SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended
December 31, 1997 Commission file number 0-19245

ARVIDA/JMB PARTNERS, L.P. - II
(Exact name of registrant as specified in its charter)

Delaware 58-1809884
(State of organization) (IRS Employer Identification No.)

900 N. Michigan Ave., Chicago, IL 60611
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code 312/440-4800

Securities registered pursuant to Section 12(b) of the Act:

Name of each exchange on
Title of each Class which registered
- ------------------- ------------------------

None None

Securities registered pursuant to Section 12(g) of the Act:

LIMITED PARTNERSHIP INTERESTS
AND ASSIGNEE INTERESTS THEREIN
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ X ]

State the aggregate market value of the voting stock held by non-affiliates
of the registrant. Not applicable.

Portions of the Prospectus of the registrant dated October 27, 1989 and
filed with the Commission pursuant to Rules 424(b) and 424(c) under the
Securities Act of 1933 are incorporated by reference in Parts II and III of
this Annual Report on Form 10-K.

TABLE OF CONTENTS

Page
----
PART I

Item 1. Business . . . . . . . . . . . . . . . . . . 1

Item 2. Properties . . . . . . . . . . . . . . . . . 4

Item 3. Legal Proceedings. . . . . . . . . . . . . . 6

Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . 6

PART II

Item 5. Market for the Partnership's Limited
Partnership Interests and
Related Security Holder Matters. . . . . . . 7

Item 6. Selected Financial Data. . . . . . . . . . . 8

Item 7. Management's Discussion and
Analysis of Financial Condition and
Results of Operations. . . . . . . . . . . . 10

Item 7A. Quantitative and Qualitative
Disclosures About Market Risk. . . . . . . . 14

Item 8. Financial Statements and
Supplementary Data . . . . . . . . . . . . . 15

Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure . . . . . . . . . . . . 37

PART III

Item 10. Director and Executive Officers
of the Registrant. . . . . . . . . . . . . . 37

Item 11. Executive Compensation . . . . . . . . . . . 40

Item 12. Security Ownership of Certain
Beneficial Owners and Management . . . . . . 42

Item 13. Certain Relationships and
Related Transactions . . . . . . . . . . . . 42

PART IV

Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K. . . . . . . . . . . 43

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . 49

PART I

ITEM 1. BUSINESS

All references to "Notes" are to Notes to Consolidated Financial
Statements contained in this report.

The registrant, Arvida/JMB Partners, L.P.-II (the "Partnership"), is a
limited partnership organized in June 1989 and is currently governed under
the Revised Uniform Limited Partnership Act of the State of Delaware. The
Partnership was formed to acquire and develop through merger or purchase
the real estate and other assets of certain affiliated partnerships
("Affiliated Partnerships") and certain other assets. In the public
offering of its limited partnership interests and assignee interests
therein (the "Interests"), which was closed in February 1990, the
Partnership sold 234,428 Interests at $1,000 per Interest. Such offering
was made pursuant to a Registration Statement on Form S-1 under the
Securities Act of 1933 (No. 3329608). Interests sold in the Partnership's
public offering were assigned by an initial limited partner to original
investors ("Holders of Interests"). At December 31, 1997, there were
approximately 15,750 Holders of Interests. The Holders of Interests of the
Partnership generally shared in their portion of the benefits of ownership
of the Partnership's assets in accordance with the number of Interests
held. Reference is made to Item 5. Market for the Partnership's Limited
Partnership Interests and Related Security Holder Matters, for a discussion
regarding transfers of the Interests.

The Partnership's assets, other than Talega, consisted principally of
interests in land developed or planned for development into master-planned
residential communities (the "Communities"). Such Communities and other
development parcels and assets owned directly or indirectly by the
Partnership, are referred to herein as the "Properties". The Partnership
had principally been engaged in the development of comprehensively planned,
primary and secondary home Communities containing a diversified product mix
designed for the various markets in which the Partnership operates.

The Partnership's credit facilities matured without repayment on
December 30, 1994. The lender did not pursue all of its remedies under the
credit facility agreement, which could have included, among other things,
realizing upon the security interests in the Partnership's Properties. The
Partnership sold its remaining assets in accordance with a plan agreed upon
with its lender. In addition, effective December 31, 1997, the Partnership
and its lender entered into a Settlement and Release Agreement
("Agreement") as discussed below.

The Partnership sold individual residential lots and undeveloped land.

The unaffiliated third-party builders and developers to whom the
Partnership sold parcels and lots were generally small to mid-size local
builders and developers who required project specific financing for their
developments and whose operations were susceptible to fluctuations in the
availability of financing. In addition, within certain Properties, the
Partnership constructed, or caused to be constructed, a variety of
products, including single-family homes and patio homes developed for sale.

The Partnership also owned and operated a golf club facility and a cable
television system within its Heathrow Community. The Partnership's
remaining Properties were located near Atlanta, Georgia and Orlando,
Florida and in Orange County, California.

Arvida Company ("Arvida"), an affiliate of the General Partner has
provided certain development, construction, management and other personnel
and services to the Partnership for all of its projects and operations,
subject, in each case, to the overall control of the General Partner on
behalf of the Partnership. The Partnership, directly or through certain
subsidiaries, provided development and management services to Community
home ownership associations within the Communities.

The business of the Partnership was cyclical in nature and certain
aspects of the development of the Properties were to some degree seasonal.
Such seasonality has not had a material impact on the Partnership's
business. A presentation of information about industry segments,
geographic regions or raw materials is not applicable and would not be
material to an understanding of the Partnership's business taken as a
whole.

The Partnership had previously been following the practice with respect
to Communities of (i) developing an overall master plan for the Community,
(ii) creating a unifying architectural theme that is consistent with the
Community's master plan, (iii) offering a variety of recreational
facilities, (iv) imposing architectural standards and other property
restrictions on residents and third-party developers in order to enhance
the long-term value of the Community, (v) establishing property owners'
associations to maintain compliance with architectural, landscaping and
other requirements and to provide ownership and maintenance of certain
facilities, and/or (vi) operating and controlling access to golf, tennis
and other recreational facilities.

The Partnership acquired interests in nine residential real estate
projects (see Item 2. Properties, for a description of the projects).
However, as a result of the real estate recession that commenced in the
early 1990's, the Partnership was unable to develop and sell its properties
as initially contemplated. In 1992, the Partnership was required to
restructure its bank financing. Nevertheless, due to the severity and
length of the real estate recession, the Partnership was unable to pay the
debt service on its bank financing, and its credit facility matured without
repayment on December 30, 1994. The Partnership and its bank lender
entered into various agreements commencing in 1995 pursuant to which, among
other things, the Partnership undertook an orderly liquidation of its
remaining assets with the net proceeds (after payment of operational costs
and general and administrative expenses) from the sale of assets applied to
repayment of the Partnership's bank debt. During 1997, the Partnership
completed the sales of its last remaining interests in real estate.

During May 1997, the Partnership closed on the sale of its Talega
Property to an unaffiliated third party for $31.1 million. The net
proceeds from the sale, after prorations and closing costs, totaled
approximately $19.1 million. Of this amount, approximately $18.8 million
was applied against the outstanding principal balance on the Partnerships'
term loans and $0.3 million was deposited to fund the Partnership's
expenses.

During July 1997, the Partnership closed on the sale of its retail
shopping center at the Heathrow Community to an unaffiliated third party
for $5.1 million. The net proceeds from the sale, after prorations and
closing costs, totaled approximately $5.0 million. Of this amount, $4.9
million was applied against the outstanding principal balance on the
Partnership's term loans and $0.1 million was deposited to fund the
Partnership's expenses.

In addition, during 1997, the Partnership closed on the sale of its
remaining three lots in the Eagle Watch Community.

At December 31, 1997, the Partnership had no remaining real
properties. Effective December 31, 1997, the Partnership and its lender
entered into the Agreement whereby the Partnership's lender agreed to
forgive the Partnership's remaining indebtedness, including all unpaid
principal and accrued interest (totaling in excess of $75 million,
collectively) and fees and expenses related to the credit facilities.

In exchange for the forgiveness of such indebtedness, the Partnership
has assigned to its lender approximately $617,000 in cash, cash equivalents
and short-term investments (including those held under restricted
collateral arrangements), approximately $664,000 of reimbursable
development expenditures related to the Talega Property, accounts
receivable (including receivables for which collectibility is uncertain),
and the Partnership's right to any net proceeds from its claim pertaining
to certain litigation relating to its former Palm Beach Polo Property in
which the Partnership is currently involved. The ultimate amount of such
net proceeds, if any, is unknown at this time. The lender has agreed to
allow the Partnership to retain approximately $571,000 in cash, cash
equivalents and short-term investments, and an approximate $242,000 account
receivable in order to pay expenses incurred prior to its termination as a
legal entity, including continuing litigation expenses to defend itself in
the lawsuit relating to the Heathrow joint venture and property described
in Part 1. Item 3. Legal Proceedings.

The Agreement further provides that the Partnership will not undertake
any business activity after December 31, 1997, or incur any additional
indebtedness not directly related to the completion of the Partnership's
winding up, and that the Partnership will assign to its lender any assets
of the Partnership that remain after payment of all its expenses relating
to or arising out of the completion of its winding up.

As of December 31, 1997, the Partnership neither operated nor carried
on any business, financial operation or venture, having ceased any such
activities prior to such date, and as a result the Partnership has been
terminated for Federal income tax purposes. The Partnership's only
activity at this time is its involvement in certain pending litigation.
Upon final resolution of the pending litigation, the Partnership will be
terminated as a legal entity. Due to the Partnership's limited assets and
the requirement, pursuant to the Agreement, that any assets remaining after
completion of the Partnership's winding up must be assigned to its lender,
there is no likelihood the Holders of Interests will receive any further
distributions from the Partnership. Moreover, the Holders of Interest have
no obligation or liability to pay, or to make capital contributions for the
payment of, any claims, losses, deficits or expenses the Partnership has
incurred or may incur in the future, and they will not receive any
allocation of profits or losses for tax or accounting purposes for any
period after December 31, 1997. Future items of profit or loss, if any,
will be fully allocable to the General Partner.

The Partnership owns no patents, trademarks, licenses or franchises
other than those trademarks and tradenames in respect of the names of its
Communities. The Arvida name and the service marks with respect to the
Arvida name were owned by Arvida, subject to the Partnership's non-
exclusive right to use the name and the service marks under a license
agreement with Arvida (and subject to the non-exclusive right of certain
third parties to the limited use of the name). In November 1997, St. Joe
Corporation (an unaffiliated third party) completed its acquisition of a
majority interest in St. Joe/Arvida Company, L.P. ("St. Joe/Arvida"), which
acquired the major assets of Arvida, including the Arvida name and service
marks with respect to the Arvida name. In connection with the acquisition
of Arvida's assets, St. Joe/Arvida was assigned Arvida's rights and
obligations under the license agreement with the Partnership. St.
Joe/Arvida also currently employs most of the personnel formerly employed
by Arvida. Affiliates of JMB Realty Corporation own a minority interest in
St. Joe/Arvida.

The Partnership's real properties were subject to competition from
similar types of properties in the vicinities in which they are located,
including properties owned, advised or managed by affiliates of the General
Partner. None of the Partnership's real estate assets were located outside
of the United States.

The Partnership has no employees. Reference is made to Note 10 for a
discussion of certain arrangements with Arvida and Arvida/JMB Partners,
L.P., both of which provided personnel to perform services on behalf of the
Partnership.

The terms of transactions between the Partnership and the General
Partner and its affiliates are set forth in Items 10, 11 and 12 below to
which reference is hereby made for a description of such terms and
transactions.

ITEM 2. PROPERTIES

The principal assets in which interests were acquired by the
Partnership are described below. Unless otherwise indicated, the acreage
amounts set forth herein are approximations of the gross acreage of the
Communities or other properties referred to or described. Except where
noted, the Partnership was the developer of the Properties. Reference is
made to Note 8 for a discussion of the mortgages securing most of these
properties.

(a) Orange County, California

The Partnership owned 2,290 undeveloped acres located in southern
Orange County, California originally planned for a master-planned
community, known as Talega. It was originally intended that the community
would offer a complete range of residential product types ranging from low-
density single-family to higher density multi-family. The residential
areas were to be oriented around major amenities such as golf courses,
parks, schools, trails, neighborhood centers and transit centers. The
Partnership ceased development of this Community in late 1991 and sold its
interest in the Property during May 1997, as discussed in Item 1. above.

(b) Palm Beach County, Florida

The Partnership owned 115 developable acres within the 2,250-acre Palm
Beach Polo and Country Club Community, which is located in Palm Beach
County, Florida. The Community was an existing development of an
unaffiliated third-party developer, Landmark Land Company of Florida, Inc.,
who filed for bankruptcy in late 1991. The Partnership's Property within
Palm Beach Polo and Country Club was encumbered by a mortgage. In July
1991, the Partnership ceased making debt service payments and was seeking a
modification of the non-recourse mortgage loan, as a result of slower than
anticipated sales absorptions which had been impacted by the financial
viability of the third-party developer, among other reasons. The
Partnership was unsuccessful in its efforts either to obtain a modification
of the loan or to resolve certain issues with the mortgage note holder, the
Resolution Trust Corporation ("RTC"). Therefore, on June 25, 1993, the
Partnership executed a deed in lieu of foreclosure agreement with the RTC
to transfer its interest in the Property.

The Partnership also owned 24 acres in Wycliffe, a 600-acre Planned
Unit Development ("PUD"), located in Palm Beach County, Florida, which was
being developed by an unaffiliated third-party developer. The Partnership
offered patio home products at this Property, all of which were sold and
closed as of December 31, 1993.

The Partnership owned a 230-acre community located in Southwest Orange
County, Florida (approximately 10 miles west of Orlando, Florida), known as
Wesmere. Amenities include an open air pavilion, tennis courts, basketball
courts, a swimming pool and a park. The Partnership constructed and sold
housing products targeted towards the primary home buyer and sold homesites
to unaffiliated third-party builders. The Partnership sold the remaining
land within this community during 1995.

(d) Seminole County, Florida

The Partnership owned a controlling interest and was the managing
general partner of a limited partnership which was the developer/owner of
the remaining residential acreage (approximately 1,800 acres), existing
community amenities and certain commercial and other real estate assets
within Heathrow, a 2,700-acre community. Heathrow is located approximately
15 miles northeast of Orlando, in Seminole County, Florida. The
Partnership developed and sold a wide range of housing products and sold
homesites to unaffiliated third-party builders. The community amenities
include golf, tennis, swimming and other recreational facilities. During
June 1996, the Heathrow joint venture closed on the sale of the remaining
land, the country club and certain related assets within Heathrow, as
discussed in Item 1. above. The Partnership sold its shopping center at
the Heathrow community during July 1997.

(e) Cherokee County, Georgia

Eagle Watch is a 1,000-acre residential and golf course community
located in Cherokee County, Georgia, northwest of Atlanta. The Partnership
owned a 99.9% partnership interest in a partnership that owned Eagle Watch.

The remaining 1/10 of 1% partnership interest was held by the General
Partner. The community offered developed homesites for sale to third party
builders. Community amenities include an 18-hole public golf course,
swimming, tennis and other recreational facilities. The Partnership closed
on the sale of the Eagle Watch Golf Club in December 1993. The Partnership
sold the remaining homesites within this Community during 1997, as
discussed in Item 1. above.

(f) Clayton County, Georgia

The Partnership owned Rock Creek, a 190-acre single-family Community
located in Clayton County, Georgia, southeast of Atlanta. The Community
offered developed homesites for sale to third-party builders and features
an eight-acre recreational area and a pavilion with swimming and tennis
courts. All homesites in this community closed as of December 31, 1995.

(g) Cobb County, Georgia

The Partnership owned Burnt Hickory Lakes, a 180-acre single-family
community located in western Cobb County, Georgia, west of Atlanta.
Amenities include lakes, tennis courts, a swimming pool and a recreational
facility. The community offered developed homesites for sale to third-
party builders, all of which were closed as of December 31, 1995.

(h) Tarrant County, Texas

The Partnership owned SouthRidge Lakes, a 270-acre community located
in northeast Tarrant County, Texas, near Dallas/Ft. Worth. Amenities
include tennis, swimming and other recreational areas. The Partnership
sold homesites to third-party builders, all of which were closed as of
December 31, 1994.

ITEM 3. LEGAL PROCEEDINGS

The Partnership has been named a defendant in a lawsuit filed on
January 11, 1996 in the Circuit Court in and for the Eighteenth Judicial
Circuit, Seminole County, Florida entitled Land Investment I, Ltd.,
Heathrow Land & Development Corporation, Heathrow Shopping Center
Associates, and Paulucci Investments v. Arvida/JMB Managers-II, Inc.,
Arvida/JMB Partners, L.P.-II, Arvida Company and JMB Realty Corporation.
The complaint, as amended, includes counts for breach of the management
agreement, fraud in the inducement and conspiracy to commit fraud in the
inducement, breach of the partnership agreement and constructive trust in
connection with the purchase and management of the Heathrow development.
Plaintiffs seek, among other things, unspecified compensatory damages,
punitive damages, attorneys fees, costs, and such other relief as the Court
deems appropriate. The Partnership believes that the lawsuit is without
merit and intends to vigorously defend itself in this matter.

The Partnership has filed a claim in a bankruptcy proceeding entitled
Landmark Land Co. of Florida, Inc., Case No. 2:91-3291-1 against the
debtor, Landmark Land Co. of Florida, Inc., in the United States District
Court for the District of South Carolina, Charleston Division. The
Partnership's claims are for breach of a joint venture agreement and breach
of contract, among other things. The proof of claim, which was filed on
March 6, 1992, seeks damages, as well as pre- and post-judgment interest,
attorneys fees and costs. The adversary proceeding commenced in August
1993. The matter was tried to the Court over a five-week period ending in
the Fall of 1995. The Partnership is awaiting the Court's ruling. The
Partnership has assigned its interest in any net proceeds (after payment of
attorneys' fees and expenses) from a recovery on its claim to its lender.

The Partnership is not subject to any other material pending legal
proceedings, other than ordinary litigation incidental to the business of
the Partnership.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of security holders during
1997 and 1996.

PART II

ITEM 5. MARKET FOR THE PARTNERSHIP'S LIMITED PARTNERSHIP
INTERESTS AND RELATED SECURITY HOLDER MATTERS

As of December 31, 1997, there were 15,750 record Holders of the
233,963 Interests outstanding of the Partnership. There is no public
market for Interests, and no public market for Interests will develop. As
of December 31, 1997, the Partnership neither operated nor carried on any
business, financial operation or venture, having ceased any such activities
prior to such date, and as a result, has been terminated for Federal income
tax purposes. As discussed in Item 1 above, the Partnership and its lender
entered into a Settlement and Release Agreement effective December 31,
1997, pursuant to which, among other things, the lender agreed to forgive
all remaining indebtedness owed to it by the Partnership under its credit
facilities in exchange for an assignment of certain of the Partnership's
remaining assets to the lender. In addition, the Partnership agreed to
transfer to the lender any assets of the Partnership remaining immediately
prior to its termination. Accordingly, there is no likelihood of any
future distributions to be made to the Holders of Interest. In addition,
Holders of Interests will not be allocated any profits or losses of the
Partnership after December 31, 1997. Further, the Partnership has
instructed its transfer agent not to permit transfers of Interests except
by operation of law or upon death of a Holder of Interests.

Reference is made to Note 9 for a discussion of the provisions of the
Partnership Agreement relating to cash distributions. Reference is made to
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations and Note 8 for a discussion of the Partnership's
previous inability to reinstate distributions.

ITEM 6. SELECTED FINANCIAL DATA
ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, 1995, 1994 AND 1993

(Liquidating
Basis)
1997 1996 1995 1994 1993
------------- ------------- ----------- ------------ ------------

Total revenues. . . . . . $ 37,116,725 25,753,220 25,775,598 52,940,395 60,904,431
============ ============ ============ ============ ============
Net operating
income (loss). . . . . . $ 33,163,029 4,602,058 1,904,695 (43,143,395) (18,502,496)
============ ============ ============ ============ ============

Net income (loss) . . . . $112,421,185 12,366,476 (18,242,348) (61,324,519) (28,388,874)
============ ============ ============ ============ ============
Net income (loss)
per Interest (a) . . . . $ 444.19 64.05 (52.00) (287.36) (95.33)
============ ============ ============ ============ ============

Total assets (b). . . . . $ 1,437,372 4,849,917 24,239,158 43,945,587 93,530,462
============ ============ ============ ============ ============

Total liabilities
(b). . . . . . . . . . . $ 1,437,372 117,271,102 149,026,819 150,490,900 138,751,256
============ ============ ============ ============ ============
Cash distributions
per Interest (c) . . . . $ 1.05 -- -- -- --
============ ============ ============ ============ ============

<FN>

The above selected financial data should be read in conjunction with the consolidated financial statements
and the related notes appearing elsewhere in this report.

(a) The net income (loss) per Interest is based upon the average number of Interests outstanding during each
period.

(b) The Partnership does not present a classified balance sheet as a matter of industry practice and, as
such, does not distinguish between current and non-current assets and liabilities.

(c) Pursuant to the Partnership Agreement, if upon completion of the liquidation and termination of the
Partnership and final distribution of all Partnership funds, the aggregate capital contributions made by the
Holders of Interests exceed the aggregate distributions paid from the Partnership to the Holders of Interests,
then the General Partner and Associate Limited Partner were required to make payments to the Holders of Interests
totaling the amount of distributions received by the General Partner and Associate Limited Partner from the
Partnership. The distributions of cash flow received by the General Partner and Associate Limited Partner from
the Partnership since its inception total approximately $247,000. Accordingly, during November 1997, the General
Partner and Associate Limited Partner made payments totaling approximately $247,000 to the Partnership and the
Partnership, in turn, made payments totaling approximately $247,000 to the Holders of Interests ($1.05 per
Interest).

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 1997 and 1996, the Partnership had cash, cash
equivalents and short-term investments of approximately $477,600 and
$182,000, respectively. Bank overdrafts, which represent checks in
transit, of approximately $10,200 at December 31, 1996 were repaid from
cash on hand in January 1997. The Partnership suspended cash distributions
to its partners in late 1990 due to, among other things, deteriorating
market conditions. The Partnership was unable to reinstate distributions
due to its financial condition, which is also discussed more fully below.

The terms of the Partnership's credit facilities are discussed in
detail in Note 8. The Partnership's credit facilities matured on
December 30, 1994. However, the Partnership did not have the funds to pay
off the balances outstanding under the credit facilities, and was
unsuccessful in its attempts to negotiate a restructuring of such credit
facilities with its lender.

In September 1994, the lender informed the Partnership that it would
not advance any funds for the construction of additional homes by the
Partnership which were not under construction or under contract for sale by
October 1994 and would not advance funds for the development of land
parcels or homesites not fully developed or in process by October 1994,
unless and until the lender and the Partnership agreed to a plan for the
orderly liquidation of the Partnership's remaining assets.

Proceeds from the sales of housing units, homesites, land parcels and
other collateral securing the credit facilities, net of brokerage
commissions and certain other customary selling expenses were delivered to
the lender and applied against the outstanding principal balances on the
term loans. Through December 31, 1997, the Partnership remitted proceeds
totaling approximately $64.1 million from sales made after becoming subject
to this requirement in September 1994.

In March 1995, the Partnership and its lender entered into Forbearance
Agreements pursuant to which, among other things, a plan for the orderly
liquidation of its remaining assets was established. The Forbearance
Agreements were modified in October 1995, March 1996, and June 1996, and
amended in September 1996 and May 1997 to provide for, among other things,
extensions of the time frame for the orderly liquidation of the
Partnership's assets. In conjunction with the September 1996 amendment,
the Partnership's lender agreed to forgive, waive and cancel a portion of
the unpaid interest on the Partnership's credit facilities in the aggregate
amount of $20 million, of which $2 million was allocated to interest on the
revolving line of credit and $18 million was allocated to interest on one
of the term loans. The forgiveness of this interest resulted in an
extraordinary gain for financial reporting purposes, and is reflected as
such on the accompanying consolidated statements of operations for the year
ended December 31, 1996. The May 1997 amendment extended the terms of the
forbearance to June 1997, among other things.

During 1997, the Partnership completed the sales of its last remaining
interests in real estate, and as a result, has no remaining properties.
Effective December 31, 1997, the Partnership and its lender entered into a
Settlement and Release Agreement ("Agreement") whereby the Partnership's
lender agreed to forgive the Partnership's remaining indebtedness,
including all unpaid principal and accrued interest (totaling in excess of
$75 million, collectively) and fees and expenses related to the credit
facilities. This forgiveness resulted in an extraordinary gain of
approximately $82.2 million for financial reporting purposes, and is
reflected as such on the accompanying consolidated statements of operations
for the year ended December 31, 1997.

In exchange for the forgiveness of such indebtedness, the Partnership
has assigned to its lender approximately $617,000 in cash, cash equivalents
and short-term investments (including those held under restricted
collateral arrangements), approximately $664,000 of reimbursable
development expenditures related to the Talega Property, accounts
receivable (including receivables for which collectibility is uncertain),
and the Partnership's right to any net proceeds from its claim pertaining
to certain litigation relating to its former Palm Beach Polo Property in
which the Partnership is currently involved. The ultimate amount of such
proceeds, if any, is unknown at this time. The lender has agreed to allow
the Partnership to retain approximately $571,000 in cash, cash equivalents
and short-term investments, and an approximate $242,000 account receivable
in order to pay any other expenses incurred prior to its termination as a
legal entity, as well as continuing litigation expenses to defend itself in
the lawsuit relating to the Heathrow joint venture and property described
in Part 1. Item 3. Legal Proceedings, subject to the Partnership's
acknowledgement that the lender has no obligation to provide any additional
funds to the Partnership for payment of such expenses.

Pursuant to the Partnership Agreement, if upon completion of the
liquidation and termination of the Partnership and final distribution of
all Partnership funds, the aggregate capital contributions made by the
Holders of Interests exceed the aggregate distributions paid from the
Partnership to the Holders of Interests, then the General Partner and
Associate Limited Partner were required to make payments to the Holders of
Interests totaling the amount of distributions received by the General
Partner and Associate Limited Partner from the Partnership. The
distributions of cash flow received by the General Partner and Associate
Limited Partner from the Partnership since its inception total
approximately $247,000. Accordingly, during November 1997, the General
Partner and Associate Limited Partner made payments totaling approximately
$247,000 to the Partnership and the Partnership, in turn, made payments
totaling approximately $247,000 to the Holders of Interests ($1.05 per
Interest).

As stipulated in a management agreement with the Partnership, Arvida
Company ("Arvida") provided development, construction, management and other
personnel and services to the Partnership for all of its projects and
operations. In accordance with this agreement, the Partnership reimbursed
Arvida for all of its out-of-pocket expenditures (including salary and
salary-related costs). Pursuant to a requirement under the Partnership's
credit facilities, a portion of the reimbursements paid to Arvida and to
Arvida/JMB Partners, L.P., as well as portions of the Partnership's
insurance and loan refinancing costs, incurred in 1992 and 1993 had been
funded on the Partnership's behalf by advances from the General Partner.
As of April 30, 1993, the General Partner had advanced the total amount
required under the terms of the credit facilities. Such advances, which do
not bear interest, totaled approximately $4,609,400. The repayment of such
advances was subordinated to the receipt by the Holders of Interests of
certain levels of return and, therefore, will not be made. Accordingly, in
December 1997, the Partnership recorded an adjustment to reflect this
liability at its fair value of $0. This adjustment resulted in an
extraordinary gain of approximately $4.6 million, and is reflected as such
on the accompanying consolidated statements of operations at December 31,
1997.

In addition, prior to the sale of the remaining land, the country club
and certain related assets within the Heathrow Community during June 1996,
Arvida was entitled to receive a management fee in connection with
providing development management services to the Heathrow venture.
Cumulative management fees of approximately $3,005,000 had been earned
through December 31, 1997, the payment of which was deferred. The ultimate
payment of these management fees will not be made as such payment was
subordinated to certain levels of return to the Holders of Interests.
Accordingly, in December 1997, the Partnership recorded an adjustment to
reflect this liability at its fair value of $0. This adjustment resulted
in an extraordinary gain of approximately $3.0 million, and is reflected as
such on the accompanying consolidated statements of operations at
December 31, 1997.

As of December 31, 1997, the Partnership neither operated nor carried
on any business, financial operation or venture, having ceased any such
activities prior to such date, and as a result the Partnership has been
terminated for Federal income tax purposes. The Partnership's only
activity at this time is its involvement in certain pending litigation.
Upon final resolution of the pending litigation, the Partnership will be
terminated as a legal entity. Due to the Partnership's limited assets and
the requirement, pursuant to the Agreement, that any assets remaining after
completion of the Partnership's winding up must be assigned to its lender,
there is no likelihood the Holders of Interests will receive any further
distributions from the Partnership. Moreover, the Holders of Interests
have no obligation or liability to pay, or to make capital contributions
for the payment of, any claims, losses, deficits or expenses the
Partnership has incurred or may incur in the future, and they will not
receive any allocation of profits or losses for tax or accounting purposes
for any period after December 31, 1997. Future items of profits or losses,
if any, will be fully allocable to the General Partner.

Reference is made to Note 11 for further discussion of certain claims
by Merrill Lynch for indemnification by the Partnership and its General
Partner against losses and expenses suffered by Merrill Lynch relating to
claims for arbitration against it by certain investors of the Partnership.

RESULTS OF OPERATIONS

The results of operations for the years ended December 31, 1997, 1996
and 1995 are primarily attributable to the limited operations of the
Partnership and the sale of the Partnership's assets as it undertook an
orderly liquidation of its remaining assets pursuant to various agreements
with its lender.

Revenues from housing and homesite activities are recognized upon the
closing of homes and developed lots, respectively, within the Partnership's
Communities. Land and property revenues are generated from the closing of
developed and undeveloped residential and/or commercial land tracts. Cost
of revenues pertaining to the Partnership's housing sales reflect the cost
of the acquired assets as well as development and construction
expenditures, certain capitalized overhead costs, capitalized interest,
real estate taxes and marketing and disposition costs. The costs related
to the Partnership's homesite sales reflect the cost of the acquired
assets, related development expenditures, certain capitalized overheads,
capitalized interest and real estate taxes, and disposition costs. Land
and property cost of revenues reflect the cost of the acquired assets,
certain development costs and the related disposition costs. Operating
properties represents the activity from the club operation, retail shopping
center and cable operations at the Partnership's Heathrow community.
Brokerage and other operations represents activity from the sale of
builders' homes within the Partnership's communities, the resale of real
estate inside and outside of the Partnership's communities, and proceeds
from the Partnership's property management activities.

The Partnership's results of operations for the year ended
December 31, 1997 were generated primarily from the closings of its Talega
Property in May, the shopping center at its Heathrow community in July, the
remaining three lots in its Eagle Watch Community in May, August and
December, respectively, and the sales center used in the Wesmere community
in June. In addition, the Partnership's operating results for 1997 include
the revenues and expenses associated with the operation of the shopping
center at its Heathrow community prior to its sale in July.

During May 1997, the Partnership closed on the sale of its Talega
Property to an unaffiliated third party for $31.1 million. The terms of
the sale were generally in accordance with an agreement made in October
1996 with certain modifications. In conjunction with the sale of the
Talega Property, the Partnership paid all current and delinquent property
taxes (including penalties and interest thereon). In addition, the
Partnership reached an agreement with the Santa Margarita Water District
(the "District") resulting in the Partnership's payment of an agreed upon
amount due for charges and assessments made by the District, including
those with respect to the Partnership's tax exempt bond financing. This
amount was paid at closing, at which time the Partnership received a full
and unconditional release from the District. In addition, all contractual
obligations of the Partnership with respect to the Talega Property were
assumed by the buyer. The net proceeds from the sale, after prorations and
closing costs, totaled approximately $19.1 million. Of this amount,
approximately $18.8 million was applied against the outstanding principal
balance on the Partnership's term loans, in accordance with the terms of
the Forbearance Agreements, and $0.3 million was deposited to fund the
Partnership's expenses. This sale is the primary cause for the
Partnership's gross operating profit for the year ended December 31, 1997
as a result of previous writedowns of the carrying value of Talega.

During July 1997, the Partnership closed on the sale of its retail
shopping center at the Heathrow community to an unaffiliated third party
for $5.1 million. The net proceeds from the sale, after prorations and
closing costs, totaled approximately $5.0 million. Of this amount, $4.9
million was applied against the outstanding principal balance on the
Partnership's term loans, in accordance with the terms of the Forbearance
Agreements, and $0.1 million was deposited to fund the Partnership's
expenses.

The closings of the Talega Property and the shopping center within
Heathrow are the cause for various significant changes reflected on the
accompanying consolidated statements of operations for the year ended
December 31, 1997 as compared to 1996.

The Partnership's results of operations for the year ended
December 31, 1996 were generated primarily from the closings of the
remaining land, country club, cable company and certain related assets
within its Heathrow community, one housing unit in its Heathrow community,
and 20 homesites within its Heathrow and Eagle Watch communities,
collectively. In addition, the Partnership's operating results for 1996
include revenues and expenses associated with the operations of the country
club and cable company in Heathrow prior to their sale in June, operating
activities of the shopping center in its Heathrow community, and revenues
and expenses associated with the Partnership's brokerage and other
operations.

During June 1996, the Heathrow joint venture, in which the Partnership
is the managing general partner, closed on the sale of the remaining land,
country club, cable company and certain related assets within the
Partnership's Heathrow Community. This transaction is reflected in Land and
property operations on the accompanying consolidated statements of
operations. This sale is the primary cause for various significant changes
on the accompanying consolidated statements of operations for the year
ended December 31, 1996 as compared to 1995. The net proceeds from this
sale, after prorations and closing costs, of approximately $18.4 million
were paid to the Partnership's lender and applied against the outstanding

principal balances on both of the Partnership's term loans. The sale
resulted in a gain for financial reporting purposes and a loss for Federal
income tax purposes in 1996.

The Partnership's results of operations for the year ended
December 31, 1995 were generated primarily from the closings of the
remaining land within the Partnership's Wesmere community, 37 housing units
within its Heathrow and Wesmere communities, collectively, and 146
homesites within its Heathrow, Eagle Watch and Rock Creek communities,
collectively. In addition, operating results for 1995 include the revenues
and expenses associated with the operations of the country club, shopping
center and cable company within its Heathrow community, and revenues and
expenses associated with the Partnership's brokerage and other operations.

During November 1995, the Partnership closed on the sale of the
remaining land within its Wesmere Community to an unaffiliated third party
for a sales price of approximately $4.25 million. In addition, the buyer
reimbursed the Partnership at closing for certain prepaid impact fees
totaling approximately $1 million which had been paid by the Partnership.
The net proceeds from such sale were paid to the Partnership's lender and
applied against the outstanding principal balance on one of the
Partnership's term loans. The sale resulted in a gain for financial
reporting purposes and a loss for Federal income tax purposes in 1995.

The decline in the gross operating profit margin from homesite
activities for the year ended December 31, 1996 as compared to 1995 is due
primarily to a reduction in the number of closings of higher margin product
at the Partnership's Heathrow community.

Selling, general and administrative expenses include all marketing
costs, with the exception of those costs capitalized in conjunction with
the construction of housing units, and project and general administrative
costs. These expenses are net of the marketing fee reimbursements received
from third-party builders. Such costs continued to decrease as a direct
result of the decline in the activities of the Partnership.

The decrease in interest and real estate taxes for the year ended
December 31, 1997 as compared to 1996 is due primarily to the decrease in
taxes attributable to the Talega Property as result of the sale of that
Property in May 1997. In addition, interest expense decreased due to a
reduction in the indebtedness outstanding during the year ended
December 31, 1997 as compared to 1996. The decrease in interest and real
estate taxes for the year ended December 31, 1996 as compared to 1995 is
due primarily to an approximate $5.5 million adjustment recorded during
1996 to reduce real estate taxes related to the Talega Property. During
the fourth quarter of 1996, the Partnership received correspondence from
the District which indicated that the Partnership's obligation to the
District had been reduced by proceeds from the sale of property previously
improved by the District. Such improvements had been funded by the bond
financing described in Note 12. The decrease in interest and real estate
taxes for 1996 as compared to 1995 is also due to a decrease in the average
amount of borrowings outstanding during the period.

INFLATION

As a result of the decrease in the level of inflation in recent years,
inflation has not had a material effect on the operations of the
Partnership. Due to the Partnership's last real estate investment being
sold in 1997 and the expected dissolution of the Partnership, inflation is
not expected to significantly impact the Partnership in the future.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

INDEX

Report of Independent Certified Public Accountants

Statement of Consolidated Net Assets (Liquidating Basis), December 31, 1997

Consolidated Balance Sheet, December 31, 1996

Consolidated Statements of Operations for the years ended
December 31, 1997 (Liquidating Basis), 1996 and 1995

Consolidated Statements of Changes in Partners'
Capital Accounts (Deficits) for the years ended
December 31, 1997 (Liquidating Basis), 1996 and 1995

Consolidated Statements of Cash Flows for the years ended
December 31, 1997 (Liquidating Basis), 1996 and 1995

Notes to Consolidated Financial Statements

SCHEDULES NOT FILED:

All schedules have been omitted as the required information is
inapplicable, or the information is presented in the consolidated financial
statements or related notes.

REPORT OF ERNST & YOUNG LLP,
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Partners
Arvida/JMB Partners, L.P.-II

We have audited the consolidated balance sheet of Arvida/JMB Partners,
L.P.-II and Consolidated Ventures as of December 31, 1996, and the related
consolidated statements of operations, changes in partners' capital
accounts (deficits), and cash flows for each of the two years in the period
ended December 31, 1996. In addition, we have audited the consolidated
statement of net assets (liquidating basis) as of December 31, 1997, and
the related consolidated statements of operations (liquidating basis),
changes in partners' capital accounts (liquidating basis), and cash flows
(liquidating basis) for the year ended December 31, 1997. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

As described in note 1 to the consolidated financial statements, upon
disposition of its remaining interest in real estate and execution of a
settlement agreement with its lender effective December 31, 1997,
Arvida/JMB Partners, L.P.-II approved a plan of liquidation and commenced
liquidation shortly thereafter. As a result, the Partnership has changed
its basis of accounting as of December 31, 1997 from the going-concern
basis to a liquidation basis.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Arvida/JMB Partners, L.P.-II and Consolidated Ventures as of December 31,
1996, and the consolidated results of their operations and their cash flows
for each of the two years in the period ended December 31, 1996, their net
assets (liquidating basis) as of December 31, 1997, and the results of
their operations (liquidating basis) and their cash flows (liquidating
basis) for the year then ended, in conformity with generally accepted
accounting principles applied on the basis described in the preceding
paragraph.

Miami, Florida
February 20, 1998

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

STATEMENT OF CONSOLIDATED NET ASSETS
(LIQUIDATING BASIS)

DECEMBER 31, 1997

ASSETS:

Cash and cash equivalents (note 4). . . . . . . . . . $ 477,532
Restricted cash (note 4). . . . . . . . . . . . . . . 515,905
Trade and other accounts receivable
(net of allowance for doubtful accounts
of $45,261) (note 5). . . . . . . . . . . . . . . . 241,885
Real estate inventories (notes 2, 6, 8 and 12). . . . --
Property and equipment, net (note 7). . . . . . . . . --
Security deposits . . . . . . . . . . . . . . . . . . 202,050
------------

Total assets. . . . . . . . . . . . . . . . $ 1,437,372
============

LIABILITIES:

Accounts payable. . . . . . . . . . . . . . . . . . $ 45,167
Deposits (note 4) . . . . . . . . . . . . . . . . . --
Reserve for liquidating expenses (including $210,000
of estimates due to affiliates of the Partnership)
(notes 8 and 12) . . . . . . . . . . . . . . . . . 1,392,205
Notes and mortgages payable (in default) (note 8) . --
------------

Commitments and contingencies
(notes 3, 8, 10, 11 and 12)

Total liabilities . . . . . . . . . . . . . 1,437,372
------------

Net assets. . . . . . . . . . . . . . . . . . . . . . $ --
============

The accompanying notes are an integral part
of these consolidated financial statements.

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1996

ASSETS:

Cash and cash equivalents (note 4). . . . . . . . . . $ 181,623
Restricted cash (note 4). . . . . . . . . . . . . . . 955,077
Trade and other accounts receivable
(net of allowance for doubtful accounts
of $76,289) (note 5). . . . . . . . . . . . . . . . 103,650
Real estate inventories (notes 2, 6, 8 and 12). . . . 57,598
Property and equipment, net (note 7). . . . . . . . . 2,701,441
Prepaid expenses and other assets (including
security deposits totaling $636,211). . . . . . . . 850,528
------------

Total assets. . . . . . . . . . . . . . . . $ 4,849,917
============

LIABILITIES:

Bank overdrafts . . . . . . . . . . . . . . . . . . $ 10,222
Accounts payable. . . . . . . . . . . . . . . . . . 129,281
Deposits (note 4) . . . . . . . . . . . . . . . . . 33,700
Accrued expenses and other liabilities
(notes 8 and 12) . . . . . . . . . . . . . . . . . 30,605,394
Amounts due to affiliates (notes 3 and 10). . . . . 7,621,046
Notes and mortgages payable (in default) (note 8) . 78,871,459
------------

Commitments and contingencies
(notes 3, 8, 10, 11 and 12)

Total liabilities . . . . . . . . . . . . . 117,271,102
------------
Partners' capital accounts (deficits) (note 9)
General Partner and Associate Limited Partner:
Capital contributions. . . . . . . . . . . . . . 2,000
Cumulative net income (loss) . . . . . . . . . . (8,448,354)
Cumulative cash distributions. . . . . . . . . . (246,771)
------------
(8,693,125)
------------
Holders of Interests (note 1):
Capital contributions, net of offering costs . . 209,753,671
Cumulative net loss. . . . . . . . . . . . . . . (304,260,557)
Cumulative cash distributions. . . . . . . . . . (9,221,174)
------------
(103,728,060)
------------
Total partners' deficits. . . . . . . . . . (112,421,185)
------------

Total liabilities and partners' deficits. . $ 4,849,917
============

The accompanying notes are an integral part
of these consolidated financial statements.

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1997 (LIQUIDATING BASIS), 1996 AND 1995

(Liquidating
Basis)
1997 1996 1995
------------ ------------ ------------

Revenues:
Housing . . . . . . . . . . . . . . . . . . . . . $ -- 140,810 6,203,400
Homesites . . . . . . . . . . . . . . . . . . . . 67,000 1,243,074 7,436,745
Land and property . . . . . . . . . . . . . . . . 36,315,000 20,286,616 4,250,000
Operating properties. . . . . . . . . . . . . . . 734,725 3,315,655 5,289,574
Brokerage and other operations. . . . . . . . . . -- 767,065 2,595,879
------------ ------------ ------------
Total revenues . . . . . . . . . . . . . 37,116,725 25,753,220 25,775,598
------------ ------------ ------------

Cost of revenues:
Housing . . . . . . . . . . . . . . . . . . . . . -- 336,186 5,440,703
Homesites . . . . . . . . . . . . . . . . . . . . 65,075 1,075,568 5,785,737
Land and property . . . . . . . . . . . . . . . . 1,623,754 14,115,847 442,363
Operating properties. . . . . . . . . . . . . . . 494,249 3,023,179 5,399,440
Brokerage and other operations. . . . . . . . . . -- 600,742 2,393,648
------------ ------------ ------------

Total cost of revenues. . . . . . . . . . 2,183,078 19,151,522 19,461,891
------------ ------------ ------------

Gross operating profit. . . . . . . . . . . . . . . 34,933,647 6,601,698 6,313,707

Selling, general and administrative expenses
(notes 3, 8 and 10) . . . . . . . . . . . . . . . 1,770,618 1,999,640 4,409,012
------------ ------------ ------------

Net operating income. . . . . . . . . . . 33,163,029 4,602,058 1,904,695

Interest income . . . . . . . . . . . . . . . . . . 20,752 28,484 200,267
Interest and real estate taxes,
net (notes 1, 8 and 12) . . . . . . . . . . . . . (10,577,474) (12,264,066) (20,347,310)
------------ ------------ ------------

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED

(Liquidating
Basis)
1997 1996 1995
------------ ------------ ------------

Gain (loss) before extraordinary item . . 22,606,307 (7,633,524) (18,242,348)

Extraordinary items:
Gain on early extinguishment
of debt (note 8). . . . . . . . . . . -- 20,000,000 --
Gain resulting from forgiveness
of indebtedness and adjustments
to convert from historical
cost basis to liquidation basis
(notes 3, 8 and 10) . . . . . . . . . 89,814,878 -- --
------------ ------------ ------------

Net income (loss) . . . . . . . . . . $112,421,185 12,366,476 (18,242,348)
============ ============ ============

Income (loss) before extraordinary
item per Interest . . . . . . . . . . . $ 444.19 64.05 (52.00)
============ ============ ============

Net income (loss) per Interest
(note 1). . . . . . . . . . . . . . . . $ 444.19 64.05 (52.00)
============ ============ ============

Cash distribution per Interest. . . . . . $ 1.05 -- --
============ ============ ============

<FN>
The accompanying notes are an integral part of these consolidated financial statements.

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL ACCOUNTS (DEFICITS)

FOR THE YEARS ENDED DECEMBER 31, 1997 (LIQUIDATING BASIS), 1996 AND 1995

GENERAL PARTNER HOLDERS
AND ASSOCIATE OF
LIMITED PARTNER INTERESTS TOTAL
--------------- ------------ ------------

Capital accounts
(deficits) at
December 31, 1994 . . . . . $ -- (106,545,313) (106,545,313)

Net loss. . . . . . . . . . . (6,054,701) (12,187,647) (18,242,348)
----------- ------------ ------------
Capital accounts
(deficits) at
December 31, 1995 . . . . . (6,054,701) (118,732,960) (124,787,661)

Net income (loss) . . . . . . (2,638,424) 15,004,900 12,366,476
----------- ------------ ------------
Capital accounts
(deficits) at
December 31, 1996 . . . . . (8,693,125) (103,728,060) (112,421,185)

Contributions . . . . . . . . 246,771 -- 246,771

Distributions . . . . . . . . -- (246,771) (246,771)

Net income (liquidating
basis). . . . . . . . . . . 8,446,354 103,974,831 112,421,185
----------- ------------ ------------
Capital accounts at
December 31, 1997 . . . . . $ -- -- --
=========== ============ ============

<FN>
The accompanying notes are an integral part of these consolidated financial statements.

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997 (LIQUIDATING BASIS), 1996 AND 1995

(Liquidating
Basis)
1997 1996 1995
------------ ------------ ------------

Net income (loss) . . . . . . . . . . . . . . . . . $112,421,185 12,366,476 (18,242,348)

Charges (credits) to net income (loss) not
requiring (providing) cash:
Amortization . . . . . . . . . . . . . . . . . . 103,103 73,032 538,616
Provision for doubtful accounts. . . . . . . . . (22,015) 98,975 (14,522)
(Gain) loss on sale of property and equipment. . (2,320,333) 1,866,865 (2,702)
Extraordinary gain on early extinguishment
of debt . . . . . . . . . . . . . . . . . . . . -- (20,000,000) --
Extraordinary gain resulting from forgiveness
of indebtedness and adjustments to convert from
historical cost basis to liquidation basis. . . (89,814,878) -- --
Changes in:
Restricted cash. . . . . . . . . . . . . . . . . 439,172 1,597,757 (2,348,639)
Trade and other accounts receivable. . . . . . . (116,220) 1,015,390 193,373
Real estate inventories:
Additions to real estate inventories . . . . . -- (4,524,288) (228,478)
Cost of revenues . . . . . . . . . . . . . . . 57,598 15,233,023 10,893,914
Capitalized real estate taxes. . . . . . . . . -- -- (51,688)
Capitalized interest . . . . . . . . . . . . . -- -- (279,639)
Prepaid expenses and other assets. . . . . . . . 545,374 986,886 3,045,175
Accounts payable, and reserve for liquidating
expenses. . . . . . . . . . . . . . . . . . . . (2,043,941) -- --
Accounts payable, accrued expenses
and other liabilities . . . . . . . . . . . . . -- 11,147,042 15,529,990
Deposits . . . . . . . . . . . . . . . . . . . . (33,700) (1,087,723) (66,580)
Amounts due to affiliates. . . . . . . . . . . . (6,543) 29,157 593,847
------------ ------------ ------------
Net cash provided by
operating activities. . . . . . . . . . 19,208,802 18,802,592 9,560,319
------------ ------------ ------------

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(Liquidating
Basis)
1997 1996 1995
------------ ------------ ------------

Investing activities:
Acquisitions of property and equipment. . . . . . (78,226) -- (180,641)
Proceeds from disposals of property
and equipment . . . . . . . . . . . . . . . . . 5,100,000 1,835,911 2,702
------------ ------------ ------------
Net cash provided by (used in)
investing activities. . . . . . . . . . 5,021,774 1,835,911 (177,939)
------------ ------------ ------------
Financing activities:
Proceeds from notes and mortgages payable . . . . -- -- --
Payments of notes and mortgages payable . . . . . (23,924,445) (21,303,749) (16,803,614)
Repayments of bank overdrafts, net. . . . . . . . (10,222) (540,444) (717,724)
Contribution from General Partner and Associate
Limited Partner. . . . . . . . . . . . . . . . . 246,771 -- --
Distribution to Holders of Interests. . . . . . . (246,771) -- --
------------ ------------ ------------
Net cash used in
financing activities. . . . . . . . . . (23,934,667) (21,844,193) (17,521,338)
------------ ------------ ------------
Increase (decrease) in cash and
cash equivalents. . . . . . . . . . . . . . . . . 295,909 (1,205,690) (8,138,958)
Cash and cash equivalents,
beginning of year . . . . . . . . . . . . . . . . 181,623 1,387,313 9,526,271
------------ ------------ ------------
Cash and cash equivalents, end of year. . . . . . . $ 477,532 181,623 1,387,313
============ ============ ============
Supplemental disclosure for cash flow information:
Cash paid for mortgage and other interest,
net of amounts capitalized. . . . . . . . . . . $ -- -- --
============ ============ ============
Non-cash investing and financing activities . . . $ -- -- --
============ ============ ============

<FN>
The accompanying notes are an integral part of these consolidated financial statements.

ARVIDA/JMB PARTNERS, L.P.-II
(A LIMITED PARTNERSHIP)
AND CONSOLIDATED VENTURES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) OPERATIONS AND BASIS OF ACCOUNTING

Operations

The Partnership's Properties consisted principally of interests in
land developed or planned for development into master-planned residential
communities ("Communities"). The Partnership had principally been engaged
in the development of comprehensively planned, primary and secondary home
Communities containing a diversified product mix designed for the various
markets in which the Partnership operates. Reference is made to note 8 for
a discussion of the orderly liquidation of the Partnership's remaining
assets.

Principles of Consolidation

The consolidated financial statements include the accounts of the
Partnership and its consolidated ventures. All material intercompany
balances and transactions have been eliminated in consolidation.

Basis of Presentation and Reserve for Liquidating Expenses

The Partnership closed on the sale of its last remaining interest in
real estate in December 1997. As a result, in December 1997, the
Partnership changed its basis of accounting for its financial statements
from the going concern basis of accounting to the liquidation basis of
accounting in accordance with generally accepted accounting principles.
Consequently, at December 31, 1997, assets have been valued at estimated
realizable values and liabilities are presented at their estimated
settlement amounts, including estimated costs associated with carrying out
the liquidation. The valuation of assets and liabilities requires many
estimates and assumptions, and there are substantial uncertainties during
the liquidation process.

Recognition of Profit from Sales of Real Estate

For sales of real estate, profit is recognized in full when the
collectibility of the sales price is reasonably assured and the earnings
process is virtually complete. When the sale does not meet the require-
ments for recognition of income, profit is deferred until such requirements
are met.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles ("GAAP") requires management to make
estimates and assumptions that affect the amounts reported or disclosed in
the financial statements and accompanying notes. Actual results could
differ from those estimates.

Real Estate Inventories and Cost of Real Estate Revenues

The Partnership's real estate inventories were carried at the lower of
carrying amount or fair value less costs to sell as determined through an
evaluation of individual projects. Fair value accounting assumes a bulk
sale of the property in its current state of development under present
market conditions. Prior to the adoption of Statement No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of", which was issued by the Financial Accounting Standards Board
("FASB") in March 1995 and effective January 1, 1995, adjustments to book
value, as they became necessary, were reported in the period in which they

became known. The total cost of land, land development and common costs
were apportioned among the projects on the relative sales value method.
Costs pertaining to the Partnership's housing, homesites and land and
property revenues reflect the cost of the acquired assets, as well as
development, construction, capitalized interest and real estate taxes and
capitalized overheads. Certain marketing costs relating to housing
projects, including exhibits and displays, were capitalized and charged to
housing cost of revenues as sales of related units were closed. A warranty
reserve was provided as sales of housing units were closed. This reserve
was reduced by the cost of subsequent work performed.

Capitalized Interest and Real Estate Taxes

Interest and real estate taxes were capitalized as incurred to
qualifying assets, principally real estate inventories. Such capitalized
interest and real estate taxes were charged to cost of revenues as revenue
from real estate inventories was recognized. Interest, including the
amortization of loan fees, of $7,736,256, $10,294,290 and $13,416,110 was
incurred for the years ended December 31, 1997, 1996 and 1995,
respectively, of which $0, $0 and $279,639 was capitalized. No interest
payments were made during the three year period ended December 31, 1997.
The Partnership has not made the required monthly interest payments on its
credit facility since September 1994.

Real estate taxes of $2,841,218, $1,969,776 and $7,262,527 were
incurred for the years ended December 31, 1997, 1996 and 1995,
respectively, of which $0, $0 and $51,688 were capitalized. Real estate
tax payments of $11,287,749, $524,024 and $484,409 were made for the years
ended December 31, 1997, 1996 and 1995, respectively. During 1996 and
1995, the Partnership received $68,443 and $625,142, respectively, of real
estate tax refunds (not included in the real estate tax payments reported
above) in connection with previously contested property taxes related to
the Partnership's Talega Property. The increase in real estate taxes paid
in 1997 as compared to 1996 and 1995 is due to the payment of all current
and delinquent property taxes (including penalties and interest thereon)
for the Talega Property in conjunction with its closing in May 1997. The
decrease in real estate taxes for the year ended December 31, 1996 as
compared to 1995 was due primarily to an approximate $5.5 million
adjustment recorded during 1996 to reduce real estate taxes related to the
Talega Property. During the fourth quarter of 1996, the Partnership
received correspondence from the District which indicated that the
Partnership's obligation to the District had been reduced by proceeds from
the sale of property previously improved by the District. Such
improvements had been funded by the bond financing described in note 12.
The preceding analysis of real estate taxes does not include real estate
taxes incurred or paid with respect to the Partnership's club facilities
and operating properties as these taxes are included in cost of revenues
for operating properties.

Property and Equipment and Other Assets

Property and equipment and other assets, subject to impairment
considerations (note 13), were carried at cost less accumulated
depreciation and amortization. Prior to the adoption of Statement No. 121
in 1996, property and equipment were depreciated on the straight-line
method over the estimated useful lives of the assets, which ranged from
three to 25 years. In accordance with Statement No. 121, the Partnership
discontinued recording depreciation on its depreciable assets in 1996 as
they were all held for disposal. Other assets were amortized on the
straight-line method over the useful lives of the assets, which ranged from
one to five years. Expenditures for maintenance and repairs were charged
to expense as incurred. Costs of major renewals and improvements which
extend useful lives were capitalized. Amortization of other assets of
approximately $103,000, $73,000 and $119,000 was recorded for the years
ended December 31, 1997, 1996 and 1995, respectively.

Partnership Records

The Partnership's records are maintained on the accrual basis of
accounting as adjusted for Federal income tax reporting purposes. The
accompanying consolidated financial statements have been prepared from such
records after making appropriate adjustments where applicable to reflect
the Partnership's accounts in accordance with GAAP and to consolidate the
accounts of the ventures as described above. Such GAAP and consolidation
adjustments are not reflected on the records of the Partnership. The net
effect of these items is summarized as follows:

1997 1996
------------------------------ ------------------------------
GAAP BASIS TAX BASIS GAAP BASIS TAX BASIS
------------ ----------- ------------ -----------

Total assets. . . . . . . . . . . . $ 1,437,372 -- 4,849,917 263,981,955
Partners' capital accounts
(deficits):
General and Associate
Limited Partner. . . . . . . . . -- -- (8,693,125) --
Holders of Interests. . . . . . . -- -- (103,728,060) 103,015,077
Net income (loss):
General and Associate
Limited Partner, net . . . . . . 8,446,354 (246,771) (2,638,424) --
Holders of Interests. . . . . . . 103,974,831 (102,768,306) 15,004,900 (8,623,515)
Net income (loss) per
Interest. . . . . . . . . . . . . 444.19 (439.25) 64.05 (36.82)
Capital Contributions:
General and Associate
Limited Partner . . . . . . . . 246,771 246,771 -- --
Holders of Interests. . . . . . . -- -- -- --
Distributions:
General and Associate
Limited Partner . . . . . . . . -- -- -- --
Holders of Interests. . . . . . . 246,771 246,771 -- --

=========== ============ ============= =============

Reference is made to note 9 for further discussion of the allocation
of profits and losses to the General Partner, Associated Limited Partner
and Holders of Interests.

The net income (loss) per Interest is based upon the average number of
Interests outstanding during the period.

Reclassifications

Certain reclassifications have been made to the 1996 and 1995
consolidated financial statements to conform with the 1997 presentation.

Income Taxes

No provision for state or Federal income taxes has been made as the
liability for such taxes is that of the partners rather than the
Partnership.

(2) INVESTMENT PROPERTIES

The Partnership had no investment properties at December 31, 1997. At
December 31, 1996, the Partnership's assets included completed inventories,
commercial properties, and brokerage and other ancillary operations.

(3) VENTURE AGREEMENT - HEATHROW

The Partnership is the managing general partner in the limited
partnership which was the developer/owner of the Heathrow Community, prior
to the sale during June 1996 of the remaining land, country club, cable
company and certain related assets within the Heathrow Community. The
Heathrow venture agreement provided that the Partnership would receive
distributions of cash flow from the Heathrow project equal to a cumulative,
compounded preferred return on its capital contribution, plus the return of
its capital contribution, with all remaining cash flow expected to be
distributable 75% to the Partnership and 25% to the venture partner, who is
the prior developer/owner of Heathrow.

Arvida Company ("Arvida") had previously entered into a development
management agreement with the prior owner of Heathrow to provide
development management services with respect to the Heathrow Property for
an annual fee equal to the greater of (i) approximately $470,000 or (ii)
10% of the excess, if any, of cash receipts (which include sale and
financing proceeds) for such period over cash expenditures (excluding the
manager's fee). Arvida continued to provide such development management
services to the Heathrow joint venture pursuant to the agreement through
June 1996; however, as the managing partner of the Heathrow joint venture,
the Partnership retained control over major decisions affecting the
Property. For the years ended December 31, 1997, 1996 and 1995, management
fees of approximately $0, $212,200 and $468,800, respectively, had been
earned, the payment of which has been deferred. The cumulative amount of
such deferred fees as of December 31, 1997 is approximately $3,005,200.
Such deferred fees did not bear interest and will not be paid as the
ultimate payment of these management fees was subordinated to certain
levels of return to the Holders of Interests. Accordingly, in December
1997, the Partnership recorded an adjustment to reflect this liability at
its fair value of $0. This adjustment resulted in an extraordinary gain of
approximately $3.0 million, and is reflected as such on the accompanying
consolidated statements of operations at December 31, 1997.

(4) CASH, CASH EQUIVALENTS AND RESTRICTED CASH

Cash and cash equivalents may consist of U.S. Government obligations
with original maturities of three months or less, money market demand
accounts and repurchase agreements, the cost of which approximate market
value. Restricted cash at December 31, 1997 and 1996 consists of the
amount remaining from the original $3 million which was deposited into a
restricted collateral account in March 1995 pursuant to an agreement
between the Partnership and its lender. Additional amounts were deposited
into the restricted collateral account pursuant to the sale of the
Partnership's remaining land, country club and cable operation within its
Heathrow community in 1996, the sale of the Talega Property in May 1997 and
the sale of the shopping center in Heathrow in July 1997. Such cash has
been used to fund the Partnership's expenses, subject to the approval of
the Partnership's lender. Reference is made to note 8 for a discussion of
an agreement entered into between the Partnership and its lender effective
December 31, 1997. There are no treasury bills or other short-term
investments with original maturity dates of three months or less included
in Cash and cash equivalents at December 31, 1997 and 1996. Credit risk
associated with cash, cash equivalents and restricted cash is considered
low due to the high quality of the financial institutions in which these
assets are held.

(5) TRADE AND OTHER ACCOUNTS RECEIVABLE

Trade and other accounts receivable at December 31, 1997 consist
primarily of a receivable due from one of the Partnership's insurance
carriers related to a claim filed by the Partnership in 1997. The
Partnership received this payment in February 1998. Reference is made to
note 8 for a discussion of an agreement entered into between the
Partnership and its lender effective December 31, 1997. At December 31,
1996, Trade and other accounts receivable consisted primarily of operating
receivables which resulted from the normal course of operations.

(6) REAL ESTATE INVENTORIES

The Partnership had no Real estate inventories at December 31, 1997.
Real estate inventories at December 31, 1996 consist of completed
inventory.

Reference is made to note 8 for a discussion regarding sales of the
Partnership's real estate inventories.

Reference is made to note 13 for a discussion regarding the impairment
of long-lived assets.

(7) PROPERTY AND EQUIPMENT

The Partnership had no Property and equipment at December 31, 1997.

Property and equipment at December 31, 1996 is summarized as follows:

1996
----------

Land . . . . . . . . . . . . . . . . . . . . . . $ 289,279
Land improvements. . . . . . . . . . . . . . . . --
Buildings. . . . . . . . . . . . . . . . . . . . 4,106,232
Equipment and furniture. . . . . . . . . . . . . 28,091
Construction in progress . . . . . . . . . . . . --
-----------
Total . . . . . . . . . . . . . . . . . . . 4,423,602
Accumulated depreciation. . . . . . . . . . (1,722,161)
-----------
Property and equipment, net . . . . . . . . $ 2,701,441
===========

Depreciation expense of approximately $419,400 was recorded for the
year ended December 31, 1995. In conjunction with the provisions of FASB
Statement No. 121, (note 13), the Partnership discontinued recording
depreciation expense on its depreciable assets in 1996 as they were all
held for disposal.

Reference is made to note 8 for a discussion regarding the sales of
the Partnership's country club, cable company and retail shopping center
located within the Heathrow community.

Reference is made to note 13 for a discussion regarding the impairment
of long-lived assets.

(8) NOTES AND MORTGAGES PAYABLE

Notes and mortgages payable at December 31, 1997 and 1996 are
summarized as follows:

1996
1997 (In Default)
------------ ----------
Term loan credit facility of
$52,500,000, bearing interest
at approximately 9.75% at
December 31, 1996. . . . . . . . . . . $ -- 11,420,548

Term loan credit facility of
$67,500,000, bearing interest
at approximately 10.25% at
December 31, 1996. . . . . . . . . . . -- 55,967,084

Revolving line of credit of
$14,301,839, bearing interest
at approximately 9.75% at
December 31, 1996. . . . . . . . . . . -- 11,483,827
----------- -----------

Total Notes and Mortgages
Payable (In Default). . . . . . $ -- 78,871,459
=========== ===========

The Partnership's credit facilities consisted of a $52.5 million term
loan, a $67.5 million term loan, a revolving line of credit of
approximately $14.3 million and approximately $4.3 million of outstanding
letters of credit securing performance obligations of the Partnership.
There was also a $5 million letter of credit facility which secured
performance obligations of the Partnership. Availability under such
facility was reduced to the extent there were performance letters of credit
outstanding under the Partnership's credit facility. The term loans, the
revolving line of credit and the letter of credit facilities matured on
December 30, 1994. However, the Partnership did not have the funds to pay
off the balances outstanding under the credit facilities and was
unsuccessful in its attempts to negotiate a restructuring of such credit
facilities with its Lender.

Prior to the maturity of the credit facilities on December 30, 1994,
the loans carried varying rates of interest. Due to its inability to pay
off the balances outstanding under the credit facilities at the maturity
date, the Partnership began accruing interest on all of the loans at the
post maturity rate of prime plus 3.25% per annum, effective December 31,
1994, as specified in the credit facility agreement. For the year ended
December 31, 1997, the effective interest rate for the combined term loans
and the revolving line of credit facility was approximately 11.5% per
annum. Interest on the facilities was payable monthly, with the exception
of interest on a portion of the $67.5 million term loan, which accrued and
was payable on the maturity date. The Partnership has not made the
required interest payments on its credit facilities since September 1994.

In March 1995, the Partnership and its lender entered into Forbearance
Agreements pursuant to which, among other things, a plan for the orderly
liquidation of its remaining assets was established. The Forbearance
Agreements were modified in October 1995, March 1996, and June 1996, and
amended in September 1996 and May 1997 to provide for, among other things,
extensions of the time frame for the orderly disposition of the
Partnership's assets. In conjunction with the September 1996 amendment,
the Partnership's lender agreed to forgive, waive and cancel a portion of
the unpaid interest on the Partnership's credit facilities in the aggregate
amount of $20 million, of which $2 million was allocated to interest on the
revolving line of credit and $18 million was allocated to interest on one
of the term loans. The May 1997 amendment extended the terms of the
forbearance to June 1997, among other things.

During November 1995, the Partnership closed on the sale of the
remaining land within its Wesmere Community to an unaffiliated third party
for a sales price of approximately $4.25 million. In addition, the seller
reimbursed the Partnership at closing for certain prepaid impact fees
totaling approximately $1 million which had been paid by the Partnership.
The net proceeds from such sale were paid to the Partnership's lender and
applied against the outstanding principal balance on one of the
Partnership's term loans. The sale resulted in a gain for financial
reporting purposes and a loss for Federal income tax purposes.

During June 1996, the Heathrow joint venture, in which the Partnership
is the managing general partner, closed on the sale of the remaining land,
country club, cable company and certain related assets within the
Partnership's Heathrow Community for approximately $19.3 million. This
transaction is reflected in Land and property operations on the
accompanying consolidated statements of operations. This sale is the
primary cause for various significant changes on the accompanying
consolidated statements of operations for the year ended December 31, 1996
as compared to 1995. The net proceeds from this sale, after prorations and
closing costs, of approximately $18.4 million were paid to the
Partnership's lender and applied against the outstanding principal balances
on both of the Partnership's term loans. The sale resulted in a gain for
financial reporting purposes and a loss for Federal income tax purposes in
1996.

On May 30, 1997, the Partnership closed on the sale of its Talega
Property to an unaffiliated third party for $31.1 million. The terms of
the sale were generally in accordance with the agreement made in October
1996 with certain modifications. In conjunction with the sale of the
Talega Property, the Partnership paid all current and delinquent property
taxes (including penalties and interest thereon). In addition, the
Partnership reached an agreement with the Santa Margarita Water District
(the "District") resulting in an agreed upon amount due for charges and
assessments made by the District, including those with respect to the
Partnership's tax exempt bond financing. This amount was paid at closing,
at which time the Partnership received a full and unconditional release
from the District. In addition, all contractual obligations of the
Partnership with respect to the Talega Property were assumed by the buyer.
The net proceeds from the sale, after prorations and closing costs, totaled
approximately $19.1 million. Of this amount, approximately $18.8 million
was applied against the outstanding principal balance on the Partnership's
term loans, in accordance with the terms of the Forbearance Agreements, and
$0.3 million was deposited to fund the Partnership's expenses. This sale
is the primary cause for the Partnership's gross operating profit for the
year ended December 31, 1997 as a result of previous writedowns of the
carrying value of Talega.

(9) PARTNERSHIP AGREEMENT

Pursuant to Section 4.2A of the Partnership Agreement, subject to
Sections 4.2C and 4.2F (described below), profits or losses of the
Partnership generally will be allocated as follows: (i) profits were
allocated such that the General Partner and the Associate Limited Partner
were allocated profits equal to the amount of cash flow distributed to them
for such fiscal period, except that the General Partner was allocated at
least 1% of profits, and the Holders of Interests were allocated the
remaining profits and (ii) losses were allocated 1% to the General Partner,
1% to the Associate Limited Partner and 98% to the Holders of Interests.

For Federal income tax and financial reporting purposes, subject to
Sections 4.2C and 4.2F (described below), all profits of the Partnership
were allocated such that the General Partner and the Associate Limited
Partner were allocated profits equal to the amount of cash flow distributed
to them, except that the General Partner was allocated at least 1% of
profits, and the Holders of Interests were allocated the remaining profits.

Losses were allocated 98% to the Holders of Interests, 1% to the Associate
Limited Partner and 1% to the General Partner.

Section 4.2C of the Partnership Agreement limits the allocation of
losses to the Holders of Interests to the extent that such allocation would
create a deficit balance in such Holder's capital account which exceeds the
Minimum Gain (as defined) which would be allocable to them if applicable
assets were disposed in a hypothetical sale at their carrying value and the
non-recourse debt secured by those assets was repaid or discharged. For
financial reporting purposes, the amount of loss allocated to the General
Partner and Associate Limited Partner, collectively, as a result of the
limitation under Section 4.2C was approximately $0 and $2,640,000 for 1997
and 1996, respectively. For Federal income tax purposes for 1997 and 1996,
the limitations under Section 4.2C did not apply and losses were allocated
in accordance with Section 4.2F as discussed below.

Section 4.2F of the Partnership Agreement requires the allocation of
Profits (as defined) to the General Partner and Associate Limited Partner
in order to take account of a current or anticipated reduction in the
Partnership's indebtedness and certain other circumstances. In accordance
with Section 4.2F of the Partnership Agreement, the General Partner and
Associate Limited Partner received allocations of Profits for Federal
income tax purposes for 1997 and 1996 in addition to their respective
allocations, pursuant to Section 4.2A of the Partnership Agreement, of the
Partnership's 1997 and 1996 losses for Federal income tax purposes, as
adjusted for such allocation of Profits.

The General Partner and Associate Limited Partner made initial capital
contributions to the Partnership of $1,000 each. Pursuant to the
Partnership Agreement, if upon completion of the liquidation and
termination of the Partnership and final distribution of all Partnership
funds, the aggregate capital contributions made by the Holders of Interests
exceed the aggregate distributions paid from the Partnership to the Holders
of Interests, then the General Partner and Associate Limited Partner were
required to make payments to the Holders of Interests totaling the amount
of distributions received by the General Partner and Associate Limited
Partner from the Partnership. The distributions of cash flow received by
the General Partner and Associate Limited Partner from the Partnership
since its inception total approximately $247,000. Accordingly, during
November 1997, the General Partner and Associate Limited Partner made
payments totaling approximately $247,000 to the Partnership and the
Partnership, in turn, made payments totaling approximately $247,000 to the
Holders of Interests ($1.05 per Interest).

As of December 31, 1997, the Partnership neither operated nor carried
on any business, financial operation or venture, having ceased any such
activities prior to such date, and as a result the Partnership has been
terminated for Federal income tax purposes. The Partnership's only
activity at this time is its involvement in certain pending litigation.
Upon final resolution of the pending litigation, the Partnership will be
terminated as a legal entity. Due to the Partnership's limited assets and
the requirement, pursuant to the Agreement, that any assets remaining after
completion of the Partnership's winding up must be assigned to its lender,
there is no likelihood the Holders of Interests will receive any further
distributions from the Partnership. Moreover, the Holders of Interests
have no obligation or liability to pay, or to make capital contributions
for the payment of, any claims, losses, deficits or expenses the
Partnership has incurred or may incur in the future, and they will not
receive any allocation of profits or losses for tax or accounting purposes
for any period after December 31, 1997. Future items of profits or losses,
if any, will be fully allocable to the General Partner.

(10) TRANSACTIONS WITH AFFILIATES

Fees, commissions and other expenditures, associated with
administering the Partnership, required to be paid to affiliates of the
General Partner, other than Arvida Company ("Arvida"), as of and for the
years ended December 31, 1997, 1996 and 1995 are as follows:

UNPAID AT
DECEMBER 31,
1997 1996 1995 1997
------- ------- ------- ------------

Insurance commissions . . $ -- 1,921 38,255 --
Reimbursement (at cost)
for accounting
services . . . . . . . . 2,374 7,806 50,424 --
Reimbursement (at cost)
for portfolio manage-
ment . . . . . . . . . . 5,021 11,645 16,646 --
Reimbursement (at cost)
for legal services . . . 63,663 28,465 26,643 --
Reimbursement (at cost)
for other adminis-
trative and out-of-
pocket expenses. . . . . 63,428 2,372 50,588 --
-------- -------- -------- ------
$134,486 52,209 182,556 --
======== ======== ======== ======

The Partnership also received reimbursements from affiliates of the
General Partner for certain general and administrative costs including, and
without limitation, salary and salary-related costs relating to work
performed by employees of the Partnership and certain out-of-pocket
expenditures incurred on behalf of such affiliates. The Partnership was
entitled to receive approximately $400, $0 and $9,900 for the years ended
December 31, 1997, 1996 and 1995, respectively, for such costs. At
December 31, 1997, approximately $400 was owed to the Partnership, none of
which was paid as of February 20, 1998.

Arvida, pursuant to an agreement with the Partnership, provided
development, construction, management and other personnel and services to
the Partnership for its projects and operations. In accordance with such
agreement, the Partnership reimbursed Arvida for all of its out-of-pocket
expenditures (including salary and salary-related costs). The total of
such costs for the years ended December 31, 1997, 1996 and 1995 was
approximately $212,500, $192,300 and $819,600, respectively. At
December 31, 1997, approximately $3,300 was unpaid, none of which was paid
as of February 20, 1998.

Prior to June 1996, the Partnership and Arvida/JMB Partners, L.P. (a
publicly-held limited partnership affiliated with the General Partner,
"Arvida/JMB-I") each employed project-related and administrative personnel
who performed services on behalf of both partnerships. In addition,
certain out-of-pocket expenditures related to such services and certain
general and administrative expenditures were incurred and charged to each
partnership as appropriate. The Partnership reimbursed or received
reimbursements from Arvida/JMB-I for such costs (including salary and
salary-related costs). Subsequent to June 1996, the Partnership no longer
employed any project-related or administrative personnel, and incurred no
costs on behalf of Arvida/JMB-I. For the year ended December 31, 1997, the
Partnership was obligated to reimburse Arvida/JMB-I approximately $112,900.

At December 31, 1997, approximately $9,900 was unpaid, all of which was
paid as of February 20, 1998. For the years ended December 31, 1996 and
1995, the Partnership was obligated to reimburse Arvida/JMB-I approximately
$1,021,800 and $1,338,900, respectively, and the Partnership was entitled
to receive approximately $245,100 and $537,700, respectively, from
Arvida/JMB-I.

Pursuant to a requirement under the Partnership's credit facilities, a
portion of the reimbursements paid to Arvida and Arvida/JMB-I as discussed
above, as well as portions of the Partnership's insurance and loan
refinancing costs incurred in 1992 and 1993 had been funded on the
Partnership's behalf by advances from the General Partner. Such advances
totaled approximately $4,609,400 at December 31, 1996 and 1995, and do not
bear interest. The repayment of such advances was subordinated to the
receipt by the Holders of Interests of certain levels of return, and
therefore, will not be made. Accordingly, in December 1997, the
Partnership recorded an adjustment to reflect this liability at its fair
value of $0. This adjustment resulted in an extraordinary gain of
approximately $4.6 million and is reflected as such on the accompanying
consolidated statements of operations at December 31, 1997. In addition,
the Partnership was entitled to receive approximately $12,900 from an
affiliate of the General Partner for salary and salary-related costs
incurred by the Partnership on behalf of such affiliate of the General
Partner, all of which was outstanding as of December 31, 1997 and
December 31, 1996, none of which was received as of February 20, 1998.

Reference is made to note 3 for a discussion of a management agreement
between Arvida and the prior owner of Heathrow.

The Partnership incurred certain general and administrative costs
which were paid by the Partnership on behalf of its affiliated homeowners
associations. The Partnership received reimbursements from the affiliates
for such costs. The Partnership was not entitled to receive any amounts
from such affiliates for the year ended December 31, 1997. For the years
ended December 31, 1996 and 1995, the Partnership was entitled to receive
approximately $1,800 and $38,600, respectively, from such affiliates.

In accordance with the Partnership Agreement, the General Partner and
Associate Limited Partner deferred a portion of their distributions of net
cash flow from the Partnership totaling approximately $247,000 at
December 31, 1996 and 1995. This amount, which does not bear interest,
will not be paid.

(11) COMMITMENTS AND CONTINGENCIES

The Partnership has been named a defendant in a lawsuit filed on
January 11, 1996 in the Circuit Court in and for the Eighteenth Judicial
Circuit, Seminole County, Florida entitled Land Investment I, Ltd.,
Heathrow Land & Development Corporation, Heathrow Shopping Center
Associates, and Paulucci Investments v. Arvida/JMB Managers-II, Inc.,
Arvida/JMB Partners, L.P.-II, Arvida Company and JMB Realty Corporation.
The complaint, as amended, includes counts for breach of the management
agreement, breach of fiduciary duty, fraud in the inducement and conspiracy
to commit fraud in the inducement, breach of the partnership agreement and
rescission in connection with the purchase and management of the Heathrow
development. Plaintiffs seek, among other things, unspecified compensatory
damages, the right to add a claim for punitive damages, rescission,
attorneys fees, costs, and such other relief as the Court deems
appropriate. The Partnership believes that the lawsuit is without merit
and intends to vigorously defend itself in this matter.

The Partnership has filed a claim in a bankruptcy proceeding entitled
Landmark Land Co. of Florida, Inc., Case No. 2:91-3291-1 against the
debtor, Landmark Land Co. of Florida, Inc. in the United States District
Court for the District of South Carolina, Charleston Division. The
Partnership's claims are for breach of a joint venture agreement and breach
of contract, among other things. The proof of claim, which was filed on
March 6, 1992, seeks damages, as well as pre- and post-judgment interest,
attorneys fees and costs. The adversary proceeding commenced in August
1993. The matter was tried to the Court over a five-week period ending in
the Fall of 1995. The Partnership is awaiting the Court's ruling. The
Partnership has assigned its interest in any net proceeds (after payment of
attorneys' fees and expenses) from a recovery on its claim to its lender.

The Partnership has been advised by Merrill Lynch that various
investors of the Partnership have sought to compel Merrill Lynch to
arbitrate claims brought by certain investors of the Partnership and has
been named as a respondent in various arbitrations representing
approximately 11% of the total Interests outstanding. These claimants have
sought and are seeking to arbitrate claims involving unspecified damages
based on Merrill Lynch's alleged violations of applicable state and/or
federal securities laws and alleged violations of the rules of the National
Association of Securities Dealers, Inc., together with pendent state law
claims. The Partnership believes that Merrill Lynch has resolved some of
these claims through litigation, and otherwise, and that Merrill Lynch is
defending other claims. Merrill Lynch may seek indemnification from the
Partnership against liabilities and expenses Merrill Lynch incurs in these
claims. The Partnership is unable to determine at this time the ultimate
investment of investors who have filed arbitration claims as to which
Merrill Lynch might seek indemnification in the future. At this time, and
based upon the information presently available about the arbitration
statements of claims filed by some of these investors, the Partnership and
its General Partner believe that they have meritorious defenses to demands
for indemnification made by Merrill Lynch and intend to vigorously pursue
such defenses. Although there can be no assurance regarding the outcome of
the claims for indemnification, at this time, based on information
presently available about such arbitration statements of claims, the
Partnership and its General Partner do not believe that the demands for
indemnification by Merrill Lynch will have a material adverse effect on the
financial condition of the Partnership.

Rental expense was $72,175, $84,868 and $99,350 for the years ended
December 31, 1997, 1996 and 1995, respectively.

(12) TAX-EXEMPT BOND FINANCING

In connection with the development of the Talega Property (which was
suspended during 1990), the Partnership had utilized bond financing to
construct certain on-site and off-site water and sewer infrastructure
improvements which the Partnership would have otherwise been obligated to
finance and construct as a condition to obtaining certain approvals for the
project. The principal amount of bonds issued was $62 million, and all of
the proceeds from the offering have been utilized. In conjunction with the
May 1997 sale of the Talega Property, the Partnership reached an agreement
with the District resulting in an agreed upon amount due for charges and
assessments made by the District, including those with respect to the
Partnership's tax exempt bond financing. This amount was paid at closing,
at which time the Partnership received a full and unconditional release
from the District.

(13) IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Partnership adopted FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
of", effective January 1, 1996. In accordance with FASB No. 121, the
Partnership discontinued recording depreciation in 1996 as all of its
assets were held for disposal. Operating results for properties which were
held for sale or disposition are reflected as operating properties revenues
and cost of revenues on the accompanying consolidated statements of
operations for the years ended December 31, 1997 and 1996.

During the second quarter of 1997, Statements of Financial Accounting
Standards No. 128 ("Earnings per Share") and No. 129 ("Disclosure of
Information about Capital Structure") were issued. As the Partnership's
capital structure consists of only general and limited partnership
interests, the adoption of these standards had no impact on the
Partnership.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTOR AND EXECUTIVE OFFICERS OF THE REGISTRANT

The General Partner of the Partnership is Arvida/JMB Managers-II,
Inc., a Delaware corporation, of which all of the outstanding shares of
stock are owned by Northbrook Corporation, a Delaware corporation.
Substantially all of the outstanding shares of stock of Northbrook
Corporation are owned by JMB Realty Corporation, a Delaware corporation
("JMB"), and certain of its officers, directors, members of their families
and affiliates. Substantially all of the outstanding shares of stock of
JMB are owned by its officers, directors, members of their families and
affiliates. Arvida/JMB Managers-II, Inc. was substituted as general
partner of the Partnership as a result of a merger on March 30, 1990 of an
affiliated corporation that was the then general partner of the Partnership
into Arvida/JMB Managers-II, Inc., which, as the surviving corporation of
such merger, continues as the General Partner. All references herein to
"General Partner" include Arvida/JMB Managers-II, Inc. and/or its
predecessor, as appropriate. The General Partner has responsibility for
all aspects of the Partnership's operations. The Associate Limited Partner
of the Partnership is Arvida/JMB Associates Limited Partnership-II, an
Illinois limited partnership, whose general partner is Arvida/JMB Managers-
II, Inc. and whose limited partners consist of partnerships comprised of
certain officers, directors, and shareholders of JMB, Arvida and their
affiliates. Various relationships of the Partnership to the General
Partner and its affiliates are described under the caption "Conflicts of
Interest" at pages 21-24 of the Prospectus of the Partnership dated October
27, 1989 (the "Prospectus"), certain portions of which description are
hereby incorporated herein by reference to Exhibit 99.1 of this report.

The director, executive officers and certain other officers of the
General Partner of the Partnership are as follows:

SERVED IN
NAME OFFICE OFFICE SINCE
---- ------ ------------

Judd D. Malkin Chairman 12/17/87
Neil G. Bluhm President 12/17/87
H. Rigel Barber Vice President 12/17/87
Gailen J. Hull Vice President 12/18/90
Howard Kogen Vice President 08/09/88
and Treasurer 01/01/91
Gary Nickele Vice President, General Counsel12/17/87
and Director 12/18/90

There is no family relationship among any of the foregoing director or
officers. The foregoing director has been elected to serve a one-year term
until the annual meeting of the General Partner to be held on August 11,
1998. All of the foregoing officers have been elected to serve one-year
terms until the first meeting of the Board of Directors held after the
annual meeting of the General Partner to be held on August 11, 1998. There
are no arrangements or understandings between or among any of said director
or officers and any other person pursuant to which any director or officer
was selected as such.

The foregoing director and officers are also officers and/or directors
of JMB, which is the corporate general partner of Carlyle Real Estate
Limited Partnership-VII ("Carlyle-VII"), Carlyle Real Estate Limited
Partnership-IX ("Carlyle-IX"), Carlyle Real Estate Limited Partnership-XI
("Carlyle-XI"), Carlyle Real Estate Limited Partnership-XII
("Carlyle-XII"), Carlyle Real Estate Limited Partnership-XIII
("Carlyle-XIII"), Carlyle Real Estate Limited Partnership-XIV
("Carlyle-XIV"), Carlyle Real Estate Limited Partnership-XV ("Carlyle-XV"),
Carlyle Real Estate limited Partnership-XVI ("Carlyle-XVI"), Carlyle Real
Estate Limited Partnership-XVII ("Carlyle-XVII"), JMB Mortgage Partners,
Ltd.-III ("Mortgage Partners-III"), JMB Mortgage Partners, Ltd-IV
("Mortgage Partners-IV"), Carlyle Income Plus, Ltd. ("Carlyle Income Plus")
and Carlyle Income Plus, L.P.-II ("Carlyle Income Plus-II") and the
managing general partner of JMB Income Properties, Ltd.-IV ("JMB
Income-IV"), JMB Income Properties, Ltd.-V ("JMB Income-V"), JMB Income
Properties, Ltd.-VII ("JMB Income-VII"), JMB Income Properties, Ltd.-X
("JMB Income-X"), JMB Income Properties, Ltd.-XI ("JMB Income-XI"), JMB
Income Properties, Ltd.-XII ("JMB Income-XII") and JMB Income Properties,
Ltd.-XIII ("JMB-XIII"). JMB is also the sole general partner of the
associate general partners of partnerships. The foregoing director and
officers are also officers and/or directors of various affiliated companies
of JMB including Arvida/JMB Managers, Inc. (the general partner of
Arvida/JMB Partners, L.P. ("Arvida/JMB-I")) and Income Growth Managers,
Inc. (the corporate general partner of IDS/JMB Balanced Income Growth, Ltd.
("IDS/BIG")). Such director and most of such officers are also partners,
directly or indirectly, of certain partnerships (the "Associate
Partnerships") which are associate general partners in the following real
estate limited partnerships: Carlyle-VII, Carlyle-IX, Carlyle-XI, Carlyle-
XII, Carlyle-XIII, Carlyle-XIV, Carlyle-XV, Carlyle-XVI, Carlyle-XVII, JMB
Income-VII, JMB Income-X, JMB Income-XI, JMB Income-XII, JMB Income-XIII,
Mortgage Partners-III, Mortgage Partners-IV, Carlyle Income Plus, Carlyle
Income Plus-II and IDS/BIG. Certain of the foregoing officers are also
partners, indirectly through other partnerships, of the Associate Limited
Partner of the Partnership and the associate limited partners of
Arvida/JMB-I.

The business experience during the past five years of the director and
such officers of the General Partner of the Partnership includes the
following:

Judd D. Malkin (age 60) is Chairman of JMB, an officer and/or director
or various JMB affiliates and a partner, directly or indirectly, of the
Associate Partnerships. He is also an individual general partner of JMB
Income Properties-IV and JMB Income Properties-VI. Mr. Malkin has been
associated with JMB since October, 1969. Mr Malkin is also a director of
Urban Shopping Centers, Inc. ("USC, Inc."), an affiliate of JMB that is a
real estate investment trust in the business of owning, managing and
developing shopping centers. He is a Certified Public Accountant.

Neil G. Bluhm (age 60) is President and a director of JMB, and an
officer and/or director of various JMB affiliates and a partner, directly
or indirectly, of the Associate Partnerships. He is also an individual
general partner of JMB Income Properties-IV and JMB Income Properties-VI.
Mr. Bluhm has been associated with JMB since August, 1970. Mr. Bluhm is
also a principal of Walton Street Real Estate Fund I, L.P. and a director
of USC, Inc. He is a member of the Bar of the State of Illinois and a
Certified Public Accountant.

H. Rigel Barber (age 48) is Chief Executive Officer and Executive Vice
President of JMB, an officer of various JMB affiliates and a partner,
directly or indirectly, of various Associate Partnerships. Mr. Barber has
been associated with JMB since March, 1982. He received a J.D. degree from
the Northwestern Law School and is a member of the Bar of the State of
Illinois.

Gailen J. Hull (age 49) is a Senior Vice President of JMB, an officer
of various JMB affiliates and a partner, directly or indirectly, of various
Associate Partnerships. Mr. Hull has been associated with JMB since March,
1982. He holds a Masters Degree in Business Administration from Northern
Illinois University and is a Certified Public Accountant.

Howard Kogen (age 62) is Senior Vice President and Treasurer of JMB,
an officer of various JMB affiliates and a partner of various Associate
Partnerships. Mr. Kogen has been associated with JMB since March, 1973.
He is a Certified Public Accountant.

Gary Nickele (age 45) is Executive Vice President and General Counsel
of JMB, and an officer of various JMB affiliates. Mr. Nickele has been
associated with JMB since February, 1984. He holds a J.D. degree from the
University of Michigan Law School and is a member of the Bar of the State
of Illinois.

ITEM 11. EXECUTIVE COMPENSATION

The officers and the director of the General Partner receive no
current direct remuneration in such capacities from the Partnership. The
General Partner and the Associate Limited Partner were entitled to receive
a share of cash distributions, when and as cash distributions were made to
the Holders of Interests, and a share of profits or losses as described
under the caption "Cash Distributions and Allocations of Profit and Losses"
at pages 58 to 60 of the Prospectus and at pages A-10 to A-14 of the
Partnership Agreement, which descriptions are incorporated herein by
reference to Exhibit 99.1 of this report. Reference is also made to Note 9
of the consolidated financial statements filed with this annual report for
a description of such distributions and allocations. The General Partner
and the Associate Limited Partner did not receive any cash distributions in
1997, 1996 or 1995.

Pursuant to the Partnership Agreement, the General Partner and
Associate Limited Partner were allocated net losses in the aggregate amount
of $246,771 for Federal income tax purposes for 1997. Reference is made to
Note 9 for further discussion of this allocation. Such losses may be used
to offset taxable income from other sources.

In January 1996, the Partnership, the General Partner, Arvida and JMB
Realty Corporation were named as defendants in a lawsuit entitled Land
Investment I, Ltd., et al. v. Arvida/JMB Managers-II, Inc., et al. (the
"Heathrow litigation"). The complaint in the Heathrow litigation includes
counts for breach of the management agreement, fraud in the inducement and
conspiracy to commit fraud in the inducement, breach of the partnership
agreement and constructive trust in connection with the purchase and
management of the Heathrow development. Plaintiffs seek, among other
things, unspecified compensatory and punitive damages. The Partnership has
paid and expects to pay all of the litigation and related expenses
(consisting primarily of attorneys' fees and expenses) incurred in
defending the claims in the Heathrow litigation on behalf of itself and the
General Partner and its affiliates.

The Partnership is permitted to engage in various transactions
involving the General Partner and its affiliates, as described under the
captions "Management of the Partnership" at pages 48 to 55 of the
Prospectus, "Conflicts of Interest" at pages 21-24 of the Prospectus and
"Rights, Powers and Duties of the General Partner" at pages A-15 to A-28 of
the Partnership Agreement, which descriptions are hereby incorporated
herein by reference to Exhibit 99.1 of this report. The relationship of
the General Partner (and its director and executive officers and certain
other officers) and its affiliates to the Partnership is set forth above in
Item 10.

Arvida may be reimbursed fully for all of its out-of-pocket
expenditures (including salary and salary-related costs) incurred while
supervising the development and management of the Partnership's properties
and other operations. In 1997, such expenses were approximately $212,500,
approximately $3,300 of which was unpaid as of December 31, 1997. In
November 1997, St. Joe Corporation completed its acquisition of a majority
interest in St. Joe/Arvida Company, L.P. ("St. Joe/Arvida"), which acquired
the major assets formerly owned by Arvida, including the Arvida name and
service marks with respect to the Arvida name, subject to the Partnership's
non-exclusive right to use the name and service marks under a license
agreement (and the non-exclusive rights of certain third parties to the
limited use of the name and service marks). St. Joe/Arvida also currently
employs most of the personnel formerly employed by Arvida. St. Joe/Arvida
may provide accounting and certain other administrative services to the
Partnership prior to its termination, the cost of which would be reimbursed
by the Partnership to St. Joe/Arvida. Affiliates of JMB own a minority
interest in St. Joe/Arvida.

Prior to June 1996, the Partnership and Arvida/JMB Partners, L.P. (a
publicly-held limited partnership affiliated with the General Partner,
"Arvida/JMB-I") each employed project-related and administrative personnel
who performed services on behalf of both partnerships. In addition,
certain out-of-pocket expenditures related to such services and certain
general and administrative costs were paid and charged to each partnership
as appropriate. The Partnership reimbursed or received reimbursements from
Arvida/JMB-I for such costs (including salary and salary-related costs).
Subsequent to June 1996, the Partnership no longer employed any project
related or administrative personnel, and incurred no costs on behalf of
Arvida/JMB-I. The Partnership owed approximately $112,900 to Arvida/JMB-I
for such costs and services incurred in 1997. Approximately $9,900 was
unpaid as of December 31, 1997.

Pursuant to a requirement under the Partnership's restructured and new
credit facility agreements, a portion of the reimbursements paid to Arvida
and Arvida/JMB-I discussed above, as well as portions of the Partnership's
insurance and loan refinancing costs for 1992, have been funded on the
Partnership's behalf by advances from the General Partner. Such advances,
which do not bear interest, totaled approximately $4,609,400 as of
December 31, 1997. The repayment of such advances is subordinated to the
receipt by the Holders of Interests of certain levels of return, and
therefore will not be made. In addition, the Partnership was entitled to
receive approximately $12,900 from an affiliate of the General Partner for
salary and salary-related costs incurred by the Partnership on behalf of
such affiliate of the General Partner, all of which was outstanding as of
December 31, 1997.

The General Partner of the Partnership or its affiliates may be
reimbursed for their direct costs or out-of-pocket costs relating to the
administration of the Partnership and the acquisition, development,
ownership, supervision, and operation of the Partnership assets. In 1997,
the General Partner of the Partnership or its affiliates were due
reimbursement for such direct or other administrative and out-of-pocket
expenditures in the amount of approximately $63,400, all of which was paid
as of December 31, 1997.

Additionally, the General Partner and its affiliates are entitled to
reimbursements for legal, accounting and portfolio management services.
Such costs for 1997 were approximately $71,000, all of which was paid as of
December 31, 1997.

Prior to the June 1996 sale of the remaining land, country club, cable
company and certain related assets within the Heathrow community, Arvida
was entitled to receive a management fee in connection with providing
development management services to the Heathrow venture. Through
December 31, 1997, management fees of approximately $3,005,000 had been
earned. Such deferred fees will not be paid. Reference is made to Note 3.

Amounts payable by the Partnership to the General Partner, Associate
Limited Partner and their affiliates (including Arvida) do not bear
interest.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) No person or group is known by the Partnership to own beneficially
more than 5% of the outstanding Interests of the Partnership.

(b) The General Partner and its officers and director do not own
Interests of the Partnership. The General Partner is also the general
partner of Arvida/JMB Associates Limited Partnership-II, the Associate
Limited Partner, and has sole voting and investment power with respect to
the interest of the Associate Limited Partner in the Partnership.

No officer or director of the General Partner of the Partnership
possesses a right to acquire beneficial ownership of Interests of the
Partnership.

(c) There exists no arrangement, known to the Partnership, the
operation of which may at a subsequent date result in a change in control
of the Partnership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no significant transactions or business relationships with
the General Partner, affiliates or their management other than those
described in Items 10, 11 and 12 above.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this report:

I. Financial Statements. (See Index to Financial
Statements filed with this annual report on Form 10-K).

II. Exhibits.

3. Amended and Restated Agreement of Limited
Partnership incorporated herein by reference.***

4.1. Assignment Agreement by and among the
Partnership, the General Partner, the Initial Limited Partner and the
Holders of Interests incorporated herein by reference.***

4.2. Amended and Restated Credit Agreement dated
June 23, 1992 between Arvida/JMB Partners, L.P.-II and Continental Bank
N.A. and Bank of America National Trust and Savings Association is
incorporated herein by reference.**

4.3. Various mortgages and other security interests
dated April 30, 1992 related to Arvida/JMB Partners, L.P.-II's Heathrow,
Talega, Wesmere, Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and
SouthRidge Lakes properties which secure loans under the Amended and
Restated Credit Agreement referred to in Exhibit 4.3 are incorporated
herein by reference.**

4.4. Revolving Loan and Letter of Credit Facility
Credit Agreement dated June 23, 1992 between Arvida/JMB Partners, L.P.-II
and Continental Bank N.A. and Bank of America National Trust and Savings
Association is incorporated herein by reference.**

4.5. Various mortgages and other security interests
dated June 23, 1992 related to Arvida/JMB Partners, L.P.-II's Heathrow,
Talega, Wesmere, Wycliffe, Eagle Watch, Burnt Hickory Lakes, Rock Creek and
SouthRidge Lakes properties which secure loans under the Revolving Loan and
Letter of Credit Facility Credit Agreement referred to in Exhibit 4.5 are
incorporated herein by reference.**

4.6. Interim Bank Letter Agreement dated March 25,
1992 between Arvida/JMB Partners, L.P.-II and Continental Bank N.A., Bank
of America National Trust and Savings Association, and Unibank is
incorporated herein by reference.**

4.7. Promissory Note effective July 1, 1992 between
Arvida/JMB Partners, L.P.-II and Arvida/JMB Managers-II, Inc. is
incorporated herein by reference to Exhibit 4.8 to the Partnership's Form
10-K (File No. 0-19245) filed on April 14, 1995.

4.8. Forbearance and Modification Agreement (Credit
Agreement) dated March 21, 1995 by and among Arvida/JMB Partners, L.P.-II,
Heathrow Development Associates, Ltd., Eagle Watch Partners, Bank of
America Illinois and Bank of America National Trust and Savings Association
is incorporated herein by reference. ****

4.9 Forbearance and Modification Agreement
(Amended and Restated Credit Agreement) dated March 21, 1995 by and among
Arvida/JMB Partners, L.P.-II, Heathrow Development Associates, Ltd., Eagle
Watch Partners, Bank of America Illinois and Bank of America National Trust
and Savings Association is incorporated herein by reference. ****

4.10. Letter dated September 20, 1994 from the
Partnership to Bank of America regarding the Partnership's acknowledgement
that all proceeds from the sale of Collateral shall be delivered
immediately to Co-Lenders is herein incorporated by reference to Exhibit
4.9 to the Partnership's Report on Form 10-Q (File No. 0-19245) filed on
November 11, 1994.

4.11. Letter Agreement dated October 31, 1995
supplementing Forbearance Agreements with Lenders is herein incorporated by
reference to Exhibit 4.12 to the Partnership's Form 10-Q Report (File No.
0-19245) filed on November 9, 1995.

4.12. Amendment of Forbearance and Modification
Agreement dated September 24, 1996 is herein incorporated by reference to
Exhibit 4.13 to the Partnership's Report on Form 10-Q (File No. 0-19245)
dated November 8, 1996.

4.13. Amendment of Forbearance and Modification
Agreement dated May 13, 1997 is incorporated herein by reference to the
Partnership's Report for June 30, 1997 on Form 10-Q (File No. 0-19245)
dated August 8, 1997.

4.14. Letter of Credit Reimbursement Agreement among
Bank of American National Trust and Savings Association, Bank of America
Illinois and Arvida/JMB Partners, L.P.-II dated May 30, 1997 is
incorporated herein by reference to the Partnership's Report for June 30,
1997 on Form 10-Q (File No. 0-19245) dated August 8, 1997.

4.15. Indemnification Agreement dated May 30, 1997
between Arvida/JMB Partners, L.P.-II and Catellus Residential Group,
Standard Pacific of Orange County, Inc. and Starwood Opportunity Fund IV,
L.P. is incorporated herein by reference to the Partnership's Report for
June 30, 1997 on Form 10-Q (File No. 0-19245) dated August 8, 1997.

4.16. Amendment No. 1 to Letter of Credit
Reimbursement Agreement dated June 30, 1997 by and between Arvida/JMB
Partners, L.P.-II and Bank of America National Trust and Savings
Association and Bank of America Illinois is incorporated herein by
reference to the Partnership's Report for September 30, 1997 on Form 10-Q
(File No. 0-19245) dated November 12, 1997.

4.17. Amendment No. 1 to Indemnification Agreement
dated June 30, 1997 by and among Arvida/JMB Partners, L.P.-II and Catellus
Residential Group, Standard Pacific of Orange County, Inc., and Starwood
Opportunity Fund IV, L.P. is incorporated herein by reference to the
Partnership's Report for September 30, 1997 on Form 10-Q (File No. 0-19245)
dated November 12, 1997.

4.18. Settlement and Release Agreement dated as of
December 31, 1997 by and between Arvida/JMB Partners, L.P.-II and Bank of
America National Trust and Savings Association is filed herewith.

4.19. Assignment dated December 31, 1997 by and
between Arvida/JMB Partners, L.P.-II and Bank of America National Trust and
Savings Association is filed herewith.

10.1. Management, Advisory and Supervisory Agreement
between the Partnership and Arvida Company is incorporated herein by
reference.**

10.2. First Amended and Restated Limited Partnership
Agreement of Heathrow Development Associates, Ltd. and Assignment of
Partnership Interests dated January 17, 1990 are incorporated herein by
reference.**

10.3. Amended and Restated Heathrow Management
Agreement dated January 17, 1990 is incorporated herein by reference.**

10.4. Eagle Watch Partners General Partnership
Agreement dated December 27, 1989 is incorporated herein by reference.**

10.5. Letter of Credit Agreement dated July 27, 1990
between Arvida/JMB Partners, L.P.-II and Santa Margarita Water District
regarding collateral for Tax-Exempt Bond Financing is incorporated herein
by reference.**

10.6. Agreement for the Payment of the Diemer
Intertie Sublease Payments, Principal and Interest of Bonds of Improvement
District No. 7 and Annual Budget Deficits Between Arvida/JMB Partners,
L.P.-II and Santa Margarita Water District dated January 15, 1990 is
incorporated herein by reference.***

10.7. Agreement for Purchase and Sale dated August
14, 1995 by and between Arvida/JMB Partners, L.P.-II and Heritage
Development South, Inc. for the sale of certain real property within the
Wesmere Community is incorporated herein by reference. *****

10.8. Agreement for Sale and Purchase of Real
Property dated October 25, 1996 by and between Arvida/JMB Partners, L.P. -
II and Starwood/ Talega Associates, L.L.C. for the sale of certain real
property within the Talega Property is incorporated by reference to Exhibit
10.16 to the Partnership's report for September 30, 1996 on Form 10-Q (File
No. 0-19245) filed with the Securities and Exchange Commission dated
November 8, 1996.

10.9. Amendment dated March 18, 1997 to Agreement
for Purchase and Sale of Real Property by and between Arvida/JMB Partners,
L.P.-II and Starwood/Talega Associates, L.L.C. for the sale of certain real
property within the Talega Property is incorporated herein by reference to
Exhibit 10.9 to the Partnership's Report for December 31, 1996 on Form 10-K
(File No. 0-19245) dated March 21, 1997.

10.10. Agreement for Sale and Purchase of Real
Property dated March 22, 1996 among Heathrow Development Associates, Ltd.,
Heathrow Golf and Country Club Limited Partnership, Heathrow Cable Limited
Partnership and 4/46A Corporation is incorporated herein by reference to
Exhibit 10.15 to the Partnership's report for March 31, 1996 on Form 10-Q
(File No. 0-19245) filed with the Securities and Exchange Commission dated
May 10, 1996.

10.11 Agreement for Sale and Purchase of Real
Property dated October 25, 1996 by and between Arvida/JMB Partners, L.P.-II
and Starwood/Talega Associates, L.L.C. for the sale of certain real
property within the Talega Property is incorporated herein by reference to
Exhibit 10.16 to the Partnership's Report for September 30, 1996 on Form
10-Q (File No. 0-19245) dated November 8, 1996.

10.12 Amendment dated March 18, 1997 to Agreement
for Purchase and Sale of Real Property by and between Arvida/JMB Partners,
L.P.-II and Starwood/Talega Associates, L.L.C. for the sale of certain real
property within the Talega Property is incorporated herein by reference to
Exhibit 10.9 to the Partnership's Report for December 31, 1996 on Form 10-K
(File No. 0-19245) dated March 21, 1997.

10.13 Amendment dated December 9, 1996 to Agreement
for Purchase and Sale of Real Property and Escrow Instructions by and
between Arvida/JMB Partners, L.P.-II and Starwood/Talega Associates, L.L.C.
for the sale of certain real property within the Talega Property is
incorporated herein by reference to Exhibit 2.3 to the Partnership's Report
on Form 8-K (File No. 0-19245) dated June 16, 1997.

10.14 Amendment dated May 20, 1997 to Agreement for
Purchase and Sale of Real Property and Escrow Instructions by and between
Arvida/JMB Partners, L.P.-II and Starwood/Talega Associates, L.L.C. for the
sale of certain real property within the Talega Property is incorporated
herein by reference to Exhibit 2.4 of the Partnership's Report on Form 8-K
(File No. 0-19245) dated June 16, 1997.

10.15. Agreement for Sale and Purchase of Real
Property dated May 27, 1997 by and between Heathrow Development Associates,
Ltd. and Roliho, Inc. for the sale of the shopping plaza at Heathrow is
incorporated herein by reference to Exhibit 2.1 to the Partnership's Report
on Form 8-K (File No. 0-19245) dated July 15, 1997.

21. Subsidiaries of the Registrant.

27. Financial Data Schedule

99.1 A copy of the following pages of the
Partnership's Prospectus dated October 27, 1989, including certain pages of
the Partnership's Amended and Restated Agreement of Limited Partnership,
which is Exhibit A to the Prospectus, and the Assignment Agreement, which
is Exhibit B to the Prospectus, are filed herewith: pages 21-24; 48-55; 58-
60; A-10 --A-14; A-15 -- A-28; A-31 -- A-34; and B-2.

** Previously filed with the Securities and Exchange
Commission as Exhibits 4.3, 4.4, 4.5, 4.6, 4.7, 10.1, 10.7, 10.8, 10.9 and
10.10, respectively, to the Partnership's Form 10-K Report (File No. 0-
19245) filed on April 13, 1992 and are herein incorporated by reference.

*** Previously filed with the Securities and Exchange
Commission as Exhibits 3, 4.1 and 10.11, respectively, to the Partnership's
Form 10-K Report (File No. 0-19245) under the Securities Act of 1934 filed
on April 12, 1993 and herein incorporated by reference.

**** Previously filed with the Securities and Exchange
Commission as Exhibits 4.9 and 4.10, respectively, to the Partnership's
Form 10-K Report (File No. 0-19245) under the Securities Act of 1934 filed
on April 14, 1995 and herein incorporated by reference.

***** Previously filed with the Securities and Exchange
Commission as Exhibit 10.14 to the Partnership's Form 10-Q Report (File No.
0-19245) under the Securities Act of 1934 filed on November 9, 1995 and
herein incorporated by reference.

The Registrant agrees to furnish to the Securities and
Exchange Commission upon its request a copy of each instrument with respect
to the Registrant and its consolidated subsidiaries the authorized
principal amount of which does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis.

(b) No reports on Form 8-K were required or filed since the
beginning of the last quarter of the period covered by this report.

No annual report or proxy material for the fiscal year 1997 has been
sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Partnership has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

ARVIDA/JMB PARTNERS, L.P.-II

BY: Arvida/JMB Managers-II, Inc.
(The General Partner)

GAILEN J. HULL
By: Gailen J. Hull
Vice President
Date: March 25, 1998

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

By: Arvida/JMB Managers-II, Inc.
(The General Partner)

NEIL G. BLUHM
By: Neil G. Bluhm, President
(Principal Executive Officer)
Date: March 25, 1998

JUDD D. MALKIN
By: Judd D. Malkin, Chairman
(Principal Financial Officer)
Date: March 25, 1998

GARY NICKELE
By: Gary Nickele, Vice President,
General Counseland Director
Date: March 25, 1998

GAILEN J. HULL
By: Gailen J. Hull, Vice President
(Principal Accounting Officer)
Date: March 25, 1998

ARVIDA/JMB PARTNERS, L.P.-II

EXHIBIT INDEX

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

3. Amended and Restated Agreement
of Limited Partnership. Yes

4.1. Assignment Agreement between
and among the Partnership,
the General Partner, the Initial
Limited Partner and the Holders of
Interests. Yes

4.2. Amended and Restated Credit
Agreement dated June 23, 1992
between Arvida/JMB Partners, L.P.-II
and Continental Bank N.A. and Bank
of America National Trust and
Savings Association. Yes

4.3. Various mortgages and other security
interests dated April 30, 1992
related to Arvida/JMB Partners,
L.P.-II's Heathrow, Talega, Wesmere,
Wycliffe, Eagle Watch, Burnt Hickory
Lakes, Rock Creek and SouthRidge Lakes
properties which secure loans under
the Amended and Restated Credit
Agreement referred to in Exhibit 4.3 Yes

4.4. Revolving Loan and Letter of Credit
Facility Credit Agreement dated
June 23, 1992 between Arvida/JMB
Partners, L.P.-II and Continental
Bank N.A. and Bank of America National
Trust and Savings Association. Yes

4.5. Various mortgages and other security
interests dated June 23, 1992 related
to Arvida/JMB Partners, L.P.-II's
Heathrow, Talega, Wesmere, Wycliffe,
Eagle Watch, Burnt Hickory Lakes,
Rock Creek and SouthRidge Lakes
properties which secure loans under
the Revolving Loan and Letter of
Credit Facility Credit Agreement
referred to in Exhibit 4.5. Yes

4.6. Interim Bank Letter Agreement
dated March 25, 1992 between
Arvida/JMB Partners, L.P.-II
and Continental Bank N.A.,
Bank of America National Trust
and Savings Association, and
Unibank. Yes

4.7. Promissory Note effective July 1,
1992 between Arvida/JMB Partners,
L.P.-II and Arvida/JMB Managers-II,
Inc. Yes

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

4.8. Forbearance and Modification Agree-
ment (Credit Agreement) dated
March 21, 1995 by and among Arvida/
JMB Partners, L.P.-II, Heathrow
Development Associates, Ltd.,
Eagle Watch Partners, Bank of
America Illinois and Bank of
America National Trust and Savings
Association. Yes

4.9. Forbearance and Modification
Agreement (Amended and Restated
Credit Agreement) dated March 21,
1995 by and among Arvida/JMB Partners,
L.P.-II, Heathrow Development
Associates, Ltd., Eagle Watch
Partners, Bank of America Illinois
and Bank of America National Trust
and Savings Association. Yes

4.11. Letter Agreement dated October 31,
1995 supplementing Forbearance
Agreements with Lenders. Yes

4.12. Amendment of Forbearance and
Modification Agreement dated
September 24, 1996 Yes

4.13. Amendment of Forbearance and
Modification Agreement dated
May 13, 1997 Yes

4.14. Letter of Credit Reimbursement
Agreement among Bank of
American National Trust and
Savings Association, Bank of
America Illinois and Arvida/
JMB Partners, L.P.-II dated
May 30, 1997 Yes

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

4.18. Settlement and Release Agreement
dated December 31, 1997 by
and between Arvida/JMB Partners,
L.P.-II and Bank of America
National Trust and Savings
Association. No

4.19. Assignment dated December 31,
1997 by and between Arvida/
JMB Partners, L.P.-II and
Bank of America National Trust
and Savings Association. No

10.1. Management, Advisory and Super-
visory Agreement between the
Partnership and Arvida Company. Yes

10.2. First Amended and Restated
Limited Partnership Agreement
of Heathrow Development Associates,
Ltd. and Assignment of Partnership
Interests dated January 17, 1990. Yes

10.3. Amended and Restated Heathrow
Management Agreement dated
January 17, 1990. Yes

10.4. Eagle Watch Partners General
Partnership Agreement dated
December 27, 1989. Yes

10.5. Letter of Credit Agreement
dated July 27, 1990 between
Arvida/JMB Partners, L.P.-II
and Santa Margarita Water
District regarding collateral
for Tax-Exempt Bond Financing. Yes

10.6. Agreement for the Payment of
Diemer Intertie Sublease Payments,
Principal and Interest on Bonds
of Improvement District No. 7 and
Annual Budget Deficits between
Arvida/JMB Partners, L.P.-II and
Santa Margarita Water District
dated January 15, 1990. Yes

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

10.7. Agreement for Purchase and
Sale dated August 14, 1995
by and between Arvida/JMB
Partners, L.P.-II and
Heritage Development South,
Inc. for the sale of certain
real property within the
Wesmere Community Yes

10.10. Agreement for Sale and Purchase
of Real Property between
Heathrow Development Associates,
Ltd., Heathrow Golf and Country
Club Limited Partnership, Heathrow
Cable Limited Partnership and 4/46A
Corporation. Yes

DOCUMENT
EXHIBIT INCORPORATED SEQUENTIALLY
NO. EXHIBIT BY REFERENCE NUMBERED PAGE
- ------- ------- ------------ -------------

10.15. Agreement for sale and Purchase
of Real Property dated May 27,
1997 by and between Heathrow
Development Associates, Ltd.
and Roliho, Inc. for the sale
of the shopping plaza at Heathrow Yes

21. Subsidiaries of the Registrant. No

27. Financial Data Schedule No

99.1 A copy of the following pages
of the Partnership's Prospectus
dated October 27, 1989, including
certain pages of the Partnership's
Amended and Restated Agreement
of Limited Partnership, which is
Exhibit A to the Prospectus,
and the Assignment Agreement, which
is Exhibit B to the Prospectus,
are filed herewith: pages 21-24;
48-55; 58-60; A-10-A-14; A-15-A-28;
A-31-A-34; and B-2. No