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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 23, 1996
Vanguard Real Estate Fund II, A Sales-Commission-Free Income Properties Fund
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(Exact name of the registrant as specified in its character)
Massachusetts 0-17656 23-2482429
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(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Vanguard Financial Center, Malvern, PA 19355
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (610) 669-1000
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INDEX
Page No.
Cover Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM
NO.
Item 1. Change in Control of Registrant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 2. Acquisition or Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 3. Bankruptcy or Receivership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 4. Changes in Registrant's Certifying Accountant . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 5. Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 6. Resignation of Registrant's Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 7. Financial Statements and Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Item 8. Change in Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3
Item 1. Change in Control of Registrant
None
Item 2. Acquisition or Disposition of Assets
None
Item 3. Bankruptcy or Receivership
None
Item 4. Changes in Registrant's Certifying Accountant
None
Item 5. Other Events
On August 27, 1996, Vanguard Real Estate Fund II ("the Fund") sold the
Bayside Business Center ("Bayside") located in San Carlos, California for a
contract price of $7,275,000. In connection with the sale, the Fund received
net proceeds of approximately $7,140,000, or $1.11 per share, after expenses
associated with the sale. Bayside's carrying value as of the date of the
transaction was approximately $7,100,000. In accordance with the amended
advisory agreement between the Fund and Aldrich, Eastman and Waltch (AEW), the
Fund incurred a disposition fee of approximately $108,000, representing 1.5% of
the contract price less selling costs.
In 1989, the Fund invested an aggregate $7,752,000 in a senior
fixed-rate mortgage loan and a junior shared-appreciation mortgage loan. Each
loan was secured by Bayside. In 1995, the Fund exercised its call rights on
the loans and subsequently acquired title to Bayside in February 1996 via a
deed in lieu of foreclosure in full satisfaction of the then-outstanding
mortgage loans. At that time, Bayside was reclassified as a direct ownership
investment. Previously, the Fund had reduced the carrying value of the loans to
the estimated fair value of the collateral less selling costs. Upon taking
title, the Fund's adviser immediately began to market the property for sale.
Subsequently, based on an evaluation of information gathered from potential
buyers contacted during the initial marketing process, the adviser reduced its
estimate of the property's fair market value. Accordingly, during the quarter
ended June 30, 1996, $400,000 was charged to the provision for possible losses
to further write down Bayside's carrying value.
The sale of Bayside was made pursuant to the Fund's previously-reported Plan
of Liquidation adopted in December 1995. The Fund's remaining real estate
asset is an interest in a limited partnership that owns an income producing
office building. The Fund's Board is currently evaluating the amount and
timing of the distribution of the net proceeds from the sale of Bayside to the
Fund's shareholders.
Item 6. Resignation of Registrant's Directors
None
Item 7. Financial Statements and Exhibits
None
Item 8. Change in Fiscal Year
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Vanguard Real Estate Fund II,
A Sales-Commission-Free Income Properties Fund
DATE: BY:
-------------------- Ralph K. Packard
Vice President & Controller