March 30, 2000



United States
Securities and Exchange Commission
Washington, D.C.  20549


RE:   United Investors Growth Properties II
      Form 10-KSB
      File No. 0-19242


To Whom it May Concern:

The  accompanying  Form 10-KSB for the year ended  December 31, 1999 describes a
change in the method of  accounting to  capitalize  exterior  painting and major
landscaping,   which  would  have  been  expensed  under  the  old  policy.  The
Partnership believes that this accounting principle change is preferable because
it  provides a better  matching  of  expenses  with the  related  benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.

Please do not hesitate to contact the undersigned with any questions or comments
that you might have.

Very truly yours,



Stephen Waters
Real Estate Controller


<PAGE>



                     FORM 10-KSB--Annual or Transitional Report

                            Under Section 13 or 15(d)

                                   FORM 10-KSB

[X]  Annual Report Under Section 13 or 15(d) of the  Securities  Exchange Act of
     1934 [No Fee Required]

                    For the fiscal year ended December 31, 1999

[ ]  Transition  Report Under Section 13 or 15(d) of the  Securities  Exchange
     Act of 1934 [No Fee Required]

                        For the transition period from to

                         Commission file number 0-19242

                       UNITED INVESTORS GROWTH PROPERTIES II
                   (Name of small business issuer in its charter)


           Missouri                                             43-1542902
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                             Identification No.)

                          55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602

                      (Address of principal executive offices)

                                 (864) 239-1000
                            Issuer's telephone number

           Securities registered under Section 12(b) of the Exchange Act:

                                      None

           Securities registered under Section 12(g) of the Exchange Act:

                      Units of Limited Partnership Interest

                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 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 there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B 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-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year:  $1,762,000

State the aggregate  market value of the voting  partnership  interests  held by
non-affiliates  computed  by  reference  to the price at which  the  partnership
interests  were sold,  or the average bid and asked  prices of such  partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

<PAGE>

                                     PART I

Item 1.  Description of Business

United Investors Growth  Properties II (the  "Registrant" or  "Partnership"),  a
Missouri Limited  Partnership,  was organized as a limited partnership under the
laws of the State of Missouri on March 23, 1990. The  Partnership is governed by
an Agreement of Limited  Partnership  dated February 22, 1991.  United Investors
Real Estate, Inc. ("UIRE"), a Delaware corporation,  is the sole general partner
(the "General  Partner") of the  Partnership.  UIRE was  wholly-owned  by MAE GP
Corporation  ("MAE GP").  Effective  February 25,  1998,  MAE GP was merged into
Insignia Properties Trust ("IPT"), which is a subsidiary of Apartment Investment
and Management  Company  ("AIMCO").  Thus,  the General  Partner is now a wholly
owned  subsidiary of AIMCO (see "Transfer of Control"  below).  The  Partnership
Agreement  provides  that the  Partnership  is to terminate on December 31, 2020
unless terminated prior to such date.

The Registrant is engaged in the business of operating and holding existing real
estate  properties for  investment.  The Registrant  owns a 99.99% interest in a
limited  partnership  which owns an apartment  complex and a 100%  interest in a
limited  liability  corporation (a "LLC") which owns a second apartment  complex
(See "Item 2. Description of Properties").

Commencing on or about June 18, 1990,  the  Partnership  offered,  pursuant to a
Registration Statement filed with the Securities and Exchange Commission,  up to
a maximum of 80,000 Units of limited partnership  interest (the "Units") at $250
per Unit with a minimum  required  purchase of eight Units or $2,000 (four Units
or $1,000 for an  Individual  Retirement  Account).  The  offering  was extended
beyond the initial  termination  date of June 18, 1992. On October 26, 1992, the
General Partner terminated the extended offering period. Upon termination of the
offering,  the Partnership had accepted subscriptions for 20,661 Units resulting
in gross  offering  proceeds  of  approximately  $5,165,000.  Since its  initial
offering,  the  Partnership  has not  received,  nor are  the  limited  partners
required to make, any additional capital contributions.

The Registrant  has no employees.  Management  and  administrative  services are
provided by the General Partner and by agents  retained by the General  Partner.
An  affiliate  of the General  Partner has been  providing  property  management
services.

The business in which the  Partnership is engaged is highly  competitive.  There
are other  residential  properties  within the market  area of the  Registrant's
properties.  The number and quality of competitive  properties,  including those
which may be managed by an affiliate of the General Partner in such market area,
could have a  material  effect on the rental  market for the  apartments  at the
Registrant's  properties and the rents that may be charged for such  apartments.
While the General  Partner and its  affiliates  own and/or control a significant
number  of  apartment  units in the  United  States,  such  units  represent  an
insignificant  percentage of total  apartment  units in the United  States,  and
competition for the apartments is local.

Both  the  income  and  expenses  of  operating  the  properties  owned  by  the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar  properties  resulting from various
market  conditions,  increases/decreases  in unemployment or population  shifts,
changes in the availability of permanent mortgage  financing,  changes in zoning
laws,  or changes in patterns or needs of users.  In  addition,  there are risks
inherent in owning and operating residential  properties because such properties
are  susceptible to the impact of economic and other  conditions  outside of the
control of the Partnership.

<PAGE>

There have been, and it is possible there may be other, Federal, state and local
legislation  and  regulations   enacted   relating  to  the  protection  of  the
environment.  The Partnership is unable to predict the extent,  if any, to which
such new  legislation  or  regulations  might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.

The Partnership  monitors its properties for evidence of pollutants,  toxins and
other  dangerous  substances,  including  the presence of  asbestos.  In certain
cases,  environmental  testing has been performed  which resulted in no material
adverse  conditions  or  liabilities.  In no case has the  Partnership  received
notice  that  it  is  a  potentially   responsible  party  with  respect  to  an
environmental clean up site.

A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation"  included in "Item 6" of this Form
10-KSB.

Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia  Financial Group, Inc. and IPT merged into AIMCO, a
publicly  traded real estate  investment  trust,  with AIMCO being the surviving
corporation (the "Insignia Merger").  As a result, AIMCO acquired 100% ownership
interest in the General Partner.  The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.

Item 2.     Description of Properties:

The following table sets forth the Partnership's investment in properties:

                          Date of
                          Purchase      Type of Ownership         Use

Riverwalk Apartments      03/31/92    Fee ownership subject    Apartment
Houston, TX                           to first mortgage (1)    104 units

Stone Ridge Apartments    07/01/92    Fee ownership subject    Apartment
Overland Park, KS                     to first mortgage (2)    106 units

(1)   Property is held by a limited  partnership in which the Registrant  owns a
      99.99% interest.

(2)   Property  is  held  by  a  limited  liability  corporation  in  which  the
      Registrant owns a 100% interest.

Schedule of Properties:

Set forth below for each of the  Registrant's  properties is the gross  carrying
value,  accumulated  depreciation,  depreciable life, method of depreciation and
Federal tax basis.

                  Gross
                 Carrying   Accumulated    Useful               Federal
Property           Value    Depreciation    Life    Method     Tax Basis
                     (in thousands)                          (in thousands)

Riverwalk          $4,509       $1,183     5-27.5     S/L        $3,263
Stone Ridge         4,159        1,078     5-27.5     S/L         3,091

   Totals          $8,668       $2,261                           $6,354

See  "Note A" of the  consolidated  financial
statements  included in "Item 7. Financial  Statements" for a description of the
Partnership's depreciation policy and "Note I - Change in Accounting Principle.

Schedule of Property Indebtedness:

The  following  table  sets  forth  certain  information  relating  to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>

                   Principal                                           Principal
                   Balance At     Stated                                Balance
                  December 31,   Interest     Period      Maturity      Due At
Property              1999         Rate      Amortized      Date     Maturity (1)
                 (in thousands)                                     (in thousands)

<S>                  <C>          <C>        <C>          <C>   <C>     <C>
Riverwalk            $3,000       7.92%      20 years     01/01/20      $   --
Stone Ridge           3,232       7.13%      30 years     12/01/04       3,018

   Total             $6,232                                             $3,018
</TABLE>

(1)   See "Item 7. Financial  Statements - Note C" for information  with respect
      to the  Registrant's  ability  to prepay  these  loans and other  specific
      details about the loans.

On December 29,  1999,  the  Partnership  refinanced  the  mortgage  encumbering
Riverwalk  Apartments.  The refinancing  replaced  indebtedness of approximately
$2,551,000  with a new  mortgage  in the  amount  of  $3,000,000.  The new  loan
requires monthly principal and interest payments of approximately $25,000, bears
interest  at 7.92% per annum,  is being  amortized  over 20 years and matures on
January 1, 2020. Total capitalized loan costs were approximately  $47,000 during
the year ended December 31, 1999.

Schedule of Rental Rates and Occupancy:

Average annual rental rate and occupancy for 1999 and 1998 for each property:

                            Average Annual           Average Annual
                             Rental Rate               Occupancy
                              (per unit)
Property                  1999          1998        1999       1998

Riverwalk                $8,142        $7,880        96%        96%
Stone Ridge               8,532         8,185        96%        97%

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  Both of the properties of the  Partnership  are subject to
competition  from other  residential  apartment  complexes in the  localities in
which they operate. The General Partner believes that both of the properties are
adequately insured. Each property is an apartment complex which leases its units
for lease terms of one year or less. No residential tenant leases 10% or more of
the  available  rental  space.  All  of the  properties  are  in  good  physical
condition,  subject to normal  depreciation and  deterioration as is typical for
assets of this type and age.


<PAGE>


Schedule of Real Estate Taxes and Rates:

Real estate taxes and effective rates in 1999 for each property were:

                                     1999            1999
                                     Taxes           Rate
                                (in thousands)
Riverwalk                             $69            2.48%
Stone Ridge                            56            1.05%

Capital Improvements:

Riverwalk Apartments

Riverwalk  Apartments spent approximately  $250,000 on capital  improvements for
the year ended December 31, 1999. These improvements  consisted primarily of air
conditioning   unit   replacements,   carpet  and  vinyl   replacements,   major
landscaping,  cabinets,  and other structural  improvements.  These improvements
were funded from operating cash flow and Partnership  reserves.  The Partnership
is currently  evaluating the capital  improvement  needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $31,200.  Additional  improvements  may be considered  and will depend on the
physical  condition  of  the  property  as  well  as  replacement  reserves  and
anticipated cash flow generated by the property.

Stone Ridge Apartments

Stone Ridge Apartments spent approximately  $87,000 on capital  improvements for
the year ended  December 31, 1999.  These  improvements  consisted  primarily of
exterior  painting,  furniture  and  fixtures,  major  landscaping,  parking lot
improvements, and carpet and vinyl replacements.  These improvements were funded
from operating cash flow and Partnership reserves.  The Partnership is currently
evaluating the capital  improvement needs of the property for the upcoming year.
The  minimum  amount to be  budgeted is expected to be $300 per unit or $31,800.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition of the property as well as replacement  reserves and anticipated  cash
flow generated by the property.

Item 3.     Legal Proceedings

The Partnership is unaware of any pending or outstanding  litigation that is not
of a routine nature arising in the ordinary course of business.

Item 4.     Submission of Matters to a Vote of Security Holders

During the quarter ended  December 31, 1999, no matters were submitted to a vote
of Unit holders through the solicitation of proxies or otherwise.


<PAGE>


                                     PART II

Item 5.     Market for Partnership Equity and Related Partner Matters

The Partnership,  a publicly held limited  partnership,  offered and sold 20,661
limited partnership units aggregating approximately $5,165,000.  The Partnership
currently  has 504  holders  of record  owning  an  aggregate  of 20,661  units.
Affiliates  of  the  General  Partner  owned  1,950  limited  partnership  units
representing  9.438% of the outstanding units as of December 31, 1999. No public
trading market has developed for the Units,  and it is not anticipated that such
a market will develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended  December 31, 1998 and 1999,  as well as for the  subsequent  period
from January 1, 2000 to March 8, 2000 (see "Item 6. Management's  Discussion and
Analysis or Plan of Operation" for further details).

                                                Distributions
                                                           Per Limited
                                        Aggregate        Partnership Unit
                                      (in thousands)

       01/01/98 - 12/31/98              $1,319 (1)            $63.21
       01/01/99 - 12/31/99                  --                    --
       01/01/00 - 03/08/00                 400 (2)             19.17

(1)   Consists  of   approximately   $399,000  of  cash  from   operations   and
      approximately   $920,000  of  cash  from  the  refinance  of  Stone  Ridge
      Apartments.

(2)   Distribution  was declared  subsequent to December 31, 1999 and consist of
      approximately  $111,000 of cash from operations and approximately $289,000
      of cash from the refinance of Riverwalk Apartments.

Future cash  distributions  will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings,  and/or property sales. The Partnership's  distribution  policy is
reviewed  on an annual  basis.  There  can be no  assurance,  however,  that the
Partnership  will  generate  sufficient  funds from  operations  after  required
capital expenditures to permit further  distributions to its partners in 2000 or
subsequent periods.

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 1,950 limited
partnership  units in the  Partnership  representing  9.438% of the  outstanding
units.  It is  possible  that  AIMCO  or its  affiliates  will  make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

<PAGE>

Item 6.     Management's Discussion and Analysis or Plan of Operation

The  matters  discussed  in this Form  10-KSB  contain  certain  forward-looking
statements  and  involve  risks and  uncertainties  (including  changing  market
conditions,   competitive  and  regulatory   matters,   etc.)  detailed  in  the
disclosures  contained  in this  Form  10-KSB  and the  other  filings  with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the  Registrant's  business and results of  operations,  including
forward-looking  statements  pertaining  to such  matters,  does not  take  into
account the effects of any changes to the  Registrant's  business and results of
operation.  Accordingly,  actual  results  could  differ  materially  from those
projected in the forward-looking  statements as a result of a number of factors,
including those identified herein.

This  item  should  be read  in  conjunction  with  the  consolidated  financial
statements and other items contained elsewhere in this report.

Results of Operations

The   Registrant's  net  income  for  the  year  ended  December  31,  1999  was
approximately $2,000 as compared to net income of approximately  $25,000 for the
year ended December 31, 1998. The decrease in net income is due primarily to the
extraordinary  loss  on the  extinguishment  of  debt  due to the  refinance  of
Riverwalk  Apartments in December 1999, as discussed below,  which was partially
offset by a cumulative effect on prior years of a change in accounting principle
(see discussion below).

Excluding  the  extraordinary  loss  on  the  extinguishment  of  debt  and  the
cumulative  effect  on prior  years of a change  in  accounting  principle,  the
Partnership had income of  approximately  $9,000 for the year ended December 31,
1999 and  approximately  $25,000 for the year ended  December 31,  1998.  Income
decreased  over the two year periods due to an increase in total  expenses which
was partially offset by an increase in total revenues.  Total revenues increased
due to an increase in rental income, which was partially offset by a decrease in
other income.  Rental income  increased  primarily as a result of average annual
rental rate increases at both properties  which was partially offset by a slight
occupancy decrease at Stone Ridge Apartments.  Other income decreased  primarily
due  to a  decrease  in  interest  income  due to  decreased  cash  balances  in
interest-bearing accounts.

Total expenses  increased  primarily due to increased general and administrative
expenses and, to a lesser extent,  increased interest expense which is partially
offset by decreased  operating  expenses.  General and  administrative  expenses
increased due to increased  legal expenses due to the settlement of a legal case
as  previously  disclosed  in the  Partnership's  Form 10-QSB for the  quarterly
period ended June 30, 1999 and increased  professional fees. Included in general
and   administrative   expenses  at  both  December  31,  1999  and  1998,   are
reimbursements  to the General Partner  allowed under the Partnership  Agreement
associated  with its management of the  Partnership.  Costs  associated with the
quarterly and annual  communications  with investors and regulatory agencies and
the annual  audit  required  by the  Partnership  Agreement  are also  included.
Interest  expense  increased  due to the payoff of the mortgage and refinance of
Riverwalk  Apartments,  as discussed below.  Operating expenses decreased due to
decreased insurance premiums at both properties due to lower rates provided by a
new insurance  carrier late in 1998 and the  completion  of a major  landscaping
project at Stone Ridge Apartments during 1998.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior painting and major landscaping.  The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the  expenditures  and
it is consistent with industry practice and the policies of the General Partner.
The effect of the change in 1999 was to increase income by approximately $28,000
($1.36 per limited  partnership  unit).  The  cumulative  effect  adjustment  of
approximately  $46,000 is the result of applying  the  aforementioned  change in
accounting  principle  retroactively  and is  included  in income for 1999.  The
proforma  amounts shown on the  statements of operations  have been adjusted for
the effect of retroactive  application of this change. The accounting  principle
change will not have an effect on cash flow, funds available for distribution or
fees payable to the General Partner and affiliates.

As part of the ongoing  business plan of the  Partnership,  the General  Partner
monitors the rental market  environment of its  investment  properties to assess
the feasibility of increasing rents,  maintaining or increasing occupancy levels
and protecting the Partnership from increases in expense.  As part of this plan,
the  General  Partner  attempts to protect  the  Partnership  from the burden of
inflation-related  increases in expenses by increasing  rents and  maintaining a
high overall occupancy level. However, due to changing market conditions,  which
can  result in the use of rental  concessions  and rental  reductions  to offset
softening market conditions, there is no guarantee that the General Partner will
be able to sustain such a plan.

Liquidity and Capital Resources

At  December  31,  1999,  the  Registrant  had  cash  and  cash  equivalents  of
approximately  $648,000 as compared to  approximately  $316,000 at December  31,
1998. The increase in cash and cash equivalents of approximately  $332,000 since
December  31,  1998,  is due to  approximately  $338,000  of  cash  provided  by
operating  activities and  approximately  $309,000 of cash provided by financing
activities, which was partially offset by approximately $315,000 of cash used in
investing activities.  Cash provided by financing activities consisted primarily
of proceeds  from debt  refinancing  which was  partially  offset by payments of
principal made on the mortgages encumbering the Registrant's properties, payment
of loan  costs,  and payment of a  prepayment  penalty.  Cash used in  investing
activities  consisted primarily of property  improvements and replacements which
was  slightly  offset by net receipts  from escrow  accounts  maintained  by the
mortgage lender.  The Partnership  invests its working capital reserves in money
market accounts.

On December 29,  1999,  the  Partnership  refinanced  the  mortgage  encumbering
Riverwalk  Apartments.  The refinancing  replaced  indebtedness of approximately
$2,551,000  with a new  mortgage  in the  amount  of  $3,000,000.  The new  loan
requires monthly principal and interest payments of approximately $25,000, bears
interest  at 7.92% per annum,  is being  amortized  over 20 years and matures on
January 1, 2020. Total capitalized loan costs were approximately  $47,000 during
the year  ended  December  31,  1999.  For  financial  statement  purposes,  the
Partnership  recognized  a loss  on the  early  extinguishment  of the  debt  of
approximately  $53,000  consisting of a prepayment  penalty and the write-off of
unamortized loan costs.

The sufficiency of existing  liquid assets to meet future  liquidity and capital
expenditure   requirements   is  directly   related  to  the  level  of  capital
expenditures  required at the  properties  to  adequately  maintain the physical
assets and other  operating  needs of the Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating  the capital  improvement  needs of the  properties  for the upcoming
year.  The  minimum  amount to be  budgeted  is  expected to be $300 per unit or
$63,000.  Additional  improvements  may be  considered  and will  depend  on the
physical  condition  of the  properties  as well  as  replacement  reserves  and
anticipated cash flow generated by the properties. The capital expenditures will
be  incurred  only if cash is  available  from  operations  or from  Partnership
reserves.  To the extent that such budgeted capital  improvements are completed,
the Registrant's  distributable  cash flow, if any, may be adversely affected at
least in the short term.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs  (exclusive  of capital  improvements)  of the  Registrant.  The  mortgage
indebtedness  for  Riverwalk  of  approximately   $3,000,000   requires  monthly
principal  and interest  payments  and matures on January 1, 2020.  The mortgage
indebtedness for Stone Ridge of  approximately  $3,232,000 has a balloon payment
of  approximately  $3,018,000 due on December 1, 2004. The General  Partner will
attempt to refinance such indebtedness and/or sell the properties prior to their
respective  maturity dates. If the properties cannot be refinanced or sold for a
sufficient  amount,  the  Registrant  will risk losing such  properties  through
foreclosure.

No cash  distributions  were made to partners during the year ended December 31,
1999.  During  the  year  ended  December  31,  1998,  cash  distributions  were
approximately  $1,319,000  (approximately  $1,306,000 to the limited partners or
$63.21  per  limited  partnership  unit).  These   distributions   consisted  of
approximately $920,000 (approximately $911,000 to the limited partners or $44.09
per limited  partnership  unit) of proceeds from the  refinancing of Stone Ridge
Apartments in November 1997 and approximately $399,000  (approximately  $395,000
to the limited partners or $19.12 per limited partnership unit) from operations.
Subsequent to December 31, 1999, a cash  distribution of approximately  $400,000
was  declared  (approximately  $396,000  to the  limited  partners or $19.17 per
limited partnership unit) of which approximately  $111,000 represented cash from
operations and approximately $289,000 represented proceeds from the refinance of
Riverwalk Apartments. Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves and the timing
of  debt  maturities,  refinancings  and/or  property  sales.  The  Registrant's
distribution  policy is reviewed on an annual basis.  There can be no assurance,
however,  that the Partnership  will generate  sufficient  funds from operations
after required capital  improvements to permit  additional  distributions to its
partners in 2000 or subsequent periods. See "Item 2. Description of Properties -
Capital   Improvements"   for  information   relating  to  anticipated   capital
expenditures at the properties.

Tender Offer

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 1,950 limited
partnership  units in the  Partnership  representing  9.438% of the  outstanding
units.  It is  possible  that  AIMCO  or its  affiliates  will  make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Year 2000 Compliance

General Description

The Year 2000 issue is the result of computer  programs  being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent  upon the  General  Partner  and its  affiliates  for  management  and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had  date-sensitive  software or embedded  chips might
have  recognized  a date using "00" as the year 1900  rather than the year 2000.
This  could  have  resulted  in a  system  failure  or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

Computer Hardware, Software and Operating Equipment

In 1999,  the Managing  Agent  completed  all phases of its Year 2000 program by
completing  the  replacement  and repair of any  hardware or software  system or
operating  equipment that was not yet Year 2000 compliant.  The Managing Agent's
hardware  and software  systems and its  operating  equipment  are now Year 2000
compliant.  No  material  failure or  erroneous  results  have  occurred  in the
Managing Agent's computer  applications  related to the failure to reference the
Year 2000 to date.

Third Parties

To  date,  the  Managing  Agent  is not  aware of any  significant  supplier  or
subcontractor  (external agent) or financial institution of the Partnership that
has a Year 2000 issue that  would  have a material  impact on the  Partnership's
results of operations,  liquidity or capital  resources.  However,  the Managing
Agent  has no means of  ensuring  or  determining  the Year 2000  compliance  of
external  agents.  At this time, the Managing Agent does not believe that a Year
2000 issue of any  non-compliant  external agent will have a material  impact on
the Partnership's financial position or results of operations.

Costs

The total cost of the Managing Agent's Year 2000 project was approximately  $3.2
million and was funded from operating cash flows.

Risks Associated with the Year 2000

The Managing  Agent  completed all necessary  phases of its Year 2000 program in
1999,  and did not  experience  system or  equipment  malfunctions  related to a
failure to reference the Year 2000. The Managing  Agent or Partnership  have not
been  materially  adversely  effected by  disruptions  in the economy  generally
resulting from the Year 2000 issue.

At this  time,  the  Managing  Agent  does not  believe  that the  Partnership's
businesses,  results of  operations  or financial  condition  will be materially
adversely effected by the Year 2000 issue.

Contingency Plans Associated with the Year 2000

The  Managing  Agent has not had to implement  contingency  plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.


<PAGE>


Item 7.     Financial Statements

UNITED INVESTORS GROWTH PROPERTIES II

LIST OF FINANCIAL STATEMENTS

Independent Auditors' Report

Consolidated Balance Sheet - December 31, 1999

Consolidated Statements of Operations - Years ended December 31, 1999 and 1998

Consolidated  Statements of Changes in Partners  (Deficit) Capital - Years ended
December 31, 1999 and 1998

Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998

Notes to Consolidated Financial Statements
<PAGE>

                          Independent Auditors' Report

The Partners

United Investors Growth Properties II

We have audited the accompanying  consolidated balance sheet of United Investors
Growth  Properties  II (the  "Partnership")  as of December  31,  1999,  and the
related  consolidated  statements of operations,  changes in partners' (deficit)
capital and cash flows for each of the years in the two-year  period then ended.
These   consolidated   financial   statements  are  the  responsibility  of  the
Partnership's  management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of the Partnership as
of December 31, 1999,  and the results of its  operations and its cash flows for
each of the  years  in the  two-year  period  then  ended,  in  conformity  with
generally accepted accounting principles.

As discussed in Note I to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.

KPMG LLP

Greenville, South Carolina
February 25, 2000


<PAGE>



                      UNITED INVESTORS GROWTH PROPERTIES II

                           CONSOLIDATED BALANCE SHEET

                                December 31, 1999

                          (in thousands, except unit data)

Assets
    Cash and cash equivalents                                       $  648
    Receivables and deposits                                           253
    Restricted escrows                                                  29
    Other assets                                                       127
    Investment properties (Notes C and F):
      Land                                             $ 1,071
      Buildings and related personal property            7,597
                                                         8,668

      Less accumulated depreciation                     (2,261)      6,407
                                                                   $ 7,464

Liabilities and Partners' (Deficit) Capital

Liabilities
    Accounts payable                                                $  105
    Tenant security deposit liabilities                                 46
    Accrued property taxes                                              32
    Other liabilities                                                   72
    Mortgage notes payable (Note C)                                  6,232

Partners' (Deficit) Capital:
    General partner                                     $ (15)
    Limited partners (20,661 units issued
      and outstanding)                                     992         977
                                                                   $ 7,464

            See Accompanying Notes to Consolidated Financial Statements


<PAGE>


                      UNITED INVESTORS GROWTH PROPERTIES II

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                          (in thousands, except unit data)

<TABLE>
<CAPTION>



                                                              Years Ended December 31,
                                                                 1999         1998
Revenues:
<S>                                                            <C>          <C>
   Rental income                                               $ 1,669      $ 1,632
   Other income                                                     93          110
         Total revenues                                          1,762        1,742

Expenses:
   Operating                                                       648          673
   General and administrative                                      119           89
   Depreciation                                                    352          326
   Interest                                                        516          499
   Property taxes                                                  118          130
         Total expenses                                          1,753        1,717

 Income before extraordinary item and cumulative effect of
   a change in accounting principle                                  9           25

Extraordinary loss on the early extinguishment of debt             (53)          --
Cumulative effect on prior years of a change in accounting
   for the cost of exterior painting and major
   landscaping (Note I)                                             46           --
Net income                                                       $   2        $  25

Net income allocated to general partner (1%)                     $  --        $  --
Net income allocated to limited partners (99%)                       2           25
                                                                 $   2        $  25
Per limited partnership unit:
   Income before extraordinary item                             $  .44       $ 1.21
   Extraordinary loss on the early extinguishment of debt        (2.54)          --
   Cumulative effect on prior years of a change in
      accounting for the cost of exterior painting and
      major landscaping                                           2.20           --

Net income                                                      $  .10       $ 1.21

Distributions per limited partnership unit                       $  --      $ 63.21

Proforma amounts assuming the new accounting principle
   was applied retroactively:
      Net (loss) income                                         $  (44)         $ 4
      Net (loss) income per limited partnership unit           $ (2.10)      $ 0.19
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements


<PAGE>


                      UNITED INVESTORS GROWTH PROPERTIES II

         CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
                          (in thousands, except unit data)
<TABLE>
<CAPTION>

                                     Limited
                                   Partnership    General     Limited
                                      Units       Partner    Partners      Total

<S>                                  <C>           <C>        <C>         <C>
Original capital contributions       20,661        $   --     $ 5,165     $ 5,165

Partners' (deficit) capital at
   December 31, 1997                 20,661        $   (2)    $ 2,271     $ 2,269

Partners' distributions                  --           (13)     (1,306)     (1,319)

Net income for the year ended
   December 31, 1998                     --            --          25          25

Partners' (deficit) capital at
   December 31, 1998                 20,661           (15)        990         975

Net loss for the year ended
   December 31, 1999                     --            --           2           2

Partners' (deficit) capital at
   December 31, 1999                 20,661         $ (15)      $ 992       $ 977
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements


<PAGE>


                      UNITED INVESTORS GROWTH PROPERTIES II

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                             Years Ended December 31,
                                                                1999          1998
Cash flows from operating activities:
<S>                                                              <C>           <C>
   Net income                                                    $   2         $ 25
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation                                                 352          326
      Amortization of loan costs                                    25           25
      Extraordinary loss on the early extinguishment
        of debt                                                     53           --
      Cumulative effect on prior years of change in
        accounting principle                                       (46)          --
      Change in accounts:
        Receivables and deposits                                   (42)        (140)
        Other assets                                               (13)          12
        Accounts payable                                            92           (2)
        Tenant security deposit liabilities                          4           (1)
        Accrued property taxes                                     (74)         106
        Other liabilities                                          (15)         (12)

          Net cash provided by operating activities                338          339

Cash flows from investing activities:
    Property improvements and replacements                        (337)        (108)
    Net receipts from (deposits to) restricted escrows              22          (36)

          Net cash used in investing activities                   (315)        (144)

Cash flows from financing activities:
   Payments on mortgage notes payable                              (68)         (63)
   Payoff of mortgage note payable                              (2,551)          --
   Proceeds from debt refinancing                                3,000           --
   Loan costs paid                                                 (47)          (5)
   Prepayment penalty                                              (25)          --
   Partners' distributions                                          --       (1,319)

          Net cash provided by (used in) financing
             activities                                            309       (1,387)

Net increase (decrease) in cash and cash equivalents               332       (1,192)

Cash and cash equivalents at beginning of year                     316        1,508

Cash and cash equivalents at end of year                        $  648       $  316

Supplemental disclosure of cash flow information:
   Cash paid for interest                                       $  512        $ 493
</TABLE>

            See Accompanying Notes to Consolidated Financial Statements


<PAGE>



                      UNITED INVESTORS GROWTH PROPERTIES II

                     Notes to Consolidated Financial Statements

                                December 31, 1999

Note A - Organization and Significant Accounting Policies

Organization:  United  Investors  Growth  Properties  II (the  "Partnership"  or
"Registrant"), a Missouri Limited Partnership, was organized in March 1990, with
the initial  group of limited  partners  being  admitted on February  22,  1991.
Additional  partners were admitted each month  thereafter  through October 1992.
The   Partnership   was  formed  to  acquire  and  operate   certain   types  of
income-producing  real estate.  United Investors Real Estate, Inc. (the "General
Partner"),  is the  general  partner.  The  General  Partner  is a  wholly-owned
subsidiary of Apartment Investment and Management Company ("AIMCO"). See "Note B
- Transfer of Control".  The directors and officers of the General  Partner also
serve as executive  officers of AIMCO. The Partnership  Agreement  provides that
the Partnership is to terminate on December 31, 2020 unless  terminated prior to
such date. The Partnership commenced operations on March 23, 1990, and completed
its  acquisition  of  apartment  properties  on July 1,  1992.  The  Partnership
operates two apartment properties in the South.

Principles of  consolidation:  The Partnership owns a 99.99% interest and is the
sole general  partner in Riverwalk  Apartments  Limited  Partnership (a Missouri
Limited  Partnership)  ("Riverwalk"),  a 104 unit apartment  complex  located in
Houston,  Texas. An  unaffiliated  individual is the sole limited  partner.  The
Partnership  reflects  its interest in Riverwalk  utilizing  full  consolidation
whereby  all of the  accounts of  Riverwalk  are  included  in the  consolidated
financial  statements  of the  Partnership  (with  intercompany  accounts  being
eliminated).  The Partnership has the ability to control the major operating and
financial  policies of this  Partnership.  The minority  interest of the limited
partner is not material to the Partnership.

In November  1997,  the  Partnership  transferred  ownership  of the Stone Ridge
Apartments  to Stone Ridge  Apartments,  LLC  ("Stone  Ridge"),  a  wholly-owned
subsidiary of the  Partnership,  which is  consolidated  with the  Partnership's
consolidated financial statements.

Cash and cash  equivalents:  Includes  cash on hand,  in banks and money  market
accounts.  At certain  times,  the amount of cash deposited at a bank may exceed
the limit on insured deposits.

Tenant  Security  deposits:  The  Partnership  requires  security  deposits from
lessees  for the  duration  of the lease,  and such  deposits  are  included  in
receivables  and  deposits.  Deposits  are  refunded  when the  tenant  vacates,
provided the tenant has not damaged the  apartment  and is current on its rental
payments.

Investment properties:  Investment properties consist of two apartment complexes
and are  stated  at cost.  Acquisition  fees are  capitalized  as a cost of real
estate. In accordance with Statement of Financial  Accounting Standards ("SFAS")
No. 121,  "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets  to Be  Disposed  Of",  the  Partnership  records  impairment  losses  on
long-lived assets used in operations when events and circumstances indicate that
the assets might be impaired  and the  undiscounted  cash flows  estimated to be
generated by those assets are less than the carrying amounts of those assets. No
adjustments  for impairment of value were necessary for the years ended December
31, 1999 or 1998.

<PAGE>

Depreciation:  Depreciation  is  provided by the  straight-line  method over the
estimated lives of the apartment  properties and related personal property.  For
Federal income tax purposes,  the  accelerated  cost recovery method is used (1)
for real property over 15 years for additions  prior to March 16, 1984, 18 years
for  additions  after  March 15,  1984 and before May 9, 1985,  and 19 years for
additions  after May 8, 1985,  and before  January 1, 1987, and (2) for personal
property  over 5 years for  additions  after  December  31,  1986,  the modified
accelerated  cost recovery method is used for  depreciation of (1) real property
over 27 1/2 years and (2) personal additions over 5 years.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (see "Note I").

Restricted Escrow: A replacement  reserve account was established at Stone Ridge
Apartments  when it was  refinanced.  The  property  makes  monthly  deposits to
maintain a Replacement  Reserve  designated for repairs and  replacements at the
properties. At December 31, 1999, this reserve totaled approximately $29,000.

Loan Costs:  Loan costs are deferred and are amortized as interest  expense over
the terms of the related loans. Unamortized loan costs of approximately $107,000
are included in other assets at December 31, 1999.

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

Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of  Financial  Instruments",  as amended  by SFAS No.  119,  "Disclosures  about
Derivative  Financial  Instruments  and Fair  Value of  Financial  Instruments",
requires  disclosure  of fair value  information  about  financial  instruments,
whether or not recognized in the balance  sheet,  for which it is practicable to
estimate  fair  value.  Fair value is defined in the SFAS as the amount at which
the  instruments  could be exchanged in a current  transaction  between  willing
parties,  other than in a forced or liquidation  sale. The Partnership  believes
that the  carrying  amount of its  financial  instruments  (except for long term
debt)  approximates  their fair value due to the short  term  maturity  of these
instruments.  The  fair  value  of  the  Partnership's  long  term  debt,  after
discounting the scheduled loan payments to maturity,  approximates  its carrying
balance.

Allocation of Net Income and Loss: In accordance with the Partnership Agreement,
net income and net loss (as defined in the Partnership Agreement, income or loss
of the Partnership determined without regard to gain or loss from sale) shall be
allocated 1% to the General Partner and 99% to the limited partners.

Gain/Loss from a Sale: Gain from a sale shall be allocated as follows: (a) first
to each partner who has a negative  capital  account,  an amount equal to (or in
proportion to if less than) such partner's  negative capital account balance and
(b) second,  99% to the limited  partners and 1% to the General  Partner,  until
each limited  partner has been allocated an amount equal to (or in proportion to
if less than) the excess,  if any, of such limited  partner's  adjusted  capital
investment over his capital account.

<PAGE>

Loss from a sale shall be  allocated  as follows:  (a) first to each partner who
has a positive capital account,  an amount equal to (or in proportion to if less
than) such partner's positive capital account balance and (b) second, 99% to the
limited partners and 1% to the General Partner.

Anything in the  Partnership  Agreement  to the  contrary  notwithstanding,  the
interests of the General  Partner,  in the  aggregate,  in each material item of
income,  gain, loss, deduction and credit of the Partnership will be equal to at
least 1% of each item at all times during the existence of the Partnership.

Advertising:  The  Partnership  expenses the costs of  advertising  as incurred.
Advertising  costs of  approximately  $37,000  and  $38,000  for the years ended
December 31, 1999 and 1998,  respectively,  were charged to operating expense as
incurred.

Leases: The Partnership  generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General  Partner's policy is to offer rental  concessions  during periods of
declining  occupancy  or in response  to heavy  competition  from other  similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Segment Reporting:  SFAS No. 131, Disclosure about Segments of an Enterprise and
Related  Information  established  standards  for the way that  public  business
enterprises  report  information  about operating  segments in annual  financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports.  It also establishes  standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note H" for required disclosure.

Note B - Transfer of Control

Pursuant  to a series  of  transactions  which  closed  on  October  1, 1998 and
February 26, 1999,  Insignia Financial Group, Inc. and Insignia Properties Trust
merged into AIMCO, a publicly traded real estate  investment  trust,  with AIMCO
being the surviving  corporation  (the "Insignia  Merger").  As a result,  AIMCO
acquired 100% ownership  interest in the General  Partner.  The General  Partner
does not believe that this transaction has had or will have a material effect on
the affairs and operations of the Partnership.

Note C - Mortgage Notes Payable

The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>

                             Principal     Monthly                           Principal
                            Balance At     Payment     Stated                 Balance
                           December 31,   Including   Interest  Maturity       Due At
Property                       1999        Interest     Rate      Date        Maturity
                                (in thousands)                             (in thousands)

<S>                            <C>          <C>        <C>      <C>   <C>      <C>
Riverwalk Apartments           $3,000       $   25     7.92%    01/01/20       $   --
Stone Ridge Apartments          3,232           22     7.13%    12/01/04        3,018

      Total                    $6,232       $   47                             $3,018
</TABLE>

<PAGE>

The  mortgage  notes  payable are  nonrecourse  and are secured by pledge of the
respective  Partnership's properties and by pledge of revenue from operations of
the respective rental properties. Both mortgage notes payable include prepayment
penalties if repaid prior to maturity.  Further,  the properties may not be sold
subject to existing indebtedness.

On December 29,  1999,  the  Partnership  refinanced  the  mortgage  encumbering
Riverwalk  Apartments.  The refinancing  replaced  indebtedness of approximately
$2,551,000  with a new  mortgage  in the  amount  of  $3,000,000.  The new  loan
requires monthly  principal and interest payments and is being amortized over 20
years. Total capitalized loan costs were  approximately  $47,000 during the year
ended  December 31, 1999.  For financial  statement  purposes,  the  Partnership
recognized  a loss on the  early  extinguishment  of the  debt of  approximately
$53,000 consisting of a prepayment penalty and the write-off of unamortized loan
costs.

Scheduled  principal  payments  on the  mortgage  notes  payable  subsequent  to
December 31, 1999, are as follows (in thousands):

            2000              $   96
            2001                 109
            2002                 118
            2003                 127
            2004               3,151
         Thereafter            2,631
                              $6,232

Note D - Transactions with Affiliated Parties

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership  activities.
The  Partnership  Agreement  provides  for payments to  affiliates  for property
management  services based on a percentage of revenue and for  reimbursement  of
certain expenses incurred by affiliates on behalf of the Partnership.

The following  payments were made to  affiliates of the General  Partner  during
each of the years ended December 31, 1999 and 1998:

                                                     1999      1998
                                                     (in thousands)
Property management fees (included in
  operating expenses)                               $ 87       $ 86
Reimbursement for services of affiliates
  (included in investment properties and
  general and administrative and operating
  expenses)                                           27         27

During the years ended  December  31, 1999 and 1998,  affiliates  of the General
Partner  were  entitled  to  receive  5% of  gross  receipts  from  both  of the
Registrant's  properties  as  compensation  for  providing  property  management
services.  The  Registrant  paid to such  affiliates  approximately  $87,000 and
$86,000, respectively, for management fees for the years ended December 31, 1999
and 1998, respectively.

<PAGE>

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative expenses amounting to approximately $27,000 for both of the years
ended December 31, 1999 and 1998.

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 1,950 limited
partnership  units in the  Partnership  representing  9.438% of the  outstanding
units.  It is  possible  that  AIMCO  or its  affiliates  will  make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

Note E - Income Tax

The Partnership has received a ruling from the Internal  Revenue Service that it
will  be  classified  as  a  partnership   for  Federal   income  tax  purposes.
Accordingly, taxable income or loss of the Partnership is reported in the income
tax returns of its partners.  Accordingly, no provision for income taxes is made
in the consolidated financial statements of the Partnership.

The  following is a  reconciliation  of reported  net (loss)  income and Federal
taxable (loss) income (in thousands, except for unit data):

                                                  1999        1998
Net income as reported                          $    2        $  25
Add (deduct):
    Deferred revenue and other liabilities          17          (24)
    Depreciation differences                         7           17
    Cumulative effect on prior year of change
      in accounting principle                      (46)          --
Federal taxable income (loss)                   $  (20)       $  18
Federal taxable income (loss) per limited
    partnership unit                            $(0.96)       $0.87

The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets at December 31, 1999 (in thousands):

Net assets as reported                                        $  977
Differences in basis of assets and liabilities:
    Investment properties at cost                                  9
    Accumulated depreciation                                      22
    Cumulative effect on prior year of change
      in accounting principle                                    (46)
    Deferred Revenue and other                                     8
    Syndication costs                                            681
    Net assets - tax basis                                    $1,651



<PAGE>


Note F- Real Estate and Accumulated Depreciation

                                              Initial Cost
                                             To Partnership
                                             (in thousands)
                                                      Buildings     Net Costs
                                                     and Related   Capitalized
                                                       Personal   Subsequent to
Description              Encumbrances       Land       Property    Acquisition
                        (in thousands)                            (in thousands)

Riverwalk                    $3,000        $  646       $3,062       $  801
Stone Ridge                   3,232           425        3,265          469

         Totals              $6,232        $1,071       $6,327       $1,270

<TABLE>
<CAPTION>

                 Gross Amount At Which
                        Carried
                  At December 31, 1999
                     (in thousands)
                        Buildings
                           And
                         Personal            Accumulated     Date of      Date    Depreciable
Description      Land    Property   Total   Depreciation   Construction Acquired  Life-Years
                                           (in thousands)
<S>             <C>       <C>      <C>         <C>            <C>       <C>   <C>   <C>
Riverwalk       $  646    $3,863   $4,509      $1,183         1985      03/31/92    5-27.5
Stone Ridge        425     3,734    4,159       1,078         1987      07/01/92    5-27.5

   Totals       $1,071    $7,597   $8,668      $2,261
</TABLE>


<PAGE>

Reconciliation of "Real Estate and Accumulated Depreciation":

                                     Years Ended December 31,
                                        1999           1998
                                          (in thousands)
Investment Properties
Balance at beginning of year           $8,285        $8,177
  Property improvements                   337           108
  Cumulative effect on prior
    years of change in accounting
    principle                              46            --
Balance at end of year                 $8,668        $8,285

Accumulated Depreciation
Balance at beginning of year           $1,909        $1,583
  Depreciation expense                    331           326
  Cumulative effect on prior
    years of change in accounting
    principle                              21            --
Balance at end of year                 $2,261        $1,909

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  1999  and  1998,  is  approximately  $8,610,000  and  $8,273,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December  31, 1999 and 1998,  is  approximately  $2,256,000  and  $1,911,000,
respectively.

Note G - Distributions

No cash  distributions  were made to the partners during the year ended December
31,  1999.  During the year ended  December 31, 1998,  cash  distributions  were
approximately  $1,319,000  (approximately  $1,306,000 to the limited partners or
$63.21  per  limited  partnership  unit).  These   distributions   consisted  of
approximately $920,000 (approximately $911,000 to the limited partners or $44.09
per limited  partnership  unit) of proceeds from the  refinancing of Stone Ridge
Apartments in November 1997 and approximately $399,000  (approximately  $395,000
to the limited partners or $19.12 per limited partnership unit) from operations.
Subsequent to December 31, 1999, a cash  distribution of approximately  $400,000
was  declared  (approximately  $396,000  to the  limited  partners or $19.17 per
limited partnership unit) of which approximately  $111,000 represented cash from
operations and approximately $289,000 represented proceeds from the refinance of
Riverwalk Apartments.

Note H - Segment Reporting

The  Partnership  has  one  reportable  segment:   residential  properties.  The
Registrant's  residential  property segment consists of two apartment complexes,
one located in Houston,  Texas and another located in Overland Park, Kansas. The
Partnership  rents apartment units to people for terms that are typically twelve
months or less.

The  Partnership  evaluates  performance  based on segment  profit (loss) before
depreciation.  The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.

<PAGE>

The  Partnership's  reportable  segment  consists of investment  properties that
offer similar products and services.  Although each of the investment properties
is  managed  separately,  they have been  aggregated  into one  segment  as they
provide services with similar types of products and customers.

Segment  information  for the years ended December 31, 1999 and 1998 is shown in
the  tables  below (in  thousands).  The  "Other"  column  includes  partnership
administration  related items and income and expense not allocated to reportable
segments.

1999                                      Residential      Other       Totals
Rental income                               $ 1,669        $  --      $ 1,669
Other income                                     85            8           93
Interest expense                                516           --          516
Depreciation                                    352           --          352
General and administrative expense               --          119          119
Extraordinary loss on early
  extinguishment of debt                        (53)          --          (53)
Cumulative effect of a change in
  accounting principle                           46           --           46
Segment profit (loss)                           113         (111)           2
Total assets                                  6,989          475        7,464
Capital expenditures for investment
  properties                                    337           --          337


1998                                      Residential     Other        Totals
Rental income                               $ 1,632        $  --      $ 1,632
Other income                                     85           25          110
Interest expense                                499           --          499
Depreciation                                    326           --          326
General and administrative expense               --           89           89
Segment profit (loss)                            89          (64)          25
Total assets                                  6,840          234        7,074
Capital expenditures for investment
  properties                                    108           --          108

<PAGE>

Note I - Change in Accounting Principle

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior painting and major landscaping.  The Partnership
believes that this accounting principle change is preferable because it provides
a better matching of expenses with the related benefit of the  expenditures  and
it is consistent with industry practice and the policies of the General Partner.
The effect of the change in 1999 was to increase income by approximately $28,000
($1.36 per limited  partnership  unit).  The  cumulative  effect  adjustment  of
approximately  $46,000 is the result of applying  the  aforementioned  change in
accounting  principle  retroactively  and is  included  in income for 1999.  The
proforma  amounts shown on the  statements of operations  have been adjusted for
the effect of retroactive  application of this change. The accounting  principle
change will not have an effect on cash flow, funds available for distribution or
fees payable to the General Partner and affiliates.

The  effect of the new  method  for each  quarter  of 1999 on net income and net
income per limited partnership unit before the cumulative effect is as follows:

                                  Increase/(Decrease) in      Per limited
                                        Net income          partnership unit

         First Quarter                    $(4,000)               $(.19)
         Second Quarter                     7,000                  .34
         Third Quarter                      6,000                  .29
         Fourth Quarter                    19,000                  .92

<PAGE>
Item 8.  Changes  In  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

Effective  September 28, 1998,  the Registrant  dismissed its prior  Independent
Auditors, Deloitte & Touche LLP ("Deloitte") and retained as its new Independent
Auditors,  KPMG LLP. Deloitte's Independent Auditor's Report on the Registrant's
consolidated  financial statements for the calendar year ended December 31, 1997
did not  contain  an  adverse  opinion or a  disclaimer  of opinion  and was not
qualified or modified as to uncertainty,  audit scope or accounting  principles.
The  decision  to  change  Independent  Auditors  was  approved  by the  General
Partner's  Directors.  During the calendar year ended 1997 and through September
28, 1998, there were no disagreements between the Registrant and Deloitte on any
matter of accounting principles or practices, financial statement disclosure, or
auditing  scope  of  procedure  which  disagreements  if  not  resolved  to  the
satisfaction  of Deloitte,  would have caused Deloitte to make references to the
subject matter of the disagreements in connection with its reports.

Effective September 28, 1998, the Registrant engaged KPMG LLP as its Independent
Auditors. During the last two calendar years and through September 28, 1998, the
Registrant  did not consult KPMG LLP  regarding any of the matters or events set
forth in Item 304 (a) (2) (i) and (ii) of Regulation S-B.

<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons, Compliance
        with Section 16(a) of the Exchange Act

United Investors Growth  Properties II (the  "Registrant" or the  "Partnership")
has no officers or directors.  United Investors Real Estate, Inc. ("UIRE" or the
"General  Partner")  manages  and  controls  the  Partnership  and  has  general
responsibility and authority in all matters affecting its business.

The names of the directors and  executive  officers of UIRE,  their ages and the
nature of all positions with UIRE presently held are as follows:

Name                    Age    Position

Patrick J. Foye         42     Executive Vice President and Director

Martha L. Long          40     Senior Vice President and Controller

Patrick J. Foye has been  Executive  Vice  President and Director of the General
Partner since October 1, 1998.  Mr. Foye has served as Executive  Vice President
of AIMCO since May 1998.  Prior to joining AIMCO,  Mr. Foye was a partner in the
law firm of Skadden,  Arps, Slate,  Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's  Brussels,  Budapest and Moscow offices from 1992
through  1994.  Mr.  Foye is also  Deputy  Chairman  of the  Long  Island  Power
Authority and serves as a member of the New York State Privatization Council. He
received a B.A.  from Fordham  College and a J.D.  from Fordham  University  Law
School.

Martha L. Long has been  Senior Vice  President  and  Controller  of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group,  Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997,  retaining  that title until  October  1998.  From 1988 to June
1994,  Ms. Long was Senior Vice  President and  Controller for The First Savings
Bank, FSB in Greenville, South Carolina.

Based solely upon a review of Forms 3 and 4 and amendments  thereto furnished to
the Registrant  under Rule 16a-3(e) during the  Registrant's  most recent fiscal
year and Form 5 and amendments  thereto furnished to the Registrant with respect
to its most recent  fiscal year,  the  Registrant  is not aware of any director,
officer,  beneficial  owner of more than ten  percent  of the  units of  limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms,  reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years.

Item 10.    Executive Compensation

Neither the  director nor any of the  officers of the General  Partner  received
remuneration from the Partnership.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 1999.

          Entity                         Number of Units   Percentage
          AIMCO Properties LP

            (an affiliate of AIMCO)           1,950          9.438%

AIMCO Properties LP is indirectly  ultimately  controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, Colorado 80222.

Item 12.    Certain Relationships and Related Transactions

The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership  activities.
The  Partnership  Agreement  provides  for payments to  affiliates  for property
management  services based on a percentage of revenue and for  reimbursement  of
certain  expenses  incurred  by  affiliates  on behalf of the  Partnership.  The
following  payments were made to affiliates of the General Partner for the years
ended December 31, 1999 and 1998:

                                                     1999         1998
                                                       (in thousands)

 Property management fees                            $ 87         $ 86
 Reimbursement for services of affiliates              27           27

During the years ended  December  31, 1999 and 1998,  affiliates  of the General
Partner  were  entitled  to  receive  5% of  gross  receipts  from  both  of the
Registrant's  properties  as  compensation  for  providing  property  management
services.  The  Registrant  paid to such  affiliates  approximately  $87,000 and
approximately  $86,000,  respectively  for  management  fees for the years ended
December 31, 1999 and 1998, respectively.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative expenses amounting to approximately $27,000 for both of the years
ended December 31, 1999 and 1998.

Several tender offers were made by various parties,  including affiliates of the
General Partner,  during the years ended December 31, 1999 and 1998. As a result
of these tender  offers,  AIMCO and its  affiliates  currently own 1,950 limited
partnership  units in the  Partnership  representing  9.438% of the  outstanding
units.  It is  possible  that  AIMCO  or its  affiliates  will  make one or more
additional offers to acquire  additional  limited  partnership  interests in the
Partnership  for cash or in exchange for units in the operating  partnership  of
AIMCO. Under the Partnership  Agreement,  unitholders  holding a majority of the
Units are  entitled to take action  with  respect to a variety of matters.  When
voting on matters, AIMCO would in all likelihood vote the Units it acquired in a
manner  favorable  to the  interest  of the  General  Partner  because  of their
affiliation with the General Partner.

<PAGE>

Item 13.  Exhibits and Reports on Form 8-K

      (a) Exhibits:

          Exhibit 18, Independent Accountants' Preferability Letter for Change
          in Accounting Principle, is filed as an exhibit to this report.

          Exhibit 27, Financial Data Schedule,  is filed as an exhibit to this
          report.

      (b) Reports on Form 8-K filed in the fourth quarter of calendar year 1999:

          None.
<PAGE>

                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act, the  Partnership
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                    UNITED INVESTORS GROWTH PROPERTIES II

                                    By:   United Investors Real Estate, Inc.,
                                          Its General Partner

                                    By:   /s/Patrick J. Foye
                                          Patrick J. Foye
                                          Executive Vice President

                                    By:   /s/Martha L. Long
                                          Martha L. Long
                                          Senior Vice President
                                          and Controller

                                    Date:


In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  Registrant and in the capacities and on the
date indicated.

/s/Patrick J. Foye            Executive Vice President      Date:
Patrick J. Foye               and Director

/s/Martha L. Long             Senior Vice President         Date:
Martha L. Long                and Controller

<PAGE>

                                INDEX TO EXHIBITS

Exhibit

1    Form of Dealer Manager Agreement between the General Partner and the Dealer
     Manager,  including Form of Soliciting  Broker  Agreement;  incorporated by
     reference to Exhibit 1 to  Amendment  No. 1 to  Partnership's  Registration
     Statement (File No. 33-34111) previously filed on June 8, 1990.

2.1  Agreement  and Plan of Merger,  dated October 1, 1998 and filed October 16,
     1998,  by and between AIMCO and IPT  (incorporated  by reference to Exhibit
     2.1 filed with Registrant's  Current Report on Form 8-K, dated,  October 1,
     1998).

3    Certificate of Limited  Partnership and Amendment thereto;  incorporated by
     reference to Exhibit 3 to  Amendment  No. 1 to  Partnership's  Registration
     Statement previously filed on June 8, 1990.

4.1  Form of Subscription Agreement; incorporated by reference to Exhibit 4.1 to
     Amendment No. 1 to Partnership's Registration Statement previously filed on
     June 8, 1990.

4.2  Agreement of Limited  Partnership of  Partnership  dated February 22, 1991;
     incorporated  by reference to Exhibit 4.2 to  Partnership's  Report on Form
     10-K previously filed on March 7, 1991.

4.2.1Amended and Restated Agreement of Limited  Partnership of Partnership dated
     June 1, 1992;  incorporated by reference to Exhibit 4.2.1 to  Partnership's
     Form 8-K, amending Partnership's Form 10-Q filed with the Commission on May
     15, 1992 previously filed on June 22, 1992.

4.3  Agreement of Joint Venture of Renaissance  Village  Associates  dated March
     22, 1991 between United  Investors  Growth  Properties (A Missouri  Limited
     Partnership) and United Investors Growth  Properties II (A Missouri Limited
     Partnership);  incorporated  by reference  to Exhibit 4.3 to  Partnership's
     Quarterly Report on Form 10-Q previously filed on April 24, 1991.

10.1 Escrow  Agreement among the  Partnership,  the Dealer  Manager,  and United
     Missouri Bank of Kansas City,  N.A.;  incorporated  by reference to Exhibit
     10.1 to Amendment No. 1 to Partnership's  Registration Statement previously
     filed on June 8, 1990.

10.1.1 Form of  Amendment  to Escrow  Agreement;  incorporated  by  reference to
     Exhibit 10.1.1 to Amendment No. 5 to Partnership's  Registration  Statement
     previously filed on February 24, 1992.

10.2 Agreement of Purchase  and Sale,  dated  August 27,  1990,  between  United
     Investors Real Estate, Inc., as purchaser, and Mueller Development Company,
     as seller,  relating to  Renaissance  Village  Apartments,  and  amendments
     thereto;  incorporated  by reference to Exhibit 10.2 to Amendment  No. 1 to
     Partnership's Registration Statement previously filed on December 6, 1990.

10.2.1 Seventh and Eighth  Amendments  to Agreement of Purchase and Sale between
     United Investors Real Estate,  Inc., as purchaser,  and Mueller Development
     Company,   as  seller,   relating  to   Renaissance   Village   Apartments;
     incorporated  by reference  to Exhibit  10.2.1 to  Partnership's  Quarterly
     Report on Form 10-Q previously filed on April 24, 1991.


<PAGE>


10.3 Agreement of Joint Venture of Renaissance  Village  Associates  dated March
     22, 1991;  incorporated  by reference to Exhibit 10.3 to Amendment No. 3 to
     Partnership's Registration Statement previously filed on April 10, 1991.

10.4 Promissory  Note and Deed of Trust with  respect to the  Permanent  Loan on
     Renaissance Village  Apartments;  incorporated by reference to Exhibit 10.3
     to  Partnership's  Quarterly  Report on Form 10-Q previously filed on April
     24, 1991.

10.5 Agreement  of Purchase  and Sale,  dated  January 9, 1992,  between  United
     Investors  Real Estate,  Inc., as purchaser,  and Normandy 104  Associates,
     Ltd.,  as seller,  relating to Riverwalk  Apartments,  and first and second
     amendments thereto;  incorporated by reference to Exhibit 10.5 to Amendment
     No. 5 to Partnership's  Registration Statement previously filed on February
     24, 1992.

10.5.1 Third  Amendment to the Agreement of Purchase and Sale,  dated January 9,
     1992 between United Investors Real Estate, Inc., as purchaser, and Normandy
     104  Associates,   Ltd.,  as  seller,  relating  to  Riverwalk  Apartments;
     incorporated by reference to Exhibit 10.5.1 to Partnership's Current Report
     on Form 8-K previously filed on April 13, 1992.

10.6 Promissory  Note and Deed of Trust with  respect to the  Permanent  Loan on
     Riverwalk  Apartments;   incorporated  by  reference  to  Exhibit  10.6  to
     Partnership's  Current  Report  on Form 8-K  previously  filed on April 13,
     1992.

10.7 Agreement of Limited Partnership of Riverwalk Associates, L.P., (a Missouri
     Limited Partnership), dated March 23, 1992, between United Investors Growth
     Properties II and Scott Wise;  incorporated by reference to Exhibit 10.7 to
     Partnership's  Current  Report  on Form 8-K  previously  filed on April 13,
     1992.

10.8 Real Estate Sale Agreement  between United Investors Real Estate,  Inc., as
     purchaser,  and The Travelers  Insurance  Company,  as seller,  relating to
     Stone  Ridge  Apartments;  incorporated  by  reference  to Exhibit  10.8 to
     Amendment No. 9 to Partnership's Registration Statement previously filed on
     June 1, 1992.

10.10Promissory  Note with  respect to the General  Partner  loan on Stone Ridge
     Apartments;  incorporated  by reference to Exhibit  10.10 to  Partnership's
     Quarterly Report on Form 10-Q previously filed on August 12, 1992.

10.11Permanent  Loan  Commitment   with  respect  to  Stone  Ridge   Apartments;
     incorporated  by  reference  to Exhibit  10.11 to  Partnership's  Quarterly
     Report on Form 10-Q previously filed on August 12, 1992.

10.12Mortgage,  Security  Agreement  and  Fixture  Filing  with  respect  to the
     Permanent  Loan on Stone Ridge  Apartments;  incorporated  by  reference to
     Exhibit 10.12 to  Partnership's  Quarterly  Report on Form 10-Q  previously
     filed on November 12, 1992.

10.13Mortgage  Note  with  respect  to  the   Permanent   Loan  on  Stone  Ridge
     Apartments.

10.14Stock  Purchase  Agreement  dated  December 4, 1992 showing the purchase of
     100% of the outstanding stock of United Investors Real Estate,  Inc. by MAE
     GP Corporation; incorporated by reference to Exhibit 10.14 to Partnership's
     Current Report on Form 8-K previously filed on December 31, 1992.


<PAGE>


10.15Purchase  and Sale  Agreement,  made as of the 19th of July,  1995,  by and
     between Kauri Investments,  Ltd., a Washington corporation, and Renaissance
     Village Associates, JV, a Kansas joint venture.  (Incorporated by reference
     to the Annual Report on Form 10-KSB for the year ended December 31, 1995)

10.16Amendment  to  Purchase  and  Sale  Agreement,  made as of the  10th day of
     August,  1995,  by  and  between  Kauri  Investments,  Ltd.,  a  Washington
     corporation,  and  Renaissance  Village  Associates,  JV,  a  Kansas  joint
     venture. (Incorporated by reference to the Annual Report on Form 10-KSB for
     the year ended December 31, 1995)

10.17Multifamily  Note  dated  November  3, 1997,  by and  between  Stone  Ridge
     Apartments,  L.L.C., a South Carolina limited  liability company and Lehman
     Brothers Holdings, Inc., a Delaware corporation  (Incorporated by reference
     to the Quarterly  Report on Form 10-QSB for the quarter ended September 30,
     1997)

10.18Multifamily  Note  dated  December  17,  1999,  by  and  between  Riverwalk
     Associates,  L.P.,  a  Missouri  limited  partnership  and GMAC  Commercial
     Mortgage Corporation, a California corporation.

16   Letter  dated  October  1, 1998 from the  Registrant's  former  independent
     accountant  regarding  its  concurrence  with  the  statements  made by the
     Registrant  in  this  current  report  (incorporated  by  reference  to the
     Registrant's Current Report on Form 8-K/A filed October 27, 1998.)

18   Independent  Accountants'  Preferability  Letter for  Change in  Accounting
     Principle.

27   Financial Data Schedule

99.1 Portions of Partnership's  Prospectus dated June 18, 1990;  incorporated by
     reference to Exhibit 99.1 to  Partnership's  Report on Form 10-K previously
     filed on March 6, 1991.


<PAGE>
                                                                      Exhibit 18

February 25, 2000


Mr. Patrick J. Foye
Executive Vice President
United Investors Real Estate, Inc.
General Partner of United Investors Growth Properties II
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602

Dear Mr. Foye:

Note I of Notes to the  consolidated  Financial  Statements of United  Investors
Growth Properties II included in its Form 10-KSB for the year ended December 31,
1999  describes  a change in the method of  accounting  to  capitalize  exterior
painting and major  landscaping,  which would have been  expensed  under the old
policy.  You have advised us that you believe that the change is to a preferable
method in your  circumstances  because it provides a better matching of expenses
with the related  benefit of the  expenditures  and is consistent  with policies
currently  being used by your  industry  and  conforms  to the  policies  of the
General Partner.

There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting  for exterior  painting and major  landscaping is to an acceptable
alternative  method which,  based on your business  judgment to make this change
for the reasons cited above, is preferable in your circumstances.

Very truly yours,
/s/KPMG LLP

<PAGE>
                                                                   Exhibit 10.18
                                                        FHLMC Loan No. 002642719

                                MULTIFAMILY NOTE
                                     (TEXAS)

US $3,000,000.00                                       As of December 17, 1999


      FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more  than  one)  promises  to pay to the  order  of  GMAC  COMMERCIAL  MORTGAGE
CORPORATION,  a California  corporation,  the principal sum of Three Million and
00/100 Dollars (US $3,000,000.00), with interest on the unpaid principal balance
at the annual rate of seven and ninety two hundredths percent (7.92%).

1. Defined  Terms.  As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness"  means the principal of, interest
on,  or any  other  amounts  due at any time  under,  this  Note,  the  Security
Instrument  or any other Loan  Document,  including  prepayment  premiums,  late
charges,  default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security  Instrument.  "Event of Default" and
other  capitalized  terms  used but not  defined  in this  Note  shall  have the
meanings given to such terms in the Security Instrument.

2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account  Manager,  or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.

3. Payment of Principal  and Interest.  Principal and interest  shall be paid as
follows:

(a) Unless  disbursement of principal is made by Lender to Borrower on the first
day of the month,  interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made  shall be  payable  simultaneously  with  the  execution  of this  Note.
Interest  under  this Note  shall be  computed  on the  basis of a 360-day  year
consisting of twelve 30-day months.

(b)  Consecutive  monthly  installments  of principal and interest,  each in the
amount  of  Twenty  Four  Thousand  Nine  Hundred  Forty  Four  and  04/100  (US
$24,944.04),  shall be  payable  on the first  day of each  month  beginning  on
February 1, 2000,  until the entire unpaid principal  balance  evidenced by this
Note is fully paid. Any accrued interest  remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued  interest" shall refer to accrued interest which has not become part of
the unpaid principal balance.  Any remaining principal and interest shall be due
and  payable  on  January  1, 2020 or on any  earlier  date on which the  unpaid
principal  balance of this Note  becomes due and  payable,  by  acceleration  or
otherwise (the "Maturity Date").  The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.

(c) Any regularly  scheduled monthly  installment of principal and interest that
is  received  by Lender  before  the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.

4.  Application of Payments.  If at any time Lender  receives,  from Borrower or
otherwise,  any amount  applicable  to the  Indebtedness  which is less than all
amounts due and payable at such time,  Lender may apply that  payment to amounts
then due and  payable in any manner and in any order  determined  by Lender,  in
Lender's  discretion.  Borrower  agrees that neither  Lender's  acceptance  of a
payment  from  Borrower in an amount that is less than all amounts  then due and
payable nor Lender's  application of such payment shall  constitute or be deemed
to  constitute  either  a  waiver  of  the  unpaid  amounts  or  an  accord  and
satisfaction.

5. Security.  The Indebtedness is secured,  among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security  Instrument"),  and reference is made to the Security  Instrument
for other rights of Lender as to collateral for the Indebtedness.

6.  Acceleration.  If an Event of Default has  occurred and is  continuing,  the
entire unpaid principal  balance,  any accrued interest,  the prepayment premium
payable under  Paragraph  10, if any, and all other  amounts  payable under this
Note and any other Loan  Document  shall at once become due and payable,  at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.

7. Default Rate. So long as (a) any monthly  installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is  continuing,  interest  under this Note shall accrue on the unpaid  principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable,  at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first  paragraph of this Note or the maximum  interest  rate which may be
collected from Borrower under  applicable law. If the unpaid  principal  balance
and all accrued  interest are not paid in full on the Maturity  Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate.  Borrower also  acknowledges  that its failure to make
timely payments will cause Lender to incur additional  expenses in servicing and
processing the loan evidenced by this Note (the "Loan"),  that,  during the time
that any  monthly  installment  under this Note is  delinquent  for more than 30
days,  Lender will incur  additional costs and expenses arising from its loss of
the use of the money due and from the adverse impact on Lender's ability to meet
its other  obligations and to take advantage of other investment  opportunities,
and that it is extremely difficult and impractical to determine those additional
costs and expenses.  Borrower also  acknowledges  that, during the time that any
monthly  installment  under this Note is delinquent for more than 30 days or any
other  Event  of  Default  has  occurred  and is  continuing,  Lender's  risk of
nonpayment of this Note will be  materially  increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest  payable under this Note to the Default Rate  represents a fair
and reasonable estimate,  taking into account all circumstances  existing on the
date of this Note,  of the  additional  costs and expenses  Lender will incur by
reason of the  Borrower's  delinquent  payment and the  additional  compensation
Lender is entitled to receive for the increased  risks of nonpayment  associated
with a delinquent loan.

8. Loan Charges.  Borrower and Lender intend at all times to comply with the law
of the State of Texas  governing the maximum rate or amount of interest  payable
on or in connection with this Note and the  Indebtedness  (or applicable  United
States federal law to the extent that it permits Lender to contract for, charge,
take,  reserve or receive a greater amount of interest than under Texas law). If
the applicable law is ever  judicially  interpreted so as to render usurious any
amount payable under this Note or under any other Loan  Document,  or contracted
for, charged,  taken, reserved or received with respect to the Indebtedness,  or
if  acceleration  of the maturity of this Note, or if any prepayment by Borrower
results in Borrower  having paid any interest in excess of that permitted by any
applicable  law,  then  Borrower  and Lender  expressly  intend  that all excess
amounts  collected  by Lender  shall be applied  to reduce the unpaid  principal
balance  of this Note (or,  if this  Note has been or would  thereby  be paid in
full,  shall be refunded to  Borrower),  and the  provisions  of this Note,  the
Security  Instrument  and any other Loan Documents  immediately  shall be deemed
reformed  and the amounts  thereafter  collectible  under this Note or any other
Loan  Document  reduced,  without  the  necessity  of the  execution  of any new
documents,  so as to comply  with any  applicable  law,  but so as to permit the
recovery of the fullest  amount  otherwise  payable under this Note or any other
Loan  Document.  The  right to  accelerate  the  maturity  of this Note does not
include the right to accelerate any interest which has not otherwise  accrued on
the date of such  acceleration,  and  Lender  does not  intend  to  collect  any
unearned  interest in the event of  acceleration.  All sums paid or agreed to be
paid to Lender for the use,  forbearance or detention of the Indebtedness shall,
to the extent permitted by any applicable law, be amortized, prorated, allocated
and spread throughout the full term of the Indebtedness until payment in full so
that the rate or amount of  interest  on  account of the  Indebtedness  does not
exceed the applicable usury ceiling.  Notwithstanding any provision contained in
this Note,  the Security  Instrument or any other Loan Document that permits the
compounding of interest,  including any provision by which any accrued  interest
is added to the principal amount of this Note, the total amount of interest that
Borrower is  obligated  to pay and Lender is entitled to receive with respect to
the  Indebtedness  shall not  exceed the amount  calculated  on a simple  (i.e.,
noncompounded)  interest basis at the maximum rate on principal amounts actually
advanced  to or for the  account of  Borrower,  including  all current and prior
advances and any advances made pursuant to the Security Instrument or other Loan
Documents  (such as for the  payment of taxes,  insurance  premiums  and similar
expenses or costs).

9.    Limits on Personal Liability.

(a) Except as otherwise  provided in this  Paragraph 9,  Borrower  shall have no
personal  liability  under this Note, the Security  Instrument or any other Loan
Document for the repayment of the  Indebtedness  or for the  performance  of any
other  obligations  of Borrower  under the Loan  Documents,  and  Lender's  only
recourse for the  satisfaction of the  Indebtedness  and the performance of such
obligations  shall be Lender's  exercise of its rights and remedies with respect
to the Mortgaged  Property and any other  collateral  held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair  Lender's  enforcement  of  its  rights  against  any  guarantor  of  the
Indebtedness or any guarantor of any obligations of Borrower.

(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note,  plus any other amounts for which Borrower has personal  liability
under this Paragraph 9.

(c) In addition to Borrower's  personal liability under Paragraph 9(b), Borrower
shall be personally  liable to Lender for the repayment of a further  portion of
the  Indebtedness  equal to any loss or damage suffered by Lender as a result of
(1) failure of  Borrower to pay to Lender upon demand  after an Event of Default
all  Rents to which  Lender  is  entitled  under  Section  3(a) of the  Security
Instrument  and the amount of all security  deposits  collected by Borrower from
tenants  then in  residence;  (2)  failure of  Borrower  to apply all  insurance
proceeds and condemnation  proceeds as required by the Security  Instrument;  or
(3)  failure of Borrower to comply  with  Section  14(d) or (e) of the  Security
Instrument relating to the delivery of books and records, statements,  schedules
and reports.

(d) For purposes of determining  Borrower's  personal  liability under Paragraph
9(b) and Paragraph  9(c), all payments made by Borrower or any guarantor of this
Note with respect to the  Indebtedness  and all amounts  received by Lender from
the  enforcement  of its rights under the Security  Instrument  shall be applied
first to the  portion of the  Indebtedness  for which  Borrower  has no personal
liability.

(e) Borrower shall become  personally  liable to Lender for the repayment of all
of the  Indebtedness  upon the  occurrence  of any of the  following  Events  of
Default: (1) Borrower's acquisition of any property or operation of any business
not  permitted  by  Section  33 of  the  Security  Instrument;  (2)  a  Transfer
(including,  but not  limited  to,  a lien or  encumbrance)  that is an Event of
Default  under  Section  21 of the  Security  Instrument,  other than a Transfer
consisting  solely of the  involuntary  removal or  involuntary  withdrawal of a
general  partner in a limited  partnership  or a manager in a limited  liability
company; or (3) fraud or written material  misrepresentation  by Borrower or any
officer,  director,  partner,  member or employee of Borrower in connection with
the  application  for or  creation  of the  Indebtedness  or any request for any
action or consent by Lender.

(f) In addition to any personal  liability for the Indebtedness,  Borrower shall
be  personally  liable to Lender for (1) the  performance  of all of  Borrower's
obligations   under  Section  18  of  the  Security   Instrument   (relating  to
environmental  matters);  (2) the costs of any audit under  Section 14(d) of the
Security  Instrument;  and (3) any  costs  and  expenses  incurred  by Lender in
connection  with the  collection of any amount for which  Borrower is personally
liable under this  Paragraph  9,  including  fees and out of pocket  expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's  books and records to determine the amount for which  Borrower has
personal liability.

(g) To the extent that Borrower has personal  liability  under this Paragraph 9,
Lender may exercise its rights  against  Borrower  personally  without regard to
whether  Lender has exercised any rights  against the Mortgaged  Property or any
other  security,  or pursued any rights  against any  guarantor,  or pursued any
other rights available to Lender under this Note, the Security  Instrument,  any
other Loan  Document or  applicable  law. For purposes of this  Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or  permitted by the  Security  Instrument  prior to the
occurrence  of an  Event of  Default  or (2)  Borrower  was  unable  to apply as
required  or  permitted  by the  Security  Instrument  because of a  bankruptcy,
receivership, or similar judicial proceeding.

10.   Voluntary and Involuntary Prepayments.

(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:

(1) Borrower may voluntarily  prepay all of the unpaid principal balance of this
Note on the last  Business Day of a calendar  month if Borrower has given Lender
at least 30 days prior  notice of its  intention to make such  prepayment.  Such
prepayment  shall be made by paying (A) the amount of principal  being  prepaid,
(B) all  accrued  interest,  (C) all other  sums due  Lender at the time of such
prepayment,  and (D) the prepayment premium  calculated  pursuant to Schedule A.
For all purposes including the accrual of interest,  any prepayment  received by
Lender on any day other than the last  calendar day of the month shall be deemed
to have been  received on the last  calendar day of such month.  For purposes of
this Note, a "Business  Day" means any day other than a Saturday,  Sunday or any
other day on which Lender is not open for business.  Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.

(2) Upon  Lender's  exercise  of any  right of  acceleration  under  this  Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this  Note  outstanding  at the  time of the  acceleration,  (A) all  accrued
interest  and  all  other  sums  due  Lender,  and (B)  the  prepayment  premium
calculated pursuant to Schedule A.

(3) Any  application  by  Lender  of any  collateral  or other  security  to the
repayment of any portion of the unpaid  principal  balance of this Note prior to
the  Maturity  Date and in the absence of  acceleration  shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.  The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment  premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.

(b)  Notwithstanding  the provisions of Paragraph  10(a), no prepayment  premium
shall be payable with respect to (A) any  prepayment  made no more than 180 days
before the Maturity  Date,  or (B) any  prepayment  occurring as a result of the
application of any insurance  proceeds or condemnation  award under the Security
Instrument.

(c)   Schedule A is hereby incorporated by reference into this Note.

(d) Any  permitted  or  required  prepayment  of less than the unpaid  principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly  installments or change the amount of such  installments,  unless Lender
agrees otherwise in writing.

(e) Borrower  recognizes that any prepayment of the unpaid principal  balance of
this Note,  whether  voluntary or  involuntary  or  resulting  from a default by
Borrower,  will result in Lender's incurring loss, including  reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments  to third  parties.  Borrower  agrees to pay to Lender  upon  demand
damages  for the  detriment  caused by any  prepayment,  and  agrees  that it is
extremely  difficult  and  impractical  to ascertain the extent of such damages.
Borrower  therefore  acknowledges  and agrees that the  formula for  calculating
prepayment  premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.

(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the  consideration  for the Loan,  and  acknowledges
that the terms of this Note are in other  respects more favorable to Borrower as
a  result  of the  Borrower's  voluntary  agreement  to the  prepayment  premium
provisions.

11. Costs and  Expenses.  Borrower  shall pay all expenses and costs,  including
fees and  out-of-pocket  expenses of attorneys and expert witnesses and costs of
investigation,  incurred by Lender as a result of any default under this Note or
in  connection  with  efforts to collect  any amount due under this Note,  or to
enforce  the  provisions  of any of the other Loan  Documents,  including  those
incurred in post-judgment  collection  efforts and in any bankruptcy  proceeding
(including  any action  for relief  from the  automatic  stay of any  bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.

12.  Forbearance.  Any  forbearance  by Lender in exercising any right or remedy
under  this  Note,  the  Security  Instrument,  or any other  Loan  Document  or
otherwise  afforded by applicable  law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy.  The  acceptance by Lender of any
payment after the due date of such  payment,  or in an amount which is less than
the required payment,  shall not be a waiver of Lender's right to require prompt
payment  when due of all other  payments or to exercise any right or remedy with
respect to any  failure to make  prompt  payment.  Enforcement  by Lender of any
security for  Borrower's  obligations  under this Note shall not  constitute  an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.

13.  Waivers.  Presentment,  demand,  notice  of  dishonor,  protest,  notice of
acceleration,  notice of intent to demand or  accelerate  payment  or  maturity,
presentment  for  payment,  notice  of  nonpayment,   grace,  and  diligence  in
collecting  the  Indebtedness  are  waived by  Borrower  and all  endorsers  and
guarantors of this Note and all other third party obligors.

14.  Commercial  Purpose.  Borrower  represents  that the  Indebtedness is being
incurred  by  Borrower  solely for the  purpose  of  carrying  on a business  or
commercial enterprise, and not for personal, family or household purposes.

15.  Counting  of  Days.  Except  where  otherwise  specifically  provided,  any
reference in this Note to a period of "days" means  calendar  days, not Business
Days.

16. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.

17.  Captions.  The captions of the paragraphs of this Note are for  convenience
only and shall be disregarded in construing this Note.

18. Notices. All notices, demands and other communications required or permitted
to be given by  Lender  to  Borrower  pursuant  to this  Note  shall be given in
accordance with Section 31 of the Security Instrument.

19. Consent to  Jurisdiction  and Venue.  Borrower  agrees that any  controversy
arising under or in relation to this Note shall be litigated  exclusively in the
jurisdiction  in which the Land is located (the  "Property  Jurisdiction").  The
state and federal  courts and  authorities  with  jurisdiction  in the  Property
Jurisdiction  shall have exclusive  jurisdiction  over all  controversies  which
shall arise under or in relation to this Note. Borrower  irrevocably consents to
service,  jurisdiction,  and venue of such  courts for any such  litigation  and
waives  any other  venue to which it might be  entitled  by virtue of  domicile,
habitual residence or otherwise.

20. WAIVER OF TRIAL BY JURY.  BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL  BY JURY  WITH  RESPECT  TO ANY  ISSUE  ARISING  OUT OF  THIS  NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES  ANY RIGHT TO TRIAL BY JURY WITH  RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT  EXISTS NOW OR IN THE  FUTURE.  THIS WAIVER OF
RIGHT  TO  TRIAL  BY JURY IS  SEPARATELY  GIVEN  BY EACH  PARTY,  KNOWINGLY  AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.

      ATTACHED SCHEDULES.  The following Schedules are attached to this Note:

             X       Schedule A    Prepayment Premium (required)

             X       Schedule B    Modifications to Multifamily Note

      IN WITNESS  WHEREOF,  Borrower has signed and delivered this Instrument or
has caused this  Instrument  to be signed and  delivered by its duly  authorized
representative.

                              RIVERWALK ASSOCIATES, L.P., a Missouri
                              limited partnership

                              By:  UNITED INVESTORS GROWTH PROPERTIES II (A
                                   Missouri Limited Partnership), a Missouri
                                   limited partnership, its general partner

                              By:  UNITED INVESTORS REAL ESTATE, INC., a
                                   Delaware corporation, its general partner

                              By:
                                   Patti K. Fielding
                                   Vice President

                                   45-1542903
                                   Borrower's Social Security/Employer ID Number


<PAGE>


PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE  CORPORATION,  WITHOUT  RECOURSE,
THIS 17TH DAY OF DECEMBER, 1999.

GMAC COMMERCIAL MORTGAGE CORPORATION, a
   California corporation

By:
   Donald W. Marshall
   Vice President


<PAGE>



                                   SCHEDULE A

                               PREPAYMENT PREMIUM

Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:

(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"),  the prepayment premium shall be the
greater of:

(i) of the unpaid principal balance of this Note; or

(ii) the product obtained by multiplying:

(A) the amount of principal being prepaid,

                        by

(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
    Rate,

                        by

(C) the Present Value Factor.

For purposes of subparagraph (ii), the following definitions shall apply:

Monthly Note Rate:  one-twelfth  (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.

Prepayment  Date: in the case of a voluntary  prepayment,  the date on which the
prepayment is made; in any other case, the date on which Lender  accelerates the
unpaid principal balance of the Note.

Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.250% U.S.  Treasury  Security
due  February 1, 2016,  as reported in The Wall Street  Journal,  expressed as a
decimal  calculated  to five digits.  In the event that no yield is published on
the  applicable  date for the Treasury  Security  used to determine  the Assumed
Reinvestment  Rate,  Lender,  in its discretion,  shall select the  non-callable
Treasury Security  maturing in the same year as the Treasury Security  specified
above with the  lowest  yield  published  in The Wall  Street  Journal as of the
applicable  date.  If the  publication  of such yield  rates in The Wall  Street
Journal is  discontinued  for any reason,  Lender shall select a security with a
comparable rate and term to the Treasury  Security used to determine the Assumed
Reinvestment  Rate.  The  selection  of an alternate  security  pursuant to this
Paragraph shall be made in Lender's discretion.


<PAGE>


Present  Value  Factor:  the factor that  discounts  to present  value the costs
resulting  to Lender from the  difference  in interest  rates  during the months
remaining in the Yield Maintenance Period,  using the Assumed  Reinvestment Rate
as the  discount  rate,  with  monthly  compounding,  expressed  numerically  as
follows:

                                  [OBJECT OMITTED]

      n = number of months remaining in Yield Maintenance Period

      ARR = Assumed Reinvestment Rate

(b) If the  prepayment  is made after the  expiration  of the Yield  Maintenance
Period but more than 180 days before the Maturity Date,  the prepayment  premium
shall be 1.0% of the unpaid principal balance of this Note.


<PAGE>



                                   SCHEDULE B

                        MODIFICATIONS TO MULTIFAMILY NOTE

1. The first sentence of 7 of the Note ("Default Rate") is hereby deleted and
      replaced with the following:

            So long as (a) any monthly  installment under this Note remains past
            due for more than thirty (30) days or (b) any other event of Default
            has  occurred  and is  continuing,  interest  under  this Note shall
            accrue on the unpaid  principal  balance from the earlier of the due
            date of the first unpaid  monthly  installment  or the occurrence of
            such other Event of Default, as applicable,  at a rate (the "Default
            Rate")  equal to the lesser of (1) the maximum  interest  rate which
            may be  collected  from  Borrower  under  applicable  law or (2) the
            greater of (i) three  percent (3%) above the  Interest  Rate or (ii)
            four percent  (4.0%) above the  then-prevailing  Prime Rate. As used
            herein,  the term  "Prime  Rate"  shall  mean  the rate of  interest
            announced by The Wall Street Journal from time to time as the "Prime
            Rate".

2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):

(4)         failure  by  Borrower  to pay the  amount  of the  water  and  sewer
            charges,  taxes,  fire, hazard or other insurance  premiums,  ground
            rents in accordance with the terms of the Security Instrument.