SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[X] Revised Definitive Proxy Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

ILM II Lease Corporation
(Name of Registrant as Specified In Its Charter)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0.11.

1) Title of each class of securities to which transaction applies:

2) Aggregate number of securities to which transaction applies:

3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):

4) Proposed maximum aggregate value of transaction:

5) Total fee paid:

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

2) Form, Schedule or Registration Statement No.:

3) Filing Party:

4) Date Filed:

ILM II LEASE CORPORATION

Dear Shareholder:

May 29, 1998

You are cordially invited to attend the Annual Meeting of Shareholders
to be held on Tuesday, July 7, 1998 at 10:30 a.m. at The Waldorf-Astoria
Hotel, 301 Park Avenue, New York, New York 10022. The business to be conducted
at the meeting, which is set forth in the formal notice that follows, includes:

1. To elect three (3) directors to hold office until the 1999 Annual
Meeting;

2. To ratify the selection of Ernst & Young LLP as auditors of the
Company for the Fiscal Year ending August 31, 1998; and

3. To transact such other business as may properly come before the
Annual meeting or any adjournment or adjournments thereof.

Only shareholders of record at the close of business on May 29, 1998
will be entitled to notice of and to vote at the Annual Meeting or any
adjournment or adjournments thereof.

At the Annual Meeting, management will review Fiscal 1997, report on
recent financial results and discuss expectations for the future. Directors and
management will be available to answer any questions from the floor.

The Company relies upon all shareholders to promptly execute and return
their proxies in order to avoid costly proxy solicitation. Therefore, in order
to save the Company the unnecessary expense of further proxy solicitation, I ask
that you promptly sign and return the enclosed proxy card in the envelope
provided. If you attend the Annual Meeting, as we hope you do, you may withdraw
your proxy at the Annual Meeting, and vote your shares in person from the floor.
Your vote is important to the Company.

Sincerely,

ILM II LEASE CORPORATION

J. William Sharman, Jr.
President

May 29, 1998

LETTER TO SHAREHOLDERS,

NOTICE

and

PROXY STATEMENT

for the

ANNUAL MEETING

SHAREHOLDERS

July 7, 1998

ILM II LEASE CORPORATION
28 State Street
Suite 1100
Boston, MA 02109

ILM II LEASE CORPORATION

May 29, 1998

Notice of Annual Meeting of Shareholders

To be Held on Tuesday, July 7, 1998

The Annual Meeting of Shareholders of ILM II Lease Corporation will be held at
The Waldorf-Astoria Hotel, 301 Park Avenue, New York, New York 10022 on
Tuesday, July 7, 1998 at 10:30 a.m. for the following purposes:

1. To elect three (3) directors to hold office until the 1999 Annual
Meeting;

2. To ratify the selection of Ernst & Young LLP as auditors of the
Company for the Fiscal Year ending August 31, 1998; and

3. To transact such other business as may properly come before the
Annual meeting or any adjournment or adjournments thereof.

Only shareholders of record at the close of business on May 29, 1998 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment or
adjournments thereof.

The holders of shares of Common Stock of record at the close of business on May
29, 1998 are entitled to vote at the meeting. If you are present at the meeting,
you may vote in Person even though you have previously delivered your proxy.

By Order of the Board of Directors

Jeffry Dwyer
Secretary

WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW YOUR
PROXY AND VOTE IN PERSON.

ILM II LEASE CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS

May 29, 1998

General

The enclosed Proxy is solicited by and on behalf of the Board of
Directors of ILM II Lease Corporation (the "Company") for the Annual Meeting of
Shareholders to be held at The Waldorf-Astoria Hotel, 301 Park Avenue, New York,
New York 10022, at 10:30 a.m. on Tuesday, July 7, 1998 (the "Annual Meeting").
The Proxy may be revoked at any time prior to voting thereof by notifying the
persons named therein of intention to revoke or by conduct inconsistent with
continued effectiveness of the Proxy, such as delivery of a later dated Proxy or
appearance at the Annual Meeting and voting in person the shares to which the
Proxy relates. Shares represented by executed Proxies will be voted, unless a
different specification is made therein, FOR election to the Board of Directors
of the persons identified therein as nominees for director, and FOR each
proposition identified therein.

This Proxy Statement and the enclosed Proxy were mailed on or about
May 29, 1998 to shareholders of record at the close of business on May 29, 1998
(the "Record Date"). The Company has mailed each shareholder of record as of the
Record Date an Annual Report that includes audited financial statements for the
fiscal year ended August 31, 1997.

The Company has one class of securities, a voting common stock (the
"Common Stock"). The holders of a majority of the shares outstanding and
entitled to vote that are present at the Annual Meeting in person or represented
by proxies will constitute a quorum. The affirmative vote of a majority of the
shares represented at the Annual Meeting is required to elect a nominee to the
Board of Directors and to approve each other proposition identified in the Proxy
Statement. In the event that none of the nominees for Director are elected at
the Annual Meeting, the existing members of the Board of Directors will continue
to serve until their successors qualify as Directors. At the close of business
on the Record Date, the Company had 5,180,952 shares outstanding and entitled to
vote. Each share has one vote on all matters, including those to be acted upon
at the Annual Meeting.

The mailing address of the Company is c/o Investor Services Department,
P.O. Box 7090, Troy, MI 48007. Notices of revocation of Proxy should be sent to
that address. Questions concerning the Annual Meeting can be answered by calling
the Company's Investor Services Department, toll free, at 888-257-3550.

The Company will provide shareholders, without charge, a copy of the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended August 31, 1997, including the financial
statements and schedules thereto, on written request to Jeffry Dwyer, Secretary
of the Company, at the Company's mailing address: Investor Services Department,
P.O. Box 7090, Troy, MI 48007.

Ownership of Equity Securities

"Beneficial ownership" as used herein has been determined in accordance
with the rules and regulations of the Securities and Exchange Commission and is
not to be construed as an admission that any of such shares are in fact
beneficially owned by any person. As of the Record Date, there are no
shareholders known to the Company who own beneficially 5% or more of the
outstanding shares of the Company's Common Stock.

As of May 29, 1998, the following is the beneficial ownership of the
Directors and nominees for Director individually and for Directors and executive
officers of the Company as a group in the Company's Common Stock.

Amount and Nature
of Beneficial
Name and Address Title Ownership Percent of Class
- ----------------------------------- ------------------------------ -------------------- ----------------

J. William Sharman, Jr. President and Chief Executive None N/A
Officer, Director and Nominee
for Director

Lawrence A. Cohen Director 492 shares *

John B. Watts III Director None N/A

Jeffry R. Dwyer Secretary, Director and Nominee None N/A
for Director

Julien G. Redele Nominee for Director None N/A

Directors and Executive Officers
of Company as a group
492 shares *

*Less than one (1%) percent

Compliance With Exchange Act Filing Requirements

The Securities Exchange Act of 1934 requires the officers and Directors
of the Company, and persons who own more than ten percent of a registered class
of the Company's equity securities, to file certain reports of ownership and
changes in ownership with the Securities and Exchange Commission (the "SEC").
Officers, Directors and ten percent beneficial holders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely on its review of the copies of such forms received by it,
the Company believes that during the year ended August 31, 1997 all filing
requirements applicable to its officers, Directors and ten percent beneficial
holders were complied with.

Terms of Solicitation

D.F. King & Co., Inc. has been retained by the Company to assist in
soliciting proxies. It is anticipated that fees and expenses paid to D.F. King &
Co., Inc. in connection with this process will be approximately $5,000. The cost
of solicitation will be borne by the Company.

ELECTION OF DIRECTORS
(Proposal 1)

At the Annual Meeting three Directors are to be elected to the Board of
Directors, each to hold office until the next Annual Meeting of Shareholders and
until his successor is duly elected and qualified, except in the event of death,
resignation or removal. Unless otherwise specified, proxies solicited hereby
will be voted for the election; discretionary authority may be exercised to vote
for a substitute. No circumstances are presently known that would render any
nominee named herein unavailable. All of the nominees are existing members of
the Board of Directors.

Information Concerning Nominees

The nominees, their ages, the year of election of each to the Board of
the Company, their principal occupations during the past five years or more, and
Directorships of each in public companies in addition to the Company, are as
follows:

J. William Sharman, Jr. (age 58) is a Director of the Company and has
held such position since he was elected as of June 9, 1989. Mr. Sharman is also
a Director of ILM Senior Living, Inc., and ILM II Senior Living, Inc., and the
current President and a Director of ILM I Lease Corporation. Mr. Sharman is the
Chairman of the Board and President of Lancaster Hotels and Resorts, Inc., a
hotel management company, and Bayou Equities, Inc., a real estate development
company. Mr. Sharman served for ten years as Chairman of the Board and President
of the Lancaster Group, Inc., a real estate development firm based in Houston,
Texas. Mr. Sharman is also a Director of Small Luxury Hotels Ltd. of the United
Kingdom, an international hotel marketing and reservations firm. He has a
Bachelor of Science degree in Civil Engineering from the University of Notre
Dame.

Jeffry R. Dwyer (age 51) is a Director of the Company and has held such
position since he was elected as of June 9, 1989. Mr. Dwyer is also a Director
of ILM Senior Living, Inc., ILM II Senior Living, Inc., ILM I Lease Corporation
and ING U.S. - Residential Real Estate Investment Company, Inc. Mr. Dwyer has
been a shareholder of the law firm of Greenberg Traurig Hoffman Lipoff Rosen &
Quentel since 1997, and from 1993 to 1997 was a partner with the law firm of
Akin, Gump, Straus, Hauer & Feld, L.L.P., in the District of Columbia, which he
joined in 1993. Immediately prior to joining Akin, Gump, Straus, Hauer & Feld,
L.L.P, Mr. Dwyer was a partner with the law firm of Morrison & Foerster in the
District of Columbia from 1989 to 1993. Prior to joining Morrison & Foerster,
Mr. Dwyer was a partner with the law firm of Lane & Edson. Mr. Dwyer has written
several books on real estate financing and taught Real Estate Planning as an
Adjunct Professor at the Georgetown University Law Center.

Julien G. Redele (age 62) was appointed to fill a newly created seat on
the Company's Board of Directors as of December 5, 1996. Following the date of
the Annual Meeting, Mr. Redele will become Chairman of the Board, President and
Chief Executive Officer of the Company and of ILM I Lease Corporation. Mr.
Redele is one of the original founders of SFRE, Inc., a Dutch owned real estate
investment and development firm which has served since 1963 as advisor to Dutch
institutional, corporate and individual investors active in the United States.
Mr. Redele serves as a director of the Island Preservation Partnership. Mr.
Redele attended Westersingel Business School, Rotterdam, where he studied
economics, law and finance. Mr. Redele also presently serves as a director of
ILM Senior Living, Inc., and ILM II Senior Living, Inc., but he is not standing
for reelection as a Director of either of the Companies.

Board Meetings During Fiscal 1997

During fiscal 1997, the Board of Directors held eight meetings. No
Director attended less than 75% of the meetings of the Board.

Legal Proceedings

None of the Directors or officers of the Company are involved in legal
proceedings which are material to an evaluation of his or her ability or
integrity as a Director or officer other than that described below.

On July 29, 1996, the Company and ILM Holding, Inc. ("ILM Holding"), a
subsidiary of ILM II Senior Living, Inc. ("ILM 2") (collectively for this
discussion, with the Company and ILM Holding, the "Companies") terminated the
property management agreement ("Agreement") with Angeles Housing Concepts, Inc.
("AHC") covering the six senior housing facilities (the "Senior Housing
Facilities") then leased by the Companies. Such Agreement was terminated for
cause pursuant to Sections 1.05(a)(i), (iii) and (iv) of the Agreement.
Simultaneously with the termination of the Agreement, the Companies, together
with certain affiliated entities, filed suit against AHC in the United States
District Court for the Eastern District of Virginia for breach of contract,
breach of fiduciary duty and fraud (the "Virginia litigation"). In November
1996, AHC filed with the Virginia District Court an Answer in response to the
litigation initiated by the Companies and a Counterclaim against ILM Holding.
The Counterclaim alleges that the Agreement was wrongfully terminated for cause
and requested damages which include the payment of the termination fee in the
amount of $750,000, payment of management fees pursuant to the Agreement from
August 1, 1996 through October 15, 1996, which is the earliest date that the
Agreement could have been terminated without cause, and recovery of attorney's
fees and expenses. The aggregate amount of damages against all parties as
requested in AHC's Counterclaim exceeds $2,000,000. ILM 2 has guaranteed the
payment of the termination fee at issue in these proceedings to the extent that
any termination fee is deemed payable by the court and in the event that the
Company fails to perform pursuant to its obligations under the Agreement. On
June 13, 1997 and July 8, 1997, the court issued orders purporting to enter
judgment against ILM Senior Living, Inc. ("ILM 1") and ILM 2 in the amount of
$1,000,000 (the "Orders"). On July 10, 1997, the Company, ILM 2, Lease II and
ILM 1 filed a notice of appeal to the United States Court of Appeals for the
Fourth Circuit from the Orders.

On February 4, 1997, AHC filed a complaint in the Superior Court of the State of
California against Capital Senior Living, Inc., an affiliate of Capital Senior
Management 2, Inc. ("Capital"), the Company's property manager, Lawrence A.
Cohen, a director and the President and Chief Executive Officer of each of ILM 1
and ILM 2, and others alleging that the defendants intentionally interfered with
AHC's Agreement (the "California litigation"). The complaint sought damages of
at least $2,000,000. On March 4, 1997, the defendants moved the case to Federal
District Court in the Central District of California. At a Board meeting on
February 26, 1997, the Board of Directors of each of ILM 1 and ILM 2 concluded
that since all of Mr. Cohen's actions relating to the California litigation were
taken either on behalf of each of ILM 1 and ILM 2 under the direction of the
Board or as a Paine Webber employee, the Company or its affiliates should
indemnify Mr. Cohen with respect to any expenses arising from the California
litigation, subject to any insurance recoveries for those expenses. The Board of
each of ILM 1 and ILM 2 also concluded that, subject to certain conditions, each
of ILM 1 and ILM 2 or its affiliates should advance up to $20,000 to pay
reasonable legal fees and expenses incurred by Capital in the California
litigation. Subsequently, the boards of directors of the Company and Lease I
voted to increase the maximum amount of the advance to Capital to $100,000. By
the end of November 1997, Capital had incurred $100,000 of legal expenses in the
California litigation. On February 2, 1998, the amount to be advanced to Capital
was increased to include 75% of the California litigation legal fees and costs
incurred by Capital for December 1997 and January 1998, plus 75% of cash legal
fees and costs incurred by Capital thereafter, not to exceed $500,000. The
Company intends to vigorously defend its interests in the Virginia Litigation.

Related Transactions

Through June 18, 1997, and subject to the supervision of the Company's
Board of Directors, assistance with the management of the business of the
Company was provided by PaineWebber.

Under the advisory agreement, PaineWebber had specific management
responsibilities: to perform day-to-day operations of the Company and to act as
the investment advisor and consultant for the Company in connection with general
policy and investment decisions. PaineWebber received a fee in an amount equal
to 0.5% of the gross operating revenue of the facilities. PaineWebber earned
management fees totaling $58,000 and $66,000 for the years ended August 31, 1997
and 1996, respectively. PaineWebber was reimbursed for direct expenses relating
to the administration of the Company. PaineWebber performed certain accounting,
tax preparation, securities law compliance and investor communications and
relations services for the Company. Included in general and administrative
expenses for the year ended August 31, 1997 and 1996 are $59,000 and $55,000,
respectively, representing reimbursement to PaineWebber for providing such
services to the Company. The Company, ILM 1, ILM 2 and their affiliates accepted
the resignation of PaineWebber effective as of June 18, 1997. The Company, ILM
1, ILM 2 and their affiliates and PaineWebber entered into a transaction
services agreement pursuant to which PaineWebber would continue to provide
certain administrative services to the Company, ILM 1, ILM 2 and their
affiliates through August 31, 1997.

The Company retained Capital to be the manager of the senior housing
facilities leased by the Company from a subsidiary of ILM 2 (the "Senior Housing
Facilities") pursuant to a Management Agreement which commenced on July 29,
1996. In November 1996, Lawrence A. Cohen, a Director of the Company and
President, Chief Executive Officer and Director of ILM 1 and ILM 2 became Vice
Chairman and Chief Financial Officer of Capital Senior Living Corporation, an
affiliate of Capital. As a result, the Management Agreement with Capital is
considered a related party transaction. Under the terms of the Management
Agreement, Capital will earn a base management fee equal to 4% of the gross
operating revenues of the Senior Housing Facilities, as defined. Capital will
also be eligible to earn an incentive management fee equal to 25% of the amount
by which the average monthly net cash flow of the Senior Housing Facilities, as
defined, for the twelve month period ending on the last day of each calendar
month exceeds a specified base amount. Each August 31, beginning on August 31,
1997, the base amount will be increased annually based on the percentage
increase in the consumer price index. ILM 2 has guaranteed the payment of all
fees due to Capital under the terms of the Management Agreement. Capital earned
total management fees of $707,000 and $60,000 for the years ended August 31,
1997 and 1996, respectively. On September 18, 1997, the Company entered into an
agreement with Capital Senior Development, Inc., an affiliate of Capital, to
manage the Facilities. Capital Senior Development, Inc. will receive a fee equal
to 7% of the total development costs of these expansions if they are pursued.
ILM 2 will reimburse the Company for all costs related to these potential
expansions, including fees to Capital Senior Development, Inc. earned fees of
$90,318 for managing pre-construction development activities for potential
expansions of the Senior Housing Facilities.

Jeffry R. Dwyer is an employee of Greenberg Traurig Hoffman Lipoff
Rosen & Quentel, P.A., which acts as Counsel to the Company and its affiliates.
Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A., received fees from the
Company of $46,000 for the year ended August 31, 1997.

Each Director of the Company, other than Mr. Watts, is a Director of
ILM 2, the Company that, through its subsidiary, owns the Senior Housing
Facilities.

Board Committees

The Company has no standing committees of its Board of Directors.

Compensation of Directors and Executive Officers

The Company's Directors each receive an annual fee of $9,000 plus $500
for attending each board of directors meeting and reimbursement for expenses
incurred in attending meetings, and as a result of other work performed for the
Company. After the date of the Annual Meeting, all Directors will receive an
annual fee of $12,000, plus $500 for attending each Board of Directors meeting,
as well as reimbursement for expenses incurred in attending meetings and other
compensation as a result of other work performed for the Company. Officers of
the Company are not compensated. Despite an increase in annual Directors'
compensation from $9,000 to $12,000 per annum, by reducing the number of
Directors from four to three the Company has maintained aggregate Directors'
compensation at $36,000 per annum. At the same time, by eliminating one Director
the Company will save $500 in attendance fees per Board meeting, plus reduce its
expense reimbursements for meeting attendance. Lawrence A. Cohen, a Director of
the Company through the date of the Annual Meeting, is an employee of Capital
Senior Living Corporation, an affiliate of Capital. Jeffry R. Dwyer is an
employee of Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A., which acts
as Counsel to the Company. The former officers of the Company, who were also
officers of PaineWebber, received compensation from

PaineWebber which indirectly related to services to the Company, because the
Company was required to pay certain fees to PaineWebber as described in "Related
Transactions," above. When PaineWebber resigned as advisor to the Company, the
former officers resigned effective the same date. Therefore, no services have
been provided by such persons subsequent to June 18, 1997. Following the date of
the Annual Meeting, Julien Redele will become the President, Chief Executive
Officer and Chairman of the Board of the Company.

Comparative Stock Performance Graph

The following performance graph compares the cumulative total
shareholder return on the Company's ("ILM II Lease") stock for the period
commencing on November 30, 1995 and terminating on August 31, 1997 with the
cumulative total returns on the SIC Code Index for companies engaged in the same
line of business as the Company ("SIC Code Index") and the Standard and Poor's
500 Stock Index ("S&P 500") over the same period. The comparison assumes that
the value of the investments in common stock of ILM II Lease, SIC Code Index

and S&P 500 were $100 at November 30, 1995 and that all dividends were
reinvested; provided, no dividends have been declared and paid by the Company.
Historical comparisons are not necessarily indicative of future performance, as
ILM II Lease stock has had limited public trading to date. Due to such limited
trading history, in order to prepare the following performance graph, the values
of ILM II Lease stock used are based on appraisals of the value of ILM II Lease
stock prepared for the Company as of December 31, 1995 (used for the value at
November 30, 1995) and December 31, 1996 (used for the value at both August 31,
1996 and 1997). Such appraisals represent the values of cash reserves at the
instant dates plus the discounted then present values of anticipated earnings
after income taxes through the expected term of the Company's existence.

COMPARATIVE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG ILM II LEASE CORPORATION,
S&P 500 INDEX AND SIC CODE INDEX

[TABULAR REPRESENTATION OF CHART]

ASSUMES $100 INVESTED ON NOV. 30, 1995
ASSUMES DIVIDEND REINVESTED
FISCAL YEAR ENDING AUG. 31, 1997

--------------------------- --------------- ---------------- ----------------
1995 1996 1997
--------------------------- --------------- ---------------- ----------------

ILM II Lease 100.00 122.22 122.22
--------------------------- --------------- ---------------- ----------------
SIC Code 100.00 160.92 167.72
--------------------------- --------------- ---------------- ----------------
S&P 500 100.00 109.53 154.05
--------------------------- --------------- ---------------- ----------------

RATIFICATION OF AUDITORS
(Proposal 2)

The Board of Directors has designated Ernst & Young LLP as the
Company's independent auditors for fiscal 1998. This firm has audited the
Company's financial statements since the Company's inception. A representative
of Ernst & Young LLP is expected to be available during the meeting to respond
to appropriate questions.

Ernst & Young LLP's principal function is to audit the consolidated
financial statements of the Company and in connection with that audit to review
certain related filings with the Securities and Exchange Commission.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF RATIFICATION OF
THE DESIGNATION OF ERNST & YOUNG LLP AS THE COMPANY'S AUDITORS FOR THE FISCAL
YEAR ENDING AUGUST 31, 1998.

OTHER BUSINESS

While management of the Company does not know of any matters which may
be brought before the Meeting other than as set forth in the Notice of Meeting,
the Proxy confers discretionary authority with respect to the transaction of any
other business. It is expected that the proxies will be voted in support of
management on any question that may properly be submitted to the meeting.

MATTERS TO BE PRESENTED AT THE
1998 ANNUAL MEETING OF SHAREHOLDERS

Any qualified shareholder wishing to make a proposal to be acted upon
at the Annual Meeting of Shareholders in 1999 must submit such proposal, to be
considered by the Company for inclusion in the proxy statement, to the Company
at its principal office, 28 State Street, Suite 1100, Boston, MA 02109, by no
later than January 16, 1999.

OTHER MATTERS

As of the date of this statement, the management of the Company knows
of no matters other than those stated above likely to be brought before the
Annual Meeting. However, if any matters not now known come before the Annual
Meeting, the persons named in the enclosed proxy are expected to vote the shares
represented by such proxy on such matters in accordance with their best
judgment.

THE COMPANY DEPENDS UPON ALL SHAREHOLDERS PROMPTLY SIGNING AND RETURNING THE
ENCLOSED PROXY TO AVOID COSTLY SOLICITATION. YOU CAN SAVE THE COMPANY
CONSIDERABLE EXPENSE BY SIGNING AND RETURNING YOUR PROXY AT ONCE.

By Order of the Board of Directors

Jeffry Dwyer
Secretary

This Proxy is Solicited on Behalf of the Board of Directors of
ILM II LEASE CORPORATION
28 State Street, Suite 1100
Boston, MA 02109

The undersigned hereby appoints Jeffry Dwyer and J. William Sharman, Jr., or
either of them, with full power of substitution in each, Proxies, to vote all
shares of Common Stock of ILM II LEASE CORPORATION held of record by the
undersigned on May 29, 1998 at the Annual Meeting of Shareholders (the
"Meeting") to be held on July 7, 1998 at 10:30 a.m., or any continuation or
adjournment thereof.

1. ELECTION OF DIRECTORS

|_| FOR all nominees listed |_| WITHHOLD AUTHORITY
below (except as marked to to vote for all nominees
the contrary below) listed below

(Instruction: To withhold authority to vote for any individual nominee,
strike such nominee's name from the list below.)

JULIEN G. REDELE JEFFRY R. DWYER J. WILLIAM SHARMAN, JR.

2. RATIFICATION OF AUDITORS. For ratification of the designation of Ernst &
Young LLP as the Company's auditors for the fiscal year ending August 31, 1998.

|_| FOR |_| AGAINST |_| ABSTAIN

3. In their discretion the Proxies are authorized to vote upon such other
business, and matters incidental to the conduct of the Meeting, as may properly
come before the Meeting.

|_| FOR |_| AGAINST |_| ABSTAIN

THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE
VOTED FOR PROPOSAL 1 AND 2.

Dated:_______________________________________________________
PROXY NUMBER When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
SHARES guardian, please give full title as such. If a corporation,
please sign in full corporate name by the President or other
authorized officer. If a partnership please sign in
partnership name by authorized person.

Please sign exactly as name appears to the left

_____________________________________________________________
Signature

_____________________________________________________________
Signature if held jointly

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE, or send to ILM II Lease Corporation, Investor Services Department,
P.O. Box 7090, Troy, MI 48007