fees will not exceed a maximum of 0.5% per annum
of invested assets (as defined in the Partnership Agreement), for administering
the affairs of the Partnership. Subject to the foregoing limitation, the
partnership management fee will be determined by the General Partner in its sole
discretion based upon its review of the Partnership's investments. Unpaid
partnership management fees for any year will be accrued without interest and
will be payable from working capital reserves or to the extent of available
funds after the Partnership has made distributions to the limited partners of
sale or refinancing proceeds equal to their original capital contributions plus
a 10% priority return thereon (to the extent not theretofore paid out of cash
flow). Partnership management fees owed to the General Partner amounting to
approximately $77,000 and $27,000 were accrued and unpaid as of September 30,
1996 and March 31, 1996, respectively.
(b) The Partnership reimburses the General Partners and their
affiliates for actual Partnership operating expenses incurred by the General
Partners and their affiliates on the Partnership's behalf. The amount of
reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. Another affiliate of the General Partners performs asset
monitoring for the Partnership. These services include site visits and
evaluations of the subsidiary partnerships' performance.
(c) Property management fees incurred by Local Partnerships
amounted to $117,431 and $86,393 and $176,631 and $141,048 for the three and six
months ended September 30, 1996 and 1995, respectively. Of these fees, $49,712
and $55,927 and $90,932 and $75,949 were incurred to affiliates of the
subsidiary partnerships' General Partners.
(d) Independence SLP, L.P., a limited partner of the
subsidiary partnerships is entitled to receive a local administrative fee of up
to $5,000 per year from each subsidiary partnership.
NOTE 3 - Commitments and Contingencies
There were no changes and/or additions to disclosures regarding
the subsidiary partnerships which were included in the Partnership's Annual
Report on Form 10-K for the period ended March 31, 1996.
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
- -------------------------------
The Partnership's primary source of funds is the proceeds of its
offering. Other sources of funds include interest earned on such proceeds which
will be invested in tax-exempt money market instruments pending acquisition of
Local Partnerships and a working capital reserve. The offering terminated as of
April 7, 1994. The Partnership has received $58,928,000 (including volume
discounts of $2,000) in gross proceeds for BACs pursuant to a public offering
resulting in net proceeds available for investment of approximately $46,848,000
after volume discounts, payment of sales commissions, acquisition fees and
expenses, organization and offering expenses and establishment of a working
capital reserve.
As of September 30, 1996, the Partnership has invested
approximately $46,996,000 (not including acquisition fees of approximately
$3,502,000) of net proceeds in fifteen Local Partnerships of which approximately
$7,908,000 remains to be paid (including approximately $1,468,000 being held in
escrow) as certain benchmarks, such as occupancy level, must be attained prior
to the release of the funds. The Partnership does not intend to acquire
additional properties. During the six months ended September 30, 1996,
approximately $1,732,000 was paid to Local Partnerships, none of which was
released from escrow. An additional $225,000 was placed into escrow for purchase
price payments during the six months ended September 30, 1996. Although the
Partnership will not be acquiring additional properties, the Partnership may be
required to fund potential purchase price adjustments based on tax credit
adjustor clauses. There have been no purchase price adjustments during the six
months ended September 30, 1996.
For the six months ended September 30, 1996, cash and cash
equivalents for the Partnership and its fifteen consolidated properties
decreased approximately $5,545,000 primarily due to cash used in operating
activities ($1,430,000), an increase in construction in progress ($4,001,000), a
decrease in due to local general partners and affiliates ($2,634,000),
acquisitions of property and equipment ($243,000), an increase in cash held in
escrow ($260,000), a decrease in accounts payable and other liabilities
($449,000) and distributions to Local General Partners of ($176,000) which
exceeded proceeds from mortgage and construction loans ($3,656,000). Included in
the adjustments to reconcile the net loss to cash flow used in operations is
depreciation and amortization of approximately $1,344,000.
A working capital reserve in the original amount of approximately
$1,473,000 (2.5% of gross equity) was established from the Partnership's funds
available for investment. The working capital reserve at September 30, 1996 and
March 31, 1996 was approximately $518,000 and $567,000, respectively, which
includes amounts which may be required for potential purchase price adjustments
based on tax credit adjustor clauses. The General Partners believe that these
reserves, plus any cash distributions received from the operations of the Local
Partnerships will be sufficient to fund the Partnership's ongoing operations for
the foreseeable future. As of September 30, 1996, there have been no cash
distributions from the Local Partnerships. Management anticipates receiving
distributions in the future, although not to a level sufficient to permit
providing cash distributions to the BAC's holders.
The Partnership has negotiated development deficit guarantees with
the Local Partnerships in which it has invested. The Local General Partners have
agreed to fund development deficits through the break-even dates of each of the
Local Partnerships.
The Partnership has negotiated Operating Deficit Guaranty
Agreements with all Local Partnerships by which the general partners of the
Local Partnerships have agreed to fund operating deficits for a specified period
of time. The terms of the Operating Deficit Guaranty Agreements vary for each
Local Partnership, with maximum dollar amounts to be funded for a specified
period of time, generally three years, commencing on the break-even date. The
gross amount of the Operating Deficit Guarantees aggregates approximately
$5,670,000, none of which have expired as of September 30, 1996.
-10-
<PAGE>
The Partnership has also negotiated rent-up guaranty agreements in
which the Local General Partners agreed to pay a liquidated damage if
predetermined occupancy rates are not achieved.
The development deficit, operating deficit and the rent-up
guaranty agreements were negotiated to protect the Partnership's interest in the
Local Partnerships and to provide incentive to the Local General Partners to
generate positive cash flow.
The Partnership and BACs holders will begin to recognize Housing
Tax Credits with respect to a property when the credit period for such property
commences. Because of the time required for the acquisition, completion and
rent-up of properties, it is expected that the amount of Tax Credits per BAC
will gradually increase over the first three years of the Partnership. Housing
Tax Credits not recognized in the first three years will be recognized in the
11th through 13th years.
The Partnership's investment as a limited partner in the Local
Partnerships is subject to the risks of potential losses arising from management
and ownership of improved real estate. The Partnership's investments also could
be adversely affected by poor economic conditions generally, which could
increase vacancy levels and rental payment defaults and by increased operating
expenses, any or all of which could threaten the financial viability of one or
more of the Local Partnerships.
For discussion of contingencies affecting certain Local
Partnerships, see Note 3 to the financial statements. The resolution of the
existing contingencies is not anticipated to impact future results of
operations, liquidity or financial condition in a material way.
Management is not aware of any trends or events, commitments or
uncertainties which have not otherwise been disclosed that will or are likely to
impact liquidity in a material way. Management believes the only impact would be
from laws that have not yet been adopted. The portfolio is diversified by the
location of the properties around the United States so that if one area of the
country is experiencing downturns in the economy, the remaining properties in
the portfolio may be experiencing upswings. However, the geographic
diversification of the portfolio may not protect against a general downturn in
the national economy. The Partnership has fully invested the proceeds of its
offering in fifteen Local Partnerships, all of which fully have their tax
credits in place. The tax credits are attached to the project for a period of
ten years, and are transferable with the property during the remainder of the
ten year period. If trends in the real estate market warranted the sale of a
property, the remaining tax credits would transfer to the new owner; thereby
adding significant value to the property on the market, which are not included
in the financial statement carrying amount.
Results of Operations
- ---------------------
In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of". Under SFAS No. 121, the Partnership is required to review long-lived assets
and certain identifiable intangibles for impairment whenever events or changes
in circumstances indicate that the book value of an asset may not be
recoverable. An impairment loss should be recognized whenever the review
demonstrates that the book value of a long-lived asset is not recoverable.
Effective April 1, 1996, the Partnership adopted SFAS No. 121, consistent with
the required adoption period.
Property and equipment are carried at the lower of depreciated
cost or estimated amounts recoverable through future operations and ultimate
disposition of the property. Cost includes the purchase price, acquisition fees
and expenses, and any other costs incurred in acquiring the properties. As
required by SFAS No. 121, a provision for loss on impairment of assets is
recorded when estimated amounts recoverable through future operations and sale
of the property on an undiscounted basis are below depreciated cost. However,
depreciated cost, adjusted for such reductions in value, if any, may be greater
than the fair value. Property investments themselves are reduced to estimated
fair value (generally using discounted cash flows) when the property is
considered to be impaired and the depreciated cost exceeds estimated fair value.
Through September 30, 1996, the Partnership has not recorded any provisions for
loss on impairment of assets or reduction to estimated fair value.
-11-
<PAGE>
As of both September 30, 1996 and 1995, the Partnership had
acquired an interest in fifteen Local Partnerships, all of which were
consolidated.
The Partnership's results of operations for the three and six
months ended September 30, 1996 and 1995 consisted primarily of (1)
approximately $54,000 and $113,000 and $124,000 and $266,000, respectively, of
tax-exempt interest income earned on funds not currently invested in Local
Partnerships and (2) the results of the Partnership's investment in fifteen of
fifteen and ten of fifteen consolidated Local Partnerships, respectively.
For the three and six months ended September 30, 1996 as compared
to 1995, rental income and all categories of expenses except general and
administrative and general and administrative-related parties increased and the
results of operations are not comparable due to the continued construction and
rent up of properties. In addition, interest income will continue to decrease in
future periods as proceeds are released to the Local Partnerships. Other income
decreased approximately $76,000 and $440,000 for the three and six months ended
September 30, 1996 as compared to 1995, primarily due to a decrease in interest
income as a result of the release of proceeds to the Local Partnerships. General
and administrative expenses decreased approximately $153,000 and $129,000 for
the three and six months ended September 30, 1996 as compared to 1995, primarily
due to legal costs incurred during the second quarter of 1995 relating to the
Martha Bryant settlement of litigation. General and administrative-related
parties decreased approximately $108,000 and $204,000 for the three and six
months ended September 30, 1996 as compared to 1995, primarily due to decreases
in partnership management fees.
For the three months ended September 30, 1996 and 1995, zero and
one of the Partnership's fifteen consolidated properties, respectively,
completed construction, and were in various stages of rent up. In addition, two
and one of the properties had completed construction in a previous fiscal
quarter, and were in various stages of rent up for the three months. Also, ten
and six of the properties had completed construction and were rented up in a
previous fiscal quarter. For the six months ended September 30, 1996 and 1995,
two and five of the Partnership's fifteen consolidated properties, respectively,
completed construction, and were in various stages of rent up. In addition, zero
and two of the properties had completed construction in a previous fiscal year,
and were in various stages of rent up for the six months. Also, ten and one of
the properties had completed construction and were fully rented up in a previous
fiscal year. As of the end of the three and six months ended September 30, 1996
and 1995, three and seven of the Partnership's fifteen consolidated properties,
respectively, were still under construction and four and ten of the properties,
respectively, had construction loans with commitments for permanent financing as
of September 30, 1996 and 1995.
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule (filed herewith).
(b) Reports on Form 8-K - No reports on Form 8-K were filed during
the quarter.
-13-
<PAGE>
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.
INDEPENDENCE TAX CREDIT PLUS L.P. II
(Registrant)
By: RELATED INDEPENDENCE ASSOCIATES L.P.,
a General Partner
By: RELATED INDEPENDENCE ASSOCIATES INC.,
a General Partner
Date: November 13, 1996 By: /s/ Alan P. Hirmes
------------------
Alan P. Hirmes,
Vice President
(principal financial officer)
Date: November 13, 1996 By: /s/ Richard A. Palermo
----------------------
Richard A. Palermo,
Treasurer
(principal accounting officer)
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The Schedule contains summary financial information extracted from the
financial statements for Independence Tax Credit Plus L.P. II and is
qualified in its entirety by reference to such financial statements
(Replace this text with the legend)
</LEGEND>
<CIK> 0000907045
<NAME> Independence Tax Credit Plus L.P. II
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 11,092,972
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 917,805
<PP&E> 106,852,585
<DEPRECIATION> 4,274,788
<TOTAL-ASSETS> 114,588,574
<CURRENT-LIABILITIES> 7,711,122
<BONDS> 59,558,822
0
0
<COMMON> 0
<OTHER-SE> 47,318,630
<TOTAL-LIABILITY-AND-EQUITY> 114,588,574
<SALES> 0
<TOTAL-REVENUES> 3,016,462
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,681,831
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,221
<INCOME-PRETAX> (1,351,590)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,351,590)
<EPS-PRIMARY> (22.62)
<EPS-DILUTED> 0
</TABLE>
