FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [X]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 	OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended March 31, 1998 OR [ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 	SECURITIES EXCHANGE ACT OF 1934 For the transition period to Commission file number 0-16798 SECURED INVESTMENT RESOURCES FUND, L.P. II (Exact name of registrant as specified in its charter) Delaware 36-3451000 (State or other jurisdiction of 	(I.R.S. Employer incorporation or organization) 	 Identification No.) 5453 W. 61st Place, Mission, Kansas 	 66205 (Address of principal executive offices) (Zip Code) (Registrant's telephone number, including area code)			 (913) 384-5700 Securities registered pursuant to Section 12(b) of the Act: 	 None Securities registered pursuant to Section 12(g) of the Act: Limited Partnership Interests ("Units") 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 such shorter periods 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 SECURED INVESTMENT RESOURCES FUND, L.P. II INDEX PART I. FINANCIAL INFORMATION		 Page Item 1. Financial Statements (Unaudited): Balance Sheets -- March 31, 1998 and December 31, 1997			 3-4 Statements of Operations -- Three Months Ended March 31, 1998 and 1997 5 Statements of Partnership Capital -- Three Months Ended March 31, 1998 and the Years Ended December 31, 1997, and 1996 				 6 Statements of Cash Flows -- Three Months Ended March 31, 1998 and 1997 	 7-8 Notes to Financial Statements 9-10 Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations					 11 PART II. OTHER INFORMATION Item 1.	Legal Proceedings				 12 Item 2.	Changes in Securities				 12 Item 3.	Defaults Upon Senior Securities		 12 Item 4. Submission of Matters to a Vote of Security Holders				 12 Item 5.	Other Information				 12 Item 6.	Exhibits and Reports on Form 8-K	 	 12 SIGNATURES 13 PART I.	FINANCIAL INFORMATION Item 1.	FINANCIAL STATEMENTS SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS March 31, 1998 December 31, (Unaudited) 1997 ASSETS INVESTMENT PROPERTIES Land and buildings $ 36,516,166	 $ 36,499,895 Furniture, fixtures and equipment 2,136,023 2,095,962 38,652,190 38,595,857 Less accumulated depreciation and allowance for losses 13,437,523 13,184,260 25,214,667 25,411,597 RESTRICTED DEPOSITS Bond cash reserves 1,510,000	 1,510,000 Bond principal reduction reserves 535,245	 519,567 Restricted Deposits 28,750 28,750 2,073,995	 2,058,517 OTHER ASSETS Cash 933,593 867,658 Rents and other receivables, less allowance of $142,367 in 1998 and $122,350 in 1997 44,162 55,968 Due from related parties (Note C) 179,423 179,423 Prepaid expenses 173,365 117,532 Debt issuance costs, net of accumulated amortization of $349,610 in 1998 and $330,728 in 1997 234,704 253,586 Commercial commissions, deposits and other 60,227	 60,679 1,625,474	 1,534,846 TOTAL ASSETS $ 28,914,136	 $ 29,004,960 SECURED INVESTMENT RESOURCES FUND, L.P. II BALANCE SHEETS--CONT'D. March 31, 1998 December 31, (Unaudited) 1997 LIABILITIES AND PARTNERSHIP CAPITAL Mortgage debt (Note B) $ 27,432,422 $ 27,442,267 Deferred interest (Note B) 737,370 737,370 Accrued interest	 799,278 799,278 Accounts payable and accrued expenses 588,421 548,265 Unearned revenue 8,863 12,736 Tenant security deposits 153,059 149,662 TOTAL LIABILITIES 29,719,413 29,689,578 PARTNERSHIP CAPITAL General Partner Capital contribution 1,000 1,000 Partnership deficit (197,082) (195,875) (196,082) (194,874) Limited Partner Capital contributions	 18,901,831 18,901,831 Partnership deficit (19,511,026) (19,391,572) (609,195) (489,741) TOTAL PARTNERSHIP CAPITAL (805,277) (684,618) $ 28,914,136 $ 29,004,960 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31, 1998 1997 REVENUES Rents	 $1,242,370 $1,474,090 Maintenance escalations and other	 26,716 29,510 1,269,086 1,503,600 OPERATING AND ADMINISTRATIVE EXPENSES Property operating expenses 522,435 626,451 General and administrative expenses 29,968 36,078 Professional services	 32,289 25,593 Management fees 54,731 64,513 639,423 752,635 NET OPERATING INCOME	 629,663 750,965 NON-OPERATING EXPENSES Interest 478,180 606,257 Depreciation and amortization	 272,144 336,025 750,324 942,282 PARTNERSHIP LOSS $ (120,661) $ (191,317) Allocation of loss: General Partner (1,207) (1,913) Limited Partner (119,454) (189,404) $ (120,661) $ (191,317) Partnership loss per limited partnership unit $ (2.23) $ (3.53) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF PARTNERSHIP CAPITAL (Unaudited) Three Months Ended March 31, 1998(Unaudited) and the Years Ended December 31, 1997 and 1996 General Limited Partner Partner Total Balances at January 1, 1996	 $ (184,586) $ 528,868 $ 344,282 Partnership loss (1,935) (191,525) (193,460) Balances at December 31, 1996 (186,521) 337,343 150,822 Partnership loss (8,354) (827,084) (835,438) Balances at December 31, 1997 (194,875) (489,741) (684,616) Partnership loss (1,207) (117,454) (120,661) Balances at March 31, 1998 $ (196,082) $ (609,195) $ (805,277) See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II, STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended March 31, 1998 1997 OPERATING ACTIVITIES Partnership income $ (120,661) $ (191,317) Adjustments to reconcile partnership loss to net cash provided by operating activities: Depreciation and amortization 272,145 373,825 Amortization of bond discount 37,800 Provision for losses on rents and other receivables 20,017 24,000 Changes in assets and liabilities: Rents and other receivables (8,210) (31,628) Prepaid expenses (55,833) (43,363) Commercial commissions, deposits and other	 452 10,857 Accounts payable and accrued expenses 40,156 112,102 Accrued interest 0 44,304 Unearned revenue (3,873) (24,325) Tenant security deposits 3,398 (2,939) NET CASH PROVIDED BY OPERATING ACTIVITIES 185,391 271,516 INVESTING ACTIVITIES Purchases of and improvements to investment properties (56,332) (15,316) Purchase of restricted bond cash reserves (15,478) (19,320) NET CASH USED IN INVESTING ACTIVITIES (71,810) (34,636) SECURED INVESTMENT RESOURCES FUND, L.P. II STATEMENTS OF CASH FLOWS (Unaudited)--CONT'D. Three Months Ended March 31, 1998 1997 FINANCING ACTIVITIES Principal payments on long-term debt $ (47,645) $ (45,610) Debt Issuance Costs 0 (7,500) Due (to) from related parties 0 0 NET CASH USED IN FINANCING ACTIVITIES (47,645) (53,110) INCREASE IN CASH AND CASH EQUIVALENTS 65,936 183,770 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 867,657 561,667 CASH AND CASH EQUIVALENTS END OF PERIOD $ 933,593 $ 745,437 See notes to financial statements. SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited) March 31, 1998 NOTE A--BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998 are not necessarily indicative of the results that may be expected for the year ended December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Fm 10-K for the year ended December 31, 1997. NOTE B--MORTGAGE DEBT Mortgage debt consists of the following: March 31, December 31, 1998 1997 Collateralized by Investment Property First Mortgages: Oak Terrace Active Retirement Center and Healthcare Center $ 12,800,000 $ 12,800,000 less bond discount (2,012,842) (2,050,642) Sunwood Village Apartments 7,992,016 8,008,454 Thomasbrook Apartments 4,984,179 4,984,179 Forest Park Shopping Ctr. 1,092,337 1,114,184 Bayberry Crossing Shopping Ctr. 2,576,732 2,586,092 $ 27,432,422 $ 27,442,267 Interest expense totaled $478,180 and $606,257 during the first quarter of 1998 and 1997, respectively. On May 17, 1996 the Partnership refinanced the matured first mortgage on Sunwood Village Apartments. The terms of the new mortgage are $8,100,000 at 8.625% interest with monthly principal and interest payments in the amount of $63,000 through the loan maturity date of June 1, 2001 (5 years). SECURED INVESTMENT RESOURCES FUND, L.P. II NOTES TO FINANCIAL STATEMENTS (Unaudited)--CONT'D. NOTE B--MORTGAGE DEBT--CONT'D. The Partnership recognized a gain of $352,227 upon payment of the refinanced note due the forgiveness of all the deferred interest relating to the original note. The Partnership has the option to currently pay or defer payment of interest due on the hedged portion ($8,400,000) of the Oak Terrace Active Retirement Center financing. As of March 31, 1998 and December 31, 1997, $737,370 of deferred interest has been accrued and is reflected in long-term accrued interest. NOTE C--RELATED PARTY TRANSACTIONS SPECS, Inc., a Kansas Corporation in which the individual General Partner has a minority interest, receives property management fees for providing property management services. SPECS, Inc. also performs various professional services for the Partnership, primarily tax accounting, audit preparation, SEC 10Q and 10K preparation, and investor services. Property management fees paid by the Partnership to SPECS, Inc. are as follows: Three Months Ended March 31, 1998 1997 Property Management Fees $ 54,731 $ 64,513 Amounts due from related parties consist of the following: March 31, December 31, 1998 1997 Secured Investment Resources II, Inc. $ (174,723) $ 174,423 Secured Investment Resources Fund, L.P. 5,000	 5,000 $ (179,423) $ 179,423 The amount due from SIR II, Inc. represents excess syndication costs. NOTE D--CASH DISTRIBUTIONS No cash distributions have been made since April 1990. Future distributions will only be made from excess cash flow not needed for working capital reserves. Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations. Results of Operations Revenues for the first three months of 1998 decreased by $234,514 (16.6%) compared to the same period of last year. Residential revenues decreased by $231,855 during that same period. Likewise, commercial rentals and miscellaneous revenues decreased by $1,531 and $1,128 respectively. Operating and Administrative expenses decreased $113,212 (15.0%) when comparing the first three months of 1998 with the same period of 1997. Higher property operating expenses are primarily due to higher resident turnover. Interest expense for the first three months decreased $128,077 (21.3%) over the 1997 first three months expense. The Partnership anticipates that operating results for the first three months will be representative of the results for the remainder of the year. Liquidity and Capital Reserves During the first three months $185,391 of cash was provided by operating activities, $71,800 was used for investing activities and $47,645 was used to reduce long term debt. Although the cash position has improved, the Partnership is past due on the Thomasbrook Apartment first mortgage. The Partnership is negotiating with the first mortgage lender to either restructure the existing debt, offer the property in exchange for the debt or allow a third party to assume the debt and acquire the property. The General Partner also anticipates that 1998 cash flow from operations will continue to improve because of stronger occupancy and continued rental rate increases. It is the General Partner's intent to evaluate the Partnership's portfolio to determine if it is prudent to offer one or more properties for sale or possible restructure of the related financing packages. Any unleveraged portion of the net sale proceeds or favorable refinancing terms could generate additional working capital. PART II.	OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The first mortgage lender for Thomasbrook Apartments has initiated a foreclosure proceeding and has requested that a receiver be appointed to manage the property. Item 2. CHANGES IN SECURITIES Inapplicable. Item 3. DEFAULTS UPON SENIOR SECURITIES None. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Inapplicable. Item 5. OTHER INFORMATION Inapplicable. Item 6. EXHIBIT AND REPORTS ON FORM 8-K (a)	Exhibits None. 	 (b)	Reports on Form 8-K There were no reports on Form 8-K filed during the quarter ended March 31, 1997. 	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. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: James R. Hoyt as Individual General Partner Date: May 28,1999 By: Secured Investment Resources II, Inc. as Corporate General Partner By: James R. Hoyt, President Date: May 28, 1999 	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. SECURED INVESTMENT RESOURCES FUND, L.P. II A Delaware Limited Partnership (Registrant) By: /s/ James R. Hoyt James R. Hoyt as Individual General Partner Date: May 28,1999 By: Secured Investment Resources II, Inc. as Corporate General Partner By: /s/ James R. Hoyt James R. Hoyt, President Date: May 28, 1999