UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006.

OR

o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                               to                               .

Commission file no. 0-16190

DEL TACO RESTAURANT PROPERTIES II

a California limited partnership

(Exact name of registrant as specified in its charter)

California	33-0064245
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
25521 Commercentre Drive, Lake Forest, California	92630
(Address of principal executive offices)	(Zip Code)

(949) 462-9300

(Registrant’s telephone number, including area code)

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 þ  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer o     Accelerated filer o     Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No þ

INDEX

DEL TACO RESTAURANT PROPERTIES II

	PAGE NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at September 30, 2006 (Unaudited) and December 31, 2005		3
Condensed Statements of Income for the three and nine months ended September 30, 2006 and 2005 (Unaudited)		4
Condensed Statements of Cash Flows for the nine months ended September 30, 2006 and 2005 (Unaudited)		5
Notes to Condensed Financial Statements (Unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3. Quantitative and Qualitative Disclosures About Market Risk		12
Item 4. Controls and Procedures		12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports		13
SIGNATURE		14
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

DEL TACO RESTAURANT PROPERTIES II

CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2006			2005
	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash	$	199,404		$	198,980
Receivable from Del Taco LLC		49,732			56,703
Deposits		1,837			1,000
Total current assets		250,973			256,683
PROPERTY AND EQUIPMENT:
Land and improvements		1,806,006			1,806,006
Buildings and improvements		1,238,879			1,238,879
Machinery and equipment		898,950			898,950
		3,943,835			3,943,835
Less—accumulated depreciation		1,964,346			1,923,711
		1,979,489			2,020,124
	$	2,230,462		$	2,276,807
LIABILITIES AND PARTNERS’ EQUITY
CURRENT LIABILITIES:
Payable to limited partners	$	40,247		$	36,815
Accounts payable		10,385			10,511
Total current liabilities		50,632			47,326
PARTNERS’ EQUITY:
Limited partners; 27,006 units outstanding at September 30, 2006 and December 31, 2005		2,207,082			2,256,236
General partner-Del Taco LLC		(27,252	)		(26,755	)
		2,179,830			2,229,481
	$	2,230,462		$	2,276,807

See accompanying notes to condensed financial statements.

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DEL TACO RESTAURANT PROPERTIES II

CONDENSED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
RENTAL REVENUES	$	159,228	$	175,543	$	484,199	$	522,254
EXPENSES:
General and administrative		9,474		10,840		62,301		61,722
Depreciation		13,545		13,545		40,635		40,635
		23,019		24,385		102,936		102,357
Operating income		136,209		151,158		381,263		419,897
OTHER INCOME:
Interest		1,027		575		2,506		1,861
Other		450		200		1,075		1,400
Net income	$	137,686	$	151,933	$	384,844	$	423,158
Net income per limited partnership unit (note 2)	$	5.05	$	5.57	$	14.11	$	15.51
Number of units used in computing per unit amounts		27,006		27,006		27,006		27,006

See accompanying notes to condensed financial statements.

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DEL TACO RESTAURANT PROPERTIES II

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended
	September 30,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	384,844		$	423,158
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		40,635			40,635
Changes in operating assets and liabilities:
Receivable from Del Taco LLC		6,971			562
Deposits		(837	)		660
Payable to limited partners		3,432			(1,957	)
Accounts payable		(126	)		(4,034	)
Net cash provided by operating activities		434,919			459,024
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions to partners		(434,495	)		(450,146	)
Net increase in cash		424			8,878
Beginning cash balance		198,980			197,784
Ending cash balance	$	199,404		$	206,662

See accompanying notes to condensed financial statements.

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DEL TACO RESTAURANT PROPERTIES II

NOTES TO CONDENSED FINANCIAL STATEMENTS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

UNAUDITED

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements and should therefore be read in conjunction with the financial statements and notes thereto contained in the annual report on Form 10-K for the year ended December 31, 2005 for Del Taco Restaurant Properties II (the Partnership or the Company). In the opinion of management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Partnership’s financial position at September 30, 2006, the results of operations for the three and nine month periods ended September 30, 2006 and 2005 and cash flows for the nine month periods ended September 30, 2006 and 2005 have been included. Operating results for the three and nine months ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006.

NOTE 2 – NET INCOME PER LIMITED PARTNERSHIP UNIT

Net income per limited partnership unit is based on net income attributable to the limited partners (after 1% allocation to the general partner) using the weighted average number of units outstanding during the periods presented which amounted to 27,006 units in 2006 and 2005.

Pursuant to the partnership agreement, annual partnership income or loss is allocated one percent to Del Taco LLC (Del Taco or the General Partner), formerly known as Del Taco, Inc., and 99 percent to the limited partners. Partnership gains from any sale or refinancing will be allocated one percent to the General Partner and 99 percent to the limited partners until allocated gains and profits equal losses, distributions and syndication costs previously allocated. Additional gains will be allocated 15 percent to the General Partner and 85 percent to the limited partners.

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DEL TACO RESTAURANT PROPERTIES II

NOTES TO CONDENSED FINANCIAL STATEMENTS — CONTINUED

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

UNAUDITED

NOTE 3 — LEASING ACTIVITIES

The Partnership leases certain properties for operation of restaurants to Del Taco on a triple net basis. The leases are for terms of 35 years commencing with the completion of the restaurant facility located on each property and require monthly rentals equal to 12 percent of the gross sales of the restaurants. The leases terminate in the years 2021 to 2022. There is no minimum rental payments required under any of the leases.

For the three months ended September 30, 2006, the five restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $1,326,901 and unaudited net income of $26,665 as compared to $1,462,860 and $128,243, respectively, for the corresponding period in 2005. Del Taco net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the decrease in net income from the corresponding period of the prior year primarily relates to additional interest expense from the debt that was issued in connection with the acquisition of Del Taco
(see Note 7).

For the nine months ended September 30, 2006, the five restaurants operated by Del Taco, for which the Partnership is the lessor, had combined, unaudited sales of $4,034,991 and unaudited net income of $160,820 as compared to $4,352,115 and $383,726, respectively, for the corresponding period in 2005. Del Taco net income by restaurant includes charges for general and administrative expenses incurred in connection with supervision of restaurant operations and interest expense and the decrease in net income from the corresponding period of the prior year primarily relates to additional interest expense from the debt that was issued in connection with the acquisition of Del Taco (see Note 7).

NOTE 4 — TRANSACTIONS WITH DEL TACO

The receivable from Del Taco consists primarily of rent accrued for the month of September 2006. The September rent was collected in October 2006.

Del Taco serves in the capacity of general partner in other partnerships which are engaged in the business of operating restaurants and three other partnerships which were formed for the purpose of acquiring real property in California for construction of Mexican-American restaurants for lease under long-term agreements to Del Taco for operation under the Del Taco trade name.

In addition, see Note 5 with respect to certain distributions to the General Partner.

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DEL TACO RESTAURANT PROPERTIES II

NOTES TO CONDENSED FINANCIAL STATEMENTS — CONTINUED

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005

UNAUDITED

NOTE 5 — DISTRIBUTIONS

On October 24, 2006, a distribution to the limited partners of $152,615 or approximately $5.65 per limited partnership unit was approved. Such distribution was paid on October 31, 2006. The General Partner also received a distribution of $1,542 with respect to its 1% partnership interest. Total cash distributions paid in January, April and July 2006 were $157,165, $137,139 and $140,191, respectively.

NOTE 6 – PAYABLE TO LIMITED PARTNERS

Payable to limited partners represents a reclassification from cash for distribution checks made to limited partners that have remained outstanding for 6 months or longer.

NOTE 7 – CONCENTRATION OF RISK

The 5 restaurants leased to Del Taco make up all of the income producing assets of the Partnership and contributed all of the Partnership’s rental revenues during the three and nine months ended September 30, 2006 and 2005. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties.

NOTE 8 – ACQUISITION OF GENERAL PARTNER

On January 30, 2006, the parent company of the General Partner entered into an agreement to sell all of its issued and outstanding common stock to Sagittarius Acquisitions II, Inc. The transaction was consummated on March 29, 2006 and is not expected to have any impact on the financial position, results of operations or cash flows of the Partnership.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Liquidity and Capital Resources

Del Taco Restaurant Properties II (the Partnership or the Company) offered limited partnership units for sale between September 1984 and December 1985. In total, $6.751 million was raised through the sale of limited partnership units and used to acquire sites, build seven restaurants, pay commissions to brokers and to reimburse Del Taco LLC (the General Partner or Del Taco) for offering costs incurred. Two restaurants were sold in 1994.

The five restaurants leased to Del Taco make up all of the income producing assets of the Partnership. Therefore, the business of the Partnership is entirely dependent on the success of the Del Taco trade name restaurants that lease the properties. The success of the restaurants is dependent on a large variety of factors, including, but not limited to, competition, consumer demand and preference for fast food, in general, and for Mexican-American food in particular.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Results of Operations

The Partnership owned seven properties that were under long-term lease to Del Taco for restaurant operations. Two restaurants were sold in 1994 and five are currently operating.

The following table sets forth rental revenue earned by restaurant for the three and nine months ended September 30, 2006 and 2005:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2006		2005		2006		2005
Bear Valley Rd., Victorville, CA	$	28,670	$	32,414	$	87,700	$	95,095
West Valley Blvd., Colton, CA		35,969		39,862		106,222		122,716
Palmdale Blvd., Palmdale, CA		19,759		22,034		58,728		63,877
DeAnza Country Shopping Center, Pedley, CA		36,114		34,624		104,603		100,567
Varner Road, Thousand Palms, CA		38,716		46,609		126,946		139,999
Total	$	159,228	$	175,543	$	484,199	$	522,254

The Partnership receives rental revenues equal to 12 percent of gross sales from the restaurants. The Partnership earned rental revenue of $159,228 during the three month period ended September 30, 2006, which represents a decrease of $16,315 from the corresponding period in 2005. The Partnership earned rental revenue of $484,199 during the nine month period ended September 30, 2006, which represents a decrease of $38,055 from the corresponding period in 2005. The changes in rental revenues between 2006 and 2005 are directly attributable to changes in sales levels at the restaurants under lease due to local competitive and industry factors.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

The following table breaks down general and administrative expenses by type of expense:

	Percentage of Total
	General & Administrative Expense
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2006			2005			2006			2005
Accounting fees		57.59	%		54.38	%		70.41	%		69.63	%
Distribution of information to Limited Partners		42.41	%		45.62	%		29.59	%		30.37	%
		100.00	%		100.00	%		100.00	%		100.00	%

General and administrative costs for the three month period ended September 30, 2006 decreased from the corresponding period in the previous year due to decreased auditing and printing costs. General and administrative costs for the nine month period ended September 30, 2006 were essentially the same as the corresponding period in 2005.

For the three month period ended September 30, 2006, net income decreased $14,247 from 2005 to 2006 due to the decrease in revenues of $16,315, partially offset by the increase in interest and other income of $701 and the $1,367 decrease in general and administrative expenses. For the nine month period ended September 30, 2006, net income decreased by $38,314 from 2005 to 2006 due to a decrease in revenues of $38,055 and an increase in general and administrative expenses of $579, partially offset by the increase in interest and other income of $320.

Recent Accounting Pronouncements

None.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations, as well as disclosures included elsewhere in this report on Form 10-Q are based upon the Partnership’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. The Partnership believes the critical accounting policies that most impact the financial statements are described below. A summary of the significant accounting policies of the Partnership can be found in Note 1 to the Financial Statements which is included in the Partnership’s December 31, 2005 Form 10-K.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations - continued

Property and Equipment: Property and equipment is stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which are 20 years for land improvements, 35 years for buildings and improvements, and 10 years for machinery and equipment.

The Partnership accounts for property and equipment in accordance with Statement of Financial Accounting Standards No. (SFAS) 144, “Accounting for the Impairment or Disposal of Long Lived Assets.” SFAS 144 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. In evaluating long-lived assets held for use, an impairment loss is recognized if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying value of the asset. Once a determination has been made that an impairment loss should be recognized for long-lived assets, various assumptions and estimates are used to determine fair value including, among others, estimated costs of construction and development, recent sales of comparable properties and the opinions of fair value prepared by independent real estate appraisers. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

None.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures:

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s President and Treasurer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the President and Treasurer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’s periodic Securities and Exchange Commission filings.

(b) Changes in internal controls:

There were no significant changes in the Company’s internal controls over financial reporting that occurred during our most recent fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

(c) Asset-Backed issuers:

Not applicable

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PART II. OTHER INFORMATION

There is no information required to be reported for any items under Part II, except as follows:

Item 6. Exhibits and Reports

(a) Exhibits

31.1	Shirlene Lopez’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Steven L. Brake’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(b)	Reports
	None.

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SIGNATURE

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.

	DEL TACO RESTAURANT PROPERTIES II (a California limited partnership) Registrant Del Taco LLC General Partner
Date: November 13, 2006	/s/ Steven L. Brake
	Steven L. Brake
	Treasurer

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Exhibit Index

Exhibits	Description
31.1	Shirlene Lopez’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Steven L. Brake’s Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification pursuant to subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002