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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number 0-16856
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3368726
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FIVE CAMBRIDGE CENTER, CAMBRIDGE MA 02142-1493
- --------------------------------------- -----------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (617) 234-3000
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Indicate by check mark whether 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
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------ ------------
Assets
Investments in mortgage loan, net $15,979,355 $15,979,355
Cash and cash equivalents 4,296,976 4,276,843
Other receivable -- 32,525
----------- -----------
Total Assets $20,276,331 $20,288,723
=========== ===========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 34,235 $ 99,954
----------- -----------
Total Liabilities 34,235 99,954
----------- -----------
Commitments and Contingencies
Partners' Equity:
Limited partners' equity (187,919 units
issued and outstanding) 19,736,069 19,684,075
General partners' equity 506,027 504,694
----------- -----------
Total Partners' Equity 20,242,096 20,188,769
----------- -----------
Total Liabilities and Partners' Equity $20,276,331 $20,288,723
=========== ===========
See notes to financial statements.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------ -------------
Revenues:
Short-term investment interest $184,889 $122,473
Other income -- 75,380
-------- --------
Total revenues 184,889 197,853
-------- --------
Costs and Expenses:
General and administrative 131,562 70,611
-------- --------
Total costs and expenses 131,562 70,611
-------- --------
Net income $ 53,327 $127,242
======== ========
Net income attributable to:
Limited partners $ 51,994 $124,061
General partners 1,333 3,181
-------- --------
$ 53,327 $127,242
======== ========
Net income per unit of limited partnership
interest (187,919 units outstanding) $ .28 $ 0.66
======== ========
See notes to financial statements.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED
----------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------ -------------
Revenues:
Short-term investment interest $66,048 $47,582
Other income -- 5,540
------- --------
Total revenues 66,048 53,122
------- --------
Costs and Expenses:
General and administrative 58,875 29,610
------- --------
Total costs and expenses 58,875 29,610
------- --------
Net income $ 7,173 $23,512
======= ========
Net income attributable to:
Limited partners $ 6,994 $22,924
General partners 179 588
------- --------
$ 7,173 $23,512
======= ========
Net income per unit of limited partnership
interest (187,919 units outstanding) $ .04 $ 0.12
======= ========
See notes to financial statements.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENT OF PARTNERS' EQUITY (UNAUDITED)
LIMITED GENERAL TOTAL
PARTNERS' PARTNERS' PARTNERS'
EQUITY EQUITY EQUITY
----------- -------- -----------
Balance - January 1, 2000 $19,684,075 $504,694 $20,188,769
Net income 51,994 1,333 53,327
----------- --------- ------------
Balance - September 30, 2000 $19,736,069 $506,027 $20,242,096
=========== ========= ============
See notes to financial statements.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
--------------------------------
SEPTEMBER 30, SEPTEMBER 30,
2000 1999
------------ -------------
Cash Flows from Operating Activities:
Net income $ 53,327 $ 127,242
Changes in operating assets and liabilities:
Other receivables 32,525 10,197
Accounts payable and accrued expenses (65,719) (14,100)
---------- ----------
Net cash provided by operating activities 20,133 123,339
---------- ----------
Cash Flows from Investing Activities:
Payments received from sale of mortgage loan, net -- 800,000
Mortgage loan payments received -- 236,678
---------- ----------
Cash provided by investing activities -- 1,036,678
---------- ----------
Net increase in cash and cash equivalents 20,133 1,160,017
Cash and cash equivalents, beginning of period 4,276,843 2,992,413
---------- ----------
Cash and cash equivalents, end of period $4,296,976 $4,152,430
========== ==========
See notes to financial statements.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The accompanying financial statements, footnotes and discussions should be
read in conjunction with the financial statements, related footnotes and
discussions contained in the Resources Accrued Mortgage Investors 2, L.P.
(the "Partnership") Annual Report on Form 10-K for the year ended December
31, 1999. The financial information contained herein is unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
such financial information have been included. All adjustments are of a
normal recurring nature. The balance sheet at December 31, 1999 was derived
from audited financial statements at such date.
The results of operations for the three and nine months ended September 30,
2000 and 1999 are not necessarily indicative of the results to be expected
for the full year.
2. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES
The Managing General Partner of the Partnership, RAM Funding, Inc. and the
Associate General Partner, Presidio AGP Corp. are directly or indirectly
wholly-owned subsidiaries of Presidio Capital Corp. ("Presidio"). The
General Partners and certain affiliates of the General Partners, are
general partners in several other limited partnerships which are also
affiliated with Presidio, and which are engaged in businesses that are, or
may be in the future, in direct competition with the Partnership.
Subject to the provisions of the Agreement of Limited Partnership
("Partnership Agreement"), Presidio controls the Partnership through its
indirect ownership of the General Partners. Presidio is indirectly
controlled by NorthStar Capital Investment Corp. ("NorthStar"), a Maryland
Corporation.
For the nine months ended September 30, 1999 reimbursable expenses due to
an affiliate of Presidio from the Partnership amounted to $8,181.
On October 21, 1999, Presidio entered into a Services Agreement with AP-PCC
III, L.P. (the "Agent") pursuant to which the Agent was retained and is
compensated by Presidio to provide asset management and investor relation
services to the Partnership and other entities affiliated with the
Partnership, which were previously provided by NorthStar Presidio.
As a result of this agreement, the Agent has the duty to direct the
day-to-day affairs of the Partnership, including, without limitation,
reviewing and analyzing potential sale, financing or restructuring
proposals regarding the Partnership's assets, preparation of all
Partnership reports, maintaining Partnership records and maintaining bank
accounts of the Partnership. The Agent is not permitted, however, without
the consent of Presidio, or as otherwise required under the terms of the
Partnership Agreement to, among other things, cause the Partnership to sell
or acquire an asset or file for bankruptcy.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
2. CONFLICTS OF INTEREST AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
In order to facilitate the provision by the Agent of the asset management
services and the investor relations services, effective October 25, 1999,
the officers and directors of the General Partner resigned and nominees of
the Agent were elected as the officers and directors of the General
Partner. The Agent is an affiliate of Winthrop Financial Associates, a
Boston-based company that provides asset management services, investor
relation services and property management services to over 150 limited
partnerships which own commercial property and other assets. The General
Partner does not believe that this relationship will have a material effect
on the operations of the Partnership.
As of September 30, 2000, affiliates of Presidio had acquired 31,893 units
of limited partnership interest of the Partnership. These units represent
16.972% of the issued and outstanding limited partnership units.
3. INVESTMENTS IN MORTGAGE LOAN AND ALLOWANCE FOR LOAN LOSSES
The Partnership, which originally invested in zero-coupon, nonrecourse
senior and junior mortgage loans, currently holds an interest in one
outstanding mortgage loan. During the first quarter of 1997, the obligor
under the Partnership's remaining mortgage loan wrote the property down to
what its management believed to be its estimated fair market value of
$15,875,000. Management of the Partnership performed its own evaluation at
that time and determined that this amount was a fair estimate of the
property value. The outstanding balance of the loan at December 31, 1996
was approximately $15,979,000 and it was unlikely that any additional
interest accrued on the loan would ultimately be recovered from the value
of the underlying property. Consequently, as of January 1, 1997 the
Partnership ceased accruing interest on the loan.
The Partnership's remaining mortgage note contains a provision which
requires the borrower to provide a current appraisal based upon certain
conditions, or in some cases upon request. If an appraisal indicates that
the value of all indebtedness senior to and including the Partnership's
loan, taking into account principal plus accrued interest in excess of 5%
per annum, exceeds 85% of the then current appraised value, the borrower
must repay a portion of the loan which results in the restoration of an 85%
loan to value ratio. See "Item 2. Management's Discussion and Analysis of
Financial Condition and Result of Operations."
A summary of mortgage activity is as follows:
Nine Months Ended Year Ended
September 30, 2000 December 31, 1999
------------------------------------------- ----------------------------------------------
Investment Interest Investment Interest
Method Method Total Method Method Total
------------- --------------- ------------ ------------- --------------- ---------------
Opening balance $ -- $15,979,355 $15,979,355 $ 800,000 $16,216,033 $ 17,016,033
Recovery of loan losses -- -- -- -- 99,156 99,156
Payments received, net -- -- -- (800,000) (335,834) (1,135,834)
----- ----------- ----------- --------- ----------- ------------
Ending balance $ -- $15,979,355 $15,979,355 $ -- $15,979,355 $ 15,979,355
===== =========== =========== ========= =========== ============
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
3. INVESTMENTS IN MORTGAGE LOAN AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Information with respect to the Partnership's mortgage loans is as follows:
Original Mortgage Mortgage Mortgage
Interest Compound Loan Maturity Amount Purchased Placement
Rate % Period Type Date Date Advanced Interest Fees
------------ ------------ ----------- ---------- ----------- -------------- ------------- ----------
Description
Shopping Center
Sierra Marketplace
Reno, Nevada 11.220 Monthly 1st 2/10/89 2/28/01 $ 6,500,000 $ -- $ 385,757
============== ============= ==========
Interest Recognized Carrying Value Contractual Balance
------------------------------ ----------------------------- -----------------------------
September 30, 1999 and Reserves/ September 30, December 31, September 30, December 31,
2000 Prior Write-offs Proceeds 2000 1999 2000 1999
-------------- ------------ ----------- --------- ------------- ------------ ------------- -------------
Shopping
Center
Sierra
Marketplace
Reno, Nevada $ -- $9,093,598 $ -- $ -- $15,979,355 $15,979,355 $ 23,831,501 $21,916,707
===== ========== ======= ====== =========== =========== ============ ===========
On March 1, 1999, the Twin Oak Property was sold to an affiliate of
NorthStar for a gross purchase price of approximately $4,150,000 (subject
to customary adjustments at closing). The Twin Oak Borrower used the
proceeds from the sale to repay the first mortgage to Southern Life
Mortgage and on May 5, 1999, the Partnership received approximately
$237,000 representing the carrying value of the Twin Oak loan. During the
quarter ended December 31, 1999, the Partnership received an additional
$99,156 representing residual proceeds from The Twin Oak sale and recorded
such amount as loan loss recovery during the quarter ended December 31,
1999.
On March 30, 1999, the Partnership sold its interest in Harborista Loan to
470 Atlantic Avenue Management Corp. ("470 Atlantic") for gross proceeds of
$1,000,000, exclusive of legal and other costs related to the transaction
of $200,000. Accordingly, the Partnership recorded $800,000 of recovery of
loan losses with respect to the sale of this loan as of December 31, 1999.
Following its acquisition of the Harborista Loan, 470 Atlantic foreclosed
on its interests in the two mortgages and acquired Harbor Plaza, the
property securing the Harborista loan. On March 29, 1999, 470 Atlantic
entered into an agreement with Charbird Enterprises LLC ("Charbird"), an
affiliate of NorthStar and the General Partners, for the performance of
services in connection with the marketing of Harbor Plaza. Charbird
assigned to NorthStar its right to receive a substantial portion of amounts
paid under the Harborista Loan and NorthStar agreed to indemnify Charbird
for any liabilities under the agreement.
Harbor Plaza was sold in December 1999 for approximately $50,500,000.
Charbird received a fee of $14,050,884 under the agreement, $12,645,796 of
which was paid to NorthStar.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
4. LITIGATION
Dr. Warren Heller, on behalf of himself and all others similarly situated,
v. RAM Funding Inc., Presidio AGP Corp., NorthStar Capital Investment Corp.
and Charbird Enterprises, LLC, defendants, and Resources Accrued Mortgage
Investors 2, L.P., as nominal defendant, Court of Chancery, New Castle
County, Delaware (Case No. 18059). On or about May 19, 2000, Dr. Warren
Heller, a limited partner, commenced a putative class action and derivative
lawsuit in the Delaware Chancery Court seeking, among other things,
monetary damages resulting from purported breaches of fiduciary duties and
breaches of the Partnership's partnership agreement in connection with the
March 1999 sale of the Harborista Loan and the marketing of Harbor Plaza
which secured the Harborista Loan. In addition, the action alleges breaches
of fiduciary duty in connection with the purported failure of the
Partnership to distribute cash and the purported failure of the Partnership
to enforce the provisions of the loan secured by the Reno, Nevada property.
The defendants have preliminarily agreed to enter into a Memorandum of
Understanding (the "MOU") settling this lawsuit. As currently contemplated,
the MOU (i) provides for an $8,000,000 payment by the defendants to the
Partnership and (ii) requires that the Partnership distribute to its
partners the $8,000,000 payment, less fees and expenses awarded by the
court to plaintiff's counsel (which amount is not expected to exceed 20% of
the settlement amount), along with $1,000,000 of the Partnership's cash
reserves. The MOU is subject to many conditions including execution of a
definitive settlement agreement, completion of discovery by plaintiffs and
court approval of the settlement following notice to limited partners.
Accordingly, there can be no assurance that the settlement will be
consummated on the terms currently contemplated or that the settlement will
be consummated at all.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS
The matters discussed in this Form 10-Q contain certain
forward-looking statements and involve risks and uncertainties
(including changing market conditions, competitive and regulatory
matters, etc.) detailed in the disclosure contained in this Form 10-Q
and the other filings with the Securities and Exchange Commission
made by the Partnership from time to time. The discussion of the
Partnership's liquidity, capital resources and results of operations,
including forward-looking statements pertaining to such matters, does
not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from
those projected in the forward-looking statements as a result of a
number of factors, including those identified herein.
This item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.
Liquidity and Capital Resources
The Partnership initially invested the net proceeds of its public
offering in four zero coupon first and junior mortgage loans
aggregating $23,300,000. These loans were secured by properties owned
principally by privately and publicly syndicated limited partnerships
originally sponsored by affiliates of the general partners. The
Partnership currently retains an investment in one of the original
four mortgage loans, which had an initial principal balance of
approximately $6,500,000. During the first quarter of 1997, the
obligor under the Partnership's remaining mortgage loan wrote the
property down to what its management believed to be its estimated
fair market value of $15,875,000. Management of the Partnership
performed its own evaluation at that time and determined that this
amount was a fair estimate of the property value. The outstanding
balance of the loan at December 31, 1996 was approximately
$15,979,000 and it was unlikely that any additional interest accrued
on the loan would ultimately be recovered from the value of the
underlying property. Consequently, as of January 1, 1997 the
Partnership ceased accruing interest on the loan. At September 30,
2000, the contractual balance of principal and accrued interest on
this loan was $23,831,501 and the Partnership had a carrying value in
this loan of $15,979,355.
The Partnership's remaining mortgage note contains a provision which
requires the borrower to provide a current appraisal based upon
certain conditions, or in some cases upon request. If an appraisal
indicates that the value of all indebtedness senior to and including
the Partnership's loan, taking into account principal plus accrued
interest in excess of 5% per annum, exceeds 85% of the then current
appraised value, the borrower must repay a portion of the loan which
results in the restoration of an 85% loan to value ratio.
The Partnership was recently contacted by the borrower under its
remaining mortgage loan in an effort to restructure the loan prior to
its maturity (February 1, 2001). In this regard, the Partnership and
the borrower are currently negotiating to modify the loan. It is
expected that if the loan is modified, any such modification will
contain the following terms:
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS (CONTINUED)
1. The Partnership will agree to delay its exercise of remedies
under the mortgage loan until February 28, 2003.
2. The borrower will place in escrow a deed as well as documents
necessary to convey the property, which documents will be
released to the Partnership on the earlier (A) March 1, 2003, (B)
at such time as a third-party purchaser is identified to acquire
the property or (C) at any time after March 1, 2002 if the
Partnership deems it necessary to protect its economic interest.
3. The borrower will agree to pay debt service to the Partnership
equal to all cash flow generated from the property in excess of
$100,000 per year.
4. The borrower will have an appraisal prepared on the property to
determine if an excess payment is due under the appraisal
provision previously described, and, if such a payment is due, to
make such payment.
5. The borrower will have the right to repay the loan after the
initial maturity date, February 28, 2001, by paying to the
Partnership the sum of the then unpaid principal balance of the
loan together with accrued interest and other charges due under
the loan and 66% of the value of the property in excess of such
amount.
The borrower indicated to the Partnership that it believes that the
value of the property has increased since 1997. If the appraisal
indicates that the value of the property has increased since 1997, the
ultimate amount received by the Partnership on account of its mortgage
loan may exceed the value at which the mortgage loan is currently
carried on your partnership's financial statements.
There can be no assurance that the foregoing transaction will be
consummated or that, if consummated, will be on the foregoing terms.
The Partnership's level of liquidity based on cash and cash
equivalents increased by $20,133 to $4,296,976 during the nine months
ended September 30, 2000 as compared to December 31, 1999. The
increase is due to cash provided by operating activities. Cash and
cash equivalents are invested in short-term instruments and are
expected to be sufficient to pay administrative expenses during the
term of the Partnership. If the proposed settlement of the class
action litigation is consummated as currently contemplated, it is
anticipated that the Partnership will make a distribution to its
partners, upon consummation of such settlement, in an amount not less
than $7,400,000 in the aggregate ($38.39 per unit). See "Item 1.
Financial Statements - Note 4."
On March 1, 1999, the Twin Oak Property was sold to an affiliate of
NorthStar Capital Investment Corp. ("NorthStar") for a gross purchase
price of approximately $4,150,000 (subject to customary adjustments at
closing). The Twin Oak Borrower used the proceeds from the sale to
repay the first mortgage to Southern Life Mortgage and on May 5, 1999,
the Partnership received approximately $237,000 representing the
carrying value of the Twin Oak loan. During the quarter ended December
31, 1999, the Partnership received an additional $99,156 representing
residual proceeds from The Twin Oak sale and recorded such amount as
loan loss recovery during the quarter ended December 31, 1999.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT
OF OPERATIONS (CONTINUED)
During the latter part of 1998 and continuing into 1999, the
Partnership attempted to arrange for financing in order to satisfy
the underlying First Mortgage encumbering Harbor Plaza, the property
underlying the Harborista Loan, and to protect the Partnership's
interest in the Harborista Loan. The Partnership was unable to obtain
financing and, on March 29, 1999, the Partnership sold its interest
in the Harborista Loan to the holder of the First Mortgage, 470
Atlantic Avenue Management Corp. ("470 Atlantic") for gross proceeds
of $1,000,000, exclusive of legal and other costs related to the
transaction of approximately $200,000.
Following its acquisition of the Harborista Loan, 470 Atlantic
foreclosed on its interests in the two mortgages and acquired Harbor
Plaza. On March 29, 1999, 470 Atlantic entered into an agreement with
Charbird Enterprises LLC ("Charbird"), an affiliate of NorthStar and
the General Partners, for the performance of services in connection
with the marketing of Harbor Plaza. Charbird assigned to NorthStar
its right to receive a substantial portion of amounts paid under the
Harborista Loan and NorthStar agreed to indemnify Charbird for any
liabilities under the agreement. Harbor plaza was sold in December
1999 for approximately $50,500,000. Charbird received a fee of
$14,050,884 under the agreement, $12,645,796 of which was paid to
NorthStar. See "Item 1. Financial Statements - Note 4."
Results of Operations
Net income decreased for the nine month period ended September 30,
2000 as compared to the same period in 1999, due to a decrease in
revenue and an increase in costs and expenses. Net income for the
three months ended September 30, 2000 as compared to 1999, decreased
due to an increase in costs and expenses, which was partially offset
by an increase in revenue.
Revenues decreased for the nine month period ended September 30, 2000
as compared to the same period in 1999, principally due to a decrease
in other income items partially offset by an increase in short term
investment interest resulting from larger cash balances available for
short term investment. Revenues increased for the three months ended
September 30, 2000 as compared to the same period in 1999 due to an
increase in interest income, which was partially offset by a decrease
in other income.
Costs and expenses increased for the three and nine month periods
ended September 30, 2000, as compared to the same periods in 1999
principally due to higher professional fees.
Inflation has not had a material effect on the Partnership's recent
operations or financial condition and is not expected to have a
material effect in the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Partnership is not subject to market risk as its cash and cash
equivalents are invested in short term money market mutual funds. The
Partnership has no loans outstanding.
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FORM 10-Q SEPTEMBER 30, 2000
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
A. Dr. Warren Heller, on behalf of himself and all others similarly
situated, v. RAM Funding Inc., Presidio AGP Corp., NorthStar
Capital Investment Corp., and Charbird Enterprises, LLC,
defendants, and Resources Accrued Mortgage Investors 2, L.P., as
nominal defendant, Court of Chancery, New Castle County, Delaware
(Case No. 18059). On or about May 19, 2000, Dr. Warren Heller, a
limited partner, commenced a putative class action and derivative
lawsuit in the Delaware Chancery Court seeking, among other
things, monetary damages resulting from purported breaches of
fiduciary duties and breaches of the Partnership's partnership
agreement in connection with the March 1999 sale of Harborista
Loan and the marketing of Harbor Plaza which secured the
Harborista Loan. In addition, the action alleges braches of
fiduciary duty in connection with the purported failure of the
Partnership to distribute cash and the reported failure of the
general partners of the Partnership to enforce the provisions of
the loan secured by the Reno, Nevada property. The defendants
have preliminarily agreed to enter into a Memorandum of
Understanding (the "MOU") settling this lawsuit. As currently
contemplated, the MOU (i) provides for an $8,000,000 payment by
the defendants to the Partnership and (ii) requires that the
Partnership distribute to its partners the $8,000,000 payment,
less fees and expenses awarded by the court to plaintiff's
counsel (which amount is not to exceed 20% of the settlement
amount), along with the $1,000,000 of the Partnership's cash
reserves. The MOU is subject to many conditions including
execution of a definitive settlement agreement, completion of
discovery by the plaintiffs and court approval of the settlement
following notice to limited partners. Accordingly, there can be
no assurance that the settlement will be consummated on the terms
currently contemplated or that the settlement will be consummated
at all.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
A. Exhibits: 27. Financial Data Schedule
B. Reports on Form 8-K: On August 2, 2000, the Registrant filed an
8-K to disclose the dismissal of its prior independent auditors.
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RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
FORM 10-Q SEPTEMBER 30, 2000
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
RESOURCES ACCRUED MORTGAGE INVESTORS 2, L.P.
BY: RAM Funding Inc.
----------------------------------------
Managing General Partner
BY: /s/ Michael L. Ashner
-----------------------------------
Michael L. Ashner
President and Director
(Principal Executive Officer)
BY: /s/ CAROLYN B. TIFFANY
-----------------------------------
Carolyn B. Tiffany
Vice President and Treasurer
(Principal Financial and Accounting Officer)
Dated: November 14, 2000
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