<PAGE>
 
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

             [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 1998

                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
              For the transition period from ________ to ________.

                         Commission File Number 0-18149

                     DEAN WITTER REALTY YIELD PLUS II, L.P.
                     --------------------------------------
         (Exact name of registrant as specified in governing instrument)

       Delaware                                          13-3469111           
-----------------------                      ---------------------------------
(State of organization)                      (IRS Employer Identification No.)

   2 World Trade Center, New York, NY                               10048   
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code:  (212) 392-1054
                                                     --------------
Securities registered pursuant to Section 12(b) of the Act:

Title of each class                  Name of each exchange on which registered
-------------------                  -----------------------------------------

     None                                                 None

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
                      -------------------------------------
                                (Title of Class)

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
                                       ---      ---

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant. N/A

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None
<PAGE>
 
                                     PART I.


ITEM 1.  BUSINESS
------   --------

The Registrant, Dean Witter Realty Yield Plus II, L.P. (the "Partnership"), is a
limited partnership formed in February 1988 under the laws of the State of
Delaware for the purpose of investing in income- producing commercial and
industrial properties.

The Managing General Partner of the Partnership is Dean Witter Realty Yield Plus
II Inc. (the "Managing General Partner"), a Delaware corporation which is
wholly-owned by Dean Witter Realty Inc. ("Realty"). The Associate General
Partner is Dean Witter Realty Yield Plus Associates II, L.P. (the "Associate
General Partner"), a Delaware limited partnership, the general partner of which
is the Managing General Partner. The Managing General Partner manages and
controls all aspects of the business of the Partnership. The terms of
transactions between the Partnership and its affiliates are set forth below in
the financial statements in Item 8 and in Item 13.

The Partnership issued 173,164 units of limited partnership interest (the
"Units") for $86,582,000. The offering has been terminated and no additional
Units will be sold.

The proceeds from the offering were used to make investments in three
participating mortgage loans and land leases secured by interests in real
property. The Partnership subsequently acquired equity interests in the real
estate securing all of the loans through foreclosure or transfers of ownership
in lieu of foreclosure. All property interests but one were sold in 1998. The
Partnership's remaining property interest is described in Item 2 below.

The One Congress Street building, the Partnership's remaining property interest,
is currently being marketed for sale, with the objective of completing such sale
in 1999. There can be no assurance that this property will be sold.

The Partnership considers its business to include one industry segment,
investment in real property. Financial information regarding the Partnership is
in the Partnership's financial statements in Item 8 below.
<PAGE>
 
The One Congress Street property is subject to competition from similar
properties in the vicinity in which it is located. Further information regarding
competition and market conditions is set forth in Item 7 below.

The Partnership has no employees.

All of the Partnership's business is conducted in the United States.

ITEM 2.  PROPERTIES
------   ----------

The Partnership's principal offices are located at Two World Trade Center, New
York, New York 10048. The Partnership has no other offices.

As of December 31, 1998, the Partnership owned a 42% general partnership
interest in GCGA Limited Partnership ("GCGA"), the owner of the One Congress
Street building. Dean Witter Realty Yield Plus, L.P. ("Yield Plus"), an
affiliate of the Partnership, owns the remaining 58% general partnership
interest. Yield Plus and the Partnership jointly made a $59.2 million
participating second mortgage loan to GCGA in 1990; the Partnership's share of
this mortgage loan was approximately $24.9 million. In 1996, GCGA filed for
bankruptcy protection, and in 1997, GCGA entered into a settlement agreement in
which Yield Plus and the Partnership acquired GCGA's equity interests in the
property. Yield Plus and the Partnership recorded these property interests at
$19.5 million and $13.9 million, respectively, the net carrying value of the
loan at the acquisition date (which was lower than the estimated fair value of
the property). The property, which includes an income-producing parking garage,
is located in Boston, MA. The office building has a net rentable area of 283,000
square feet, including 37,000 square feet of retail space. The property is
subject to a first mortgage loan.

The largest office tenant at the One Congress Street building is the Government
Service Administration ("GSA"). In 1998 GSA occupied an average of 69% of the
property's office space, and at December 31, 1998, GSA occupied 82% of the
space.

GSA's lease expires on July 31, 2006; however, after July 31, 2003, GSA has a
one-time option to terminate its lease on all or a portion of its space. The
lease does not include any renewal options. GSA's 1998 rent per annum was
approximately $31.85 per square foot, and will increase periodically to a
maximum of $47.34 per square foot, beginning in August 2005.

During the fourth quarter of 1998, the remaining office space at the One
Congress Street building was leased to the Commonwealth of Massachusetts
<PAGE>
 
for a five year period beginning in January 1999. The 1999 rent per annum from
this lease will be approximately $38.22 per square foot, and will increase
annually to a maximum of $40.22 per square foot in 2003.

All of the parking space is leased to Kinney Systems Inc. through December 31,
2003, subject to two successive five year renewal options at market rental rates
(but in no event less than 105% of the rent payable in 2003). The 1998 rent per
annum on this lease was approximately $4,036,000, and rents will increase
annually to a maximum rent per annum of $4,498,000 in 2003.

In 1998, GSA also leased approximately 19% of the retail space at the property;
however, the retail space, which is not a significant portion of the overall
space, remains substantially vacant.

The One Congress Street property is managed by an affiliate of the original
general partner of GCGA.

Generally, the leases pertaining to the property provide for pass-throughs to
the tenants of their pro-rata share of certain operating expenses. In the
opinion of the Managing General Partner, the property is adequately covered by
insurance.

The property owner's Federal tax basis of the One Congress Street property is
$47.7 million. The building is depreciated using an accelerated method over a
period of 15 years. The property owner's real estate taxes in 1998 totaled
approximately $3.4 million and were assessed at a rate of $3.14 per $100 of
assessed valuation.

In 1998, the Partnership sold the Century Alameda Distribution Center, located
in Lynwood, California, and the joint venture which owned the Michelson property
(in which the Partnership is a 49.19% general partner) sold its property.

Further information relating to the Partnership's property is included in Item 7
and Notes 4 and 5 to the financial statements in Item 8 below.

ITEM 3.  LEGAL PROCEEDINGS
------   -----------------

On December 27, 1995, a purported class action lawsuit (the "Grigsby Action")
naming various public real estate partnerships sponsored by Realty (including
the Partnership and its Managing General Partner and Associate General Partner),
Realty, Dean Witter Reynolds Inc. ("DWR") and others as defendants was filed in
Superior Court in California. The complaint alleged fraud, negligent
misrepresentation, intentional and
<PAGE>
 
negligent breach of fiduciary duty, unjust enrichment and related claims and
sought compensatory and punitive damages in unspecified amounts and injunctive
and other equitable relief. The defendants removed the case to the United States
District Court for the Southern District of California. Pursuant to an order of
the U.S. District Court for the Southern District of California entered May 24,
1996, the Grigsby Action was transferred to the U.S. District Court for the
Southern District of New York.

On February 14, 1996, a purported class action lawsuit (the "Schectman Action")
naming various public real estate partnerships sponsored by Realty (including
the Partnership and its Managing General Partner), Realty, Dean Witter, Discover
& Co. (now known as Morgan Stanley Dean Witter & co., "MWD") and DWR as
defendants was filed in the Chancery Court of Delaware for New Castle County
(the "Delaware Chancery Court"). On February 23, 1996, a purported class action
lawsuit (the "Dosky Action") naming various public real estate partnerships
sponsored by Realty (including the Partnership and its Managing General
Partner), Realty, MWD, DWR and others as defendants was filed in the Delaware
Chancery Court. On February 29, 1996, a purported class action lawsuit (the
"Segal Action") naming various public real estate partnerships sponsored by
Realty (including the Partnership and its Managing General Partner), Realty,
DWR, MWD and others as defendants was filed in the Delaware Chancery Court. On
March 13, 1996, a purported class action lawsuit (the "Young Action") naming the
Partnership, other unidentified limited partnerships, MWD, DWR and others as
defendants was filed in the Circuit Court for Baltimore City in Baltimore,
Maryland. The defendants removed the Young Action to the United States District
Court for the District of Maryland.

Thereafter, the Schectman Action, the Dosky Action and the Segal Action were
consolidated in a single action (the "Consolidated Action") in the Delaware
Chancery Court. The Young Action was dismissed without prejudice. The plaintiffs
in the Young Action and the Grigsby Action joined the Consolidated Action. The
Grigsby Action remains stayed indefinitely subject to being reopened for good
cause.

On October 7, 1996, the plaintiffs in the Consolidated Action filed a First
Consolidated and Amended Class Action Complaint naming various public real
estate partnerships sponsored by Realty (including the Partnership and its
Managing General Partner), Realty, MWD, DWR and others as defendants. This
complaint alleges breach of fiduciary duty and seeks an accounting of profits,
compensatory damages in an unspecified amount, possible liquidation of the
Partnership under a
<PAGE>
 
receiver's supervision and other equitable relief. The defendants filed a motion
to dismiss this complaint on December 10, 1996.

On July 17, 1998, the Delaware Chancery Court granted the defendants' motion to
dismiss the complaint in the Consolidated Action. The plaintiffs filed a notice
of appeal from the Chancery Court's order on August 14, 1998. Oral argument on
the appeal was heard by the Delaware Supreme Court on January 5, 1999. The
Delaware Supreme Court affirmed the Chancery Court's dismissal of the
Consolidated Action on January 6, 1999.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
------   ---------------------------------------------------

No matter was submitted during the fourth quarter of the fiscal year to a vote
of Unit holders.



                                    PART II.


ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
------  ---------------------------------------------------------------------

An established public trading market for the Units does not exist, and it is not
anticipated that such a market will develop in the future. Accordingly,
information as to the market value of a Unit at any given date is not available.
However, the Partnership does allow limited partners (the "Limited Partners") to
transfer their Units if a suitable buyer can be located.

As of February 28, 1999, there were 7,560 holders of limited partnership
interests.

The Partnership is a limited partnership and, accordingly, does not pay
dividends. It does, however, make distributions of cash to its partners.
Pursuant to the Partnership Agreement, distributable cash, as defined, is paid
90% to the Limited Partners and 10% to the general partners (the "General
Partners").

The Managing General Partner was obligated to (a) defer receipt of its share of
distributable net cash flow, and (b) contribute additional capital to the
Partnership, sufficient to fund any shortfalls between cash flow and a 7.5%
annual distribution rate to Limited Partners during the offering period (which
ended March 1990) and the twelve quarters thereafter. During the offering
period, the Managing General Partner
<PAGE>
 
deferred receipt of distributions totaling $3,713,000, but was not required to
make any additional capital contributions. Thereafter, the Managing General
Partner contributed a total of $4,807,069 with respect to the twelve quarters
ended March 31, 1993.

The Partnership paid cash distributions during the year ended December 31, 1998
aggregating $246.53 per Unit (including $233.84 per Unit from proceeds from the
sales of Century Alameda and Michelson property interests, which were paid 100%
to the Limited Partners). Total distributions amounted to $42,934,281 with
$42,690,119 distributed to the Limited Partners and $244,162 to the General
Partners. In 1997, the Partnership paid quarterly cash distributions aggregating
$12.50 per Unit to Limited Partners. The total distribution was $2,405,056 with
$2,164,550 distributed to the Limited partners and $240,506 distributed to the
General Partners.

The Partnership did not make a distribution of distributable cash following the
second quarter 1998 cash distribution (paid July 1998), and does not anticipate
making regular distributions to its partners in the future. Generally, future
cash distributions will be paid from proceeds received from the sale of the One
Congress Street property and cash reserves.

Sale or financing proceeds will be distributed, to the extent available: first,
97% to the Limited Partners and 3% to the General Partners until each Limited
Partner has received a return of their invested capital plus an amount
sufficient to provide a 10% cumulative annual return thereon; second, 100% to
the General Partners until they have received an amount equal to (i) any portion
of their share of net cash flow previously deferred and not distributed, and
(ii) any additional capital contributions made by the Managing General Partner
to fund distributions to the Limited Partners in respect of the 7.5% minimum
annual return described above; and third, 85% to the Limited Partners and 15% to
the General Partners.

Taxable income (subject to certain adjustments) will be allocated to the
partners in proportion to the distribution of distributable cash or sale or
financing proceeds, as the case may be (or 90% to the Limited Partners and 10%
to the General Partners if there is no distributable cash or sale or financing
proceeds). At a minimum, the General Partners must be allocated 1% of the
taxable income from a sale or financing. Tax losses, if any, will be allocated
90% to the Limited Partners and 10% to the General Partners.

ITEM 6.  SELECTED FINANCIAL DATA
------   -----------------------

The following sets forth a summary of selected financial data for the
Partnership:
<PAGE>                                              
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

            Years ended December 31, 1998, 1997, 1996, 1995, and 1994

<TABLE>
<CAPTION>
                                      1998/1/          1997/2/         1996/3/          1995           1994       
----------------------------------------------------------------------------------------------------------------- 
<S>                                <C>              <C>             <C>             <C>             <C>           
Total revenues                     $17,623,800      $ 3,359,076     $ 4,073,429     $ 4,790,945     $ 4,232,379   
                                                                                                                  
Net income                         $16,812,595      $ 1,741,253     $ 1,013,115     $ 3,445,931     $ 2,396,809   
                                                                                                                  
Net income per                                                                                                    
  Unit of limited                                                                                                 
  partnership interest             $     96.23      $      9.05     $      5.27     $     17.91     $     12.46   
                                                                                                                  
Cash distribution paid                                                                                            
  per Unit of limited                                                                                             
  partnership interest/4/          $    246.53/5/   $     12.50     $     12.50     $     16.25     $     20.00   
                                                                                                                  
Total assets at                                                                                                   
  December 31                      $15,996,248      $42,328,088     $43,004,012     $44,487,504     $44,411,118    
</TABLE>

-------------------------------

1. Total revenues and net income include gains of $2.7 million and $12.7 million
   on the sales of the Century Alameda and Michelson properties, respectively.

2. Total revenues and net income are net of reserves of $1.1 million of accrued
   but unpaid interest on the One Congress Street participating mortgage loan.

3. Net income is net of a $1.5 million loss on impairment on the One Congress
   Street participating mortgage loan, and total revenues and net income are net
   of reserves of $.5 million of accrued but unpaid interest on the loan.

4. Distributions paid to Limited Partners for the year ended December 31, 1998
   included a return of capital of $200.77 per Unit, calculated as the excess of
   cash distributed per Unit over accumulated earnings per Unit not previously
   distributed. All distributions paid to Limited Partners in 1994-1997
   represent returns of capital.
   
5. Includes distributions of sales proceeds of $233.84 from sales of property
   Interests.

The above financial data should be read in conjunction with the financial
statements and the related notes appearing in Item 8.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
------  -----------------------------------------------------------------------
        OF OPERATIONS
        -------------

Liquidity and Capital Resources
-------------------------------

The Partnership raised $86,582,000 through a public offering which terminated in
1990. The Partnership has no plans to raise additional capital.
<PAGE>
 
The Partnership committed the gross proceeds raised in the offering to three
investments. No additional investments are planned.

The Century Alameda and Michelson properties were sold in 1998. The aggregate
net cash received from the sold properties for 1998 operations was approximately
$1,220,000. See Notes 4 and 5 to the Financial Statements.

As a result of the property sales, Partnership cash flow from operations
decreased during 1998 as compared to 1997.

Effective August 11, 1998, the Partnership's interest in the partnership which
owns the One Congress Street property ("GCGA") is the Partnership's sole
property interest. GCGA began to market its property for sale during the fourth
quarter of 1998; however, there can be no assurance that the One Congress Street
property will be sold.

Currently, the vacancy rate in the downtown Boston office market, the location
of One Congress Street, is approximately 7% and rental rates in this market are
stable. There is no significant new construction in this market. In 1998, GCGA
and the Government Services Administration ("GSA") amended their lease to
increase GSA's office space at the property from 70% to 82% starting October
1998. The GSA lease, as amended, is scheduled to expire no earlier than August
1, 2003. Also, in 1998, the remaining vacant office space at the property was
leased to the Commonwealth of Massachusetts for a five year period beginning in
January 1999. The lease for 100% of the parking lot space at the property with
Kinney Systems, Inc. expires in 2003. GSA also leased a small portion of retail
space in 1998; however, the retail space, which is not a significant portion of
the overall space, remains substantially vacant.

As part of the amended lease between GCGA and GSA, GCGA will fund tenant
improvements of up to $2,580,000; $1,300,000 of this amount (plus interest at
8%) will be repaid by GSA in monthly installments over five years. In addition,
GCGA is required to fund leasing commissions of up to $1,409,000. The maximum
amount of the Partnership's share of the above mentioned tenant-related
expenditures (42%) is approximately $1,675,000 (of which $546,000 would be
repaid by GSA, as described above). The Partnership has paid approximately
$946,000 of the expenditures through December 31, 1998.

As of December 31, 1998, the Partnership is also required to fund approximately
$217,000, its share of tenant improvement and leasing commissions, for the new
lease between the Commonwealth of Massachusetts and GCGA.
<PAGE>
 
During the year ended December 31, 1998, all of the Partnership's property
interests generated positive cash flow from operations, and it is anticipated
that the One Congress Street property will continue to do so in 1999.

During the year ended December 31, 1998, the Partnership contributed $1,143,000
and $171,000 to its GCGA and Michelson joint ventures, respectively, primarily
for tenant improvements and leasing commissions at the properties.

During the year ended December 31, 1998, the Partnership paid cash distributions
of cash flow from operations and proceeds from sale of properties. See Item 5.

During the year ended December 31, 1998, distributions to investors (excluding
distribution of sale proceeds) and contributions to the GCGA and Michelson
partnerships exceeded cash flows from operations and distributions from the GCGA
and Michelson partnerships (excluding the distribution of sale proceeds). This
deficiency was funded from cash reserves.

The Managing General Partner believed that the Partnership would not have
sufficient cash reserves to fully fund its potential liability for its share of
capital expenditures and leasing commissions at the One Congress Street property
and other Partnership cash requirements. Therefore, in order to increase cash
reserves, the Partnership decreased its second quarter 1998 cash distribution
(paid July 1998) from $3.125 per Unit to $1.25 per Unit, and thereafter, did not
pay quarterly cash distributions. Generally, future cash distributions will be
paid from proceeds received from the sale of the One Congress Street property
and cash reserves.

Deferred expenses, other assets, accounts payable and other liabilities and
security deposits decreased in 1998 as a result of the property sales.

Except as discussed above and in the financial statements, the Managing General
Partner is not aware of any trends or events, commitments or uncertainties that
may have a material impact on liquidity.

Operations
----------

Fluctuations in the Partnership's operating results for the year ended December
31, 1998 compared to 1997 and 1997 compared to 1996 are primarily attributable
to the following:
<PAGE>
 
Equity in earnings of unconsolidated partnerships increased in 1998 primarily as
a result of the Partnership's share of the gain from the sale of the Michelson
property in April 1998. See Note 4 to the financial statements. Equity in
earnings also increased by approximately $143,000 and $192,000 during 1998 and
1997 because, effective October 27, 1997, the Partnership began recognizing its
share of earnings from the GCGA property using the equity method of accounting.

The gain on sale of real estate in 1998 resulted from the sale of the Century
Alameda property. Rental income, property operating expenses, depreciation and
amortization expenses, and general and administrative expenses decreased for the
same reason.

In 1998, there was no interest income recorded on the Partnership's
participating mortgage loan to GCGA because the loan is now accounted for as an
investment in unconsolidated partnership. Interest on this loan to GCGA
decreased in 1997 compared to 1996 because $1,130,000 of reserves of uncollected
interest were recognized from January 1, 1997 to October 27, 1997 (when the
Partnership obtained control of the property) compared to $470,000 in 1996.

There were no other individually significant factors which caused changes in
revenues or expenses.

Inflation
---------

Inflation has been consistently low during the periods presented in the
financial statements and, as a result, has not had a significant effect on the
operations of the Partnership or its properties.
<PAGE>
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
------   --------------------------------------------


                     DEAN WITTER REALTY YIELD PLUS II, L.P.


                                      INDEX



                                                                        Page
                                                                        ----

(a) Financial statements

Independent Auditors' Report 
Balance Sheets at December 31, 1998 and 1997 
Income Statements for the years ended
  December 31, 1998, 1997 and 1996
Statements of Partners' Capital for the years
  ended December 31, 1998, 1997 and 1996
Statements of Cash Flows for the years ended
  December 31, 1998, 1997 and 1996
Notes to Financial Statements


(b) Financial statement schedule

Real Estate and Accumulated Depreciation          III


------------------

All schedules other than those indicated above have been omitted because either
the required information is not applicable or the information is shown in the
financial statements or notes thereto.
<PAGE>
 
Independent Auditors' Report



The Partners
Dean Witter Realty Yield Plus II, L.P.


We have audited the accompanying balance sheets of Dean Witter Realty Yield Plus
II, L.P. (the "Partnership") as of December 31, 1998 and 1997, and the related
statements of income, partners' capital and cash flows for each of the three
years in the period ended December 31, 1998. Our audits also included financial
statement schedule III. These financial statements and the financial statement
schedule are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements and the
financial statement schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of Dean Witter Realty Yield Plus II, L.P. as of
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1998, in conformity
with generally accepted accounting principles. Also, in our opinion, financial
statement schedule III, when considered in relation to the basic financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.



                              Deloitte & Touche LLP
                            /s/Deloitte & Touche LLP


New York, New York
March 18, 1999
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                                 BALANCE SHEETS

                           December 31, 1998 and 1997


                                                 1998                1997
--------------------------------------------------------------------------------

            ASSETS                             

Investment in unconsolidated partnerships     $13,923,431         $32,650,908

Cash and cash equivalents                       2,062,767           2,680,667

Building, at cost, net of accumulated
  depreciation of $1,211,289 in 1997                 -              6,093,337

Deferred expenses, net                               -                292,703

Other assets                                      10,050              610,473
--------------------------------------------------------------------------------

                                              $15,996,248         $42,328,088
===============================================================================
                                                                               
  LIABILITIES AND PARTNERS' CAPITAL                                            
                                                                               
Accounts payable and other liabilities        $    81,320         $   193,555  
                                                                               
Security deposits                                     -                97,919  
-------------------------------------------------------------------------------
                                                                               
                                                   81,320             291,474  
-------------------------------------------------------------------------------
                                                                               
Partners' capital:                                                             
  General partners                              3,444,225           3,539,365  
  Limited partners ($500 per Unit,                                           
    173,164 Units issued)                      12,470,703          38,497,249  
-------------------------------------------------------------------------------
                                                                               
     Total partners' capital                   15,914,928          42,036,614  
-------------------------------------------------------------------------------
                                                                               
                                              $15,996,248         $42,328,088  
===============================================================================


                See accompanying notes to financial statements.
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                                INCOME STATEMENTS

                  Years ended December 31, 1998, 1997, and 1996



<TABLE>
<CAPTION>

                                                        1998           1997           1996
-----------------------------------------------------------------------------------------------

<S>                                                 <C>              <C>            <C> 
Revenues:
  Equity in earnings of unconsolidated                                            
    partnerships                                    $13,554,417      $1,125,625     $  946,761
  Rental                                              1,118,383       1,564,070      1,475,990
  Gain on sale of real estate                         2,655,594               -              -
  Interest on participating mortgage loan                     -         503,707      1,520,481
  Interest on cash and cash equivalents and                                       
    other                                               295,406         165,674        130,197
-----------------------------------------------------------------------------------------------

                                                     17,623,800       3,359,076      4,073,429
-----------------------------------------------------------------------------------------------

Expenses:
  Property operating                                    508,469         922,107        817,877
  Depreciation and amortization                         126,208         392,618        402,256
  General and administrative                            176,528         303,098        363,181
  Loss on impairment of participating
    mortgage loan                                             -               -      1,477,000
-----------------------------------------------------------------------------------------------

                                                        811,205       1,617,823      3,060,314
-----------------------------------------------------------------------------------------------

Net income                                          $16,812,595      $1,741,253     $1,013,115
===============================================================================================

Net income allocated to:
  Limited partners                                  $16,663,573      $1,567,128     $  911,804
  General partners                                      149,022         174,125        101,311
-----------------------------------------------------------------------------------------------

                                                    $16,812,595      $1,741,253     $1,013,115
===============================================================================================

Net income per Unit of limited partnership
  Interest                                          $     96.23      $     9.05     $     5.27
===============================================================================================
</TABLE>


                 See accompanying notes to financial statements.
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.


                         STATEMENTS OF PARTNERS' CAPITAL

                  Years ended December 31, 1998, 1997 and 1996

<TABLE> 
<CAPTION> 
                                                        Limited           General
                                                        Partners          Partners          Total
---------------------------------------------------------------------------------------------------------
<S>                                                   <C>                <C>             <C> 
Partners' capital at January 1, 1996                  $40,347,417        $3,744,941      $44,092,358

Net income                                                911,804           101,311        1,013,115

Cash distributions                                     (2,164,550)         (240,506)      (2,405,056)
---------------------------------------------------------------------------------------------------------

Partners' capital at December 31, 1996                 39,094,671         3,605,746       42,700,417

Net income                                              1,567,128           174,125        1,741,253

Cash distributions                                     (2,164,550)         (240,506)      (2,405,056)
---------------------------------------------------------------------------------------------------------

Partners' capital at December 31, 1997                 38,497,249         3,539,365       42,036,614

Net Income                                             16,663,573           149,022       16,812,595

Cash Distributions                                    (42,690,119)         (244,162)     (42,934,281)
---------------------------------------------------------------------------------------------------------
Partners' Capital at December 31, 1998                $12,470,703        $3,444,225      $15,914,928
=========================================================================================================
</TABLE> 


                See accompanying notes to financial statements.
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                            STATEMENTS OF CASH FLOWS

                  Years ended December 31, 1998, 1997, and 1996

<TABLE> 
<CAPTION> 
                                                                                 1998                1997             1996
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>                 <C>               <C> 
Cash flows from operating activities:
  Net income                                                                 $16,812,595         $ 1,741,253       $1,013,115
  Adjustments to reconcile net income to                                                                      
    net cash provided by operating activities:
      Equity in earnings of unconsolidated
        partnerships                                                         (13,554,417)         (1,125,625)        (946,761)
      Gain on sale of real estate                                             (2,655,594)                  -                -
      Depreciation and amortization                                              126,208             392,618          402,256
      Loss on impairment of participating
        mortgage loan                                                                  -                   -        1,477,000
      Decrease (increase) in operating assets:
        Other assets                                                             402,151            (345,093)         145,217
        Deferred expenses                                                         18,624                   -                -
      Decrease in operating liabilities:
        Accounts payable and other liabilities                                  (114,385)            (12,121)         (91,551)
        Security deposits                                                        (97,919)                  -                -
------------------------------------------------------------------------------------------------------------------------------

      Net cash provided by operating activities                                  937,263             651,032        1,999,276
------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities
  Distributions from unconsolidated partnerships                              33,595,903           1,884,766        2,297,113
  Contributions to unconsolidated partnerships                                (1,314,009)           (413,373)        (949,484)
  Proceeds from sale of real estate                                            9,097,224                   -                -
  Additions to building and improvements                                               -                   -         (212,002)
------------------------------------------------------------------------------------------------------------------------------

  Net cash provided by investing activities                                   41,379,118           1,471,393        1,135,627
------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing activities:
  Cash distributions                                                         (42,934,281)         (2,405,056)      (2,405,056)
------------------------------------------------------------------------------------------------------------------------------

(Decrease) increase in cash and cash equivalents                                (617,900)           (282,631)         729,847

Cash and cash equivalents at beginning of year                                 2,680,667           2,963,298        2,233,451
------------------------------------------------------------------------------------------------------------------------------

Cash and cash equivalents at end of year                                     $ 2,062,767         $ 2,680,667       $2,963,298
==============================================================================================================================

Supplemental disclosure of non-cash investing activities:
    Reclassification of investment in participating 
      mortgage loan to investment in unconsolidated
      partnership:
    Investment in participating mortgage loan, net                           $         -         $13,755,767       $        -
    Deferred expenses, net                                                             -              74,822                -
------------------------------------------------------------------------------------------------------------------------------

Addition to investment in unconsolidated
  partnership                                                                $         -         $13,830,589       $        -
==============================================================================================================================
</TABLE> 

                See accompanying notes to financial statements.
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                          Notes to Financial Statements

1.     The Partnership
       ---------------

Dean Witter Realty Yield Plus II, L.P. (the "Partnership") is a limited
partnership organized under the laws of the State of Delaware in 1988 to invest
in participating mortgage loans collateralized by income-producing commercial
and industrial properties. The Managing General Partner of the Partnership is
Dean Witter Realty Yield Plus II Inc., which is wholly-owned by Dean Witter
Realty Inc. ("Realty").

The Partnership issued 173,164 units of limited partnership interest (the
"Units") for $86,582,000. No additional Units will be sold. 

The Partnership expects to sell its remaining real estate investment in 1999.
Pursuant to the Partnership Agreement, the sale of the Partnership's last such
investment will cause the dissolution of the Partnership. Thereafter, the
Partnership will wind up its affairs, make a final cash distribution, and
terminate.

2.     Summary of Significant Accounting Policies
       ------------------------------------------

The Partnership's records are maintained on the accrual basis of accounting for
financial reporting and tax purposes. The preparation of financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

The Partnership's 49.19% general partnership interest in DW Michelson Associates
("DMA") and, effective October 27, 1997, the Partnership's 42% general
partnership interest in GCGA Limited Partnership ("GCGA"), the owner/borrower of
the One Congress Street property, are accounted for on the equity method. See
Note 4.

Real estate and the investments in unconsolidated partnerships, all of which
were acquired in settlement of loans, were recorded at the lower of the carrying
value of the original participating mortgage loan or estimated fair value of the
real estate investment at the date of foreclosure or in-substance foreclosure.
Costs of improvements to real 
<PAGE>
 
estate are capitalized and repairs are expensed. Depreciation is recorded on the
straight-line method.

Cash and cash equivalents consist of cash and highly liquid investments with
maturities, when purchased, of three months or less.

At least annually, and more often if circumstances dictate, the Partnership
evaluates the recoverability of the net carrying value of its real estate (and
any related assets), including the real estate (and related assets) owned by the
unconsolidated partnerships. As part of this evaluation, the Partnership
assesses, among other things, whether there has been a significant decrease in
the market value of any of its properties. If events or circumstances indicate
that the net carrying value of a property may not be recoverable, the expected
future net cash flows from the property are estimated for a period of
approximately five years (or a shorter period if the Partnership expects that
the property may be disposed of sooner), along with estimated sales proceeds at
the end of the period. If the total of these future undiscounted cash flows were
less than the carrying amount of the property, the property would be written
down to its fair value as determined (in some cases with the assistance of
outside real estate consultants) based on discounted cash flows, and a loss on
impairment recognized by a charge to earnings.

The Partnership also periodically evaluated the collectibility of both interest
and principal of its investment in the participating mortgage loan to determine
whether it was impaired. The mortgage loan was considered to be impaired when,
based on then-current information and events, it was probable that the
Partnership would be unable to collect all amounts due according to the existing
contractual terms of the loan. When the mortgage loan was considered to be
impaired, the Partnership established a valuation allowance which was equal to
the difference between a) the carrying value of the loan, and b) the present
value of the expected cash flows from the loan at its effective interest rate,
or, for practical purposes, at the estimated fair value of the real estate
collateralizing the loan.

Because the determination of fair value is based upon projections of future
economic events such as property occupancy rates, rental rates, operating cost
inflation and market capitalization rates which are inherently subjective, the
amounts ultimately realized at disposition may differ materially from the net
carrying value as of December 31, 1998. The cash flows used to evaluate the
recoverability of the assets and to determine fair value are based on good faith
estimates and assumptions developed by the Managing General Partner.
Unanticipated events and circumstances may occur and some assumptions may not
materialize; 
<PAGE>
 
therefore actual results may vary from the estimates and the variances may be
material. The Partnership may provide additional write-downs, which could be
material, in subsequent years if real estate markets or local economic
conditions change.

Deferred expenses consisted of leasing commissions and, prior to October 27,
1997, origination fees in connection with the participating mortgage loan.
Leasing commissions were amortized over the applicable lease terms. Origination
fees were amortized over the loan term, which approximated the effective yield
method.

Rental income was accrued on a straight-line basis over the terms of the leases.
Accruals in excess of amounts payable by tenants pursuant to their leases
(resulting from rent concessions or rents which periodically increase over the
term of a lease) were recorded as receivables and included in other assets.

Net income per Unit amounts are calculated by dividing net income allocated to
Limited Partners, in accordance with the Partnership Agreement, by the weighted
average number of Units outstanding.

No provision for income taxes has been made in the financial statements, since
the liability for such taxes is that of the partners rather than the
Partnership.

The accounting policies used for tax reporting purposes differ from those used
for financial reporting as follows: (a) depreciation is calculated using
accelerated methods, (b) rental income is recognized based on the payment terms
in the applicable leases, and (c) write-downs for impairments of real estate and
the participating mortgage loan are not deductible. For tax purposes, the
Partnership continues to recognize taxable interest income on its loans secured
by the Michelson (until the property was sold) and One Congress Street
properties. The Partnership also recognized its share of DMA's taxable income
(which was net of interest expense on the participating mortgage loans which
were still outstanding). In addition, offering costs are treated differently for
tax and financial reporting purposes. The tax basis of the Partnership's assets
and liabilities is approximately $24.8 million higher than the amounts reported
for financial statement purposes at December 31, 1998.

The implementation in 1998 of Financial Accounting Standards Board Statement No.
130 "Reporting Comprehensive Income" and Statement No. 131 "Disclosures about
Segments of an Enterprise and Related Information" effective for the
Partnership's 1998 year-end financial statements did not have any impact on the
Partnership's financial statements.
<PAGE>
 
3.     Partnership Agreement
       ---------------------

The Partnership Agreement provides that net cash flow, as defined, will be paid
90% to the Limited Partners and 10% to the General Partners. However, during the
offering period (which ended in March 1990) and the twelve quarters thereafter,
the Managing General Partner was obligated to (a) defer receipt of its share of
distributable net cash flow, which totaled $3,713,000; and (b) contribute
additional capital to the Partnership sufficient to fund the difference between
cash flow and a 7.5% annual distribution rate to Limited Partners, a total of
$4,807,069.

Sale or financing proceeds will be distributed, to the extent available: first,
97% to the Limited Partners and 3% to the General Partners until each Limited
Partner has received a return of their invested capital plus an amount
sufficient to provide a 10% cumulative annual return thereon; second, 100% to
the General Partners until they have received an amount equal to (i) any portion
of their share of net cash flow previously deferred and not distributed, and
(ii) any additional capital contributions made by the Managing General Partner
to fund distributions to the Limited Partners in respect of the 7.5% minimum
annual return described above; and third, 85% to the Limited Partners and 15% to
the General Partners.

Taxable income (subject to certain adjustments) will be allocated to the
partners in proportion to the distribution of distributable cash or sale or
financing proceeds, as the case may be (or 90% to the Limited Partners and 10%
to the General Partners if there is no distributable cash or sale or financing
proceeds). At a minimum, the General Partners must be allocated 1% of the
taxable income from a sale or financing. Tax losses, if any, will be allocated
90% to the Limited Partners and 10% to the General Partners.

Distributions paid to Limited Partners in 1998 included a return of capital of
$200.77 per Unit, calculated as the excess of cash distributed over accumulated
earnings not previously distributed. All distributions paid to Limited Partners
in 1997 and 1996 represent returns of capital.

4.     Investments in Participating Mortgage Loan and Unconsolidated
       -------------------------------------------------------------
       Partnerships
       ------------

One Congress Street, Boston, Massachusetts

The Partnership and Dean Witter Realty Yield Plus, L.P. ("Yield Plus"; and
collectively, with the Partnership, the "Lender"), an affiliate, made 
<PAGE>
 
a $59.2 million participating second mortgage loan on the One Congress Street
building (the "Loan") to GCGA. The loan is due in 2001. Base interest was
originally payable at 8% and the first $250,000 of net revenues in any calendar
year from the property was payable as additional interest. The Lender also owned
a 58% interest in adjusted net revenue and capital proceeds generated by the
property. The property is subject to a first mortgage loan.

In October 1996, GCGA defaulted on the Loan by failing to timely pay its debt
service. Thereafter, the Lender accelerated the Loan and attempted to take
possession of the property. On October 15, 1996, GCGA filed a voluntary petition
under Chapter 11 of the U.S. Bankruptcy Code. On October 27, 1997, the Lender
entered into a settlement agreement with GCGA (the "Agreement"). As part of the
Agreement, a new corporation which is jointly owned by the Partnership (42%) and
Yield Plus (58%) became the sole general partner of GCGA (the "New General
Partner") (with an aggregate 19.81% ownership interest in the property). The
Partnership and Yield Plus have agreed to make all decisions concerning the
property jointly. The Lender has retained an affiliate of GCGA's original
general partner as property manager.

The Agreement also provides the following:

(a)      as a result of their interests in the New General Partner, the
         Partnership and Yield Plus are required to make additional loans to
         fund future tenant improvements and leasing commissions at the property
         (the "New Loans") in proportion to their ownership of the New General
         Partner. Any New Loans will bear interest at 12%, payable monthly from
         available cash flow generated by the property after payment of debt
         service on the first mortgage loan and certain operating escrows;

(b)      the interest rate on the principal of the Loan and past due interest
         thereon (aggregating approximately $12.3 million at the date of the
         Agreement) has been increased to 10%, payable monthly from available
         cash flow generated by the property after payment of debt service on
         the New Loans;

(c)      any future unpaid debt service will accrue interest at 10%; and

(d)      the Partnership's and Yield Plus' interest in adjusted net revenue and
         capital proceeds generated by the property was increased to 80%.
<PAGE>
 
The Agreement effectively changed the Lender from a participating lender to GCGA
into the general partner in a partnership which owns the One Congress Street
property. The Partnership, through the New General Partner, owns an 8.3%
partnership interest in GCGA and, accordingly, at October 27, 1997, the
Partnership recorded its investment at an amount equal to the net carrying value
of its investment in the participating mortgage loan and related assets (which
carrying value was less than the estimated fair value of the property at that
date). The Partnership began, effective October 27, 1997, to account for its
investment on the equity method (and stopped recognizing interest income from
its participating mortgage loan). Because the Partnership and Yield Plus control
GCGA and are entitled to receive substantially all the cash flow and other
economic benefits from the property, the Partnership and Yield Plus recognize
all of GCGA's profits and losses in proportion to their ownership of the New
General Partner.

The Partnership believed that during the period of the bankruptcy it would be
unable to collect its interest on the Loan in full and that the bankruptcy could
adversely impact future leasing at the property. Accordingly, in 1996, the
Partnership determined that the Loan was impaired and recorded an additional
valuation allowance of $1,477,000 to reduce the carrying value of the Loan to
its estimated fair value. The Partnership had previously recognized an
impairment allowance of $9.8 million in 1993.

In 1997 (prior to the Agreement) and 1996, the Partnership reserved accrued but
unpaid interest on the Loan of $1,130,000 and $470,000, respectively. At October
27, 1997, the Partnership's total reserves against accrued but unpaid interest
approximated $1,600,000.


Summarized financial information of GCGA is as follows:

<TABLE> 
<CAPTION> 
                                                                                  December 31,
                                                                           1998                  1997
------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>                    <C> 
                    ASSETS

Land and building net                                                  $60,698,880            $59,921,306
Other                                                                    6,394,881              8,333,385
------------------------------------------------------------------------------------------------------------

Total assets                                                           $67,093,761            $68,254,691
============================================================================================================

    LIABILITIES AND PARTNERS CAPITAL DEFICIENCY

First mortgage loan                                                    $37,750,000            $37,750,000
</TABLE> 
<PAGE>
 
<TABLE> 
<CAPTION> 
<S>                                                                     <C>                    <C> 
Second mortgage loan and accrued
  interest                                                              79,023,308             72,148,266
Other liabilities                                                        3,190,814              3,036,017
Partners' capital deficiency                                           (52,870,361)           (44,679,592)
------------------------------------------------------------------------------------------------------------

Total liabilities and partners' capital deficiency                     $67,093,761            $68,254,691
============================================================================================================

<CAPTION> 

         STATEMENTS OF OPERATIONS
                                                              Years ended December 31,
                                                      1998              1997             1996
--------------------------------------------------------------------------------------------------------
<S>                                                <C>               <C>               <C> 
Revenues:
   Rental                                          $11,513,818       $ 11,498,722      $ 13,380,683
   Other                                                79,390            238,937            63,455
--------------------------------------------------------------------------------------------------------

                                                   $11,593,208         11,737,659        13,444,138
--------------------------------------------------------------------------------------------------------
Expenses:
   Interest on second mortgage loan                  8,078,420          8,036,377         9,357,983
   Other interest                                    3,798,362          3,768,876         3,816,304
   Property operating and other                      5,946,569          5,075,676         4,874,545
   Depreciation and amortization                     1,960,626          1,940,143         2,226,861
--------------------------------------------------------------------------------------------------------

                                                   19,783,977          18,821,072        20,275,693
--------------------------------------------------------------------------------------------------------

Net loss                                          $(8,190,769)        $(7,083,413)      $(6,831,555)
========================================================================================================
</TABLE> 

GCGA's second mortgage loan consists of the Loan. The accounting policies of
GCGA are consistent with those of the Partnership.

Michelson, Irvine, California

The property, which consists of three office buildings, is owned by Michelson
Company Limited Partnership (the "Company"). The 90% general partner of the
Company was DMA, a general partnership owned 49.19% by the Partnership and
50.81% by Yield Plus, and the 10% limited partner of DMA was SC Enterprises
("SCE"), an affiliate of the property's developer.

In April 1998, DMA sold its 90% general partnership interest in the Company to
SCE along with two promissory notes (totaling approximately $1.2 million) due
from SCE for a negotiated aggregate sale price of $64 million. SCE assigned its
right to purchase the interest in the Company to Spieker Properties. L.P., which
is not affiliated with the Partnership, its affiliated partnerships or SCE.

The sale price was received in cash at closing on April 3, 1998. On April 28,
1998, the Partnership distributed approximately $31.4 million 
<PAGE>
 
($181.09 per Unit), its share of the net proceeds from the sale, 100% to the
Limited Partners. The Partnership's share of the gain on sale of the property
was approximately $12.7 million; such gain was allocated 100% to Limited
Partners in accordance with the Partnership Agreement.


Summarized financial information of DW Michelson is as follows:


                                INCOME STATEMENT


<TABLE> 
<CAPTION> 
                                                                Years ended December 31,
                                                      1998                1997              1996
-------------------------------------------------------------------------------------------------------------
<S>                                                <C>                 <C>               <C> 
Revenues:
   Rental                                          $  1,809,111        $6,814,131        $6,600,303
   Gain on sale of property                          25,221,250              -                 -
   Other                                                114,859           110,244            41,640
-------------------------------------------------------------------------------------------------------------

                                                     27,145,220         6,924,375         6,641,943
-------------------------------------------------------------------------------------------------------------

Expenses:
   Property operating                                   736,120         2,917,322         2,506,666
   Depreciation and amortization                         64,745         2,108,642         2,210,576
-------------------------------------------------------------------------------------------------------------

                                                        800,865         5,025,964         4,717,242
-------------------------------------------------------------------------------------------------------------
Net income                                         $ 26,344,355        $1,898,411        $1,924,701
=============================================================================================================
</TABLE> 


Yield Plus and the Partnership received cash flow and profits and losses from
operations according to their interests in DMA.

The accounting policies of DMA and the Company were consistent with those of the
Partnership.

5.     Sale of Real Estate 
       -------------------

On August 11, 1998, the Partnership sold the Century Alameda Distribution Center
to an unaffiliated party for a negotiated sale price of $9.35 million. The
Partnership recognized a gain on this sale of approximately $2.7 million, which
was allocated 100% to the Limited Partners in accordance with the Partnership
Agreement. On August 26, 1998, the Partnership distributed 100% to the Limited
Partners approximately $9.1 million ($52.75 per Unit), the proceeds from the
sale of the property (net of closing costs).
<PAGE>
 
6.  Related Party Transactions
    --------------------------

An affiliate of Realty provided property management services for the Michelson
and the Century Alameda Distribution Center properties. For the years ended
December 31, 1998, 1997 and 1996, the affiliate received property management
fees of approximately $40,000, $126,000, and $130,000, respectively. These
amounts are included in property operating expenses.

Realty performs administrative functions and processes certain investor tax
information for the Partnership. For the years ended December 31, 1998, 1997,
and 1996, the Partnership incurred approximately $145,000, $212,000, and
$212,000, respectively, for these services. These amounts are included in
general and administrative expenses.

As of December 31, 1998, the affiliates were owed a total of approximately
$9,500 for these services.

7.  Litigation
    ----------

Various public partnerships sponsored by Realty (including the Partnership and
its Managing General Partner) were defendants in a class action lawsuit. On July
17, 1998, the Delaware Chancery Court granted the defendants' motion to dismiss
the complaint in the lawsuit. On August 14, 1998, the plaintiffs filed a notice
of appeal from the Court's order. On January 6, 1999, the Delaware Supreme Court
affirmed the Chancery Court's dismissal of the complaint.
<PAGE>
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
------   ---------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

None.

                                   PART III.


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
-------   --------------------------------------------------

The Partnership is a limited partnership which has no directors or officers.

The directors and executive officers of the Managing General Partner are as
follows:

                                               Position with the
Name                                       Managing General Partner       
----                               -------------------------------------------
William B. Smith                        Chairman of the Board of Directors
E. Davisson Hardman, Jr.                President and Director
Lawrence Volpe                          Director
Ronald T. Carman                        Secretary and Director


All of the directors have been elected to serve until the next annual meeting of
the shareholder of the Managing General Partner or until their successors are
elected and qualify. Each of the executive officers has been elected to serve
until his successor is elected and qualifies.

William B. Smith, age 55, has been a Managing Director of Morgan Stanley and
co-head of Morgan Stanley Realty Incorporated since July 1997, and a Managing
Director of Dean Witter Realty Inc., which he joined in 1982. He is an Executive
Vice President of Dean Witter Reynolds Inc.

E. Davisson Hardman, Jr., age 49, has been a Managing Director of Morgan Stanley
Asia, Ltd. since July 1997, and a Managing Director of Dean Witter Realty Inc.,
which he joined in 1982.

Lawrence Volpe, age 51, is a Senior Vice President of Dean Witter Realty Inc.,
which he joined in 1983. Since June 1998, he has served in an advisory capacity
in connection with Dean Witter Realty Inc. and related entities. Prior to June
1998, he was the Controller of Dean Witter Reynolds Inc., the Managing General
Partner, and Dean Witter Realty, Inc., and a Director of Dean Witter Realty Inc.
<PAGE>
 
Ronald T. Carman, age 47, is a Director and the Secretary of Dean Witter Realty
Inc. He has been an Assistant Secretary of MWD and a Managing Director of Morgan
Stanley and Co. Inc. since July 1998. Previously, he was a Senior Vice President
and Associate General Counsel of Dean Witter Reynolds Inc., which he joined in
1984.

There is no family relationship among any of the foregoing persons.

ITEM 11.  EXECUTIVE COMPENSATION
-------   ----------------------

The General Partners are entitled to receive cash distributions, when and as
cash distributions are made to the Limited Partners, and a share of taxable
income or tax loss. Descriptions of such distributions and allocations are
contained in Item 5 above. The General Partners received cash distributions of
$244,162, $240,506 and $240,506 during the years ended December 31, 1998, 1997,
and 1996, respectively.

The General Partners and their affiliates were paid certain fees and reimbursed
for certain expenses. Information concerning such fees and reimbursements is
contained in Note 6 to the Financial Statements in Item 8 above.

The directors and officers of the Partnership's Managing General Partner
received no remuneration from the Partnership.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
-------   --------------------------------------------------------------

    (a)   No person is known to the Partnership to be the beneficial owner of
more than five percent of the Units.

    (b)   The directors and executive officers of the Managing General Partner
own the following Units as of February 28, 1999:

                                                              Amount and
                                                              Nature of
Title of Class        Name of Beneficial Owner           Beneficial Ownership
--------------        ------------------------           --------------------
Limited               All directors and executive                *
Partnership           officers of the Managing                              
Interests             General Partner, as a group                           

---------
*Own, by virtue of ownership of limited partnership interests in the Associate
General Partner, less than 1% of the Units of the Partnership.
<PAGE>
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
-------   ----------------------------------------------

As a result of their being partners of a limited partnership which is the
limited partner of the Associate General Partner, certain current and former
officers and directors of the Managing General Partner also own indirect
partnership interests in the Partnership. The Partnership Agreement of the
Partnership provides that cash distributions and allocations of income and loss
to the General Partners shall be distributed or allocated 50% to the Managing
General Partner and 50% to the Associate General Partner. The General Partners'
share of cash distributions and income or loss is described in Item 5 above.

All of the outstanding shares of common stock of the Managing General Partner
are owned by Dean Witter Realty Inc., a Delaware corporation which is a
wholly-owned subsidiary of Morgan Stanley Dean Witter & Co. The general partner
of the Associate General Partner is the Managing General Partner. The limited
partner of the Associate General Partner is LSYP 88, L.P., a Delaware limited
partnership. Realty and certain current and former officers and directors of the
Managing General Partner are partners of LSYP 88, L.P. Additional information
with respect to the directors and executive officers and compensation of the
Managing General Partner and affiliates is contained in Items 10 and 11 above.

The One Congress Street property was developed by a partnership between a
Maryland-based developer and an entity comprised of former Realty executives,
some of whom were formerly executive officers of the Managing General Partner.
This entity withdrew as a partner of the borrower in September 1993, so the
borrower partnership was controlled solely by the Maryland-based developer until
control of the borrower was transferred to the Partnership and Yield Plus in
1997.

The General Partners and their affiliates were paid certain fees and reimbursed
for certain expenses. Information concerning such fees and reimbursements is
contained in Note 6 to the Financial Statements in Item 8 above. The Partnership
believes that the payment of fees and the reimbursement of expenses to the
General Partners and their affiliates are on terms as favorable as would be
obtained from unrelated third parties.
<PAGE>
 
                                   PART IV.


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
-------   ----------------------------------------------------------------


(a) The following documents are filed as part of this Annual Report:

     1.           Financial Statements (see Index to Financial Statements filed
                  as part of Item 8 of this Annual Report).
                  
     2.           Financial Statement Schedules (see Index to Financial
                  Statements filed as part of Item 8 of this Annual Report).
                  
     3.           Exhibits

       (3)(a)     Amended and Restated Agreement of Limited Partnership dated as
                  of June 24, 1988 set forth in Exhibit A to the Prospectus
                  included in Registration Statement Number 33-20475 is
                  incorporated herein by reference.

       (3)(b)     Certificate of Limited Partnership dated as of June 24, 1988
                  set forth in Registration Statement Number 33-20475 is
                  incorporated herein by reference.

       (4)(a)     Amended and Restated Agreement of Limited Partnership dated as
                  of June 24, 1988 set forth in Exhibit A to the Prospectus
                  included in Registration Statement Number 33-20475 is
                  incorporated herein by reference.

       (4)(b)     Certificate of Limited Partnership dated as of June 24, 1988
                  set forth in Registration Statement Number 33-20475 is
                  incorporated herein by reference.

       (10)(a)    Partnership Agreement for DW Michelson Associates dated March
                  14, 1988 was filed as Exhibit 10.1 (a) to Amendment No. 1 to
                  Registrant's Registration Statement on Form S-11 and is
                  incorporated herein by reference.

       (10)(b)    First Mortgage Promissory Note, dated April 26, 1989, between
                  the Government Center Garage Realty Trust (Maker) and Dean
                  Witter Realty Yield Plus II, L.P.(Holder) was filed as Exhibit
                  to Amendment No. 2 to Current Report on Form 8-K on April 26,
                  1989 and is incorporated herein by reference.
<PAGE>
 
       (10)(c)    Construction Loan Agreement, dated April 26, 1989, between
                  Government Center Garage Realty Trust, as Borrower and Dean
                  Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield
                  Plus II, L.P., as Lender was filed as Exhibit to Amendment No.
                  2 to Current Report on Form 8-K on April 26, 1989 and is
                  incorporated herein by reference.

       (10)(d)    Intercreditor Agreement among Dean Witter Realty Yield Plus,
                  L.P., Dean Witter Realty Yield Plus II, L.P., and Realty
                  Management Services Inc. dated as of April 26, 1989 was filed
                  as Exhibit to Amendment No. 2 to Current Report on Form 8-K on
                  April 26, 1989 and is incorporated herein by reference.

       (10)(e)    First Amendment to Construction Loan Agreement dated October
                  12, 1989 between Government Center Garage Realty Trust, as
                  Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
                  Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit
                  10(e) to Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1995 and incorporated by reference herein.
                  
       (10)(f)    Amended and Restated Construction Loan/Office Loan Promissory
                  Note dated October 12, 1989 between Government Center Garage
                  Realty Trust (Maker) and Dean Witter Realty Yield Plus II,
                  L.P. (Holder). Filed as Exhibit 10(f) to Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 1995 and
                  incorporated by reference herein.

       (10)(g)    Second Amendment to Construction Loan Agreement dated June 22,
                  1990 between Government Center Garage Realty Trust, as
                  Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
                  Witter Realty Yield Plus II, L.P., as Lender. Filed as Exhibit
                  10(g) to Registrant's Annual Report on Form 10-K for the year
                  ended December 31, 1995 and incorporated by reference herein.
                      
       (10)(h)    First Amendment to Amended and Restated Construction
                  Loan/Office Loan Promissory Note dated June 22, 1990 between
                  Government Center Garage Realty Trust (Maker) and Dean Witter
                  Realty Yield Plus II, L.P. (Holder). Filed as Exhibit 10(h) to
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated by reference herein.
                  
       (10)(i)    Supplemental Loan Agreement dated September 20, 1993 between
                  Government Center Garage Realty Trust, as Borrower and Dean
<PAGE>
 
                  Witter Realty Yield Plus, L.P. and Dean Witter Realty Yield
                  Plus II, L.P., as Lender. Filed as Exhibit 10(i) to
                  Registrant's Annual Report on Form 10-K for the year ended
                  December 31, 1995 and incorporated by reference herein.

       (10)(j)    Second Amendment to Notes dated September 20, 1993 between
                  Government Center Garage Realty Trust (Maker) and Dean Witter
                  Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II,
                  L.P., (Holders). Filed as Exhibit 10(j) to Registrant's Annual
                  Report on Form 10-K for the year ended December 31, 1995 and
                  incorporated by reference herein.

       (10)(k)    Supplement and Amendment to Construction Loan Agreement dated
                  October 27, 1997 between Government Center Garage Realty Trust
                  (Borrower) and Dean Witter Realty Yield Plus, L.P. and Dean
                  Witter Realty Yield Plus II, L.P. (Lenders) was filed as an
                  Exhibit to Form 8-K on October 27, 1997 and is incorporated
                  herein by reference.

       (10)(l)    Third Amendment to Notes dated October 27, 1997 between
                  Government Center Garage Realty Trust (Maker) and Dean Witter
                  Realty Yield Plus, L.P. and Dean Witter Realty Yield Plus II,
                  L.P. (Holder) was filed as an Exhibit to Form 8-K on October
                  27, 1997 and is incorporated herein by reference.

       (10)(m)    "Purchase and Sale Agreement" dated as of December 26, 1997
                  among DW Michelson Associates as Seller, Michelson Company
                  Limited Partnership as Acquired Partnership and SC Enterprises
                  as Purchaser, First Amendment to Purchase and Sale Agreement
                  dated as of February 3, 1998 and Assignment and Assumption
                  Agreement dated as of April 3, 1998 were collectively filed as
                  an Exhibit to Form 8-K on April 3, 1998 and are incorporated
                  herein by reference.

       (10)(n)    "Purchase and Sale Agreement" dated as of July 1, 1998 between
                  Dean Witter Realty Yield Plus II, L.P. as Seller and St. Paul
                  Properties, Inc. as Purchaser was filed as an Exhibit to Form
                  8-K on August 11, 1998 and is incorporated herein by
                  reference.


    (27)  Financial Data Schedule
<PAGE>
 
   (b)     No Forms 8-K were filed by the Partnership during the last quarter of
           the period covered by this report.

   (d)     Financial statements of GCGA Limited Partnership, owner of an office
           building/parking garage complex located in Boston, Massachusetts.
<PAGE>
 
                                   SIGNATURES
                                   ----------


Pursuant to the requirements of Section 13 or 15(d) 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.

DEAN WITTER REALTY YIELD PLUS II, L.P.


By:   Dean Witter Realty Yield Plus II Inc.
      Managing General Partner


By:   /s/ E. Davisson Hardman, Jr.                    Date:  March 24, 1999
      --------------------------------------
      E. Davisson Hardman, Jr.
      President


By:   /s/ Charles M. Charrow                          Date:  March 24, 1999
      --------------------------------------
      Charles M. Charrow
      Controller
      (Principal Financial and Accounting Officer)


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.


DEAN WITTER REALTY YIELD PLUS II INC.
Managing General Partner


/s/ William B. Smith                                  Date: March 24, 1999
-------------------------------------
William B. Smith
Chairman of the Board of Directors

/s/ E. Davisson Hardman, Jr.                          Date: March 24, 1999
-------------------------------------
E. Davisson Hardman, Jr.
Director

/s/ Lawrence Volpe                                    Date: March 24, 1999
-------------------------------------
Lawrence Volpe
Director

/s/ Ronald T. Carman                                  Date: March 24, 1999
-------------------------------------
Ronald T. Carman
Director
<PAGE>
 
                                  SCHEDULE III
                                  ------------

                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                    Real Estate and Accumulated Depreciation

                                December 31, 1998

                         Initial Cost to Partnership (A)
                         -------------------------------

Reconciliation of real estate owned:

<TABLE> 
<CAPTION> 
                                                                 1998               1997               1996
---------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                <C>                <C> 
Balance at beginning of period                                $7,304,626         $7,304,626         $7,092,624
                                                        
Improvements                                                           -                  -            212,002
Sale of real estate                                           (7,304,626)                 -                  -
---------------------------------------------------------------------------------------------------------------
Balance at end of period                                               -         $7,304,626         $7,304,626
===============================================================================================================
                                                        
Reconciliation of accumulated depreciation:             
                                                        
Balance at beginning of period                                $1,211,289         $1,012,772          $ 824,572
  Depreciation expense                                            99,258            198,517            188,200
  Sale of real estate                                         (1,310,547)                 -                  -
---------------------------------------------------------------------------------------------------------------
                                                        
Balance end of period                                                  -         $1,211,289         $1,012,772
===============================================================================================================
</TABLE> 
<PAGE>
 
                     DEAN WITTER REALTY YIELD PLUS II, L.P.

                          Year ended December 31, 1998

                                  Exhibit Index



    Exhibit No.                            Description
    ----------------------------------------------------------------------------

     (3)(a)           Amended and Restated Agreement of Limited Partnership
                      dated as of June 24, 1988 set forth in Exhibit A to the
                      Prospectus included in Registration Statement Number 33-
                      20475 is incorporated herein by reference.

     (3)(b)           Certificate of Limited Partnership dated as of June 24,
                      1988 set forth in Registration Statement Number 33-20475
                      is incorporated herein by reference.

     (4)(a)           Amended and Restated Agreement of Limited Partnership
                      dated as of June 24, 1988 set forth in Exhibit A to the
                      Prospectus included in Registration Statement Number 33-
                      20475 is incorporated herein by reference.

     (4)(b)           Certificate of Limited Partnership dated as of June 24,
                      1988 set forth in Registration Statement Number 33-20475
                      is incorporated herein by reference.

    (10)(a)           Partnership Agreement for DW Michelson Associates dated
                      March 14, 1988 was filed as Exhibit 10.1 (a) to Amendment
                      No. 1 to Registrant's Registration Statement on Form S-11
                      and is incorporated herein by reference.
                      
    (10)(b)           First Mortgage Promissory Note, dated April 26, 1989,
                      between the Government Center Garage Realty Trust (Maker)
                      and Dean Witter Realty Yield Plus II, L.P. (Holder) was
                      filed as Exhibit to Amendment No. 2 to Current Report on
                      Form 8-K on April 26, 1989 and is incorporated herein by
                      reference.
                          
               
    (10)(c)           Construction Loan Agreement, dated April 26, 1989, between
                      Government Center Garage Realty Trust, as Borrower and
                      Dean Witter Realty Yield Plus, L.P. and Dean Witter Realty
                      Yield Plus II, L.P., as Lender was filed as Exhibit to
                      Amendment No. 2 to Current Report on Form 8-K on April 26,
                      1989 and is incorporated herein by reference.
<PAGE>
 
       (10)(d)        Intercreditor Agreement among Dean Witter Realty Yield
                      Plus, L.P., Dean Witter Realty Yield Plus II, L.P., and
                      Realty Management Services Inc. dated as of April 26, 1989
                      was filed as Exhibit to Amendment No. 2 to Current Report
                      on Form 8-K on April 26, 1989 and is incorporated herein
                      by reference.

       (10)(e)        First Amendment to Construction Loan Agreement dated
                      October 12, 1989 between Government Center Garage Realty
                      Trust, as Borrower and Dean Witter Realty Yield Plus, L.P.
                      and Dean Witter Realty Yield Plus II, L.P., as Lender.
                      Filed as Exhibit 10(e) Registrant's Annual Report on Form
                      10-K for the year ended December 31, 1995 and incorporated
                      by reference herein.

       (10)(f)        Amended and Restated Construction Loan/Office Loan
                      Promissory Note dated October 12, 1989 between Government
                      Center Garage Realty Trust (Maker) and Dean Witter Realty
                      Yield Plus II, L.P. (Holder). Filed as Exhibit 10(f) to
                      Registrant's Annual Report on Form 10-K for the year ended
                      December 31, 1995 and incorporated by reference herein.

       (10)(g)        Second Amendment to Construction Loan Agreement dated June
                      22, 1990 between Government Center Garage Realty Trust, as
                      Borrower and Dean Witter Realty Yield Plus, L.P. and Dean
                      Witter Realty Yield Plus II, L.P., as Lender. Filed as
                      Exhibit 10(g) to Registrant's Annual Report on Form 10-K
                      for the year ended December 31, 1995 and incorporated by
                      reference herein.
                      
       (10)(h)        First Amendment to Amended and Restated Construction
                      Loan/Office Loan Promissory Note dated June 22, 1990
                      between Government Center Garage Realty Trust (Maker) and
                      Dean Witter Realty Yield Plus II, L.P. (Holder). Filed as
                      Exhibit 10(h) to Registrant's Annual Report on Form 10-K
                      for the 
<PAGE>
 
                      year ended December 31, 1995 and incorporated by
                      reference herein.
                      
       (10)(i)        Supplemental Loan Agreement dated September 20, 1993
                      between Government Center Garage Realty Trust, as Borrower
                      and Dean Witter Realty Yield Plus, L.P. and Dean Witter
                      Realty Yield Plus II, L.P., as Lender. Filed as Exhibit
                      10(i) to Registrant's Annual Report on Form 10-K for the
                      year ended December 31, 1995 and incorporated by reference
                      herein.
                      
       (10)(j)        Second Amendment to Notes dated September 20, 1993 between
                      Government Center Garage Realty Trust (Maker) and Dean
                      Witter Realty Yield Plus, L.P. and Dean Witter Realty
                      Yield Plus II, L.P., (Holders). Filed as Exhibit 10(j)
                      Registrant's Annual Report on Form 10-K for the year ended
                      December 31, 1995 and incorporated by reference herein.

       (10)(k)        Supplement and Amendment to Construction Loan Agreement
                      dated October 27, 1997 between Government Center Garage
                      Realty Trust (Borrower) and Dean Witter Realty Yield Plus,
                      L.P. and Dean Witter Realty Yield Plus II, L.P. (Lenders)
                      was filed as an Exhibit to Form 8-K on October 27, 1997
                      and is incorporated herein by reference.

       (10)(l)        Third Amendment to Notes dated October 27, 1997 between
                      Government Center Garage Realty Trust (Maker) and Dean
                      Witter Realty Yield Plus, L.P. and Dean Witter Realty
                      Yield Plus II, L.P. (Holder) was filed as an Exhibit to
                      Form 8-K on October 27, 1997 and is incorporated herein by
                      reference.

       (10)(m)        "Purchase and Sale Agreement" dated as of December 26,
                      1997 among DW Michelson Associates as Seller, Michelson
                      Company Limited Partnership as Acquired Partnership and SC
                      Enterprises as Purchaser, First Amendment to Purchase and
                      Sale Agreement dated as of February 3, 1998 and Assignment
                      and Assumption Agreement dated as of April 3, 1998 were
                      collectively filed as an Exhibit to Form 8-K on April 3,
                      1998 and are incorporated herein by reference.
                           
       (10)(n)        "Purchase and Sale Agreement" dated as of July 1, 1998
                      between Dean Witter Realty Yield Plus II, L.P. as Seller
                      and St. Paul Properties, Inc. as Purchaser was filed as an
                      Exhibit to Form 8-K on August 11, 1998 and is incorporated
                      herein by reference.
                      

       (27)           Financial Data Schedule

       (99)           Financial statements of GCGA Limited Partnership, owner of
                      an office building/parking garage complex located in
                      Boston, Massachusetts.