-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AEov3vmtTLogue3a/TM7F4VEmq/hfJtJF0LYS95bzafG7ghI5mzGc+s0l9lg+zTC HpvgN0xR/1xpe1nQXOJ8YQ== 0000711642-00-000142.txt : 20000516 0000711642-00-000142.hdr.sgml : 20000516 ACCESSION NUMBER: 0000711642-00-000142 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DAVIDSON DIVERSIFIED REAL ESTATE II LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000750258 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 621207077 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14483 FILM NUMBER: 630481 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8642391000 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 FORMER COMPANY: FORMER CONFORMED NAME: FREEMAN DIVERSIFIED REAL ESTATE II LP DATE OF NAME CHANGE: 19910501 10QSB 1 FIRST QUARTER OF 2000 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 [ ] 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 0-14483 Davidson Diversified Real Estate II, L.P. (Exact name of small business issuer as specified in its charter) Delaware 62-1207077 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 a) Davidson Diversified Real Estate II, L.P. CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 2000
Assets Cash and cash equivalents $ 1,472 Receivables and deposits, net of $196 for doubtful accounts 284 Restricted escrows 448 Other assets 422 Investment properties: Land $ 2,603 Buildings and related personal property 37,848 40,451 Less accumulated depreciation (21,900) 18,551 $ 21,177 Liabilities and Partners' Deficit Liabilities Accounts payable $ 215 Tenant security deposit liabilities 136 Accrued property taxes 587 Other liabilities 588 Due to Managing General Partner 880 Mortgage notes payable 23,943 Partners' Deficit General partners $ (538) Limited partners (1,224.25 units issued and outstanding) (4,634) (5,172) $ 21,177 See Accompanying Notes to Consolidated Financial Statements
b) Davidson Diversified Real Estate II, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 2000 1999 Revenues: (restated) Rental income $ 1,779 $ 1,933 Other income 112 136 Total revenues 1,891 2,069 Expenses: Operating 1,043 890 General and administrative 62 88 Depreciation 474 426 Interest 535 522 Property taxes 137 156 Total expenses 2,251 2,082 Loss from continuing operations (360) (13) Loss from discontinued operation -- (49) Net loss $ (360) $ (62) Net loss allocated to general partners (2%) $ (7) $ (1) Net loss allocated to limited partners (98%) (353) (61) $ (360) $ (62) Per limited partnership unit: Loss from continuing operations $(288.34) $ (10.62) Loss from discontinued operation -- (39.21) Net loss $(288.34) $ (49.83) See Accompanying Notes to Consolidated Financial Statements c) Davidson Diversified Real Estate II, L.P. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 1,224.25 $ 1 $24,485 $24,486 Partners' deficit at December 31, 1999 1,224.25 $ (531) $(4,281) $(4,812) Net loss for the three months ended March 31, 2000 -- (7) (353) (360) Partners' deficit at March 31, 2000 1,224.25 $ (538) $(4,634) $(5,172)
See Accompanying Notes to Consolidated Financial Statements d) Davidson Diversified Real Estate II, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2000 1999 Cash flows from operating activities: Net loss $ (360) $ (62) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 474 519 Amortization of discounts, loan costs and leasing commissions 55 59 Loss on disposal of property 19 -- Change in accounts: Receivables and deposits 296 141 Other assets (80) (56) Accounts payable (179) (81) Tenant security deposit liabilities (31) (2) Accrued property taxes (12) (37) Other liabilities (79) 87 Net cash provided by operating activities 103 568 Cash flows used in investing activities: Property improvements and replacements (287) (179) Net withdrawals from restricted escrows 64 15 Net cash used in investing activities (223) (164) Cash flows used in financing activities: Advances from Managing General Partner 378 -- Payments on mortgage notes payable (184) (195) Net cash provided by (used in) financing activities 194 (195) Net increase in cash and cash equivalents 74 209 Cash and cash equivalents at beginning of period 1,398 971 Cash and cash equivalents at end of period $ 1,472 $ 1,180 Supplemental disclosure of cash flow information: Cash paid for interest $ 460 $ 498 Supplemental disclosures of non-cash activity: At December 31, 1999, property improvements and replacements and accounts payable were both adjusted by approximately $91,000 for non-cash activity. See Accompanying Notes to Consolidated Financial Statements
e) Davidson Diversified Real Estate II, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Davidson Diversified Real Estate II, L.P. (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of Davidson Diversified Properties, Inc. (the "Managing General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999. Principles of Consolidation: The Registrant's financial statements include all the accounts of the Partnership and its four 99.9% owned partnerships. The Managing General Partner of the consolidated partnerships is Davidson Diversified Properties, Inc. Davidson Diversified Properties, Inc. may be removed as the general partner of the consolidated partnerships by the Registrant; therefore, the consolidated partnerships are controlled and consolidated by the Registrant. All significant interpartnership balances have been eliminated. Reclassifications: Certain reclassifications have been made to the 1999 balances to conform to the 2000 presentation. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the Managing General Partner. The Managing General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the Managing General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. The following amounts were paid or accrued to the Managing General Partner and its affiliates during the three months ended March 31, 2000 and 1999: 2000 1999 ---- ---- (in thousands) Property management fees (included in operating expenses) $ 97 $104 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) 48 61 Due to affiliates (included in other liabilities) 226 203 Due to Managing General Partner 880 -- During the three months ended March 31, 2000 and 1999, affiliates of the Managing General Partner were entitled to receive 5% of gross receipts from all of the Registrant's residential properties for providing property management services. The Registrant paid to such affiliates approximately $97,000 and $104,000 for the three months ended March 31, 2000 and 1999, respectively. An affiliate of the Managing General Partner was entitled to receive reimbursement of accountable administrative expenses amounting to approximately $48,000 and $61,000 for the three months ended March 31, 2000 and 1999, respectively. A portion of both the current fees and the prior year fees were not able to be paid due to the Partnership's cash flow. Accordingly, as of March 31, 2000, a liability of approximately $226,000 exists and is reflected in other liabilities. As of March 31, 2000 the Managing General Partner has loaned the Partnership approximately $880,000 to cover operational expenses required at Greensprings Manor Apartments. This loan was made in accordance with the terms of the Partnership Agreement. Interest is charged at the prime rate plus 1%. AIMCO and its affiliates currently own 467.25 limited partnership units in the Partnership representing 38.166% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the Managing General Partner because of their affiliation with the Managing General Partner. Note D - Discontinued Operations Shoppes at River Rock was the only commercial property owned by the Partnership and represented one segment of the Partnership's operations. Due to the sale of the property on December 30, 1999, the results of the commercial segment have been shown as loss from discontinued operation as of March 31, 2000 and 1999 and accordingly, the statements of operations have been restated to reflect this presentation. Revenues of this property were approximately $263,000 for the three months ended March 31, 1999 and loss from operations was approximately $49,000 for the same period. Note E - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consists of four apartment complexes located in Ohio, Kentucky, Tennessee, and Indiana. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. The commercial property segment consisted of a shopping center located in Tennessee, which was sold on December 30, 1999. As a result of the sale of the commercial property during 1999, the commercial segment is shown as discontinued operation. Measurement of segment profit and loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers. Segment information for the three months ended March 31, 2000 and 1999 is shown in the tables below. The "Other" column includes partnership administration related items and income and expense not allocated to the reportable segment (in thousands). 2000 Residential Other Totals Rental income $ 1,779 $ -- $ 1,779 Other income 106 6 112 Interest expense 530 5 535 Depreciation 474 -- 474 General and administrative expense -- 62 62 Segment loss (299) (61) (360) Total assets 20,247 930 21,177 Capital expenditures for investment properties 196 -- 196
1999 Residential Commercial Other Totals (discontinued 1999) Rental income $ 1,933 $ -- $ -- $ 1,933 Other income 132 -- 4 136 Interest expense 513 -- 9 522 Depreciation 426 -- -- 426 General and administrative expense -- -- 88 88 Loss from discontinued operations (49) -- (49) Segment profit (loss) 80 (49) (93) (62) Total assets 21,076 3,470 590 25,136 Capital expenditures for investment properties 171 8 -- 179
Note F - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operation. 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. The Partnership's investment properties consist of four apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 2000 and 1999: Average Occupancy 2000 1999 Big Walnut Apartments Columbus, Ohio 90% 91% LaFontenay I & II Apartments Louisville, Kentucky (1) 94% 91% The Trails Apartments Nashville, Tennessee 96% 94% Greensprings Manor Apartments Indianapolis, Indiana (2) 61% 94% (1) The Managing General Partner attributes the increase in occupancy at LaFontenay I & II Apartments to management's intensified marketing efforts as well as capital improvements to enhance the exterior of the property. (2) The Managing General Partner attributes the decrease in occupancy at Greensprings Manor Apartments to construction at the property. The property is currently undergoing a major renovation project to enhance the appearance of the property to attract additional tenants. Results of Operations The Registrant's net loss for the three months ended March 31, 2000, was approximately $360,000 compared to a net loss of approximately $62,000 for the three months ended March 31, 1999. The increase in net loss was due to a decrease in total revenues and an increase in total expenses. Total revenues decreased due to a decrease in rental income and other income. Rental income decreased primarily due to the decrease in occupancy at Greensprings Manor Apartments as discussed above. This decrease in rental income was partially offset by an increase in occupancy at two of Registrant's investment properties and an increase in average annual rental rates at all four of the properties. Other income decreased due to a decrease in late charges charged to tenants. Total expenses increased primarily due to an increase in operating and depreciation expenses which was partially offset by a decrease in property tax and general and administrative expenses. Operating expenses increased primarily due to an increase in security expenses at Greensprings Manor Apartments. Depreciation expense increased due to an increase in capital improvements which occurred in 1999. Property tax expense decreased due to a tax refund which was received from the taxing authorities for LaFontenay I & II Apartments during 2000. General and administrative expense decreased as a result of a decrease in general partner reimbursement fees. Also included in general and administrative expenses were costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement. As part of the ongoing business plan of the Partnership, the Managing General Partner monitors the rental market environment of the investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the Managing General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the Managing General Partner will be able to sustain such a plan. Liquidity and Capital Resources At March 31, 2000, the Partnership had cash and cash equivalents of approximately $1,472,000 as compared to approximately $1,180,000 at March 31, 1999. Cash and cash equivalents increased approximately $74,000 for the three months ended March 31, 2000 from the Partnership's year end, primarily due to approximately $103,000 of cash provided by operating activities and approximately $194,000 of cash provided by financing activities which was partially offset by approximately $223,000 of cash used in investing activities. Cash provided by financing activities consisted of advances from the Managing General Partner, which was partially offset by payments of principal made on the mortgages encumbering the Partnership's properties. Cash used in investing activities consisted of property improvements and replacements, partially offset by net withdrawals from escrow accounts maintained by the mortgage lender. The Partnership invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the various properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Big Walnut Apartments: The property has budgeted, but is not limited to, capital improvements of approximately $662,000 during the current year which consists of floor covering and appliance replacements, roof replacements, swimming pool improvements and other property enhancements. The Partnership has completed approximately $79,000 in capital expenditures at Big Walnut Apartments as of March 31, 2000 consisting primarily of parking lot and swimming pool improvements, electrical upgrades, and appliance and floor covering replacements. These improvements were funded primarily from property operations. LaFontenay I & II Apartments: The property has budgeted, but is not limited to, capital improvements of approximately $117,000 during the current year which consists of floor covering and appliance replacement, air conditioning and heating replacements. The Partnership has completed approximately $50,000 in capital expenditures at LaFontenay I & II Apartments as of March 31, 2000, consisting primarily of plumbing improvements appliances and floor covering replacements. These improvements were funded primarily from property operations. The Trails: The property has budgeted, but is not limited to, capital improvements of approximately $86,000 during the current year which consists of floor covering and appliance replacements, and air conditioning upgrades. The Partnership has completed approximately $35,000 in capital expenditures at The Trails Apartments as of March 31, 2000, consisting primarily of swimming pool improvements, and floor covering replacements. These improvements were funded primarily from property operations. Greensprings Manor: The property has budgeted, but is not limited to, capital improvements of approximately $190,000 during the current year which consists of floor covering and appliance replacements, cabinet replacements, and heating and air conditioning improvements. The Partnership has completed approximately $32,000 in capital expenditures at Greensprings Manor Apartments as of March 31, 2000, consisting primarily of floor covering replacements and appliances. These improvements were funded primarily from property operations. The property is also undergoing a major renovation project to improve the exterior and interior appearance of the property. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Registrant's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness of approximately $23,943,000, net of discount, is amortized over periods with required balloon payments ranging from November 15, 2002 to December 1, 2009. The Managing General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the property cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such property through foreclosure. No cash distributions were made during the three months ended March 31, 2000 or 1999. The Registrant's distribution policy is reviewed on a semi-annual basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancing and/or property sales. There can be no assurance, however, that the Registrant will generate sufficient funds from operations after planned capital expenditures to permit distributions to its partners in 2000 or subsequent periods. In addition, the Partnership may be restricted from making distributions if the amount in the reserve accounts for Big Walnut and Greensprings Manor Apartments is below $400 per unit or $333,000 in total. As of March 31, 2000, the account balances were approximately $172,000 for Big Walnut Apartments and $235,000 for Greensprings Manor Apartments. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the Managing General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia Financial Group, Inc. ("Insignia") and entities which were, at one time, affiliates of Insignia ("Insignia Affiliates") of interests in certain general partner entities, past tender offers by Insignia Affiliates to acquire limited partnership units, the management of partnerships by Insignia Affiliates and the Insignia Merger (see "Part 1 - Financial Information, Item 1. Financial Statements, Note B - Transfer of Control"). The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the Managing General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The Managing General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who own units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Superior Court of the State of California, County of San Mateo, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of class plaintiffs' counsel to enter the settlement. On December 14, 1999, the Managing General Partner and its affiliates terminated the proposed settlement. Certain plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in the action. The Managing General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: A Form 8-K dated December 30, 1999 was filed with the Securities and Exchange Commission on January 6, 2000, in connection with the sale of The Shoppes at River Rock. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DAVIDSON DIVERSIFIED REAL ESTATE II, L.P. By: Davidson Diversified Properties, Inc. Its Managing General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: May 10, 2000 EX-27 2 FIRST QUARTER 10-QSB
5 This schedule contains summary financial information extracted from Davidson Diversified Real Estate II 2000 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000750258 Davidson Diversified Real EstateII 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 1,472 0 284 0 0 0 40,451 21,900 21,177 0 23,943 0 0 0 (5,172) 0 0 1,891 0 0 2,251 0 535 0 0 0 0 0 0 (360) (288.34) 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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