<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC. 20549

                                    FORM 10-K


  X        ANNUAL REPORT PURSUANT TO SECTION 15 (d) OF THE SECURITIES EXCHANGE
------     ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998.

           TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES 
------     EXCHANGE ACT OF 1934.

               COMMISSION FILE NUMBER: 0-17680 (FORMERLY 33-20255)

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

                        SOUTHEAST ACQUISITIONS II, L.P.

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

                         (Name of issuer in its charter)
       Delaware                                                       23-2498841
(State of incorporation)       (IRS Employer Identification organization Number)


                         301 South Perimeter Park Drive
                           Nashville, Tennessee 37211
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                    (Address of principal executive offices)

           Issuer's telephone no., including area code: (615) 833-8716
--------------------------------------------------------------------------------

          Securities registered pursuant to Section 12 (b) of the Act.

                           Name of each exchange: None
             Title of each class on which registered: Not Applicable

          Securities registered pursuant to Section 12 (g) of the Act:
                    Limited Partnership Units $1,000 Per Unit
     -----------------------------------------------------------------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past (90) days. Yes  X   No 
                                                                ---     ---

Check if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained in this form, and no disclosure will 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. Yes  X   No 
               ---     ---


<PAGE>   2




                                TABLE OF CONTENTS

<TABLE>
<S>             <C>                                                             <C> 
PART I

ITEM I.        BUSINESS...........................................................1
               Background ........................................................1
               Material Recent Developments.......................................2
               Employees..........................................................2
               Competition........................................................2
               Trademarks and Patents.............................................2

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

ITEM 3.        LEGAL PROCEEDINGS..................................................4

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


PART II.

ITEM 5.        MARKET FOR THE PARTNERSHIP'S UNITS OF LIMITED PARTNERSHIP
               INTEREST AND RELATED SECURITY HOLDER MATTERS.......................4

ITEM 6.        SELECTED FINANCIAL DATA............................................5

ITEM 7.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS..........................................5
               Background.........................................................5
               Results of Operations..............................................5
               1998 Compared to 1997..............................................6
               1997 Compared to 1996..............................................6
               Liquidity and Capital Resources....................................6
               Year 2000 Compliance...............................................7

ITEM 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA........................7

ITEM 9.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURE...........................................7


PART III

ITEM 10.      DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP.................7

ITEM 11.      EXECUTIVE COMPENSATION..............................................8

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT..........................................................9
              Security Ownership of Management....................................9
              Changes in Control..................................................9
</TABLE>

                                      - i -

<PAGE>   3
<TABLE>
<S>           <C>                                                               <C>
ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................9


PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
              FORM 8-K...........................................................10
                        (a)  Index to Financial Statements.......................10
                        (b)  Reports on Form 8-K.................................10
                        (c)  Exhibits (numbered in accordance with item 601 of 
                             Regulation S-K).....................................10

SIGNATURES
</TABLE>









                                     - ii -


<PAGE>   4


                                     PART I

ITEM 1.  BUSINESS

         Background

         Southeast Acquisitions II, L.P. (the "Partnership") was formed on
December 14, 1987, as a Delaware limited partnership. The Partnership's public
offering of 9,650 units of limited partnership interest ("Units") commenced on
June 8, 1988 and terminated on July 18, 1988 when all 9,650 Units were sold. The
Partnership has since been scheduled to terminate on December 31, 2000.

         The Partnership purchased the following three parcels of unimproved 
land in 1988; 353 acres in Henry County, Georgia; 91 acres in Greenville, South
Carolina; and 135 acres in Rutherford County, Tennessee. The Partnership's
primary business objective is to realize appreciation in the value of the three
parcels of unimproved land (each a "Property", collectively the "Properties"),
by holding the Properties for investment and eventual sale, although there is no
assurance that this will be attained.

         Since acquisition, the Partnership has sold approximately 61% of its 
Georgia Property, approximately 79% of its South Carolina Property, and
approximately 27% of its Tennessee Property. All remaining land is currently
being marketed.

         The timing and manner of sale will be determined by Southern Management
Group, LLC, the General Partner of the Partnership. The General Partner
generally has the right to sell Property, or portions thereof, without the
consent of the Limited Partners. The Partnership Agreement provides, however,
that a majority in interest of the Limited Partners must consent to the sale or
disposition at one time of 60% or more of the real estate acreage held by the
Partnership as of September 22, 1997 unless the sale or disposition is being
made in connection with the liquidation of the Partnership pursuant to the
Partnership Agreement or in the event that the net proceeds of the sale, when
distributed in accordance with the Partnership Agreement, will be sufficient to
provide the Limited Partners with distributions equal to the acquisition cost of
the assets sold.

         The General Partner believes that the Partnership's cash reserves will 
be sufficient to last for at least two more years assuming no significant
increases in expenses. However, if the reserves are exhausted and the
Partnership is unable to borrow funds, the Partnership may have to sell the
Property on unfavorable terms.

         The General Partner has no plans to develop the Properties, except for 
activities including rezoning, land planning, market surveys and other
activities necessary to prepare the Properties for sale. There can be no
assurance that necessary funds would be available should it be desirable for the
Partnership to improve the Properties to facilitate their sale.

         At a special meeting of Limited Partners held on November 5, 1997, the 
Partnership Agreement was amended to (i) extend the term of the Partnership from
its original expiration date of December 31, 1998 to December 31, 2000; (ii)
substitute Southern Management Group, LLC for Southeast Acquisitions, Inc. as
the general partner of the Partnership; (iii) authorize new commissions and new
management fees for the new General Partner; (iv) give the new General Partner
the exclusive right to sell Partnership Property; and (v) modify the Partnership
Agreement to require that a majority in interest of the limited Partners must
consent to the sale or disposition at one time of 60% or more of the real estate
acreage held by the Partnership as of September 22, 1997 unless the sale or
disposition is being made in connection with the liquidation of the Partnership
pursuant to the Partnership Agreement or the net proceeds of the sale, when
distributed in accordance with the Partnership Agreement, will be sufficient to
provide the Limited Partners with distributions equal to the acquisition cost of
the assets sold.





                                       1
<PAGE>   5



         Material Recent Developments

         During 1998, there were five different land sales and one sale of an 
utility easement. The utility easement consisted of 2.9 acres of the Rutherford
County Property in Tennessee and was sold to the Tennessee Valley Authority for
$101,500. Four of the five land sales took place in Greenville, South Carolina.
These sales included 1.9 acres sold for approximately $166,885 per acre, .277
acres sold for $100,000 per acre, 2.049 acres sold for approximately $166,911
per acre and 17.316 acres for $95,000 per acre. The fifth land sale took place
in Henry County, Georgia and consisted of 44.325 acres sold for approximately
$4,725 per acre.

         Employees

         The Partnership presently has no employees.  The General Partner 
manages and controls the affairs of the Partnership. (See Part III, Item 10,
Directors and Executive Officers of the Partnership).

         Competition

         The General Partner believes that there is significant direct 
competition within a five-mile radius of the Properties. The properties are
located in three distinct areas of the Southeastern United States.

         Trademarks and Patents

         The Partnership has no trademarks or patents.

ITEM 2.  PROPERTIES

         The Partnership owns three tracts of undeveloped land consisting of 
approximately 136 acres in Henry County, Georgia, 19 acres in Greenville, South
Carolina, and 98 acres in Rutherford County, Tennessee.

         Henry County, Georgia Property:

         The Henry County, Georgia Property, after the sale of approximately 13 
acres during 1988 and 1989, 15 acres in 1992, 47 acres in 1993, 73 acres in
1994, 25 acres in 1995 and 44 acres during 1998, consists of approximately 136
acres of undeveloped land, zoned RA/Residential-Agricultural District (which
does not permit construction of multi-family structures), fronting King Mill
Road, Iris Lake Road and Whitaker Road and is located 1.5 miles east of
Interstate 75 in Henry County, Georgia, southeast of the center of Metropolitan
Atlanta. As a result of sales of portions of the Property in prior years, the
Property now consists of two non-contiguous parcels.

         The General Partner has been advised that Rabbit Run Road, running 
along the side of one of the parcels, has been selected for paving and
improvement by the local municipality. This work is scheduled to be done in the
Spring of 1999. Paving of the road will permit the site to be platted and
approved as a subdivision.

         The former general partner had the Henry County Property appraised in 
1997 by Urban Realty Advisors, Inc. The 1997 appraiser has no relationship with
the former general partner or the current General Partner. The property was
appraised in 1997 for $585,000 or approximately $3,250 per acre. The appraiser
used the sales comparison (market) approach to value the Property. Using sales
of similar residential land from the surrounding area, the appraiser determined
an estimate of the value for the remaining Property.

         The appraised value does not reflect costs, expenses and commissions, 
which would be incurred in connection with a sale of the Property. Moreover,
appraisals are only an approximation of current market value, which can only be
established by an actual sale.


                                       2

<PAGE>   6



         On August 18, 1998, the Partnership closed the sale of 44.325 acres of 
Henry County Property for approximately $209,000 less commissions and expenses.

         Greenville, South Carolina Property:

         The Greenville, South Carolina Property currently consists of 
approximately 19 acres of unzoned and generally flat land located approximately
1,200 feet southwest of the I-385 and Fairview Road interchange in Simpsonville,
South Carolina, eight miles southeast of the Greenville city limits and just
outside the town of Simpsonville in Greenville County.

         During 1997, the Partnership sold approximately 1 acre of the 
Greenville Property for $160,000 per acre.

         On April 7, 1998, the Partnership closed the sale of 1.9 acres of the 
Greenville Property for approximately $317,000 less commissions and expenses.

         On May 11, 1998, the Partnership closed the sale of .277 acres of the 
Greenville Property for approximately $27,700 less commissions and expenses.

         On July 30, 1998, the Partnership closed the sale of 2.049 acres of the
Greenville Property for approximately $342,000 less commissions and expenses.

         On August 5, 1998, the Partnership closed the sale of 17.316 acres of 
the Greenville Property for approximately $1,645,000 less commissions and
expenses.

         The former general partner had the Greenville Property appraised in
1996 by Owen Faulkner & Associates. The appraiser has no affiliation with the
former general partner or the current General partner. The Property, which
consisted of approximately 47.5 acres at the time, was appraised for $3,300,000
or approximately $69,474 per acre. The appraisal used the sales comparison
(market) approach to value. A present value analysis (discounted cash flow) was
also conducted to support the market approach and reconcile the final value. The
appraiser used the then current marketing plan and comparable sales in the area
to estimate the value of the tracts of the Property.

         The appraised value does not reflect costs, expenses and commissions, 
which would be incurred in connection with a sale of the property. Moreover,
appraisals are only an approximation of current market value, which can only be
established by an actual sale.

         Rutherford County, Tennessee Property:

         The Rutherford County, Tennessee Property is located approximately 18 
miles southeast of the Nashville Central business district and 10 miles
southeast of the Nashville Metropolitan Airport. Following a sale of four acres
in 1995 and 32.514 acres in 1997, the Property consists of approximately 49
acres in the northeast quadrant of the I-24/Sam Ridley interchange and 49 acres
located at the northeast quadrant of the same interchange, with frontage on the
access road. The four acres sold in 1995 were part of the Property located at
the northwest corner of the I-24 interchange. This land was located along Sam
Ridley and was the portion of the Property located furthest from the interchange
itself and was sold for a price of $50,000 per acre. The 32.514-acre sale in
1997 was also at $50,000 per acre. During 1998 there were no sales of Rutherford
County, Tennessee Property but the Partnership sold an easement for $101,500
less commissions.

         In an effort to make future development of the Property easier, all of
the Property has now been zoned for commercial use and is located entirely
within the Smyrna City Limits rather than part in the City of Smyrna and part in
the City of LaVergne. There is a small cemetery located in the northwest
quadrant of I-24, which the former general partner was aware of at the time of
purchase, and which the General Partner does not believe will have an adverse
effect on the Partnership's ability to sell the land. The I-24/Sam Ridley
Parkway interchange is one exit south of Interchange City Industrial Park, the
largest industrial park in the Nashville area, and 



                                       3

<PAGE>   7


is currently the last I-24 interchange south of the city to which sewer lines
are available. At December 31, 1997, I-24 was being widened to three lanes in
each direction from Bell Road in Nashville to the Sam Ridley interchange. This
widening was completed in 1998.

         The former general partner had the Rutherford County Property appraised
in 1996 by Martin Appraisal Services. The appraiser had no affiliation with the
former general partner, although the president of Martin Appraisal Services
served as a vice president of an affiliate of the current General Partner from
April 1984 to August 1987. The Property was appraised in two tracts; one
consisting of 84.5 acres for $2,250,000 or approximately $26,627 per acre and
the second consisting of 45.05 acres for $2,000,000 or approximately $44,395 per
acre. The appraisal used the sales comparison (market) approach to value the
Property in bulk. The appraiser also estimated the value of the Property if
developed and sold as lots to end-users. The appraiser was able to use several
sales of land that occurred in the past few years along Sam Ridley Parkway in
the sales comparison approach. In the development analysis, the appraiser
evaluated the sale of tracts of land over a three-year period and estimated the
costs of necessary utility improvements. Due to the short period of time
estimated as an absorption period, the appraiser did not discount the cash flow
for the absorption period.

         The appraised value does not reflect costs, expenses and commissions, 
which would be incurred in connection with a sale of the property. Moreover,
appraisals are only an approximation of current market value, which can only be
established by an actual sale.


ITEM 3.  LEGAL PROCEEDINGS

         The Partnership is not directly a party to, nor is the Partnership's 
Property directly the subject of, any material legal proceedings.


ITEM 4.  SUBMISSION OF ITEMS TO A VOTE OF SECURITY HOLDERS

         There were no matters submitted to a vote of security holders in 1998.


                                     PART II

ITEM 5.  MARKET FOR THE PARTNERSHIP'S UNITS OF LIMITED PARTNERSHIP INTEREST AND 
         RELATED SECURITY HOLDER MATTERS

         There is no established public trading market for the Units and it is 
not anticipated that any will develop in the future. The Partnership commenced
an offering to the public on June 8, 1988 of 9,650 units of limited partnership
interests. The offering of $9,650,000 was fully subscribed and terminated on
June 24, 1988. As of December 31, 1998, there were 475 limited partners in the
Partnership.






                                       4
<PAGE>   8


ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
                  For the Year      For the Year    For the Year      For the Year     For the Year
                     Ended             Ended            Ended             Ended           Ended
                  December 31,      December 31,     December 31,      December 31,     December 31,
                     1998              1997              1996              1995            1994
------------------------------------------------------------------------------------------------------
<S>               <C>               <C>             <C>               <C>               <C>
Operating
Revenues          $1,719,053        $1,349,188       $1,007,565        $  925,101       $  108,787
------------------------------------------------------------------------------------------------------
Net Income        $1,620,142        $1,231,547       $  947,477        $  865,009       $   31,186
------------------------------------------------------------------------------------------------------
Net Income per
Unit of Limited
Partnership
Interest          $   167.89        $   127.62       $    98.18        $    89.64       $     3.23
------------------------------------------------------------------------------------------------------
Total Assets      $2,349,250        $2,632,282       $2,693,772        $3,050,057       $3,632,210
------------------------------------------------------------------------------------------------------
Long Term
Obligations       NONE              NONE             NONE              NONE             NONE
------------------------------------------------------------------------------------------------------
Cash
Distributions
Declared per
Unit of Limited
Partnership
Interest          $   186.00        $   150.00       $   134.00        $   150.00       NONE
------------------------------------------------------------------------------------------------------
</TABLE>

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

         Background

         The Partnership was formed to acquire and realize appreciation in the 
Property by holding it for investment and eventual sale. However, there can be
no assurance that the Partnership's objectives will be realized.

         Results of Operations

         The Partnership had no operations from the date of its formation on 
December 14, 1987 until June 24, 1988 when it acquired the first Property and
sold 3,165 units of limited partnership interest. During 1988 the Partnership
acquired three additional Properties and sold 6,485 additional Units of limited
partnership interests.

         In 1988 the Partnership purchased 579 acres of unimproved land at three
locations. The status of these Properties at December 31, 1998 is as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                                     Property Sold Prior to          Remaining Property Held
Place                      Property Purchased        December 31, 1998               for Sale
------------------------------------------------------------------------------------------------------------
<S>                        <C>                       <C>                             <C>
Henry County,              353 Acres                 217 Acres                       136 Acres
Georgia
------------------------------------------------------------------------------------------------------------
Greenville,                91 Acres                  72 Acres                        19 Acres
South Carolina
------------------------------------------------------------------------------------------------------------
Rutherford County,         135 Acres                 37 Acres                        98 Acres
Tennessee
------------------------------------------------------------------------------------------------------------
</TABLE>




                                       5


<PAGE>   9

         1998 Compared to 1997

         During 1998 the Partnership sold 44.325 acres of the Henry County 
Property, 21.542 acres of the Greenville Property, and granted an easement on
the Rutherford County Property. These transactions provided a gain of $1,700,041
compared with gains from sales of Property during 1997 of $1,332,213. Other
revenues in 1998 consisted of $19,012 in interest income compared with interest
income of $16,875 in 1997. During 1998, a distribution of $186 per Unit was made
to the Limited Partners.

         Expenses during 1998 were $98,911, consisting of general and 
administrative expenses of $40,310, management fees of $19,000, real estate
taxes of $38,757 and insurance of $844. The general and administrative expenses
included $30,187 in accounting and legal fees, which represents a $13,830
increase over 1997. This increase was primarily due to fees related to the
change in the general partner, as well as additional assistance that was
required in preparing the income tax return and preparing Securities and
Exchange Commission reports. The general and administrative fees also included
consulting fees of $2,587 related to customizing the General Partner's computer
software for maintaining Limited Partner records. The increase in management
fees between 1997 and 1998 represent new management fees for the new General
Partner which were included as part of an amendment to the Limited Partnership
Agreement. In 1998 there was a $4,353 decrease in real estate tax due to the
sale of land. In 1997, expenses totaled $117,641, consisting of general and
administrative expenses of $22,086, management fees of $2,915, real estate taxes
of $43,110, insurance of $381, and professional fee expenses of $49,149. The
professional fees were related to the change in general partner as an amendment
of the Partnership Agreement in conjunction with a special meeting of the
Limited Partners in November, 1997.

         1997 Compared to 1996

         During 1997 the Partnership sold one acre of the Greenville Property 
and 32.514 acres of the Rutherford County Property for a gain of $1,332,313,
compared with $995,155 in gains from sale of Property in 1996. Other revenues in
1997 consisted of $16,275 in interest income and $600 in partnership transfer
fees, as compared with $9,005 in interest income, $1,250 in transfer fees and
$2,155 in other income in 1996.

         Expenses during 1997 included $49,149 of professional and other fees 
related to the change in general partner and an amendment of the Partnership
Agreement in connection with a special meeting of the Limited Partners in
November, 1997. There were no such fees in 1996. In addition, expenses in 1997
included $2,915 in management fees to the General Partner as compared with
$9,374 in management fees to the former general partner in 1996. The management
fees paid to the former general partner provided for a limit on cumulative
management fees over the life of the partnership and this limit was reached in
1996. The amended Partnership Agreement approved at the November 5, 1997 special
meeting of Limited Partners provides for an annual management fee of $19,000 to
the current General Partner.

         General and administrative expenses decreased from $31,249 in 1996 to 
$22,086 in 1997, primarily due to costs of appraisals in 1996, which were not
recurring expenditures. Real estate taxes increased from $19,116 in 1996 to
$43,110 in 1997 due to a reappraisal of commercial property in Greenville, South
Carolina. Insurance expense in 1997 was approximately the same as in 1996.

         Inflation did not have a material impact on operations during 1998, 
1997 and 1996.

         Liquidity and Capital Resources

         The Partnership had cash reserves of $632,129 at December 31, 1998.  
The General Partner believes that the Partnership has sufficient cash reserves
to cover normal partnership expenses for an additional two years. However, if
additional expenses are incurred or should the Partnership decide to construct
infrastructure improvements to enhance the marketability of the Property, the
reserves may be inadequate to cover the Partnership's operating expenses. If the
reserves are exhausted, the Partnership may have to dispose of some of the
Property or incur indebtedness on unfavorable terms.



                                       6

<PAGE>   10




         Year 2000 Compliance

         The Partnership's operations are not dependent in any meaningful way on
computer hardware or software. The General Partner has determined that the
Partnership's accounting systems and Limited Partner registration records will
not be negatively affected by the so-called "Year 2000 Problem". The "Year 2000
Problem" generally refers to the inability of computer software or hardware to
recognize years in more than two digits. As a result, the year 2000 would appear
as "00" and may be viewed by the computer as the year 1900. This could cause
severe negative consequences in some computer software and hardware.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         The Partnership's financial statements for the years ended December 31,
1998 and 1997 together with the report of the Partnership's independent
auditors, Williams Benator & Libby, LLP, and the financial statements for the
years ended December 31, 1996 and 1995, together with the report of the
partnership's former independent auditors, Ernst & Young LLP, are included in
this form 10-K.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

         Not Applicable.


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP

         The Partnership does not have any directors or officers.  The General 
Partner manages and controls the affairs of the Partnership and has
responsibility for all aspects of the Partnership's operations. The current
members and executive officers and directors of the General Partner are
identified and described below.

         The General Partner is a Tennessee limited liability company whose
members are Richard W. Sorenson, who owns a 50% interest in the General Partner
and has a 51% voting right and Southeast Venture LLC, a Tennessee limited
liability company which owns 50% and has a 49% voting right.

         Mr. Sorenson, age 73, has over 37 years experience in several real 
estate disciplines, including land acquisition and development, development of
office buildings, shopping centers, warehouses and medical facilities. All of
these activities occurred in the southeastern United States.

         Mr. Sorenson was President of Phoenix Investment Company ("Phoenix"), 
a publicly owned, Atlanta based real estate development and investment firm from
1965 to 1970. Concurrent with his employment at Phoenix, he was President of
First Atlanta Realty Fund, a publicly owned real estate investment trust. During
his tenure with the trust, he served as a Trustee of the National Association of
Real Estate Investment Trusts.

         Following his departure from Phoenix in 1970, Mr. Sorenson became Vice 
President of Cousins Properties in Atlanta, where he was responsible for
development of office buildings, shopping centers and apartments until 1971.
Until forming Southeast Venture Companies ("SV") in 1979, Mr. Sorenson was an
independent real estate developer.

         Mr. Sorenson was co-founder of SV in 1979.  In 1992, substantially all
of the assets of SV were sold to Southeast Venture Corporation.

         Mr. Sorenson is a graduate of the Northwestern University Business 
School with a major in real estate.



                                       7
<PAGE>   11

         The other member of the General Partner is Southeast Venture LLC
("SVLLC"). The officers and key employees of SVLLC include the following:

         Paul J. Plummer, age 49.  Mr. Plummer serves as director of project 
management services for SVLLC. Mr. Plummer is responsible for management, team
structuring, cost control and scheduling of large scale projects for SVLLC
including office buildings, medical centers, commercial office buildings,
commercial land ventures and build-to-suit projects. Before joining SVLLC in
1986, Mr. Plummer served as a partner and director of design for the
Nashville-based architecture and engineering firm of Gresham, Smith and
Partners. In that capacity he was responsible for the design and planning of
over 15 major projects throughout the United States and Saudi Arabia. Mr.
Plummer earned his bachelor of architecture degree from the University of
Kentucky and is a member of the American Institute of Architects.

         Wood S. Caldwell, age 45.  Mr. Caldwell is responsible for all site 
development activities on behalf of commercial and health care clients of SVLLC,
including managing all design consultants, permitting, scheduling, budgeting and
construction management. He contributes to SVLLC's development team in the areas
of land planning, zoning, permitting, engineering and construction. Before
joining SVC in 1985, Mr. Caldwell served as a professional engineer for Gresham,
Smith and Partners. As the prime site design engineer for Gresham, Smith and
Partners, Mr. Caldwell produced and coordinated site development plans for over
50 separate medical facilities in over 40 different communities throughout the
southeast. Mr. Caldwell earned his bachelor of engineering degree from the
Vanderbilt University School of Engineering.

         Axson E. West, age 44.  Mr. West serves as vice president of brokerage 
services for SVLLC, specializing in office and industrial leasing, improved
property sales and land disposition for several commercial and residential
projects. Mr. West has sold real estate and real estate securities since 1980
and, since joining SVC in 1988, he has been responsible for the disposition of
land encompassing industrial, office and retail developments. Mr. West is
director of the Nashville Board of Realtors and president elect of the board's
commercial investment division. He received his Bachelor of Arts degree from
Vanderbilt University and is a Certified Commercial Investment Member, a
designation of the Commercial Investment Real Estate Institute.

         Cameron W. Sorenson, age 37.  Mr. Sorenson serves as director of 
vertical development for SVLLC. He is primarily responsible for providing
development and project management for the clients of SVLLC. Prior to assuming
these responsibilities, Mr. Sorenson was project director for two large-scale
land development ventures for SVLLC. Prior to joining SVC in 1987, Mr. Sorenson
was with Trust Company Bank in Atlanta, as an officer in the National Division,
managing a credit portfolio in excess of $150 million. He received his Bachelor
of Science degree in finance from the MacIntyre School of Business at the
University of Virginia. Cameron Sorenson is the son of Richard W. Sorenson, the
individual majority member of the General Partner.

         Randy W. Parham, age 44.  Mr. Parham is the President of SVLLC.  He is 
primarily responsible for property management, park and association management
and also specializes in real estate development and brokerage. Mr. Parham is a
licensed real estate broker and architect. Prior to joining SVLLC in 1998, Mr.
Parham was a project manager with Gresham, Smith and Partners from 1978 to 1983
and was responsible for overall project management of project team and project
financial management. Following his departure from Gresham, Smith and Partners,
Mr. Parham joined Metrocenter Properties, Inc., an 850 acre mixed-use
development in Nashville, Tennessee. He was Vice-President and was responsible
for initiation and development of new projects, land sales and lease
negotiations. In 1991 he purchased the assets of Metro Center Properties and
formed Metro Center Management, Inc. where he served as President through 1997.


ITEM 11. EXECUTIVE COMPENSATION

         During the fiscal year ended December 31, 1998 and 1997, the 
Partnership did not pay compensation to any officers of the General Partner. The
Partnership paid to the General Partner management fees of $19,000 and $2,915 in
the fiscal years ended December 31, 1998 and 1997, respectively. See Item 13 of
this report, "Certain Relationships and Related Transactions".



                                       8

<PAGE>   12



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         As of December 31, 1998 no person or "group" (as that term is used in 
Section 13(d) (3) of the Securities Exchange Act of 1934) was known to the
Partnership to beneficially own more than 5% of the Units of the Partnership.

         Security Ownership of Management

         No individual member, or director or officer of a member, of the 
General Partner nor such directors or officers as a group, owns any of the
Partnership's outstanding securities. The General Partner owns a general
partnership interest which entitles it to receive 30% of cash distributions
after the Limited Partners have received cumulative distributions equal to a 10%
non-compounded Cumulative Annual Return on their Adjusted Capital Contribution
plus a return of their Capital Contributions as those terms are defined in the
Partnership Agreement. The General Partner will share in taxable income to
reflect cash distributions or, to the extent there are losses, 1% of such
losses.

         Changes in Control

         There are no arrangements known to the Partnership that would at any 
subsequent date result in a change in control of the Partnership.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         From 1988 through 1996, the Partnership paid $18,753 annually as an 
administration fee to the former general partner. This fee was computed as one
quarter of one percent of the base cost of the land. The cumulative amount of
such fee could not exceed $150,021 and, as of December 31, 1996, fees charged
since inception amounted to $150,021. As of November 5, 1997, the Limited
Partners voted and agreed to pay the new General Partner, Southern Management
Group, LLC, a fee of $2,915 for the period November 5, 1997 through December 31,
1997 and annual fees of $19,000 from January 1, 1998 through December 31, 2000.
Any fee payments would cease at a date when the Partnership was liquidated.

         The General Partner will also receive 30% of cash distributions after 
the Limited Partners have received (i) cumulative distributions equal to a 10%
Cumulative Annual Return on their Adjusted Capital Contributions plus (ii) a
return of their Capital Contributions (as those terms are defined in the
Partnership Agreement). During 1998, 1997 and 1996, the General Partner received
no cash distributions.

         At the special meeting of Limited Partners held on November 5, 1997, 
the Partnership Agreement was amended to provide that total compensation paid to
all persons, including the General Partner, for the sale of the Partnership's
property is limited to a competitive real estate commission or disposition fee
not to exceed 10% of the contract price of the sale of the property. Any such
real estate commission or disposition fee paid to the General Partner will
reduce any distribution to which it would otherwise be entitled under the
amended Partnership Agreement. In addition, the Partnership Agreement was
amended to provide that the General Partner may act as the exclusive agent for
the sale of the Property. During 1998, the Partnership paid real estate sales
commissions of $66,692 to the General Partner. No real estate sales commissions
were paid to the General Partner in 1997. In addition, the Partnership paid real
estate sales commissions of $10,150 and $130,060 to affiliates of the General
Partner during 1998 and 1997, respectively.




                                       9

<PAGE>   13



                                     PART IV

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

<TABLE>
<CAPTION>
(a)      Index to Financial Statements                                    Page
<S>      <C>                                                              <C>
         Report of Independent Auditors for 1998 and 1997                  F-1
         Balance Sheets                                                    F-2
         Statements of Income                                              F-3
         Statements of Partners' Equity                                    F-4
         Statements of Cash Flows                                          F-5
         Notes to Financial Statements                                     F-6
         Report of Independent Auditors for 1996 and 1995                  F-11
         Balance Sheets                                                    F-12
         Statements of Operations                                          F-13
         Statements of Partners' Equity (Deficit)                          F-14
         Statements of Cash Flows                                          F-15
         Notes to Financial Statements                                     F-16

         Schedules have been omitted because they are inappropriate, 
         not required, or the information is included elsewhere in 
         the financial statements or notes thereto.


(b)      Reports on Form 8-K

         No reports on Form 8-K were filed by the Partnership
         during the fourth quarter of 1998.


(c)      Exhibits (numbered in accordance with Item 601 of Regulation S-K)

</TABLE>


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Exhibit Numbers                      Description                            Page Numbers
----------------------------------------------------------------------------------------
<S>                     <C>                                                 <C>
3.1 (a)                 Certificate of Limited Partnership                  *
----------------------------------------------------------------------------------------
3.1 (b) & (4)           Restated Limited Partnership Agreement              **
----------------------------------------------------------------------------------------
3.1                     First Amendment to Restated Limited                 E-1
                        Partnership Agreement
----------------------------------------------------------------------------------------
9                       Not Applicable
----------------------------------------------------------------------------------------
11                      Not Applicable
----------------------------------------------------------------------------------------
12                      Not Applicable
----------------------------------------------------------------------------------------
13                      Not Applicable
----------------------------------------------------------------------------------------
16                      Not Applicable
----------------------------------------------------------------------------------------
18                      Not Applicable
----------------------------------------------------------------------------------------
19                      Not Applicable
----------------------------------------------------------------------------------------
22                      Not Applicable
----------------------------------------------------------------------------------------
</TABLE>


                                       10

<PAGE>   14


<TABLE>
<S>                     <C>
24                      Not Applicable
----------------------------------------------------------------------------------------
25                      Not Applicable
----------------------------------------------------------------------------------------
27                      Financial Data Schedule (for SEC use only)
----------------------------------------------------------------------------------------
29                      Not Applicable
----------------------------------------------------------------------------------------
</TABLE>

*    Incorporated by reference to Exhibit 3.1 filed as part of the Exhibits to
     the Partnership's Registration Statement on Form S-18, Registration No.
     33-20255.

**   Incorporated by reference to Exhibit 3.2 filed as part of the Partnership's
     Registration Statement on Form S-18, Registration No. 33-20255.






                                       11

<PAGE>   15


                                   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.

                                 SOUTHEAST ACQUISITIONS II, L.P.
                                 a Delaware limited partnership

                                 By:    SOUTHERN MANAGEMENT GROUP, LLC
                                        General Partner

                                 By:     /s/ Richard W. Sorenson
                                         ---------------------------------------
                                         RICHARD W. SORENSON
                                         President and Chief Executive Officer


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

<TABLE>
<CAPTION>
Signature                                   Title                                       Date
---------                                   -----                                       ----
<S>                                         <C>                                         <C>
/s/ Richard W. Sorenson                     President, Chief Executive                  March 11, 1999
-------------------------------             Officer and Chief Financial Officer
                                            of Southern Management Group, LLC.

</TABLE>










                                       12

<PAGE>   16
                         SOUTHEAST ACQUISITIONS II, L.P.

                          AUDITED FINANCIAL STATEMENTS

                                DECEMBER 31, 1998

                                      with

                          INDEPENDENT AUDITORS' REPORT



<PAGE>   17








                         REPORT OF INDEPENDENT AUDITORS


Partners
Southeast Acquisitions II, L.P.
Nashville, Tennessee


We have audited the accompanying balance sheets of Southeast Acquisitions II,
L.P. (a Delaware limited partnership) as of December 31, 1998 and 1997, and the
related statements of income, partners' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Southeast Acquisitions II, L.P.
as of December 31, 1998 and 1997, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.


WILLIAMS BENATOR & LIBBY, LLP

Atlanta, Georgia
January 15, 1999






                                       F-1


<PAGE>   18


BALANCE SHEETS

SOUTHEAST ACQUISITIONS II, L.P.


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

Land held for sale--Note D                              $1,602,084   $2,287,806
Cash and cash equivalents                                  632,129      344,476
Cash held in escrow--Note E                                 88,406          -0-
Property tax reimbursement due from purchaser of land       26,631          -0-
                                                        ----------   ----------

                                                        $2,349,250   $2,632,282
                                                        ==========   ==========


LIABILITIES AND PARTNERS' EQUITY

Accounts payable and accrued expenses--Note B           $   52,899   $   52,410
Escrow payable                                                 -0-       99,000
Payable to affiliate--Note B                                   -0-       13,954

Partners' equity--Note C:
    General partner                                         26,122        9,921
    Limited partners (9,650 units outstanding)           2,270,229    2,456,997
                                                        ----------   ----------
                                                         2,296,351    2,466,918
                                                        ----------   ----------

                                                        $2,349,250   $2,632,282
                                                        ==========   ==========

</TABLE>


See notes to financial statements.





                                      F-2






<PAGE>   19


STATEMENTS OF INCOME

SOUTHEAST ACQUISITIONS II, L.P.


<TABLE>
<CAPTION>
                                                     Year Ended December 31
                                                       1998         1997
                                                    ----------   ----------
<S>                                                 <C>          <C>
Revenues:
    Gain on sale of land                            $1,608,691   $1,332,313
    Gain on sale of easement                            91,350          -0-
    Interest and other income                           19,012       16,875
                                                    ----------   ----------
                                                     1,719,053    1,349,188
Expenses:
    General and administrative                          40,310       22,086
    Management fees--Note B                             19,000        2,915
    Real estate taxes                                   38,757       43,110
    Insurance                                              844          381
    Professional and other fees related to change
      in general partner and amendment of
      Partnership agreement                                -0-       49,149
                                                    ----------   ---------- 
                                                        98,911      117,641
                                                    ----------   ----------

Net income:
    General partners                                    16,201       12,315
    Limited partners                                 1,603,941    1,219,232
                                                    ----------   ----------

                                                    $1,620,142   $1,231,547
                                                    ==========   ==========

Net income per limited partnership unit             $   167.89   $   127.62
                                                    ==========   ==========
</TABLE>


See notes to financial statements.





                                       F-3


<PAGE>   20


STATEMENTS OF PARTNERS' EQUITY

SOUTHEAST ACQUISITIONS II, L.P.


<TABLE>
<CAPTION>

                                                General            Limited
                                               Partners            Partners             Total
                                              -----------        ------------       -------------
<S>                                           <C>                <C>                <C>
Balance at January 1, 1997                    $    (2,394)       $   2,685,263      $    2,682,869

Distributions ($150 per unit)                         -0-           (1,447,498)         (1,447,498)

Net income for the year ended
    December 31, 1997                              12,315            1,219,232           1,231,547
                                              -----------        -------------      --------------

Balance at December 31, 1997                        9,921            2,456,997           2,466,918

Distributions ($186 per unit)                         -0-           (1,790,709)         (1,790,709)

Net income for the year ended
    December 31, 1998                              16,201            1,603,941           1,620,142
                                              -----------       --------------     ---------------

Balance at December 31, 1998                  $    26,122        $   2,270,229      $    2,296,351
                                              ===========        =============      ==============
</TABLE>



See notes to financial statements.








                                       F-4


<PAGE>   21


STATEMENTS OF CASH FLOWS

SOUTHEAST ACQUISITIONS II, L.P.



<TABLE>
<CAPTION>
                                                                                      Year Ended December 31
                                                                                        1998           1997
                                                                                    -----------    -----------
<S>                                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                                                      $ 1,620,142    $ 1,231,547
    Adjustments to reconcile net income to net
       cash provided by operating activities:
         Gain on sale of land                                                        (1,608,691)    (1,332,313)
         Proceeds from sale of land, net of escrowed cash
             of $88,406 in 1998                                                       2,206,007      1,624,987
         Increase in property tax reimbursement due from
             purchaser of land                                                          (26,631)           -0-
         Increase in accounts payable and accrued expenses                                  489         41,507
         (Decrease) increase in escrow payable                                          (99,000)        99,000
         (Decrease) increase in payable to affiliate                                    (13,954)        13,954
                                                                                    -----------    -----------
                                                            NET CASH PROVIDED BY
                                                             OPERATING ACTIVITIES     2,078,362      1,678,682

CASH FLOWS FROM FINANCING ACTIVITIES
    Distributions to limited partners                                                (1,790,709)    (1,447,498)
                                                                                    -----------    -----------
                                                             INCREASE IN CASH AND
                                                                 CASH EQUIVALENTS       287,653        231,184

Cash and cash equivalents at beginning of year                                          344,476        113,292
                                                                                    -----------    -----------

                                                       CASH AND CASH EQUIVALENTS
                                                                   AT END OF YEAR   $   632,129    $   344,476
                                                                                    ===========    ===========
</TABLE>



See notes to financial statements.









                                       F-5


<PAGE>   22


NOTES TO FINANCIAL STATEMENTS

SOUTHEAST ACQUISITIONS II, L.P.

December 31, 1998


NOTE A--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Southeast Acquisitions II, L.P. ("the Partnership") is a Delaware limited
partnership that was formed to acquire and sell undeveloped land. The
Partnership was formed during December 1987 and received equity contributions
totaling $9,650,000 through the sale of 9,650 limited partnership units during
1988. The Partnership was originally scheduled to terminate on December 31,
1998. However, during November 1997, concurrent with the replacement of the
previous general partner, the term of the Partnership was extended to December
31, 2000.

During 1988, the Partnership purchased undeveloped land as follows:
approximately 135 acres near Nashville, Tennessee, approximately 91 acres in
Greenville, South Carolina, and approximately 353 acres near Atlanta, Georgia.
This land was purchased from an affiliate of the previous general partner. The
three tracts of land are being marketed for sale. At December 31, 1998, the
remaining land consisted of approximately 98 acres of the Tennessee land,
approximately 19 acres of the South Carolina land and approximately 136 acres of
the Georgia land.

The following accounting policies are presented to assist the reader in
understanding the Partnership's financial statements:

Basis of Accounting: The Partnership maintains its accounting records on the
accrual basis of accounting. Sales of land are recognized upon the closing of an
enforceable sales contract and the Partnership's execution of its obligations
under the contract.

Land Held for Sale: Land is carried at the lower of cost or fair value less
estimated cost to sell. The Partnership's land is carried net of the remaining
portion of an original write-down of $3,467,829 that was recognized during 1991.

Income Taxes: Federal and state income taxes have not been provided for in the
financial statements. Under existing law, the Partnership is not treated as a
taxable entity. Rather, each partner must include his allocated share of
Partnership income, loss, gain, deduction, and credit in his individual income
tax return. The write-down of the land's carrying value that has been recorded
for financial statement purposes will not be recognized for income tax purposes
until the land is sold. At December 31, 1998 and 1997, the remaining portion of
the 1991 write-down that had not been recognized for income tax purposes totaled
$2,521,015.




                                       F-6


<PAGE>   23


NOTES TO FINANCIAL STATEMENTS--Continued

SOUTHEAST ACQUISITIONS II, L.P.


NOTE A--DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES--Continued

Estimates: 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
disclosures 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.

Cash Equivalents: For purposes of reporting cash flows, the Partnership
considers all demand deposits and highly liquid investments purchased with an
original maturity of three months or less which can be readily converted to cash
on demand, without penalty, to be cash equivalents. At December 31, 1998, cash
on deposit included approximately $623,000 in excess of federally insured
limits.


NOTE B--RELATED PARTY TRANSACTIONS

During the years ended December 31, 1998 and 1997, the Partnership paid
management fees of $19,000 and $2,915, respectively, to the current general
partner, as provided for in the amendment to the partnership agreement that was
adopted during November 1997. No management fees were paid to the previous
general partner since aggregate management fees that had been authorized by the
original partnership agreement had been satisfied during a prior year.

The amended partnership agreement provides for annual management fees of $19,000
to be paid to the current general partner through the year ended December 31,
2000.

At December 31, 1997, the Partnership owed $5,536 to companies related to the
current general partner for legal fees incurred for the change in general
partner and approval of the amendments to the partnership agreement. At December
31, 1997, the partnership also owed $13,954 to Southeast Acquisitions III, L.P.,
a partnership with the same general partner.

During the year ended December 31, 1998, sales commissions totaling $66,692 were
paid to the current general partner related to sales of land. During the years
ended December 31, 1998 and 1997, sales commissions of $10,150 and $130,060,
respectively, were paid to one of the current general partner's members and a
related company.




                                       F-7


<PAGE>   24


NOTES TO FINANCIAL STATEMENTS--Continued

SOUTHEAST ACQUISITIONS II, L.P.


NOTE B--RELATED PARTY TRANSACTIONS--Continued

The Partnership agreement provides for reimbursement of expenses incurred by the
general partner related to the administration and operation of the Partnership.
Reimbursements to the current general partner's members and related companies
totaled $9,265 during the year ended December 31, 1998. Reimbursements to the
previous general partner totaled $43,440 during the year ended December 31,
1997. No reimbursements were paid to the current general partner during the year
ended December 31, 1997.


NOTE C--PARTNERS' EQUITY

In accordance with the partnership agreement (as amended in November 1997), cash
distributions and Partnership profits and losses are to be allocated as follows:

(a)      Except for distributions in connection with the liquidation of the
         Partnership, cash distributions are to be made 100% to the limited
         partners until the limited partners have received (i) cumulative
         distributions equal to their 10% noncompounded cumulative annual return
         on their adjusted capital contribution, as defined ($1,259,493 at
         December 31, 1998) plus (ii) a return of their capital contributions
         ($9,650,000 at December 31, 1998); thereafter, distributions will be
         made 70% to the limited partners and 30% to the general partner.
         Distributions in connection with the Partnership's liquidation will be
         made in accordance with the partners' capital accounts as maintained
         for federal income tax purposes.

(b)      Profits and losses are to be allocated as provided in the partnership
         agreement. Generally, profits will be allocated to the partners to
         reflect cash distributions or to offset negative balances in the
         partners' capital accounts, but at least 1% of profits will be
         allocated to the general partner. Losses will generally be allocated
         99% to the limited partners, in proportion to their units, and 1% to
         the general partner, or to reduce any positive account balances in the
         partners' capital accounts.

Upon Partnership dissolution and termination, the general partner is required to
contribute to the capital of the Partnership the lesser of any negative amount
of its capital account as defined, or 1.01% of the capital contributions made by
the limited partners. Any amount so contributed shall be distributed to the
limited partners in proportion to their positive capital account balances.

During the years ended December 31, 1998 and 1997, the Partnership paid
distributions against the limited partners' cumulative annual return in
accordance with the partnership agreement of $1,790,709 and $1,447,498, or per
unit amounts of $186 and $150, respectively.


                                       F-8


<PAGE>   25


NOTES TO FINANCIAL STATEMENTS--Continued

SOUTHEAST ACQUISITIONS II, L.P.


NOTE C--PARTNERS' EQUITY--Continued

Cumulative distributions applied against the limited partners' cumulative annual
return through December 31, 1998 totaled $8,873,807, or $920 per unit.

Total compensation paid to all persons, including the general partner, upon the
sale of the Partnership's property is limited to a competitive real estate
commission or disposition fee not to exceed 10% of the contract price. Any such
commission or disposition fee paid to the general partner would reduce any
distribution which it would otherwise be entitled to pursuant to the partnership
agreement. The general partner or an affiliate may be given an exclusive right
to sell property for the Partnership. The Partnership has committed to pay 40%
of total sales commissions on future sales of the Nashville, Tennessee land to
the previous general partner.


NOTE D--SUMMARY OF PROPERTY AND ACTIVITY

At December 31, 1998 land consisted of the following:

<TABLE>
<CAPTION>
                                                                         Gross Amount
                                                                      at Which Carried at
          Description                           Initial Cost           December 31, 1998            Date Acquired
-----------------------------------             ------------           ------------------           -------------
<S>                                             <C>                   <C>                           <C>
98 acres of unimproved land
    in Rutherford County, Tennessee             $   3,321,198            $     800,183                June 1988

19 acres of unimproved land in
    Greenville, South Carolina                        515,326                  515,326                June 1988

136 acres of unimproved land in
    Henry County, Georgia                             286,575                  286,575                July 1988
                                                -------------            -------------

                                                $   4,123,099            $   1,602,084
                                                =============            =============
</TABLE>

There were no liens on the land as of December 31, 1998. At December 31, 1998,
the aggregate carrying value of the land for income tax purposes was $4,123,099.
The difference between the carrying value for financial statement purposes and
income tax purposes resulted from a write-down of the Tennessee property's
carrying value that was recorded for financial statement purposes during 1991 as
more fully described in Note A.


                                       F-9


<PAGE>   26


NOTES TO FINANCIAL STATEMENTS--Continued

SOUTHEAST ACQUISITIONS II, L.P.


NOTE D--SUMMARY OF PROPERTY AND ACTIVITY--Continued

Land activity during the years ended December 31, 1997 and 1998 consisted of the
following:

<TABLE>
<S>                                                                             <C>
         Balance at January 1, 1997                                             $2,580,480
         Additions                                                                     -0-
         Deductions--cost of land sold                                            (292,674)
                                                                                ----------

                                               Balance at December 31, 1997      2,287,806
         Additions                                                                     -0-
         Deductions--cost of land sold                                            (685,722)

                                               Balance at December 31, 1998     $1,602,084
                                                                                ==========
</TABLE>


NOTE E--CASH HELD IN ESCROW

At December 31, 1998, cash held in escrow consisted of $88,406 to pay for sewer
construction on the land located in Greenville, South Carolina as required in
connection with the sale of an adjoining land parcel.















                                      F-10

<PAGE>   27


                         Southeast Acquisitions II, L.P.

                              Financial Statements

                     Years ended December 31, 1996 and 1995




                                    CONTENTS

<TABLE>
<S>                                                                      <C>
Report of Independent Auditors...........................................F-12

Audited Financial Statements

Balance Sheets...........................................................F-13
Statements of Operations.................................................F-14
Statements of Partners' Equity (Deficit).................................F-15
Statements of Cash Flows ................................................F-16
Notes to Financial Statements............................................F-17
</TABLE>





                                      F-11

<PAGE>   28







                         Report of Independent Auditors


To the Partners of 
Southeast Acquisitions II, L.P.


We have audited the balance sheets of Southeast Acquisitions II, L.P. (a
Delaware limited partnership) as of December 31, 1996 and 1995, and the related
statements of operations, partners' equity (deficit), and cash flows for each of
the three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Southeast Acquisitions II, L.P.
as of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996, in
conformity with generally accepted accounting principles.

                                                     /s/ Ernst & Young LLP

Philadelphia, Pennsylvania
March 7, 1997



                                      F-12
<PAGE>   29


                         Southeast Acquisitions II, L.P.

                                 Balance Sheets




<TABLE>
<CAPTION>
                                                                              DECEMBER 31
                                                                      1996                  1995
                                                              --------------------------------------------

<S>                                                           <C>                      <C>           
ASSETS
Land, net                                                        $    2,580,480        $    2,963,920
Cash and cash equivalents                                               113,292                86,137
                                                              --------------------------------------------
                                                                 $    2,693,772        $    3,050,057
                                                              ============================================

LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
Accrued expenses                                                 $       10,903        $       16,877
Due to affiliate                                                              -                 4,688

Partners' equity (deficit):
    General                                                              (2,394)              (11,869)
    Limited (9,650 units authorized, issued and outstanding)
                                                                      2,685,263             3,040,361
                                                              --------------------------------------------
                                                                 $    2,693,772        $    3,050,057
                                                              ============================================
</TABLE>

See accompanying notes.



                                      F-13
<PAGE>   30


                         Southeast Acquisitions II, L.P.

                            Statements of Operations



<TABLE>
<CAPTION>

                                                             YEAR ENDED DECEMBER 31
                                                1996                   1995                   1994
                                        -----------------------------------------------------------------
<S>                                     <C>                       <C>                    <C>        
Revenue:
    Interest and other income               $     12,410          $     14,900           $      9,022
    Net gain on sales of land                    995,155               910,201                 99,765
                                        -----------------------------------------------------------------
                                               1,007,565               925,101                108,787

Expenses:
    General and administrative                    31,249                21,847                 29,603
    Management fee                                 9,374                18,753                 18,753
    Real estate taxes                             19,116                18,964                 22,528
    Insurance                                        349                   528                  6,717
                                        -----------------------------------------------------------------
                                                  60,088                60,092                 77,601
                                        -----------------------------------------------------------------
Net Income:
    Allocated to General Partner                   9,475                 8,650                    312
    Allocated to Limited Partners
                                                 938,002               856,359                 30,874
                                        -----------------------------------------------------------------
                                            $    947,477          $    865,009           $     31,186
                                        =================================================================

Net income per limited
    partnership unit                        $      98.18          $      89.64           $       3.23
                                        =================================================================
</TABLE>


See accompanying notes.


                                      F-14
<PAGE>   31


                         Southeast Acquisitions II, L.P.

                    Statements of Partners' Equity (Deficit)



<TABLE>
<CAPTION>

                                              GENERAL             LIMITED
                                              PARTNER            PARTNERS              TOTAL
                                        ------------------------------------------------------------

<S>                                     <C>                   <C>                 <C>           
Balance, January 1, 1994                  $      (20,831)     $    3,600,628      $    3,579,797
    Net income                                       312              30,874              31,186
                                        -----------------------------------------------------------
Balance, December 31, 1994                       (20,519)          3,631,502           3,610,983
    Capital distribution                               -          (1,447,500)         (1,447,500)
    Net income                                     8,650             856,359             865,009
                                        -----------------------------------------------------------
Balance, December 31, 1995                       (11,869)          3,040,361           3,028,492
    Capital distributions                              -          (1,293,100)         (1,293,100)
    Net income                                     9,475             938,002             947,477
                                        -----------------------------------------------------------
Balance, December 31, 1996                $       (2,394)     $    2,685,263      $    2,682,869
                                        ===========================================================
</TABLE>


See accompanying notes.



                                      F-15
<PAGE>   32


                         Southeast Acquisitions II, L.P.

                            Statements of Cash Flows


<TABLE>
<CAPTION>

                                                                         YEAR ENDED DECEMBER 31
                                                                1996              1995             1994
                                                          -----------------------------------------------------

<S>                                                       <C>                <C>                <C>          
OPERATING ACTIVITIES
Net income                                                  $      947,477   $      865,009     $      31,186
Adjustments to reconcile net income to
    net cash provided by operating activities:
       Gain on sales of land                                      (995,155)        (910,201)          (99,765)
       Proceeds from sales of land parcels                       1,378,595        1,111,473           302,902
       Changes in operating assets and
          liabilities:
              Accrued expenses                                      (5,974)             338           (17,452)
              Due to affiliate                                      (4,688)               -                 -
                                                          -----------------------------------------------------
Net cash provided by operating activities                        1,320,255        1,066,619           216,871

FINANCING ACTIVITIES
Distribution to limited partners                                (1,293,100)      (1,447,500)                -
                                                          -----------------------------------------------------
Net cash used in financing activities                           (1,293,100)      (1,447,500)                -
                                                          -----------------------------------------------------
Net increase (decrease) in cash
    and cash equivalents                                            27,155         (380,881)          216,871

Cash and cash equivalents, beginning of year                        86,137          467,018           250,147
                                                          -----------------------------------------------------
Cash and cash equivalents, end of year                      $      113,292   $       86,137     $     467,018
                                                          =====================================================
</TABLE>



See accompanying notes.




                                      F-16
<PAGE>   33


                         Southeast Acquisitions II, L.P.

                          Notes to Financial Statements

                                December 31, 1996

1. DESCRIPTION OF BUSINESS

Southeast Acquisitions II, L.P. is a Delaware limited partnership. The General
Partner (Southeast Acquisitions, Inc.) is an indirect wholly-owned subsidiary of
The Fidelity Mutual Life Insurance Company (in Rehabilitation). Per the
Partnership Agreement, the Partnership shall exist for a term ending December
31, 1998, at which time it shall be dissolved.

Fidelity Mutual Life Insurance Company (the Company) was placed into
Rehabilitation, as defined, by the Commonwealth Court of Pennsylvania on
November 6, 1992 and it remains in Rehabilitation as of the report date. The
General Partner does not at this time expect that the Rehabilitation of the
Company will negatively impact the operation of either the General Partner or
the Partnership. The Company's Rehabilitation Plan, originally filed in June
1994, was amended in January 1995 and again in June 1996.

The Partnership purchased approximately 86 acres of unimproved land near
Nashville, Tennessee on June 24, 1988 from Southeastern Land Fund, Inc. (SELF),
an affiliate of the General Partner. An additional 49 acres of unimproved land
adjacent to the first 86 acres was purchased from SELF on June 29, 1988. On July
6, 1988, the Partnership purchased approximately 91 acres of unimproved land in
Greenville, South Carolina, and on July 18, 1988, purchased approximately 353
acres of unimproved land near Atlanta, Georgia from SELF. The four tracts of
unimproved land are being marketed for sale and will be sold as conditions
warrant.

2. SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING

The Partnership maintains its accounting records on the accrual basis of
accounting.

LAND

Land is carried at the lower of cost or fair value less estimated cost to sell.
The carrying value of land, as disclosed on the balance sheet, is net of a
$3,467,829 write-down in 1991.

CASH EQUIVALENTS

For purposes of reporting cash flows, short-term investments which have an
original maturity of three months or less are considered cash equivalents.





                                      F-17
<PAGE>   34


                         Southeast Acquisitions II, L.P.

                    Notes to Financial Statements (continued)



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

INCOME TAXES

In conformity with the Internal Revenue Code and applicable state and local tax
statutes, taxable income or loss of the Partnership is required to be reported
in the tax returns of the partners in accordance with the term of the
Partnership Agreement. Accordingly, no provision has been made in the
accompanying financial statements for any federal, state, or local income tax.

USE OF ESTIMATES

The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect various amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

3. RELATED-PARTY TRANSACTIONS

Management fees were paid to the General Partner totaling $9,374, $18,753, and
$18,753 in 1996, 1995, and 1994, respectively. The annual management fee is
computed as one-quarter of one percent of the original cost of the land. The
cumulative amount of such fees may not exceed $150,021 as provided by the
Partnership Agreement, and such fees charged since inception amount to $150,021.

4. PARTNERS' EQUITY

The Partnership received equity contributions totaling $9,650,000 through the
sale of 9,650 limited partnership units in 1988.

During 1995, the Partnership made distributions to the limited partners in the
amount of $150 per unit, or $1,447,500. The distributions represented a payment
of earnings in the amount of $88.74 per unit, or $856,000 and a return of basis
in the amount of $61.26 per unit, or $591,000.

During 1996, the Partnership made distributions to the limited partners in the
amount of $134 per unit, or $1,293,100. The distributions represented a payment
of earnings in the amount of $97.20 per unit, or $938,000 and a return of basis
in the amount of $36.80 per unit, or $355,000.




                                      F-18
<PAGE>   35

                         Southeast Acquisitions II, L.P.

                    Notes to Financial Statements (continued)



4. PARTNERS' EQUITY (CONTINUED)

Cumulative distributions through December 31, 1996, in the amount of $584 per
unit, or $5,635,600 represented a payment of earnings in the amount of $218 per
unit, or $2,104,000 and a return of basis in the amount of $366 per unit, or
$3,531,600.

In accordance with the Partnership Agreement, cash distributions and profits or
losses for each year of the Partnership shall be allocated as follows:

(a)      Cash Distributions--Except for distributions in connection with the
         liquidation of the Partnership, cash distributions, if any, will be
         made 100% to the limited partners until the limited partners have
         received (i) cumulative distributions equal to their 10% noncompounded
         cumulative annual return on their adjusted capital contributions, as
         defined ($2,567,700 at December 31, 1996) plus (ii) a return of their
         capital contributions ($9,650,000 at December 31, 1996); thereafter,
         distributions will be made 70% to the limited partners and 30% to the
         General Partner. Distributions in connection with the Partnership's
         liquidation will be made in accordance with the partners' capital
         accounts as maintained for federal income tax purposes.

(b)      Profits and Losses--Profits generally will be allocated to the partners
         to reflect cash distributions, but at least 1% of profits will be
         allocated to the General Partner. Losses, if any, generally will be
         allocated 99% to the limited partners and 1% to the General Partner. In
         no event will the General Partner be allocated less than 1% of profits
         or losses for any year.

The Partnership Agreement also provides that upon Partnership dissolution or
termination, the General Partner shall contribute to the capital of the
Partnership the lesser of any negative amount of its capital account, as
defined, or 1.01% of the capital contributions made by the limited partners. Any
amount so contributed shall be distributed to the limited partners in proportion
to their positive capital account balances.




                                      F-19