10-Q 1 a2028322z10-q.txt 10-Q UNITED STATES 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 25, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES --- EXCHANGE ACT OF 1934 Commission File Number 0-14941 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 13-3330195 -------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 625 MADISON AVENUE, NEW YORK, NEW YORK 10022 --------------------------------------- ------------ (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (212)421-5333 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 --- --- PART I - FINANCIAL INFORMATION Item 1. Financial Statements CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited)

============= ============= ~~June~~September 25, March 25, 2000 2000 ------------- ------------- ASSETS Property and equipment - net of accumulated depreciation of $2925,~~859~~971,~~257~~763 and $29,375,696, respectively $33 29,~~754~~123,~~256~~491 $ 34,237,818 Property and equipment held for sale - net of accumulated depreciation of $913,~~483~~841,~~002~~573 and $12,824,528, respectively 1418,~~706~~903,~~809~~401 18,695,807 Cash and cash equivalents 1,~~401~~766,~~715~~128 1,504,490 Cash - restricted for tenants' security deposits ~~410~~408,~~094~~964 435,137 Mortgage escrow deposits 2,~~005~~256,~~329~~021 1,961,983 Deferred costs, net of accumulated amortization of $~~473~~503,~~807~~454 and $453,237, respectively 1,~~360~~331,~~792~~145 1,441,913 Prepaid expenses and other assets ~~181~~863,~~512~~196 173,093 ------------- ------------- Total assets $53 54,~~820~~652,~~507~~346 $ 58,450,241 ============= =============

2 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (continued)

============= ============= ~~June~~September 25, March 25, 2000 2000 ------------- ------------- LIABILITIES AND PARTNERS' DEFICIT Liabilities Mortgage notes payable $ 66,~~172~~052,~~946~~854 $ 71,887,945 Accounts payable, accrued expenses and other liabilities 45,~~245~~610,~~251~~970 4,100,178 Tenants' security deposits payable ~~410~~408,~~094~~964 435,137 Due to general partners of subsidiaries and their affiliates ~~562~~527,~~541~~589 562,541 Due to general partners and affiliates 5,~~126~~232,~~446~~900 6,726,899 ------------ ------------ Total liabilities 7677,~~517~~833,~~278~~277 83,712,700 ------------ ------------ Minority interest 4,~~142~~047,~~409~~620 4,237,149 ------------ ------------ Commitments and contingencies (Note 4) Partners' deficit: Limited partners (26,~~253~~638,~~241~~719) (28,887,065) General partners (~~585~~589,~~939~~832) (612,543) ------------ ------------ Total partners' deficit (2627,~~839~~228,~~180~~551) (29,499,608) ------------ ------------ Total liabilities and partners' deficit $53 54,~~820~~652,~~507~~346 $ 58,450,241 ============ ============

See Accompanying Notes to Consolidated Financial Statements. 3 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited)

========================================= =================================== Three Months Ended ~~June~~Six Months Ended September 25, September 25, ----------------------------------------- ----------------------------------- 2000 1999* 2000 1999* ----------------------------------------- ----------------------------------- Revenues Rentals, net $3,~~532~~400,~~702~~537 $4,~~214~~255,~~677~~094 $ 6,933,239 $8,469,771 Other ~~130~~208,~~907~~166 ~~158~~255,~~600~~537 339,073 414,137 Gain on sale of property (Note 3) 0 0 2,951,106 0 ---------- ---------- ------------ ---------- Total revenues 63,~~614~~608,~~715~~703 4,~~373~~510,~~277~~631 10,223,418 8,883,908 ---------- ---------- ------------ ---------- Expenses Administrative and management ~~758~~717,~~019~~089 ~~793~~881,~~190~~059 1,475,108 1,674,249 Administrative and management- related parties (Note 2) ~~258~~231,~~267~~099 ~~325~~317,~~723~~238 489,366 642,961 Operating ~~228~~178,~~802~~659 ~~323~~286,~~947~~268 407,461 602,958 Repairs and maintenance ~~414~~679,~~130~~999 ~~524~~855,~~793~~406 1,094,129 1,387,456 Taxes and insurance ~~353~~324,~~265~~862 ~~454~~449,~~596~~342 678,127 903,938 Interest 1,~~415~~354,~~827~~452 1,~~736~~984,~~908~~390 2,770,279 3,721,298 Depreciation and amortization ~~513~~516,~~212~~198 ~~802~~852,~~517~~520 1,029,410 1,655,037 ---------- ---------- ------------ ---------- Total expenses 34,~~941~~002,~~522~~358 45,~~961~~626,~~674~~223 7,943,880 10,587,897 ---------- ---------- ~~Income~~------------ ---------- (~~loss~~Loss) income before minority interest (393,655) (1,115,592) 2,~~673~~279,~~193~~538 (~~588~~1,~~397~~703,989) Minority interest in loss (income) ~~loss~~ of subsidiaries 4,284 11,706 (128,~~765~~481) 113,~~879~~585 ---------- ---------- ------------ ---------- Net (loss) income $ (~~loss~~389,371) $2(1,~~660~~103,~~428~~886) $ 2,271,057 $(~~586~~1,~~518~~690,404) ========== =========== ============ ===========

*Reclassified for comparative purposes. See Accompanying Notes to Consolidated Financial Statements. 4 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statement of Changes in Partners' Deficit (Unaudited)

==============================================~~====~~ Limited General Total Partners Partners ----------------------------------------------~~----~~ Balance- March 26, 2000 $(29,499,608) $(28,887,065) $(612,543) Net income - ~~three~~six months ended ~~June~~September 25, 2000 2,~~660~~271,~~428~~057 2,~~633~~248,~~824~~346 2622,~~604~~711 ------------ ------------ --------- Balance- ~~June~~September 25, 2000 $(2627,~~839~~228,~~180~~551) $(26,~~253~~638,~~241~~719) $(~~585~~589,~~939~~832) ============ ============ =========

See Accompanying Notes to Consolidated Financial Statements. 5 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows (Decrease) Increase in Cash and Cash Equivalents (Unaudited) (continued)

============================== ~~Three~~Six Months Ended ~~June~~September 25, ------------------------------ 2000 1999 ------------------------------ Cash flows from operating activities: Net income (loss) $ 2,~~660~~271,~~428~~057 $ (~~586~~1,~~518~~690,404) ----------- ----------- Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Gain on sale of property (2,951,106) 0 Depreciation and amortization ~~513~~1,~~212~~029,410 ~~802~~1,~~517~~655,037 Minority interest in income (loss) of subsidiaries 128,~~765~~481 (113,~~879~~585) Decrease in cash-restricted for tenants' security deposits 2526,~~043~~173 1621,~~613~~957 (Increase) decrease in mortgage escrow deposits (~~139~~328,~~863~~467) ~~196~~163,~~365~~226 Increase in prepaid expenses and other assets (24706,~~690~~374) (~~300~~303,~~176~~300) Increase ~~(decrease)~~ in accounts payable, accrued expenses and other liabilities ~~213~~1,~~091~~595,597 ~~(209~~53,~~222)~~552 Decrease in tenants' security deposits payable (34,~~598~~728) (1621,~~613~~957) ~~Increase~~Decrease in due to general partners of subsidiaries and their affiliates 0(34,952) 9(47,~~928~~685) (Decrease) increase in due to general partners and affiliates (1,~~600~~493,~~453~~999) ~~306~~735,~~822~~139 ----------- ----------- Total adjustments (32,~~955~~859,~~599~~965) ~~804~~2,~~355~~242,384 ----------- ----------- Net cash (used in) provided by operating activities (1588,~~295,171~~908) ~~217~~551,~~837~~980 ----------- ----------

6 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows (Decrease) Increase in Cash and Cash Equivalents (Unaudited) (continued)

============================== ~~Three~~Six Months Ended ~~June~~September 25, ------------------------------ 2000 1999 ------------------------------ Cash flows from investing activities: Net proceeds from the sale of property 1,638,742 0 Increase in mortgage reserve deposits (163,~~728~~816) (~~36,570~~744) ~~Acquisitions~~Acquisition of property and equipment (~~793~~69,958) (1131,~~444~~022) ----------- ---------- Net cash provided by (used in) investing activities 1,~~636~~504,~~221~~968 (38131,~~014~~766) ----------- ---------- Cash flows from financing activities: Principal payments of mortgage notes payable (~~336~~456,~~320~~412) (~~132~~260,~~649~~449) Decrease in capitalization of consolidated subsidiaries attributable to minority interest (~~107~~198,~~505~~010) (3196,~~092~~348) Increase in deferred costs 0 (24,661) ----------- ---------- Net cash used in financing activities (~~443~~654,~~825~~422) (~~188~~381,~~402~~458) ----------- ---------- Net ~~decrease~~increase in cash and cash equivalents ~~(102~~261,~~775)~~638 (838,~~579)~~756 Cash and cash equivalents- beginning of period 1,504,490 1,449,846 ----------- ---------- Cash and cash equivalents- end of period $1,~~401~~766,~~715~~128 $1,~~441~~488,~~267~~602 ========== ==========

7 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Consolidated Statements of Cash Flows (Decrease) Increase in Cash and Cash Equivalents (Unaudited) (continued)

============================== ~~Three~~Six Months Ended ~~June~~September 25, ------------------------------ 2000 1999 ------------------------------ Supplemental disclosure of non cash activities: Summarized below are the components of the gain on sale of property: Decrease in property and equipment, net of accumulated depreciation $ 34,~~989~~006,~~796~~580 $ 0 Decrease in mortgage escrow deposits 98,245 0 Decrease in deferred costs 51,469 0 Decrease in accounts payable, accrued expenses and other liabilities (84,805) 0 Decrease in prepaid expenses and other assets 16,271 0 Decrease in tenants' security deposits payable (21,445) 0 Decrease in mortgage notes payable (5,378,679) 0 ~~Decrease in due to general partners and affiliates (68,018) 0~~

See Accompanying Notes to Consolidated Financial Statements. 8 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) Note 1 - General The consolidated financial statements for the six months ended September 25, 2000 include the accounts of Cambridge Advantaged Properties II Limited Partnership (the "Partnership") and eight subsidiary partnerships ("subsidiaries", "subsidiary partnerships" or "Local Partnerships") one of which only has activity through the date of sale of its property and the related assets and liabilities. The consolidated financial statements for the six months ended September 25, 2000 include the accounts of the Partnership and ten subsidiary partnerships. The Partnership is a limited partner, with an ownership interest of 98% in each of the subsidiary partnerships. Through the rights of the Partnership and/or one of its general partners (a "General Partner"), which General Partner has a contractual obligation to act on behalf of the Partnership, to remove the general partner of the subsidiary partnerships (the "Local General Partners") and to approve certain major operating and financial decisions, the Partnership has a controlling financial interest in the subsidiary partnerships. For financial reporting purposes, the Partnership's fiscal quarter ends September 25. All subsidiaries have fiscal quarters ending June 30. Accounts of the subsidiary partnerships have been adjusted for intercompany transactions from July 1 through September 25. The Partnership's fiscal quarter ends on September 25 in order to allow adequate time for the subsidiaries' financial statements to be prepared and consolidated. The books and records of the Partnership are maintained on the accrual basis of accounting, in accordance with generally accepted accounting principles ("GAAP"). All intercompany accounts and transactions have been eliminated in consolidation. Increases (decreases) in the capitalization of consolidated subsidiaries attributable to minority interest arise from cash contributions and cash distributions to the minority interest partners. 9 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) The Partnership's investment in each subsidiary is equal to the respective subsidiary's partners' equity less minority interest capital, if any. Losses attributable to minority interests which exceed the minority interests' investment in a subsidiary have been charged to the Partnership. Such losses aggregated approximately $1,000 and $7,000 and $1,000 and $13,000 for the three and six months ended September 25, 2000 and 1999, respectively. In consolidation, all subsidiary partnership losses are included in the Partnership's capital account except for losses allocated to minority interest capital. The unaudited financial statements have been prepared on the same basis as the audited financial statements included in the Partnership's Form 10-K for the year ended March 25, 2000. In the opinion of the General Partners, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary to present fairly the financial position of the Partnership as of September 25, 2000, the results of operations for the three and six months ended September 25, 2000 and 1999 and cash flows for the six months ended September 25, 2000 and 1999, respectively. However, the operating results for the six months ended September 25, 2000 may not be indicative of the results for the year. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been omitted. It is suggested that these consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Partnership's March 25, 2000 Annual Report on Form 10-K. Note 2 - Related Party Transactions One of the General Partners of the Partnership, Related and Cambridge Associates Limited Partnership ("Related and Cambridge Associates"), has a 1% interest as a special limited partner in each of the subsidiary partnerships. Whitney Management Corp., which was an affiliate of the Related General Partner through October 1997, is the managing agent of three properties. 10 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) Fees incurred to related parties for the three and six months ended September 25, 2000 and 1999 were as follows:

~~Fees~~Three ~~incurred~~Months toEnded ~~related~~Six ~~parties~~Months ~~for~~Ended ~~the~~September ~~three months ended June~~ 25, ~~2000~~September ~~and 1999 were as follows: ======================= Three Months Ended June~~ 25, -------------------------- ----------------------- 2000 1999* 2000 1999* -------------------------- ----------------------- Partnership ~~management~~manage- ment fees (a) $~~128~~ 86,750 $161,000 $215,500 $322,000 Expense ~~reimbursement~~reimburse- ment (b) 2235,~~084~~331 2314,000 57,415 37,925 Property ~~management~~manage- ment fees incurred to affiliates of the General Partners (c) 4143,~~270~~274 7779,~~983~~691 84,544 157,674 Local ~~administrative~~administra- tive fee (d) 2,000 2,000 4,000 4,000 --------- --------- -------- -------- Total general and administrative- General Partners ~~194~~167,~~104~~355 ~~264~~256,~~908~~691 361,459 521,599 --------- --------- -------- -------- Property ~~management~~manage- ment fees incurred to affiliates of the subsidiary partnerships' general partners (c) 6463,~~163~~744 60,~~815~~547 127,907 121,362 --------- --------- -------- -------- Total general and administrative- related parties $~~258~~231,~~267~~099 $~~325~~317,~~723~~238 $489,366 $642,961 ========= ========= *Reclassified======== ~~for comparative purposes.~~========

*Reclassified for comparative purposes. (a) After all other expenses of the Partnership are paid, an annual partnership management fee of up to .5% of invested assets is payable to the Partnership's General Partners and affiliates. Partnership management fees have been charged to operations and are included in administrative and management-related parties expenses. Partnership management fees owed to the General Partners amounting to approximately $3,217,000 and $3,002,000 were accrued and unpaid as of September 25, 2000 and March 25, 2000, respectively. Without the General Partners' advances and continued accrual without payment of certain fees and expense reim- 11 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) bursements, the Partnership will not be in the position to meet its obligations. The General Partners have continued advancing and allowing the accrual without payment of these amounts, but are under no obligation to do so. (b) An affiliate of Related Advantaged Residential Associates, Inc. (the "Related General Partner") performs services for the Partnership which include, but are not limited to: accounting and financing management, registrar, transfer and assignment functions, asset management, investor communications, printing and other administrative services. The amount of reimbursement from the Partnership is limited by the provisions of the Partnership Agreement. Another affiliate of the Related General Partner performs asset monitoring for the Partnership. These services include site visits and evaluations of the subsidiary partnerships' performance. Expense reimbursements and asset monitoring fees owed to the Related General Partner amounting to approximately $68,000 and $743,000 were accrued and unpaid as of September 25, 2000 and March 25, 2000, respectively. (c) Property management fees paid by subsidiary partnerships amounted to $166,984 and $205,811 and $344,510 and $417,504 for the three and six months ended September 25, 2000 and 1999, respectively. Of these fees $107,018 and $140,238 and $212,451 and $279,036 were incurred to affiliates of the Local General Partners. Of such amounts incurred to affiliates of the Local General Partners, $43,274 and $79,691 and $84,544 and $157,674 were also incurred to affiliates of the General Partners. (d) Related and Cambridge Associates, a limited partner of the subsidiary partnerships, is entitled to receive a local administrative fee of up to $2,500 per year from each subsidiary partnership. Note 3 - Sale of Properties GENERAL The Partnership is currently in the process of winding up its operations and disposing of its investments. It is anticipated that this process will take a number of years. As of September 25, 2000, the Partnership has disposed of six of its twelve original investments. 12 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) Four additional investments are listed for sale and the General Partner anticipates that the two remaining investments will be listed for sale by December 31, 2001. There can be no assurance as to when the Partnership will dispose of its last remaining investments or the amount of proceeds which may be received. However, based on the historical operating results of the Local Partnership and the current economic conditions including changes in tax laws, it is unlikely that the proceeds from such sales will be sufficient to return the limited partners original investment. INFORMATION REGARDING DISPOSITION BROOKWOOD APARTMENTS, L.P. ("BROOKWOOD") On March 24, 2000, the property and related assets and liabilities of Brookwood were sold to an unaffiliated third party for $7,300,000 inclusive of the mortgage assumption, resulting in a gain of approximately $2,951,000. For tax purposes, the entire gain to be realized by the Partnership is anticipated to be approximately $6,118,000. APPLE CREEK ASSOCIATES OF DENTON, LTD. ("APPLE CREEK") On July 7, 2000, Apple Creek's mortgage loan was refinanced in the principal amount of $7,250,000, at an interest rate of 8.15% and a maturity date of July 2010. In addition, on July 28, 2000, the property and related assets and liabilities of Apple Creek were sold to an unaffiliated third party purchaser for $9,100,000 inclusive of a note payable to the Partnership in the amount of $700,000, resulting in a gain of approximately $6,000,000. For tax purposes, the entire gain to be realized by the Partnership is anticipated to be approximately $9,200,000. TRIANGLE/OAKS LIMITED PARTNERSHIP ("TRIANGLE/OAKS") On July 11, 2000, Triangle/Oaks entered into a letter of intent to sell the property and related assets and liabilities to an unaffiliated third party purchaser for a price of approximately $22,400,000. On October 20, 2000, Triangle/Oaks entered into a contract with the unaffiliated third party purchaser for a reduced sales price of $20,550,000. The price reduction was due to termite damage to the property. No assurances can be given that the sale will actually occur. 13 CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP AND SUBSIDIARIES Notes to Consolidated Financial Statements September 25, 2000 (Unaudited) SUNCREEK - 268 LTD. (SUNCREEK") On July 13, 2000, Suncreek entered into a letter of intent to sell the property and the related assets and liabilities to an unaffiliated third party for a purchase price of $13,400,000. On September 15, 2000, the letter of intent was cancelled and the property was placed back on the market. WOODRIDGE, LTD. ("WOODRIGE") On September 8, 2000, Woodridge entered into a letter of intent to sell the property and the related assets and liabilities to an unaffiliated third party for a purchase price of $11,850,000. The closing is expected to occur in late 2000. No assurances can be given that the closing will actually occur. Note 4 - Commitments and Contingencies There were no material changes and/or additions to disclosures regarding the subsidiary partnerships which were included in the Partnership's Annual Report on Form 10-K for the period ended March 25, 2000. 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations LIQUIDITY AND CAPITAL RESOURCES The Partnership's primary sources of funds are the cash distributions from operations and cash distributions from sales of the Local Partnerships in which the Partnership has invested. These sources are available to meet the obligations of the Partnership. However, the cash distributions received from the Local Partnerships to date have not been sufficient to meet all such obligations of the Partnership. During the six months ended September 25, 2000 and 1999, such distributions amounted to approximately $2,055,000 and $137,000, respectively. Accordingly, the Related General Partner advanced funds to meet the Partnership's third party obligations with remaining unpaid balances due to the Related General Partner totaling approximately $1,956,000 and $2,950,000 at September 25, 2000 and March 25, 2000, respectively. In addition, certain fees and expense reimbursements owed to the General Partners amounting to approximately $3,286,000 and $3,745,000 were accrued and unpaid as of September 25, 2000 and March 25, 2000, respectively. Without the General Partners' adpvances and continued accrual without payment of certain fees and expense reimbursements, the Partnership will not be in the position to meet its obligations. The General Partners have continued advancing and allowing the accrual without payment of these amounts but they are under no obligation to do so. Proceeds received by the Partnership from future sales will be used to pay current operating expenses and then any outstanding amounts due to the General Partners. During the six months ended September 25, 2000, cash and cash equivalents of the Partnership and its eight consolidated Local Partnerships increased approximately $262,000. This increase was attributable to the net proceeds from the sale of property ($1,639,000) which exceeded cash flow used in operating activities ($589,000), a decrease in capitalization of consolidated subsidiaries attributable to minority interest ($198,000), principal payments of mortgage notes payable ($456,000), acquisition of property and equipment ($70,000) and an increase in mortgage reserve deposits ($64,000). Included in the adjustments to reconcile the net income to cash flow used in operating activities is gain on sale of property ($2,951,000) and depreciation and amortization ($1,029,000). 15 For a discussion of contingencies affecting certain Local Partnerships, see Note 4 to the financial statements. Management is not aware of any trends or events, commitments or uncertainties, which have not otherwise been disclosed, that will or are likely to impact liquidity in a material way. Management believes the only impact would be from laws that have not yet been adopted. The portfolio is diversified by the location of the properties around the United States so that if one area of the United States is experiencing downturns in the economy, the remaining properties in the portfolio may be experiencing upswings. However, the geographic diversification of the portfolio may not protect against a general downturn in the national economy. RESULTS OF OPERATIONS The results of operations of the Partnership, as well as the Local Partnerships, remained fairly consistent during the three and six months ended September 25, 2000 and 1999, excluding Player's Club at Fort Myers, Ltd., Suntree at Fort Myers, Ltd., and Brookwood which sold their respective properties and related assets and liabilities (collectively the "Sold Assets"). Contributing to the relatively stable operations at the Local Partnerships is the fact that a large portion of the Local Partnerships are operating under government assistance programs which provide for rental subsidies and/or reductions of mortgage interest payments. The Partnership's primary source of income continues to be its portion of the Local Partnerships' operating results. The majority of Local Partnership income continues to be in the form of rental income with the corresponding expenses being divided among operations, depreciation, and mortgage interest. Rental income decreased approximately 20% and 18% for the three and six months ended September 25, 2000 as compared to 1999. Excluding the Sold Assets, rental income increased approximately 6% and 4% for the three and six months ended September 25, 2000 as compared to 1999, primarily due to rental rate increases. Total expenses, excluding the operations for the Sold Assets and the categories of administrative and management and administrative and management-related parties, operating and repairs and maintenance remained fairly consistent with a decrease of 4% and an increase of less than 1% for the three and six months ended September 25, 2000 as compared to 1999. 16 Administrative and management decreased approximately 19% and 12% for the three and six months ended September 25, 2000 as compared to 1999. Excluding the Sold Assets, administrative and management increased approximately $83,000 and $169,000 for the three and six months ended September 25, 2000 and 1999, primarily due to an increase in employee benefits, postage, telephone and cable fees at one Local Partnership as well as small increases at three other Local Partnerships. Administrative and management-related parties decreased approximately 27% and 24% for the three and six months ended September 25, 2000 as compared to 1999. Excluding the Sold Assets, administrative and management-related parties decreased approximately $49,000 and $80,000, primarily due to a decrease in Partnership management fees due to the sales of the Local Partnerships. Operating decreased approximately 38% and 32% for the three and six months ended September 25, 2000 as compared to 1999. Excluding the Sold Assets, operating expenses decreased approximately $33,000 and $41,000, due to a decrease in water and sewer usage at two Local Partnerships. Repairs and maintenance decreased approximately 21% for both the three and six months ended September 25, 2000 as compared to 1999. Excluding the Sold Assets, repairs and maintenance increased approximately $172,000 and $191,000, primarily due to repairs on building exteriors, concrete work, common area painting and rehabilitation of transferred and neglected units. Taxes and insurance, interest and depreciation and amortization decreased approximately $124,000 and $226,000, $630,000 and $951,000, $336,000 and $626,000, respectively, for the three and six months ended September 25, 2000 as compared to 1999, primarily due to decreases relating to the Sold Assets. Excluding the Sold Assets, taxes and insurance and interest increased (decreased) approximately $12,000 and $18,000, ($121,000) and ($36,000), respectively. Excluding the Sold Assets and Triangle/Oaks Limited Partnership for depreciation and amortization only, depreciation and amortization expense remained fairly consistent with an increase of approximately $13,000 and $22,000 for the three and six months ended September 25, 2000 as compared to 1999. Triangle/Oaks Limited Partnership is not depreciated during the period because it is classified as an asset held for sale. 17 Item 3. Quantitative and Qualitative Disclosures about Market Risk None 18 PART II - OTHER INFORMATION Item 1. Legal Proceedings - None Item 2. Changes in Securities and Use of Proceeds - None Item 3. Defaults Upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other information - None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: 27 Financial Data Schedule (filed herewith). (b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter. 19 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. CAMBRIDGE ADVANTAGED PROPERTIES II LIMITED PARTNERSHIP (Registrant) By: RELATED ADVANTAGED RESIDENTIAL ASSOCIATES, INC., a General Partner Date: October 20, 2000 By: /s/ Alan P. Hirmes ------------------- Alan P. Hirmes, President (principal executive and financial officer) Date: October 20, 2000 By: /s/ Glenn F. Hopps ------------------ Glenn F. Hopps, Treasurer (principal accounting officer) By: RELATED AND CAMBRIDGE ASSOCIATES, LIMITED PARTNERSHIP, a General Partner By: Related Advantaged Residential Associates, Inc., its General Partner Date: October 20, 2000 By: /s/ Alan P. Hirmes ------------------- Alan P. Hirmes, Senior Vice President (principal executive and financial officer) Date: October 20, 2000 By: /s/ Glenn F. Hopps ------------------- Glenn F. Hopps, Treasurer (principal accounting officer)

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