SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 2O549
FORM 1O-K
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the Fiscal year ended December 31, 2006
[ ]Transition Report Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
For the Transaction Period from ________ to ________
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 (I.R.S. Employer
(Incorporation or Organization) (Identification Number)
2800 N Dallas Pkwy #100 Plano, Texas 75093-5994
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including area code(972) 836-8000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on
which Registered
None None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Interests
(Title of Class)
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 the Form 10-k. _______
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 whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Act).
Yes___ No X.
Documents Incorporated by Reference
The Prospectus dated July 6, 1985 filed pursuant to Rule 424(b) as
supplemented pursuant to Rule 424(b) on December 11, 1985
Part I
Item 1. Business
The Registrant, Amrecorp Realty Fund II, (the "Partnership"), is a
limited partnership organized under the Texas Uniform Limited
Partnership Act pursuant to a Certificate of Limited Partnership
dated April 16, 1984 and amended on July 5, 1984. As of December
31, 2006, the Partnership consisted of an individual general
partner, Mr. Robert J. Werra (the "General Partner") and 1,470
limited partners owning 14,544 limited partnership interests at
$1,000 per interest. The distribution of limited partnership
interests commenced pursuant to a Registration Statement on Form
S-11 under the Securities Act of 1933 (Registration #2-90654) as
amended.
The Partnership was organized to acquire a diversified portfolio of
income-producing real properties, primarily apartments, as well as
office buildings, industrial buildings, and other similar
properties. The Partnership intends to continue until December 31,
2014 unless terminated by an earlier sale of its Properties.
The General Partner manages the affairs of the Partnership and acts
as the Managing Agent with respect to the Partnership's properties.
The General Partner may also engage other on-site property managers
and other agents, to the extent the General Partner considers
appropriate. The General Partner makes all decisions regarding
investments in and disposition of properties and has ultimate
authority regarding all property management decisions.
The Partnership competes in the residential and commercial rental
markets. The General Partner prepared market analyses for the
property areas and determined these areas contain other like
properties which may be considered competitive on the basis of
location, amenities and rental rates.
No material expenditure has been made or is anticipated for either
Partnership-sponsored or consumer research and development
activities relating to the development or improvement of facilities
or services provided by the Partnership. There neither has been,
nor are any anticipated, material expenditures required to comply
with any Federal, State or local environmental provisions which
would materially affect the earnings or competitive position of the
Partnership.
The Partnership is engaged solely in the business of real estate
investments. Its business is believed by management to fall
entirely within a single industry segment. Management does not
anticipate that there will be any material seasonal effects upon
the operation of the Partnership.
Competition and Other Factors
The majority of the Properties' leases are of six to twelve month
terms. Accordingly, operating income is highly susceptible to
varying market conditions. Occupancy and local market rents are
driven by general market conditions which include job creation, new
construction of single and multi-family projects, and demolition
and other reduction in net supply of apartment units.
On the property owned at December 31, 2006, the Partnership has
been able to maintain a generally high occupancy level and
increasing rents primarily due to the positive relationship between
apartment unit supply and demand in the market. In addition,
operating expenses and capitalized expenditures have increased as
units are updated and made more competitive in the market place.
In March 2007, Robert Werra, the general partner, filed with the
Securities and Exchange Commission preliminary consent solicitation
material in which Mr. Werra is seeking the consent of the limited
partners for him to purchase the sole asset of Amrecorp Realty Fund
II, the Chimney Square Apartments, at a purchase price of its
appraised value of $5,250,000. This transaction is subject to
approval of limited partners holding 66-2/3 % of the limited
partnership units, excluding any units held by Robert Werra or his
affiliates. If the sale to Mr. Werra is approved and completed,
the general partner estimates that, after payment of partnership
indebtedness, the limited partners would receive a distribution
from the partnership of approximately $95 to $100 per limited
partnership unit, and the partnership would be terminated. At the
time of the filing of this Form 10-K, the partnership is working
with the Securities and Exchange Commission to finalize the consent
solicitation material in preparation for mailing the material to
the limited partners.
In 1996, the Partnership sold its commercial shopping center
located in Lancaster, Texas, receiving net proceeds of $949,649 and
recognizing a loss of $10,177. In addition, in January 1997 the
Partnership sold its apartment complex located in Charlotte, North
Carolina, for net proceeds of $4,149,635 and recognizing a gain of
$1,287,391.
Item 2. Properties
At December 31, 2006 the Partnership owned one property, Chimney
Square Apartments.
Name and Location General Description of the Property
Chimney Square A fee simple interest in seventeen
Apartments two-story residential buildings
located in Abilene, Texas purchased
in 1984, containing approximately
126,554 net rentable square feet on
approximately 7.18 acres of land.
The community consists of 128
apartment units and twenty-four
townhouse units.
Occupancy Rates
Percent
2002 2003 2004 2005 2006
Chimney Square 96.1% 94.5% 99.2% 96.9% 98.1%
The property is encumbered by a non-recourse mortgage payable. For
information regarding the encumbrances to which the property is
subject and the status of the related mortgage loan, see
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Capital Resources" contained
in Item 7 hereof and Note B to the Financial Statements and
Schedule Index contained in Item 8.
Item 3. Legal Proceedings
The Partnership is not engaged in any material legal proceedings.
Item 4. Submission of Matters to a Vote of Unit Holders
There were no matters submitted to a vote of unit holders during
the fourth quarter of the fiscal year.
By virtue of its organization as a limited partnership, the
Partnership has outstanding no securities possessing traditional
voting rights. However, as provided and qualified in the Limited
Partnership Agreement, limited partners have voting rights for,
among other things, the removal of the General Partner and
dissolution of the Partnership.
PART II
Item 5. Market for Registrant's Units and Related Unit-holders
Matters
The Partnerships outstanding securities are in the form of Limited
Partnership Interests ("Interests"). As of December 31, 2006 there
were approximately 1,470 limited partners owning 14,544 limited
partnership interests at $1,000 per interest. A public market for
trading Interests has not developed and none is expected to
develop. In addition, transfer of an Interest is restricted
pursuant to Article X, Section 2, of the Limited Partnership
Agreement.
Although a public market for trading Interests has not developed,
Everest Management, LLC has acquired 990.25 units, approximately
9%, of the outstanding Interests of the partnership from 2001
though 2005 (as reported in Item 12(b)). Also, Equity Resources
has purchased 920 units or 8.36% of the fund between 2000 and 2002.
The registrant knows of no other activity involving the sale or
acquisition of Interest.
The General Partner continues to review the Partnership's ability
to make distributions on a quarter-by-quarter basis. In 2006 and
2005 the partnership distributed $25 per limited partnership unit.
In 2004 the partnership distributed $100 per limited partnership
unit. In 2002 the partnership distributed $15 per limited
partnership unit. In 2001 the partnership distributed $20 per
limited partnership unit. In 2000 the partnership distributed $25
per limited partnership unit. In 1998 the Partnership distributed
$35 per $1000 unit due to the refinancing of Chimney Square
Apartments. In 1997 the Partnership distributed $100 per $1000
unit due to the sale of Shorewood Apartments. In 1996 the
Partnership distributed $50 per $1000 unit due to the sale of
Lancaster Place.
An analysis of tax income or loss allocated and cash distributed to
Investors per $1,000 unit is as follows:
YEARS TAXABLE INCOME OR TAXABLE LOSS CASH
GAIN DISTRIBUTED
1984 - 1993 $0 $910 $30
1994 0 $27 0
1995 0 $28 0
1996 $62 0 $50
1997 $143 0 $100
1998 0 $1 $35
1999 0 $0 $0
2000 $2 $0 $25
2001 $10 $0 $20
2002 $15 $0 $15
2003 $17 $0 $0
2004 $10 $0 $100
2005 $13 $0 $25
2006 $12 $0 $25
Item 6. Selected Financial Data
The following table sets forth selected financial data regarding
the Partnership's results of operations and financial position as
of the dates indicated. This information should be read in
conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained in Item 7 hereof and
the Financial Statements and notes thereto contained in Item 8.
2006 2005 2004 2003 2002
Limited Partner Units 14,544 14,544 14,544 14,544 14,544
Outstanding
Statement of Operations
Total Revenues $965 $941 $932 $911 $886
Net Income (Loss) $3 $19 $78 $65 $(1)
Limited Partner Net $0.20 $1.32 (.08) 5.32 4.45
Income(Loss) per Unit - Basic
Cash Distributions to $25 $25 100 0 15
Limited Partners per Unit -
Basic
Balance Sheet:
Real Estate, net 1,363 1,542 $1,628 1,694 1,872
Total Assets 1,715 2,102 2,357 2,158 2,169
Mortgages and Notes 3,818 3,864 3,920 2,138 2,191
Payable
Partner's Equity (2,333)(1,972)(1,627) (173) (251)
Item 7 Management's Discussion and Analysis of Financial
Conditions and Results of Operations
This discussion should be read in conjunction with Item 6 -
"Selected Financial Data" and Item 8 - "Financial Statements and
Supplemental Information."
Results of Operations: 2006 VERSUS 2005
Revenue from Property Operations increased $23,706 or 2.5% as
compared to 2005, due to increased rental rates and occupancy.
Other income for 2006 increased $211 primarily due to increased fee
income. The following table illustrates the increases:
Increase/
(Decrease)
Rentals $23,495
Fees and other 211
Net Increase $23,706
Property operating expenses for 2006 decreased $8,213 from 2005 or
1.1%. Repairs and maintenance decreased $12,995 or 14.1% due to
fewer deferred maintenance projects being performed. Payroll
decreased $3,959 or 3.5% due to decreased employees. Utilities
decreased $5,495 or 12.4% due to lower electric rates. Real estate
taxes decreased $3,221 or 2.6% primarily due to decreased tax
rates. General and administrative increased $12,138 or 13.3% due
to higher partnership legal bills. The following table illustrates
the increases or (decreases):
Increase
(Decrease)
Depreciation and amortization $4,049
Real estate taxes (3,221)
Payroll (3,959)
Repairs and maintenance (12,995)
General and administrative 12,138
Property management fee affiliate 1,270
Utilities (5,495)
Net Decrease $(8,213)
Results of Operations: 2005 VERSUS 2004
Revenue from Property Operations increased $8,959 or 0.96% as
compared to 2004, due to increased rental rates. Other income for
2005 decreased $2,906 primarily due to decreased fee income. The
following table illustrates the increases:
Increase/
(Decrease)
Rentals $11,865
Fees and other (2,906)
Net Increase $8,959
Property operating expenses for 2005 increased $1,067 from 2004 or
0.14%. Repairs and maintenance decreased $55,038 or 37.5% due to
fewer deferred maintenance projects being performed. Payroll
increased $13,371 or 13.5% due to higher salaries. Utilities
increased $1,863 or 4.4% due to higher electric rates as a result
of higher natural gas prices. Real estate taxes increased $8,227
or 7.0% primarily due to increased assessed valuations. . General
and administrative increased $10,869 or 13.5% due to postage for
partnership mailings. Depreciation and amortization increased
$21,394 or 10.7% due to 2005 including a full year's amortization
of deferred financing costs associated with the refinancing of the
mortgage in December 2004 as well as 2005 including a full year's
depreciation on significant additions to building improvements in
2004. The following table illustrates the increases or
(decreases):
Increase
(Decrease)
Repairs and maintenance $(55,038)
Property management fee to affiliate 381
Utilities 1,863
Real estate taxes 8,227
Depreciation and amortization 21,394
General administrative 10,869
Payroll 13,371
Net Increase $1,067
Liquidity and Capital Resources
In March 2007, Robert Werra, the general partner, filed with the
Securities and Exchange Commission preliminary consent solicitation
material in which Mr. Werra is seeking the consent of the limited
partners for him to purchase the sole asset of Amrecorp Realty Fund
II, the Chimney Square Apartments, at a purchase price of its
appraised value of $5,250,000. This transaction is subject to
approval of limited partners holding 66-2/3 % of the limited
partnership units, excluding any units held by Robert Werra or his
affiliates. If the sale to Mr. Werra is approved and completed,
the general partner estimates that, after payment of partnership
indebtedness, the limited partners would receive a distribution
from the partnership of approximately $95 to $100 per limited
partnership unit, and the partnership would be terminated. At the
time of the filing of this Form 10-K, the partnership is working
with the Securities and Exchange Commission to finalize the consent
solicitation material in preparation for mailing the material to
the limited partners.
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 gain from the sale
was $1,287,391.
The partnership refinanced its mortgage note during December 2004.
The proceeds from the refinancing enabled the partnership to issue
a distribution in the amount of $100 per limited partnership unit.
As of December 31, 2006, the Partnership had $73,658 in cash and
cash equivalents as compared to $191,459 as of December 31, 2005.
The net decrease in cash of $117,801 is principally due to
distributions paid during 2006.
The remaining property is encumbered by a non-recourse mortgage as
of December 31, 2006, with an interest rate of 6.25%. Required
principal payments on this mortgage note for the five years ended
December 31, 2011, are $45,427; $48,014; $50,759; $55,027 and
$58,877 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 the balloon
mortgage payment will be proceeds from the sale, financing or
refinancing of the properties.
Item 7a - Quantitative and Qualitative Disclosure about Market
Risk
Market Risk
The Partnership is exposed to interest rate changes primarily as a
result of its real estate mortgages. The Partnerships interest
rate risk management objective is to limit the impact of interest
rate changes on earnings and cash flows and to lower it's overall
borrowing costs. The partnership does not enter into derivative or
interest rate transactions for any purpose.
The Partnerships' activities do not contain material risk due to
changes in general market conditions. The partnership invests only
in fully insured bank certificates of deposits, and mutual funds
investing in United States treasury obligations.
Risk Associated with Forward-Looking Statements Included in this
Form 10-K This Form 10-K contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created
thereby. These statements include the plans and objectives of
management for future operations, including plans and objectives
relating to capital expenditures and rehabilitation costs on the
Properties. The forward-looking statements included herein are
based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve
judgments with respect to, among other things, future economic,
competitive and market conditions and future business decisions,
all of which are difficult or impossible to predict accurately and
many of which are beyond the control of the Company. Although the
Company believes that the assumptions underlying the forward-
looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this Form 10-K will prove to
be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the
Company will be achieved.
Item 8 Financial Statements and Supplemental Information
AMRECORP REALTY FUND II
FINANCIAL STATEMENTS
AND REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
December 31, 2006 and 2005
INDEX TO FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm 2
Financial Statements
Balance Sheets as of December 31, 2006 and 2005 3
Statements of Income for the years ended December 31,
2006, 2005 and 2004 4
Statements of Partners' Equity (Deficit) for the years
ended December 31, 2006, 2005 and 2004 5
Statements of Cash Flows for the years ended December
31, 2006, 2005 and 2004 6
Notes to Financial Statements 7
Schedule III - Real Estate and Accumulated Depreciation 15
All other schedules have been omitted because they are not
applicable, not required or the information has been supplied
in the financial statements or notes thereto.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the General Partner and Limited Partners of
Amrecorp Realty Fund II
We have audited the accompanying balance sheets of Amrecorp
Realty Fund II, a Texas limited partnership (the "Partnership")
as of December 31, 2006 and 2005, and the related statements of
income, partners' equity (deficit), and cash flows for the years
ended December 31, 2006, 2005 and 2004. 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 audits.
We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. The Partnership is not required
to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included
consideration of internal control over financial reporting as a
basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Partnership's internal control over
financial reporting. Accordingly, we express no such opinion. 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 presentation of the financial statements. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the December 31, 2006 and 2005 financial
statements referred to above present fairly, in all material
respects, the financial position of Amrecorp Realty Fund II as of
December 31, 2006 and 2005, and the results of its operations and
its cash flows for the years ended December 31, 2006, 2005 and
2004 in conformity with accounting principles generally accepted
in the United States of America.
Our audits were made for the purpose of forming an opinion on the
basic financial statements taken as a whole. Schedule III for
the year ended December 31, 2006 is presented for the purpose of
complying with the Securities and Exchange Commission's rules and
is not a required part of the basic financial statements. This
schedule has been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion,
fairly states, in all material respects, the financial data
required to be set forth therein in relation to the basic
financial statements taken as a whole.
Farmer Fuqua & Huff, P.C.
March 2, 2007
Plano, Texas
AMRECORP REALTY FUND II
BALANCE SHEETS
December 31,
ASSETS
2006 2005
Investments in real estate at cost
Land $580,045 $580,045
Buildings, improvements and
furniture and fixtures 5,070,130 5,040,345
5,650,175 5,620,390
Accumulated depreciation (4,287,592) (4,078,027)
1,362,583 1,542,363
Cash and cash equivalents 73,658 191,459
Due from affiliates 2,063 ---
Deferred financing costs, net of
accumulated amortization of $31,180
and $15,590, respectively 77,950 93,540
Escrow deposits 182,023 261,607
Other assets 16,789 13,125
TOTAL ASSETS 1,715,066 2,102,094
LIABILITIES AND PARTNERS' EQUITY
Mortgage payable 3,818,168 3,864,817
Accounts payable and accrued expenses 155,919 142,287
Due to affiliates --- 705
Accrued interest payable 20,548 18,680
Distributions payable 24,335 23,935
Security deposits 29,212 24,141
TOTAL LIABILITIES 4,048,182 4,074,565
PARTNERS' EQUITY (2,333,116) (1,972,471)
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIT) $1,715,066 $2,102,094
AMRECORP REALTY FUND II
STATEMENTS OF INCOME
For the Years Ended December 31,
2006 2005 2004
PROPERTY REVENUES
Rentals $938,936 $915,441 $903,576
Fees and other 26,037 25,826 28,732
Total property revenues 964,973 941,267 932,308
OPERATING EXPENSES
Depreciation and amortization 225,155 221,106 199,712
Real estate taxes 123,010 126,231 118,004
Payroll 108,675 112,634 99,263
Repairs and maintenance 78,906 91,901 146,939
General and administrative 103,477 91,339 80,470
Property management fee to
affiliate 48,266 46,996 46,615
Utilities 38,862 44,357 42,494
Administrative services fees
to affiliate 5,472 5,472 5,472
Total operating expenses 731,823 740,036 738,969
OPERATING INCOME 233,150 201,231 193,339
FINANCIAL INCOME AND (EXPENSE)
Interest income 9,112 2,114 247
Interest expense (239,307) (184,006) (194,780)
Total other income and (expense) (230,195) (181,892) (194,533)
NET INCOME (LOSS) $ 2,955 $19,339 $(1,194)
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT - BASIC
Net income (loss) per unit-basic $.20 $1.32 $(.08)
LIMITED PARTNERSHIP UNITS
OUTSTANDING - BASIC 14,544 14,544 14,544
AMRECORP REALTY FUND II
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
For the Years Ended December 31, 2006, 2005, and 2004
General Limited
Partner Partners Total
Balance, January 1, 2004 (72,820) (99,796) (172,616)
Distributions --- (1,454,000) (1,454,000)
Net loss (12) (1,182) (1,194)
Balance, December 31, 2004 $(72,832) $(1,554,978) $(1,627,810)
Distributions --- (364,000) (364,000)
Net income 193 19,146 19,339
Balance, December 31, 2005 $(72,639) $(1,899,832) $(1,972,471)
Distributions --- (363,600) (363,600)
Net income 30 2,925 2,955
Balance, December 31, 2006 $(72,609) $(2,260,507) $(2,333,116)
AMRECORP REALTY FUND II
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,
2006 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,955 $19,339 $(1,194)
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 225,155 221,106 199,712
Changes in assets and liabilities:
Due from affiliates (2,063) --- ---
Escrow deposits 35,888 (116,556) (2,277)
Other assets (3,664) 1,270 (1,075)
Accrued interest payable 1,868 18,680 (16,611)
Due to affiliates (705) 513 (128)
Accounts payable and accrued expenses 13,633 124,632 23,865
Security deposits 5,071 2,056 (1,128)
Net cash provided by operating
activities 278,138 271,040 201,164
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in real estate (29,785) (119,412) (126,199)
Deposits to reserve for replacements (34,777) (37,387) (32,220)
Disbursements from reserve for
replacements 78,472 268,338 22,038
Net cash provided by (used for)
investing activities 13,910 111,539 (136,381)
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on mortgages and notes payable (46,649) (55,183) (59,039)
Proceeds from borrowings --- --- 1,540,762
Distributions (363,600) (364,000)(1,454,000)
Deferred financing costs --- (5,992) (97,420)
Distributions payable 400 (1,250) ---
Net cash used for financing
activities (409,849) (426,425) (69,697)
Net decrease in cash and
cash equivalents (117,801) (43,846) (4,914)
Cash and cash equivalents at
beginning of period 191,459 235,305 240,219
Cash and cash equivalents at
end of period $73,658 $191,459 $235,305
Supplemental disclosure of cash flow information:
Cash paid during the year for
interest $237,439 $165,326 $211,390
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Amrecorp Realty Fund II (the "Partnership"), a Texas limited
partnership, was formed on April 16, 1984, under the laws of
the state of Texas, for the purpose of acquiring,
maintaining, developing, operating, and selling buildings
and improvements. The Partnership owns and operates rental
apartments in Abilene, Texas. The Partnership will be
terminated by December 31, 2014, although this date can be
extended if certain events occur. The general partner is
Mr. Robert J. Werra.
An aggregate of 25,000 units at $1,000 per unit are
authorized, of which 14,544 were outstanding for each of the
three years ended December 31, 2006. Under the terms of the
offering, no additional units will be offered.
ALLOCATION OF NET INCOME (LOSS) AND CASH
Net operating income and loss are allocated 1% to general
partners and 99% to limited partners. Net operating cash
flow, as defined in the partnership agreement, shall be
distributed to the limited and general partners first to the
limited partners in an amount equal to a variable
distribution preference on capital contributions for the
current year and then to the extent the preference has not
been satisfied for all preceding years, and, thereafter, 10%
to the general partner and 90% to the limited partners.
Net income from the sale of property is allocated first, to
the extent there are cumulative net losses, 1% to the
general partner and 99% to the limited partners; second, to
the limited partners in an amount equal to their
distribution preference as determined on the date of the
partners' entry into the Partnership; and, thereafter, 15%
to the general partner and 85% to the limited partners.
Cash proceeds from the sale of property or refinancing are
allocated first to the limited partners to the extent of
their capital contributions and distribution preference as
determined on the date of the partners' entry into the
Partnership; and, thereafter, 15% to the general partner and
85% to the limited partners.
Basis of Accounting
The Partnership maintains its books on the basis of
accounting used for federal income tax reporting purposes.
Memorandum entries have been made to present the
accompanying financial statements in accordance with U.S.
generally accepted accounting principles.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Recent Accounting Pronouncements
In May 2005, the FASB issued Statement No. 154, "Accounting
Changes and Error Corrections" ("Statement No. 154").
Statement No. 154, which replaces APB Opinion No. 20,
"Accounting Changes" and FASB Statement No. 3, "Reporting
Accounting Changes in Interim Financial Statements", changes
the requirements for the accounting for and reporting of a
change in accounting principle. The statement requires
retrospective application of changes in accounting principle
to prior periods' financial statements unless it is
impracticable to determine the period-specific effects or the
cumulative effect of the change. Statement No. 154 is
effective for accounting changes and corrections of errors
made in fiscal years beginning after December 15, 2005. The
adoption of Statement No. 154 is not expected to have a
material impact on the financial position, results of
operations or cash flows of the Partnership.
In June 2005, the FASB ratified the consensus in EITF Issue
No. 04-5, "Determining Whether a General Partner, or the
General Partners as a Group, Controls a Limited Partnership
or Similar Entity When the Limited Partners Have Certain
Rights" ("Issue 04-5"), which provides guidance in
determining whether a general partner controls a limited
partnership. Issue 04-5 states that the general partner in a
limited partnership is presumed to control that limited
partnership. The presumption may be overcome if the limited
partners have either (1) the substantive ability to dissolve
the limited partnership or otherwise remove the general
partner without cause or (2) substantive participating
rights, which provide the limited partners with the ability
to effectively participate in significant decisions that
would be expected to be made in the ordinary course of the
limited partnership's business and thereby preclude the
general partner from exercising unilateral control over the
partnership. Issue 04-5 is not expected to have a material
effect on the financial position, results of operations or
cash flows of the Partnership.
Income Taxes
No provision for income taxes has been made since the
partners report their respective share of the results of
operations on their individual income tax return.
Revenue Recognition
The Partnership has leased substantially all of its rental
apartments under cancelable leases for periods generally
less than one year. Rental revenue is recognized on a
monthly basis as earned.
Deferred Financing Costs
Costs incurred to obtain mortgage financing are being
amortized over the life of the mortgage using the straight-
line method.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Syndication Costs
Costs or fees incurred to raise capital for the Partnership
are netted against the respective partners' equity accounts.
Cash and Cash Equivalents
The Partnership considers all highly liquid instruments with
a maturity of three months or less to be cash equivalents.
Investments in Real Estate and Depreciation
All real estate holdings are stated at cost or adjusted
carrying value. Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-
Lived Assets" ("SFAS No. 144"), requires that a property be
considered impaired if the sum of the expected future cash
flows (undiscounted and without interest charges) is less
than the carrying amount of the property. If impairment
exists, an impairment loss is recognized, by a charge
against earnings, equal to the amount by which the carrying
amount of the property exceeds the fair value less cost to
sell the property. If impairment of a property is
recognized, the carrying amount of the property is reduced
by the amount of the impairment, and a new cost for the
property is established. Such new cost is depreciated over
the property's remaining useful life. Depreciation is
provided by the straight-line method over estimated useful
lives, which range from 5 to 27.5 years.
There was no charge to earnings during 2006 due to an
impairment of real estate.
Computation of Earnings Per Unit
The Partnership has adopted Statement of Financial
Accounting Standards ("SFAS") No.128, "Earnings per Share".
Basic earnings per unit is computed by dividing net income
(loss) attributable to the limited partners' interests by
the weighted average number of units outstanding. Earnings
per unit assuming dilution would be computed by dividing net
income (loss) attributable to the limited partners'
interests by the weighted average number of units and
equivalent units outstanding. The Partnership has no
equivalent units outstanding for any period presented.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED
Concentration of Credit Risk
Financial instruments, which potentially subject the
Partnership to concentrations of credit risk, consist
primarily of cash. The Partnership places its cash with
various financial institutions. The Partnership's exposure
to loss should any of these financial institutions fail
would be limited to any amount in excess of the amount
insured by the Federal Deposit Insurance Corporation or
Securities Investor Protection Corporation, where
applicable. Management does not believe significant credit
risk exists at December 31, 2006.
At December 31, 2006 and 2005, included in cash and cash
equivalents is $70,529 and $185,475, respectively, which is
cash held in a pooled account of the property's management
company, as a fiduciary, in a financial institution and
could be at risk.
Use of Estimates
The preparation of financial statements in conformity with
U.S. 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 that reporting period. Actual results
could differ from those estimates.
Environmental Remediation Costs
The Partnership accrues for losses associated with
environmental remediation obligations when such losses are
probable and reasonably estimable. Accruals for estimated
losses from environmental remediation obligations generally
are recognized no later than completion of the remedial
feasibility study. Such accruals are adjusted as further
information develops or circumstances change. Costs of
future expenditures for environmental remediation
obligations are not discounted to their present value.
Recoveries of environmental remediation costs from other
parties are recorded as assets when their receipt is deemed
probable. Project management is not aware of any
environmental remediation obligations that would materially
affect the operations, financial position or cash flows of
the Project.
Comprehensive Income
Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, (SFAS 130), requires that
total comprehensive income be reported in the financial
statements. For the years ended December 31, 2006, 2005,
2004, the Partnership's comprehensive income was equal to
its net income and the Partnership does not have income
meeting the definition of other comprehensive income.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE B - MORTGAGE PAYABLE
The company had mortgages payable of $3,818,168 and
$3,864,817 at December 31, 2006 and 2005, respectively.
Prior to refinancing in December 2005, the note had an
interest rate of 9.325% and was payable in monthly
installments of principal and interest of $21,324 through
March 2005, at which time a lump sum payment of
approximately $2,069,000 was due. The current note is
payable in monthly installments of principal and interest to
be calculated on the monthly LIBOR rate plus 1.53%, through
January 2012. This mortgage note is secured by real estate
with a net book value of $1,362,583.
At December 31, 2006, estimated required principal payments
due under the maximum "capped" stated terms of 6.25%, per
the Partnership's mortgage note payable are as follows:
2007 45,427
2008 48,014
2009 50,759
2010 55,027
2011 58,877
Thereafter 3,560,064
$3,818,168
NOTE C - RELATED PARTY TRANSACTIONS
The Partnership agreement specifies that certain fees be
paid to the general partner or his designee. An affiliate
of the general partner receives a property management fee
that is 5% of the Partnership's gross receipts.
Additionally, the Partnership reimburses the affiliate for
administrative expenditures. The following fees and
reimbursements were earned by an affiliate of the general
partner in 2006, 2005 and 2004:
2006 2005 2004
Property management fee $48,266 $46,996 $46,615
Administrative service fee 5,472 5,472 5,472
Resulting from the above transactions, amounts due from (to)
an affiliate of the general partner as of December 31, 2006
and 2005 totaled $2,063 and $(705), respectively.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE D - ACCUMULATED AMORTIZATION
At December 31, 2006, amortization expense for deferred
financing costs over the next five years is as follows:
2007 15,590
2008 15,590
2009 15,590
2010 15,590
2011 15,590
$77,950
NOTE E - COMMITMENTS
The Partnership will pay a real estate commission to the
general partner or his affiliates in an amount not exceeding
the lesser of 50% of the amounts customarily charged by
others rendering similar services or 3% of the gross sales
price of a property sold by the Partnership.
NOTE F - RECONCILIATION OF BOOK TO TAX LOSS (UNAUDITED)
If the accompanying financial statements had been prepared
in accordance with the accrual income tax basis of
accounting rather than U.S. generally accepted accounting
principals ("GAAP"), the excess of revenues over expenses
for 2006 would have been as follows:
Net loss per accompanying financial statements $2,955
Add - book basis depreciation using
straight-line method 209,565
Deduct - amount capitalized for book
and expensed for tax (12,800)
Deduct - income tax basis depreciation
expense using ACRS method
(27,518)
Excess of revenues over expenses,
accrual income tax basis $172,202
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE G - ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The following estimated fair value amounts have been
determined using available market information or other
appropriate valuation methodologies that require
considerable judgment in interpreting market data and
developing estimates. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that
the Partnership could realize in a current market exchange.
The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated
fair value amounts.
The fair value of financial instruments that are short-term
or reprice frequently and have a history of negligible
credit losses is considered to approximate their carrying
value. These include cash and cash equivalents, accounts
payable and other liabilities.
Management has reviewed the carrying value of its mortgage
payable in connection with interest rates currently
available to the Partnership for borrowings with similar
characteristics and maturities and has determined that their
estimated fair value would approximate their carrying value
as of December 31, 2006 and 2005.
The fair value information presented herein is based on
pertinent information available to management. Although
management is not aware of any factors that would
significantly affect the estimated fair value amounts, such
amounts have not been comprehensively revalued for purposes
of these financial statements since that date, and
therefore, current estimates of fair value may differ
significantly from the amounts presented herein.
NOTE H - SUBSEQUENT EVENT
On March 2, 2007, the Partnership filed a preliminary
consent of solicitation statement seeking the consent of
limited partnership unit holders for the Partnership to sell
the final property of the Partnership to an affiliate of the
general partner for a sales price of $5,250,000. The
property has a net book value of $1,362,583 and an
outstanding mortgage payable of $3,818,168 at December 31,
2006. The sale is contingent on obtaining the consent of
sixty-six and two-thirds percent of the outstanding limited
partnership unit holders excluding those limited partnership
units owned by the general partner or its affiliate. The
closing of the sale would take place on or before the
earliest occurrence of (1) ten days following the purchaser
obtaining written approval from the lender to assume the
existing loan or (2) 90 days after the approval of 66-2/3s
of the limited partnership unit holders. Should the limited
partnership unit holders approve the sale of the final
property of the Partnership and the sale be completed, it is
management's intention to dissolve the Partnership.
AMRECORP REALTY FUND II
NOTES TO FINANCIAL STATEMENTS
December 31, 2006 and 2005
NOTE I - QUARTERLY DATA (UNAUDITED)
The table below reflects the Partnership's selected
quarterly information for the years ended December 31, 2006
and 2005.
Year ended December 31, 2006
First Second Third Fourth
Quarter Quarter Quarter Quarter
Rents and other property
revenue $231,409 $ 247,848 $ 240,828 $ 244,888
Operating expenses 158,836 189,477 180,661 202,849
Operating income 72,573 58,371 60,167 42,039
Other income (expense) (53,775) (58,872) (58,394) (59,154)
Net income (loss) $18,798 $(501) $1,773 $(17,115)
Net income (loss)
allocable to limited
partnership unit $18,610 $(496) $1,755 $(16,944)
Net income (loss) per
limited unit - basic and
diluted $1.28 $(.03) $.12 $(1.17)
Year ended December 31, 2005
First Second Third Fourth
Quarter Quarter Quarter Quarter
Rents and other property
revenue $229,992 $244,636 $234,798 $231,841
Operating expenses 180,587 181,346 181,963 196,140
Operating income 49,405 63,290 52,835 35,701
Other income (expense) (38,655) (42,432) (47,738) (53,067)
Net income (loss) $10,750 $20,858 $5,097 $(17,366)
Net income (loss)
allocable to limited
partnership unit $10,643 $20,649 $5,046 $(17,192)
Net income (loss) per
limited unit - basic
and diluted $0.73 $1.42 $0.35 $(1.18)
AMRECORP REALTY FUND II
Schedule III - Real Estate and Accumulated Depreciation
December 31, 2006
Initial Cost
to Partnership
Description Encumbrances Land Building Total Cost
and Subsequent to
Improvements Acquisitions
A 128-unit
two-story
apartment
community of
wooden frame
construction
acquired
combination
brick veneer
and wood
siding
exterior
located in
Abilene,
Texas (b) $580,045 $4,341,569 $728,561
Gross Amounts at Which
Carried at Close of Year
Description Land Buildings Total Accumulated
and (c)(d) Deprteciation
Improvements (c)
A 128-unit
two-story
apartment
community of
wooden frame
construction
acquired
combination
brick veneer
and wood
siding
exterior
located in
Abilene,
Texas $580,045 $5,070,130 $5,650,175 $4,287,592
Description Date of Date Life on Which
Construction Acquired Depreciation
Is Computed
A 128-unit
two-story
apartment
community of
wooden frame
construction
acquired
combination
brick veneer
and wood
siding
exterior
located in
Abilene, Complete at
Texas Date Acquired 11/1/84 (a)
See notes to Schedule III.
AMRECORP REALTY FUND II
Schedule III - Real Estate and Accumulated Depreciation (Continued)
December 31, 2006
NOTES TO SCHEDULE III:
(a) See Note A to financial statements outlining depreciation methods
and lives.
(b) See description of mortgages and notes payable in Note B to the
financial statements.
(c) The reconciliation of investments in real estate and accumulated
depreciation for the years ended December 31, 2006, 2005 and 2004 is
as follows:
Investments in Accumulated
Real Estate Depreciation
Balance, January 1, 2004 $5,374,779 $3,680,782
Acquisitions 126,199 ---
Depreciation expense --- 191,729
Balance, December 31, 2004 $5,500,978 $3,872,511
Acquisitions 119,412 ---
Depreciation expense --- 205,516
Balance, December 31, 2005 $5,620,390 $4,078,027
Acquisitions 29,785 ---
Depreciation expense --- 209,565
Balance, December 31, 2006 $5,650,175 $4,287,592
(d) Aggregate cost for federal income tax purposes is $5,654,967.
Item 9. Changes in and Disagreements on Accounting and
Financial Disclosure
On November 6, 1998, an 8-K was filed to disclose the change in
auditors. No financial statements were issued in conjunction with
this filing. The Registrant has not been involved in any
disagreements on accounting and financial disclosure.
Item 9a. Controls and Procedures
Based on their most recent evaluation, which was completed within 90
days of the filing of this Form 10-K, our Principal Financial Officer
and Principal Executive Officer, believe our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) are
effective. There were not any significant changes in internal controls
or in other factors that could significantly affect these controls
subsequent to the date of their evaluation, and there has not been any
corrective action with regard to significant deficiencies and material
weaknesses.
PART III
Item 10. Directors and Executive Officers of the Partnership
The Partnership itself has no officers or directors. Robert J. Werra
is the General Partner of the Partnership.
Robert J. Werra, 67, the General Partner, joined Loewi & Co.,
Incorporated ("Loewi") in 1967 as a Registered Representative. In
1971, he formed the Loewi real estate department, and was responsible
for its first sales of privately placed real estate programs. Loewi
Realty was incorporated in 1974, as a wholly owned subsidiary of Loewi
& Co., with Mr. Werra as President. In 1980, Mr. Werra along with
three others formed Amrecorp Inc. to purchase the stock of Loewi Real
Estate Inc., and Loewi Realty. In 1991 Univesco, Inc. became the
management agent for the Partnership. Limited Partners have no right
to participate in management of the Partnership.
Item 11. Management Renumeration and Transactions
As stated above, the Partnership has no officers or directors.
Pursuant to the terms of the Limited Partnership Agreement, the
General Partner receives 1% of Partnership income and loss up to 15%
of the net proceeds received from sale or refinancing of Partnership
properties (after return of Limited Partner capital contributions and
payments of a 6% Current Distribution Preference thereon).
Univesco, Inc., an affiliate of the General Partner, is entitled to
receive a management fee with respect to the properties actually
managed of 5% of actual gross receipts from a property or an amount
competitive in price or terms for comparable services available from a
non-affiliated persons. The Partnership is also permitted to engage
in various transactions involving affiliates of the General Partner as
described under the caption "Compensation and Fees" at pages 6-8,
"Management" at page 17 "Allocation of Net Income and Losses and Cash
Distributions" at pages 34-36 of the Prospectus as supplemented,
incorporated in the Form S-11 Registration Statement which was filed
with the Securities and Exchange Commission and made effective on May
2, 1983.
For the Fiscal year ended December 31, 2006, 2005, and 2004, property
management fees earned totaled $48,266, $46,996, and $46,615,
respectively. An additional administration service fee was paid to
the general partner of $5,472, $5,472, and $5,472, for the years ended
December 31, 2006, 2005, and 2004, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
(a) No one owns of record, except as noted in Item (b) below, and the
General Partner knows of no one who owns beneficially, more than five
percent of the Interests in the Partnership, the only class of
securities outstanding.
Amount and Nature
Title Name of of Beneficial Percent
of Class Beneficial Owner Ownership of Interest
Limited Everest Management, LLC 990.25 6.8%
Partnership
Interests
Equity Resources 920 6.3%
(b) By virtue of its organization as a limited partnership, the
Partnership has no officers or directors. Persons performing
functions similar to those of officers and directors of the
Partnership, beneficially own, the following units of the Partnership
as of March 1, 2007.
Title Name of Amount and Nature Percent
of Class Beneficial Owner of Beneficial Owners of Interest
Limited Robert J. Werra 86 units 0.59%
Partnership 2800 N Dallas Pkwy #100
Interests Plano, Texas 75093
(c) There is no arrangement, known to the Partnership, which may, at a
subsequent date, result in a change in control of the Partnership.
Item 13. Certain Relationships and Related Transactions
As stated Item 11, the Partnership has no officers or directors.
Pursuant to the terms of the Limited Partnership Agreement, the
General Partner receives 1% of Partnership income and loss up to 15%
of the net proceeds received from sale or refinancing of Partnership
properties (after return of Limited Partner capital contributions and
payments of a 6% Current Distribution Preference thereon).
Univesco, Inc., an affiliate of the General Partner, is entitled to
receive a management fee with respect to the properties actually
managed by the corporate general partner. For residential properties
(including all leasing and releasing fees and fees for leasing related
services), the lessor of 5% of gross receipts of the Partnership from
such properties or an amount which is competitive in price or terms
with other non-affiliated persons rendering comparable services which
could reasonably be made available to the Partnership. The
Partnership is also permitted to engage in various transactions
involving affiliates of the General Partner as described under the
caption "Compensation and Fees" at pages 6-8, "Management" at page 17
"Allocation of Net Income and Losses and Cash Distributions" at pages
34-36 of the Prospectus as supplemented, incorporated in the Form S-11
Registration Statement which was filed with the Securities and
Exchange Commission and made effective on July 6,1984 and incorporated
herein by reference.
See Note C to the Financial Statements for detailed information
concerning fees paid to Univesco, Inc. (an affiliate of the General
Partner).
Item 14. Principal Accounting Fees and Services
The following table sets forth the aggregate fees for professional
services rendered to the Partnership for the years 2006 and 2005 by
the Partnership's principal accounting firm, Farmer, Fuqua, & Huff,
P.C.
Type of Fees 2006 2005
Audit Fees $12,250 $11,500
Audit related fees --- ---
Tax fees --- ---
All other fees --- ---
PART IV
Item 15. Exhibits, Financial Statements, Schedules and Reports on
Form 8-K
(A) 1. See accompanying Financial Statements Index
2. Additional financial information required to be furnished:
Schedule III- Real Estate and Accumulate Depreciation.
3. Exhibits
None.
(B) Reports on Forms 8-K for the quarter ended December 31, 2006.
November 6, 1998, an 8-K was filed to disclose the change in
auditors. No financial statements were issued in conjunction with
this filing.
(C) Exhibits
3. Certificate of Limited Partnership, 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.
9. Not Applicable
10. Not Applicable
11. Not Applicable
12. Not Applicable
13. Not Applicable
14. Code of Ethics for Senior Financial Officers
18. Not Applicable
19. Not Applicable
22. Not Applicable
23. Not Applicable
24. Not Applicable
25. Power of Attorney, incorporated by reference to Registration
Statement No. 2-90654 effective July 5, 1984.
28. None
31. Certification
32. Officers Section 1350 Certifications
(d) Financial Statement Schedules excluded from the annual report
None
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.
Amrecorp Realty Fund II
ROBERT J. WERRA, GENERAL PARTNER
/s/ Robert J. Werra
March 30, 2007
EXHIBIT 14
Code of Ethics for Senior Financial Officers
The principal executive officer, president, principal financial
officer, chief financial officer, principal accounting officer and
controller (all, the partnership's "Senior Financial Officers") hold
an important and elevated role in corporate governance, vested with
both the responsibility and authority to protect, balance, and
preserve the interests of all of the enterprise stakeholders,
including shareholders, customers, employees, suppliers, and citizens
of the communities in which business is conducted. Senior Financial
Officers fulfill this responsibility by prescribing and enforcing the
policies and procedures employed in the operation of the enterprise's
financial organization and by acting in good faith and in the
partnership's best interests in accordance with the Partnership's Code
of Business Conduct and Ethics.
1 Honest and Ethical Conduct
Senior Financial Officers will exhibit and promote
honest and ethical conduct through the establishment and
operation of policies and procedures that:
. Encourage and reward professional integrity in all
aspects of the financial organization, by eliminating
inhibitions and barriers to responsible behavior, such
as coercion, fear of reprisal, or alienation from the
financial organization or the enterprise itself.
. Promote the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships.
. Provide a mechanism for members of the finance
organization to inform senior Management of deviations
in the practice from policies and procedures governing
honest and ethical behavior.
. Respect the confidentiality of information acquired in
the course of work, except when authorized or otherwise
legally obligated to disclose such information, and
restrict the use of confidential information acquired
in the course of work for personal advantage.
. Demonstrate their personal support for such policies
and procedures through periodic communication
reinforcing these ethical standards throughout the
finance organization.
2 Financial Records and Periodic Reports
Senior Financial Officers will establish and manage the
enterprise transaction and reporting systems and procedures
to provide that:
. Business transactions are properly authorized and
accurately and timely recorded on the partnership's
books and records in accordance with Generally Accepted
Accounting Principles ("GAAP") and established
partnership financial policy.
. No false or artificial statements or entries for any
purpose are made in the partnership's books and
records, financial statements and related
communications.
. The retention or proper disposal of partnership records
shall be in accordance with established records
retention policies and applicable legal and regulatory
requirements.
. Periodic financial communications and reports will
include full, fair, accurate, timely and understandable
disclosure.
3 Compliance with Applicable Laws, Rules and Regulations.
Senior Financial Officers will establish and maintain
mechanisms to:
. Educate members of the finance organization about any
federal, state or local statute, regulation or
administrative procedure that affects the operation of
the finance organization and the enterprise generally.
. Monitor the compliance of the finance organization with
any applicable federal, state or local statute,
regulation or administrative rule.
. Identify, report and correct in a swift and certain
manner, any detected deviations from applicable
federal, state or local statute or regulation.
4 Reporting of Non-Compliance
Senior Financial Officers will promptly bring to the attention of
the Audit Committee:
. Material information that affects the disclosures made
by the partnership in its public filings.
. Information concerning significant deficiencies in the
design or operation of internal controls that could
adversely affect the partnership's ability to record,
process, summarize and report financial data.
Senior Financial Officers will promptly bring to the attention
of the General Counsel and to the Audit Committee:
. Fraud, whether or not material, that involves
management or other employees who have a significant
role in the partnership's financial reporting,
disclosures or internal controls.
. Information concerning a violation of this Code or
the partnership's Code of Business and Ethics
Conduct, including any actual or apparent conflicts
of interest between personal and professional
relationships, involving management or other
employees who have a significant role in the
partnership's financal reporting, disclosures or
internal controls.
. Evidence of a material violation by the partnership
or its employees or agents of applicable laws, rules
or regulations.
5 Disciplinary Action
In the event of violation by Senior Financial
Officers of this Code or the partnerhip's Code of
Business Conduct and Ethics, the Audit Committee of the
Board of Directors shall recommend appropriate
disciplinary and remedial actions.
Exhibit 31
CERTIFICATION
I, Robert J. Werra, certify that:
1 . I have reviewed this annual report on Form 10-K of
Amrecorp Realty Fund II;
2 . Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not
misleading with respect to the period covered by this annual
report;
3 . Based on my knowledge, the financial statements, and
other financial information included in this annual report, fairly
present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the
periods presented in this annual report;
4 . The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13-15(e) and 15d-
15e) and have internal control over financial reporting (as defined
in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant
and have:
(a) designed such disclosure controls and
procedures to ensure that material information relating
to the registrant, including its consolidated
subsidiaries, is made known to us by others within those
entities, particularly during the period in which this
annual report is being prepared;
(b) designed such internal control over financial
reporting, or caused such internal control over financial
reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial
statements for external purposes in accordance with
generally accepted accounting principals; and
(c) evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the
controls and procedures as of the end of the period
covered by this report based on such evaluation; and
(d) disclosed in this report any change in the
registrant's internal control over financial reporting
that occurred during the registrant's most recent fiscal
quarter that has materially affected, or is reasonably
likely to materially affect, the registrant's internal
control over financial reporting; and
(e) presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material
weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) any fraud, whether or not material, that
involves management or other employees who have a
significant role in the registrant's internal controls.
Dated: March 30, 2007.
/s/ Robert W. Werra
General Partner
Exhibit 32
Officers' Section 1350 Certifications
The undersigned officer of Amrecorp Realty Fund II, a Texas
limited Partnership (the "Partnership"), hereby certifies that
(i) the Partnership's Annual Report on Form 10-K for the year ended
December 31, 2005 fully complies with the requirements of Section
13(a) of the Securities Exchange Act of 1934, and (ii) the
information contained in the Partnerhip's Annual Report on Form 10-
K for the year ended December 31, 2005 fairly presents, in all
material respects, the financial condition and results of
operations of the Partnership's, at and for the periods indicated.
Dated: March 30, 2007.
/s/ Robert J. Werra
General Partner