SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 2001 Commission file number 2-90654
AMRECORP REALTY FUND II
(Exact name of registrant as specified in its charter)
TEXAS 75-1956009
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification Number)
2800 N Dallas Parkway Suite 100
Plano, Texas 75093
(Address of principal executive offices)
Registrant's telephone number, including area code: (972)836-8000.
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: Y No:
REGISTRANT IS A LIMITED PARTNERSHIP
TABLE OF CONTENTS
Item 1. Financial Statements
The following Unaudited financial statements are filed herewith:
Consolidated Balance Sheet as of September 30, 2001 and
December 31, 2000 Page 3
Consolidated Statements of Operations for the Three & Nine months
Ended September 30, 2001 and 2000 Page 4
Consolidated Statements of Cash Flows for the Nine months Ended
September 30, 2001 and 2000 Page 5
Item 2. Results of Operations and Management's Discussion and Analysis of
Financial Condition Page 6
Liquidity and Capital Resources Page 7
Other Information Page 8
Signatures Page 10
The statements, insofar as they relate to the period subsequent to
December 31, 2000 are Unaudited.
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Balance Sheets
September 30, December 31,
2001 2000
(Unaudited)
ASSETS
Real Estate assets, at cost $580,045 $580,045
Land 4,653,056 4,653,056
Buildings and improvements 5,233,101 5,233,101
Less: Accumulated (3,258,199) (3,114,199)
depreciation
Real estate, net 1,974,902 2,118,902
Investments in Real Estate
Held for Sale
Cash including cash 366,199 210,193
investments
Escrow deposits 198,056 220,453
Deferred Costs and Fees 37,200 28,509
Other assets 1,150 7,961
Total assets $2,577,507 $2,586,018
LIABILITIES AND PARTNERS' EDQUITY:
LIABILITIES:
Mortgage and notes payable $2,248,115 $2,285,057
Payable to Affiliates 2,712 0
Interest payable 0 17,757
Real estate taxes payable 76,515 0
Security deposits 19,101 18,301
Accounts payable and accrued 77,735 143,975
expenses
Total liabilities 2,424,178 2,465,090
PARTNERS CAPITAL (DEFICIT):
Limited Partners 234,448 202,373
General Partners (81,119) (81,445)
Total Partners Capital 153,329 120,928
(Deficit)
Total Liability and $2,577,507 $2,586,018
Partners Equity
See notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
REVENUES 2001 2000 2001 2000
Rental income $214,370 $212,307 $635,028 $625,342
Other property 7,750 5,503 23,365 25,744
Total revenues 222,120 217,810 658,393 651,086
EXPENSES
Salaries & wages 22,433 19,794 58,624 55,476
Maintenance & repairs 14,868 15,101 42,881 45,709
Utilities 9,713 7,299 25,983 20,834
Real estate taxes 25,500 24,334 76,500 71,836
General administrative 20,069 12,122 35,115 32,994
Contract services 10,323 9,786 31,272 29,453
Insurance 5,637 4,667 15,536 12,507
Interest 52,587 53,634 158,538 161,802
Depreciation and 48,000 50,000 144,000 150,000
amortization
Property management fees 10,945 10,806 32,412 31,973
Amortization of 1,712 1,711 5,133 5,132
deferred costs and fees
Total expense 221,787 209,254 625,994 617,716
NET INCOME (LOSS) $333 $8,556 $32,399 $33,370
NET INCOME PER SHARE $0.02 $0.59 $2.23 $2.29
See Notes to Condensed Consolidated Financial Statements
AMRECORP REALTY FUND II
Condensed Consolidated Statement of Cash Flows
Unaudited
Nine Months Ended
September 30,
2001 2000
CASH FLOWS FROM OPERATING ACTIVITY
Net income (loss) $32,399 $33,370
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization 144,000 150,000
Net Effect of changes in operating accounts
Escrow deposits 22,397 (5,263)
Deferred Costs (8,691) (6,498)
Accrued real estate taxes 76,515 71,836
Security deposits 800 (551)
Accounts payable (66,240) (55,905)
Other assets 6,811 5,531
Net cash used by operating activities 207,991 192,520
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used by operating activities 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage notes payable (36,942) (33,465)
Distribution to Limited Partners 0 (363,596)
Proceeds from amounts due affiliates 2,712 738
Increase in accrued interest (17,757) (18,161)
Net cash provided by investing (51,987) (414,484)
activities
NET INCREASE (DECREASE) IN CASH AND 156,004 (221,964)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF 210,193 378,479
PERIOD
CASH AND CASH EQUIVALENT, END OF PERIOD $366,197 $156,515
See Notes to Condensed Consolidated Financial Statements
Basis of Presentation:
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the
Partnership believes that the disclosures are adequate to make
the information presented not misleading. It is suggested that
these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the
Partnership's latest annual report on Form 10-K.
Item 2. RESULTS OF OPERATIONS AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
Results of Operations
At September 30, 2001 the Partnership owned one property,
Chimney Square Apartments located in Abilene Texas with
approximately 126,554 net rentable square feet.
The occupancy of Chimney Square averaged 99.0% during the third
quarter of 2001 as compared to 97.4% for the third quarter of
2000.
THIRD QUARTER 2001 COMPARED TO THIRD QUARTER 2000
Revenue from property operations increased $4,310 or 1.98%, for
the third quarter of 2001, as compared to the 2000 third
quarter. The increase in rental income of $2,063 or 0.97% is
primarily due to higher rental rates. Other income increased
$2,247 or 40.83% primarily due to increased late charges and
other fees. The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $2,063 0.97%
Other property 2,247 40.83%
$4,310 1.98%
Property operating expenses increased $12,532 or 5.99%, for the
third quarter of 2001, as compared to the same period in 2000.
This was primarily due to an increase in general &
administrative due to increased mailing costs. Utilities
increased $2,414 or 33.07% due to higher electric and water
costs. Insurance costs increased $970 or 20.78% from increased
premiums. Salaries and wages increased $2,639 or 13.33% due to
higher salaries. The following table illustrates the
components by category:
Increase Percent
(Decrease) Change
Salaries & wages $2,639 13.33%
Maintenance & repairs (233) 1.54%
Utilities 2,414 33.07%
Real estate taxes 1,166 4.79%
General administrative 7,947 65.56%
Contract services 537 5.49%
Insurance 970 20.78%
Interest (1,047) 1.95%
Depreciation and amortization (2,000) 4.00%
Property management fees 139 1.29%
Net Increase $12,532 5.99%
(Decrease)
THIRD QUARTER 2000 COMPARED TO THIRD QUARTER 1999
Revenue from property operations increased $8,448 or 4.04%, for
the third quarter of 2000, as compared to the 1999 third
quarter. The increase in rental income of $9,288 or 4.57% is
primarily due to higher rental rates. Other income decreased
$840 or 13.24% primarily due to decreased late charges and
other fees. The following table illustrates the components:
Increase Percent
(Decrease) Change
Rental income $9,288 4.57%
Other property (840) 13.24%
$8,448 4.04%
Property operating expenses increased $393 or 0.19%, for the
third quarter of 2000, as compared to the same period in 1999.
This was primarily due from decreased general and
administrative. General and administrative costs decreased
$7,091 or 36.91% from decreases in postage related mailings.
Maintenance & repairs decreased $1,803 or 10.67% due to reduced
turnover of residents. Real estate taxes increased $2,917 or
13.62% primarily due to increased assessments on the property.
Insurance increased $900 or 23.89% with the annual policy
renewal. The following table illustrates the components by
category:
Increase Percent
(Decrease) Change
Salaries & wages $4,218 27.08%
Maintenance & repairs (1,803) 10.67%
Utilities (148) 1.99%
Real estate taxes 2,917 13.62%
General administrative (7,091) 36.91%
Contract services (82) 0.83%
Insurance 900 23.89%
Interest (956) 1.75%
Depreciation and amortization 2,000 4.17%
Property management fees 438 4.22%
Net Increase $393 0.19%
(Decrease)
LIQUIDITY AND CAPITAL RESOURCES
While it is the General Partners primary intention to operate
and manage the existing real estate investments, the General
Partner also continually evaluates this investment in light of
current economic conditions and trends to determine if these
assets should be considered for disposal. Accordingly, in 1996
the Partnership sold its investment in the shopping center
located in Lancaster, Texas, recognizing a loss of $10,177.
Shorewood Apartments, an apartment complex located in
Charlotte, North Carolina was sold in January 1997. Net
proceeds from the sale was 1.3 million dollars resulting in
cash distribution of $100.00 per unit.
As of September 30, 2001, the Partnership had $366,199 in cash
and cash equivalents as compared to $210,193 as of December 31
2000. The net increase in cash of $156,006 is principally due
to cash flow from operations.
The property is encumbered by non-recourse mortgage as of
September 30, 2001, with an interest rate of 9.325%. Required
principal payments on this mortgage note for the three years
ended December 31, 2003, are $44,680, $49,029 and $53,082
respectively.
For the foreseeable future, the Partnership anticipates that
mortgage principal payments (excluding balloon mortgage
payments), improvements and capital expenditures will be funded
by net cash from operations. The primary source of capital to
fund future Partnership acquisitions and balloon mortgage
payments will be proceeds from the sale, financing or
refinancing of the properties.
On February 7, 1995 the Partnership refinanced the loan on
Chimney Square Apartments. The original loan matured and a new
$2,475,000 loan bearing interest at 9.325% per year was secured
from Newport Mortgage Company L.P. The loan matures on March 1,
2005. In connection with this loan, the lender required, and
the Partnership provided, a new single asset partnership known
as Chimney Square Apartments, owned 99% by the Fund.
In February, 1991, Amrecorp Realty Inc., resigned as the
Managing General Partner of the Partnership. As was
communicated to all limited partners, this step was taken in
order to minimize any effect that Amrecorp's financial
difficulties might have on the partnership. Management of the
Partnership's assets is performed by Univesco, Inc., a Texas
corporation, Robert J. Werra, CEO.
Management intends to continue operating the Partnership in its
present form while investigating options to improve operations
of the Partnership.
Part II
Other Information
Item 1. Legal Proceedings
See Part I Item 2. Management's Discussion
and Analysis of Financial Conditions and
Results of Operations.
Item 2. Changes in Securities.
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
None
(A) The following documents are filed herewith or
incorporated herein by reference as indicated
as Exhibits:
Exhibit Designation Document Description
3 Limited Partnership Agreement
incorporated by reference
to Registration Statement
No. 2-90654 effective July 6, 1984.
4 Limited Partnership Agreement
incorporated by reference to
Registration Statement No. 2-90654
effective July 6, 1984.
11 Not Applicable
15 Not Applicable
18 Not Applicable
19 Not Applicable
20 Not Applicable
23 Not Applicable
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
AMRECORP REALTY FUND II
a Texas limited partnership
By: /s/ Robert J. Werra
Robert J. Werra,
General Partner
Date: November 1, 2001