<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
 
                                   FORM 10-K
 
(Mark One)
 
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934
 
For the fiscal year ended December 31, 1996
 
                                       OR
 
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
 
For the transition period from _______________________ to ______________________
 
Commission file number: 0-14437
 
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)
 
Delaware                                         13-3236335
--------------------------------------------------------------------------------
(State or other jurisdiction                  (I.R.S. Employer
of incorporation or organization)            Identification No.)
 
One Seaport Plaza, New York, N.Y.                  10292-0116
--------------------------------------------------------------------------------
(Address of principal executive offices)          (Zip Code)
 
Registrant's telephone number, including area code (212) 214-1016
 
Securities registered pursuant to Section 12(b) of the Act:
                                               None
------------------------------------------------------------------------------

Securities registered pursuant to section 12(g) of the Act:
                              Units of Limited Partnership Interest
-----------------------------------------------------------------------------
                                         (Title of class)
 
   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes CK  No__
 
   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [CK]
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
   Registrant's Annual Report to Limited Partners for the year ended December
31, 1996 is incorporated by reference into Parts I, II and IV of this Annual
Report on Form 10-K
 
   Amended and Restated Agreement of Limited Partnership included as part of the
Registration Statement filed with the Securities and Exchange Commission
pursuant to Rule 424(b) under the Securities Act of 1933, and amended on January
1, 1987, is incorporated by reference into Part IV of this Annual Report on Form
10-K
 
                               Index to exhibits can be found on pages 9 and 10.
<PAGE>
 
                      CAUTIONARY STATEMENT FOR PURPOSES OF
                       THE ``SAFE HARBOR'' PROVISIONS OF
              THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
 
   When used in this Annual Report on Form 10-K, the words ``Believes,''
``Anticipates,'' ``Expects'' and similar expressions are intended to identify
forward-looking statements. Statements looking forward in time are included in
this Annual Report on Form 10-K pursuant to the ``Safe Harbor'' provision of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties which could cause actual results to differ
materially, including, but not limited to, those set forth in ``Management's
Discussion and Analysis of Financial Condition and Results of Operations.''
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Registrant undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events.
 
                                       2
<PAGE>
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                PAGE
                                                                                               ------
<S>          <C>                                                                               <C>
PART I
Item  1      Business........................................................................     4
Item  2      Properties......................................................................     4
Item  3      Legal Proceedings...............................................................     4
Item  4      Submission of Matters to a Vote of Limited Partners.............................     4
PART II
Item  5      Market for the Registrant's Units and Related Limited Partner Matters...........     5
Item  6      Selected Financial Data.........................................................     5
Item  7      Management's Discussion and Analysis of Financial Condition and Results of
               Operations....................................................................     6
Item  8      Financial Statements and Supplementary Data.....................................     6
Item  9      Changes in and Disagreements with Accountants on Accounting and Financial
               Disclosure....................................................................     6
PART III
Item 10      Directors and Executive Officers of the Registrant
             Prudential-Bache Properties, Inc................................................     6
             Prudential Realty Partnerships, Inc.............................................     7
Item 11      Executive Compensation..........................................................     8
Item 12      Security Ownership of Certain Beneficial Owners and Management..................     8
Item 13      Certain Relationships and Related Transactions..................................     8
PART IV
Item 14      Exhibits, Financial Statement Schedules and Reports on Form 8-K
             Financial Statements and Financial Statement Schedules..........................     9
             Exhibits........................................................................     9
             Reports on Form 8-K.............................................................    10
SIGNATURES...................................................................................    14
</TABLE>
                                       3
<PAGE>
                                     PART I
 
Item 1. Business
 
General
 
   Prudential Realty Acquisition Fund II, L.P. (the ``Registrant ''), a Delaware
limited partnership, was formed on August 10, 1984 and will terminate in
accordance with a vote of the limited partners as described below. The
Registrant was formed to acquire and manage income-producing commercial real
estate with proceeds raised from the initial sale of 44,503 limited partnership
units (``Units''). The Registrant's fiscal year for book and tax purposes ends
on December 31.
 
   The Registrant had invested in and operated a real estate investment
portfolio which consisted of four properties and a mortgage loan. These
commercial real estate properties consisted of an office building, an industrial
warehouse and two shopping centers. The shopping centers were acquired through a
joint venture agreement with Prudential Acquisition Fund I, L.P., an affiliated
limited partnership (``Joint Venture''). All of the Registrant's properties have
been sold as of December 31, 1996, as described below.
 
   In January 1996, the General Partners mailed to all limited partners a
Consent Solicitation Statement (the ``Statement'') asking for their written
consent to approve (i) a plan of sale of the remaining assets of the Registrant
and (ii) the complete liquidation and dissolution of the Partnership, as more
fully described in the Statement. On March 11, 1996, the limited partners
holding a majority of the Units approved the plan of sale and complete
liquidation and dissolution of the Registrant. Pursuant to the approval of the
plan of liquidation, the general partners sold all the properties of the
Partnership in the year ended December 31, 1996, as discussed below.
 
   The two shopping centers owned by the Joint Venture were sold on March 26,
1996 for a gross sales price of $15,500,000 less costs to sell and pro-rations.
On December 18, 1996, an agreement was signed by and between the Registrant and
Prudential Acquisition Fund I, L.P., an affiliated limited partnership,
outlining the terms of the dissolution of the Joint Venture. As of December 31,
1996, all remaining assets of the Joint Venture were distributed in liquidation
in accordance with this agreement.
 
   The Eight Forge Park office building was sold on August 30, 1996 for a gross
sales price of $5,060,000 less costs to sell and pro-rations, and the TASH
industrial warehouse was sold on December 17, 1996 for a gross sales price of
$5,245,000 less costs to sell and pro-rations. The first mortgage loan was
assigned in April 1996 for net proceeds, after selling expenses, of $361,000.
See Notes C, D and F to the financial statements of the Registrant's Annual
Report to Limited Partners for the year ended December 31, 1996 (``Registrant's
Annual Report'') for further information.
 
General Partners
 
   The general partners of the Registrant are Prudential-Bache Properties, Inc.
(``PBP'') and Prudential Realty Partnerships, Inc. (``PRP'') (collectively, the
``General Partners'').
 
Employees
 
   The Registrant has no employees. Management and administrative services for
the Registrant are performed by the General Partners and their affiliates
pursuant to the Partnership Agreement. See Note G to the financial statements in
the Registrant's Annual Report for further information.
 
Item 2. Properties
 
   All of the Registrant's properties were sold as of December 31, 1996. See
Notes C, D and F to the financial statements of the Registrant's Annual Report
for further information.
 
Item 3. Legal Proceedings
 
   This information is incorporated by reference to Note H of the financial
statements in the Registrant's Annual Report which is filed as an exhibit
hereto.
 
Item 4. Submission of Matters to a Vote of Limited Partners
 
   None
 
                                       4
<PAGE>
 
                                    PART II
 
Item 5. Market for the Registrant's Units and Related Limited Partner Matters
 
   As of March 3, 1997, there were 5,829 holders of record owning 44,503 Units.
A significant secondary market for the Units has not developed, and it is not
expected that one will develop in the future. There are also certain
restrictions set forth in the Partnership Agreement limiting the ability of a
Limited Partner to transfer Units. Consequently, holders of Units may not be
able to liquidate their investments in the event of an emergency or for any
other reason.
 
   The following per Unit cash distributions were paid to Limited Partners
during the quarter indicated:
 
<TABLE>
<CAPTION>
Quarter Ended          1996        1995
--------------        -------      -----
<S>                   <C>          <C>
March 31              $  9.50      $8.50
June 30               $159.34      $9.50
September 30          $100.00      $9.50
December 31           $113.86      $9.50
</TABLE>
 
   As a result of the approval by the limited partners holding a majority of the
Units of the plan of sale and liquidation of the Registrant, all properties of
the Registrant were sold during the year ended December 31, 1996. The increase
in distributions during the year ended December 31, 1996 was primarily the
result of the distribution of net proceeds from the sales of the properties. See
Item 1 Business for further information. The Registrant intends to make a final
liquidating distribution in 1997. The distributions paid to limited partners
during 1996 and 1995 represent a return of capital on a generally accepted
accounting principles (GAAP) basis. (The return of capital on a GAAP basis is
calculated as limited partner distributions less net income allocated to limited
partners.)
 
Item 6. Selected Financial Data
 
   The following table presents selected financial data of the Registrant. This
data should be read in conjunction with the financial statements of the
Registrant and the notes thereto contained on pages 2 through 9 in the
Registrant's Annual Report which is filed as an exhibit hereto.
<TABLE>
<CAPTION>
                                                       Year ended December 31,
                                 -------------------------------------------------------------------
                                    1996          1995          1994          1993          1992
                                 -----------   -----------   -----------   -----------   -----------
<S>                              <C>           <C>           <C>           <C>           <C>
Rental income                    $   442,636   $ 1,286,758   $ 1,380,623   $ 1,340,207   $ 1,312,628
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Joint venture equity income
  (loss) (a)                     $  (537,955)  $  (609,162)  $   113,565   $(6,665,416)  $(1,356,061)
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Provision for loan loss          $    89,000   $        --   $        --   $   884,852   $        --
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Provision for loss on
  impairment of assets           $        --   $ 1,000,000   $ 1,400,000   $        --   $        --
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Gain on sale of properties       $   591,668   $        --   $        --   $        --   $        --
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Estimated liquidation costs      $   277,000   $        --   $        --   $        --   $        --
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Net loss                         $  (112,219)  $(1,149,484)  $  (558,669)  $(6,799,543)  $  (488,508)
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Net loss per limited
  partnership unit               $     (3.58)  $    (29.94)  $    (16.33)  $   (156.57)  $    (14.59)
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Total assets                     $ 1,564,479   $18,331,682   $21,017,985   $23,266,408   $31,725,482
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Total limited partnership
  distributions                  $17,031,298   $ 1,646,613   $ 1,513,605   $ 1,512,631   $ 1,446,349
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
Limited partner distributions
  per unit                       $    382.70   $     37.00   $     34.00   $     34.00   $     32.50
                                 -----------   -----------   -----------   -----------   -----------
                                 -----------   -----------   -----------   -----------   -----------
</TABLE>
 
(a) Includes $1,081,000, $6,463,000 and $1,426,000 provisions for loss on
    impairment of assets in 1995, 1993 and 1992, respectively.
 
                                       5
<PAGE>
 
Item 7. Management's Discussion and Analysis of Financial Condition and Results
        of Operations
 
   This information is incorporated by reference to pages 10 through 11 of the
Registrant's Annual Report which is filed as an exhibit hereto.
 
Item 8. Financial Statements and Supplementary Data
 
   The financial statements are incorporated by reference to pages 2 through 9
of the Registrant's Annual Report which is filed as an exhibit hereto.
 
Item 9. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure
 
   None
 
                                    PART III
 
Item 10. Directors and Executive Officers of the Registrant
 
   There are no directors or executive officers of the Registrant. The
Registrant is managed by the General Partners.
 
   The Registrant, the Registrant's General Partners and their directors and
executive officers, and any persons holding more than ten percent of the
Registrant's Units are required to report their initial ownership of such Units
and any subsequent changes in that ownership to the Securities and Exchange
Commission on Form 3, 4 and 5. Such executive officers, directors and persons
who own greater than ten percent of the Registrant's Units are required by
Securities and Exchange Commission regulations to furnish the Registrant with
copies of all Forms 3, 4 or 5 they file. All of these filing requirements were
satisfied on a timely basis. In making these disclosures, the Registrant has
relied solely on written representations of the General Partners' directors and
executive officers and persons who own greater than ten percent of the
Registrant's Units, if any, or copies of the reports they have filed with the
Securities and Exchange Commission during and with respect to its most recent
fiscal year.
 
Prudential-Bache Properties, Inc.
 
   The directors and executive officers of PBP and their positions with regard
to managing the Registrant are as follows:
 
    Name                                      Position
Thomas F. Lynch, III         President, Chief Executive Officer,
                               Chairman of the Board of Directors and Director
Barbara J. Brooks            Vice President--Finance and Chief Financial Officer
Eugene D. Burak              Vice President and Chief Accounting Officer
Chester A. Piskorowski       Senior Vice President
Frank W. Giordano            Director
Nathalie P. Maio             Director
 
   THOMAS F. LYNCH, III, age 38, is the President, Chief Executive Officer,
Chairman of the Board of Directors and a Director of PBP. He is a Senior Vice
President of Prudential Securities Incorporated (``PSI''), an affiliate of PBP.
Mr. Lynch also serves in various capacities for other affiliated companies. Mr.
Lynch joined PSI in November 1989.
 
   BARBARA J. BROOKS, age 48, is the Vice President-Finance and Chief Financial
Officer of PBP. She is a Senior Vice President of PSI. Ms. Brooks also serves in
various capacities for other affiliated companies. She has held several
positions within PSI since 1983. Ms. Brooks is a certified public accountant.
 
   EUGENE D. BURAK, age 51, is a Vice President of PBP. He is a First Vice
President of PSI. Prior to joining PSI in September 1995, he was a management
consultant for three years and was with Equitable Capital Management Corporation
from March 1990 to May 1992. Mr. Burak is a certified public accountant.
 
   CHESTER A. PISKOROWSKI, age 53, is a Senior Vice President of PBP. He is a
Senior Vice President of PSI and is the Senior Manager of the Specialty Finance
Asset Management area. Mr. Piskorowski has held
                                       6
<PAGE>
several positions within PSI since April 1972. Mr. Piskorowski is a member of
the New York and Federal Bars.
 
   FRANK W. GIORDANO, age 54, is a Director of PBP. He is a Senior Vice
President of PSI and an Executive Vice President and General Counsel of
Prudential Mutual Fund Management LLC, an affiliate of PSI. Mr. Giordano also
serves in various capacities for other affiliated companies. He has been with
PSI since July 1967.
 
   NATHALIE P. MAIO, age 46, is a Director of PBP. She is a Senior Vice
President and Deputy General Counsel of PSI and supervises non-litigation legal
work for PSI. She joined PSI's Law Department in 1983; presently, she also
serves in various capacities for other affiliated companies.
 
   There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing directors and executive officers have
indefinite terms.
 
Prudential Realty Partnerships, Inc.
 
   The directors and executive officers of Prudential Realty Partnerships, Inc.
and their positions are as follows:
 
   Name                                      Position
Joel W. Stoesser                Chairman of the Board of Directors
David Bradford                  President and Director
Kevin R. Smith                  Vice President and Director
Jose Gener                      Vice President and Comptroller
C. Edward Chaplin               Treasurer
Roger S. Pratt                  Director
Joseph D. Margolis              Secretary
 
   JOEL W. STOESSER, age 56, is a Managing Director of Prudential Real Estate
Investors. He is head of Investment Advisory Services, which includes
responsibility for portfolio management and asset management of separate
accounts and certain co-investment programs and commingled funds. Prior to his
current assignment, Mr. Stoesser served as a Senior Vice President of Prudential
Realty Group. Prior to joining Prudential in 1988, he also served as a Senior
Vice President in Real Estate Investment Management at CIGNA Corporation and
held assignments with Connecticut General Life Insurance Company as head of real
estate operations and as Director of strategic planning for all investment
operations.
 
   DAVID BRADFORD, age 43, is a Managing Director of Prudential Real Estate
Investors. He is the portfolio manager of PRISA, a large commingled fund. Prior
to joining Prudential in 1995, Mr. Bradford was a Senior Vice President in
Portfolio Management at Equitable Real Estate. His 13-year tenure at Equitable
included positions in pension investment marketing across all asset classes,
real estate product management and portfolio operations and investment. Most
recently (1991-1995), Mr. Bradford was Assistant Portfolio Manager for
Equitable's Prime Property Fund.
 
   KEVIN R. SMITH, age 39, is a Vice President of Prudential Real Estate
Investors. He is a portfolio manager for three separate accounts and two
commingled funds. Mr. Smith has been employed by Prudential since 1981 and has
experience in asset management, development, property acquisitions and sales,
and mortgage loans as a result of field office assignments in Cleveland,
Houston, and Northern New Jersey.
 
   JOSE GENER, age 46, is a Vice President, Operations and Systems, with
Prudential Asset Management Group. In his present assignment, he is responsible
for reporting for the institutional real estate management arm of PAMG. Mr.
Gener has been with Prudential since 1977, serving in a series of
comptrollership assignments. Since 1986 he has worked primarily with the
investment management units of Prudential.
 
   C. EDWARD CHAPLIN, age 40, is Vice President and Treasurer of Prudential
Insurance Company of America. He is responsible for all borrowings, cash
management and securities custody activities of The Prudential. Mr. Chaplin
joined Prudential in the Realty Group in August 1983. In May 1992, he
transferred to the Treasurer's Department as Vice President and Assistant
Treasurer, with responsibility for Banking and Cash Management. In October 1993,
he was promoted to Managing Director and Assistant Treasurer, with
                                       7
 <PAGE>
<PAGE>
responsibility for managing Prudential's debt issuance, its relationships with
the major credit rating agencies and financial counterparty credit analysis. In
November 1995, Mr. Chaplin was appointed to Vice President and Treasurer.
 
   ROGER S. PRATT, age 44, is Managing Director of Prudential Real Estate
Investors. He is the portfolio manager of PRISA II, a large commingled fund. Mr.
Pratt joined the Prudential Realty Group in June 1982 as an asset manager in the
Atlanta regional office and subsequently has served in a variety of positions
for Prudential. Prior to assuming his current position in February 1992, Mr.
Pratt was Vice President in charge of the New Jersey regional office.
 
   JOSEPH D. MARGOLIS, age 36, is Assistant General Counsel responsible for the
provision and coordination of legal services to Prudential Real Estate Investors
as well as other Prudential Asset Management Group Real Estate entities. His
assignments with Prudential have included counsel to The Prudential Mortgage
Capital Company, Inc. and Associate Regional Counsel in the Boston Realty Group
office. Prior to joining Prudential, Mr. Margolis was employed by Nutter,
McClennen & Fish in Boston, Massachusetts.
 
   There are no family relationships among any of the foregoing directors or
executive officers. All of the foregoing executive officers and directors have
indefinite terms.
 
Item 11. Executive Compensation
 
   The Registrant does not pay or accrue any fees, salaries or any other form of
compensation to directors and officers of the General Partners for their
services. Certain executive officers and directors of the General Partners
receive compensation from affiliates of the General Partners, not from the
Registrant, for services performed for various affiliated entities, which may
include services performed for the Registrant; however, the General Partners
believe that any compensation attributable to services performed for the
Registrant is immaterial. See Item 13 Certain Relationships and Related
Transactions for information regarding compensation to the General Partners.
 
Item 12. Security Ownership of Certain Beneficial Owners and Management
 
   As of March 3, 1997, no director or executive officer of either of the
General Partners owns directly or beneficially any interest in the voting
securities of the General Partners.
 
   As of March 3, 1997, no director or executive officer of either of the
General Partners owns directly or beneficially any of the Units issued by the
Registrant.
 
   As of March 3, 1997, no limited partner beneficially owns more than five
percent (5%) of the outstanding Units issued by the Registrant.
 
Item 13. Certain Relationships and Related Transactions
 
   The Registrant has and will continue to have certain relationships with the
General Partners and their affiliates. However, there have been no direct
financial transactions between the Registrant and the directors or executive
officers of the General Partners.
 
   Reference is made to Notes A and G to the financial statements of the
Registrant's Annual Report which is filed as an exhibit hereto, which identify
the related parties and discuss the services provided by these parties and the
amounts paid or payable for their services.
 
                                       8
<PAGE>
                                    PART IV
 
<TABLE>
<CAPTION>
                                                                                             Page
                                                                                           in Annual
                                                                                            Report
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
<S>  <C>      <C>                                                                          <C>
(a)  1.       Financial Statements and Independent Auditors' Report--Incorporated by
              reference to the Registrant's Annual Report which is filed as an exhibit
              hereto
              Independent Auditors' Report                                                      2
              Financial Statements:
              Statement of Net Assets--December 31, 1996                                        3
              Statement of Financial Condition--December 31, 1995                               3
              Statements of Operations--Three Years Ended December 31, 1996                     4
              Statements of Changes in Partners' Capital--Three Years Ended December 31,
              1996                                                                              4
              Statements of Cash Flows--Three Years Ended December 31, 1996                     5
              Notes to Financial Statements                                                     6
     2.       Financial Statement Schedules and Independent Auditors' Report
              Independent Auditors' Report on Schedules
              Schedules:
              III--Real Estate and Accumulated Depreciation--December 31, 1996
              IV--Mortgage Loan on Real Estate--December 31, 1996
              All other schedules have been omitted because they are not applicable or
              the required information is included in the financial statements and notes
              thereto.
     3.       Exhibits
              Description:
     2        Consent Solicitation Statement dated January 26, 1996 (13)
     3 and 4  Amended and Restated Agreement of Limited Partnership (1)
              Amendment to Limited Partnership Agreement Dated as of January 1, 1987 (2)
     10       Material Contracts:
           A. Real Property and Mortgage Management and Supervisory Services Agreement
              (3)
           B. Joint Venture Agreement dated May 8, 1985 between The Prudential Insurance
              Company of America (``Prudential'') and Prudential Acquisition Fund I, L.P.
              (``PAF'') (4)
           C. Purchase Agreement and First Amendment to Joint Venture Agreement dated
              June 28, 1985 between PAF and Prudential (5)
           D. Amended and Restated Joint Venture Interest Acquisition and Option
              Agreement dated June 28, 1985 between Prudential and Registrant (5)
           E. Amended and Restated Acquisition Fee Agreement dated June 28, 1985 among
              Prudential Realty Partnerships, Inc., Prudential-Bache Properties, Inc.,
              Registrant, PAF, Prudential, and Ridge Plaza Joint Venture (5)
           F. First Amendment to Amended and Restated Joint Venture Interest Acquisition
              and Option Agreement dated October 25, 1985 between Prudential and
              Registrant (6)
           G. Second Amendment to Joint Venture Agreement of Ridge Plaza Joint Venture
              and Second Amendment to Amended and Restated Joint Venture Interest
              Acquisition and Option Agreement and First Amendment to Amended and
              Restated Acquisition Fee Agreement dated January 14, 1986 among PAF,
              Prudential, and Registrant (7)
           H. Third Amendment to Joint Venture Agreement of Ridge Plaza Joint Venture
              dated as of May 15, 1986 among PAF, Prudential and Registrant (8)
           I. Promissory Note Due May 15, 1993 dated May 6, 1988 (9)
           J. Mortgage and Security Agreement Dated May 6, 1988 (9)
</TABLE>
 
                                       9
<PAGE>
<TABLE>
<S>  <C>      <C>                                                                          <C>
           K. Purchase & Sale Agreement with Exhibits dated November 1, 1995 by and
              between Ridge Plaza Joint Venture and PIRP, Inc. (10)
           L. First Amendment to Purchase & Sale Agreement made as of March 4, 1996, by
              and between Ridge Plaza Joint Venture and PIRP, Inc. (10)
           M. Real Estate Sale Contract dated July 3, 1996 by and between the Registrant
              and MGI Properties (11)
           N. First Amendment to Real Estate Contract dated August 27, 1996 by and
              between the Registrant and MGI 8 Forge Park, Inc. (11)
           O. Purchase and Sale Agreement dated December 11, 1996 by and between the
              Registrant and Delphinidae/White Birch (12)
           P. Agreement for Dissolution of Joint Venture/Partnership dated December 18,
              1996 by and between the Registrant and Prudential Acquisition Fund I, L.P.
              (filed herewith)
     13       Registrant's 1996 Annual Report to Limited Partners (with the exception of
              the information and data incorporated by reference in Items 3, 7 and 8 of
              this Annual Report on Form 10-K, no other information or data appearing in
              the Registrant's 1996 Annual Report is to be deemed filed as part of this
              report.)
     27       Financial Data Schedule (filed herewith)
     (b)      Reports on Form 8-K
              Registrant's Current Report on Form 8-K dated December 17, 1996, as filed
              with the Securities and Exchange Commission on December 27, 1996, relating
              to Item 2 regarding to the sale of the TASH property.
---------------
 (1) Incorporated by reference to Prospectus dated February 14, 1985, as filed with the Commission
     pursuant to Rule 424(b) under the Securities Act of 1933
 (2) Incorporated by reference to Exhibits 3 and 4 of Registrant's Annual Report on Form 10-K for
     the year ended December 31, 1988
 (3) Incorporated by reference to Exhibit 10C to Amendment No. 1 to Registration Statement No.
     2-93027 filed February 12, 1985
 (4) Incorporated by reference to Exhibit 10(c) of Registrant's Current Report on Form 8-K dated May
     23, 1985
 (5) Incorporated by reference to Exhibit 10(d) of Post-Effective Amendment No. 1 to Registration
     Statement No. 2-93027 filed July 5, 1985
 (6) Incorporated by reference to Exhibit 10(a) of Post-Effective Amendment No. 2 to Registration
     Statement No. 2-93027 filed December 19, 1985
 (7) Incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated
     January 14, 1986
 (8) Incorporated by reference to Exhibit 10(a) of Registrant's Current Report on Form 8-K dated May
     15, 1986
 (9) Incorporated by reference to Exhibit 10 of Registrant's Annual Report on Form 10-K for the year
     ended December 31, 1988
(10) Incorporated by reference to Exhibits 10(k) and 10(l) of Registrant's Current Report on Form
     8-K dated March 26, 1996
(11) Incorporated by reference to Exhibits 10(m) and 10(n) of Registrant's Current Report on Form
     8-K dated August 30, 1996
(12) Incorporated by reference to Exhibit 10(o) of Registrant's Current Report on Form 8-K dated
     December 17, 1996
(13) Incorporated by reference to Proxy Statement on Schedule 14A as filed with the Commission on
     January 26, 1996
</TABLE>
 
                                       10
<PAGE>
Deloitte &
   Touche LLP
                        --------------------------------------------------------
                        Two World Financial Center     Telephone: (212) 436-2000
                        New York, New York 10281-1414  Facsimile: (212) 436-5000

 
                          INDEPENDENT AUDITORS' REPORT
 
To the Partners of Prudential Realty Acquisition Fund II, L.P.
New York, New York
 
We have audited the statement of net assets in process of liquidation of
Prudential Realty Acquisition Fund II, L.P. (a Delaware Limited Partnership) as
of December 31, 1996, the statement of financial condition of Prudential Realty
Acquisition Fund II, L.P. as of December 31, 1995, and the related statements of
operations, changes in partner's capital and cash flows for each of the three
years in the period ended December 31, 1996, and have issued our report thereon
dated March 24, 1997; such financial statements and report thereon are included
in your 1996 Annual Report to Limited Partners and are incorporated herein by
reference. Our audits also included the financial statement schedules of
Prudential Realty Acquisition Fund II, L.P., listed in Item 14. These financial
statement schedules are the responsibility of the General Partners. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
 
/s/ Deloitte & Touche LLP
 
March 24, 1997

-----------------
Deloitte Touche
Tohmatsu
International
-----------------
 
                                       11
<PAGE>
 
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
             Schedule III--Real Estate and Accumulated Depreciation
                               December 31, 1996
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                                                            Costs                    Gross Amounts at which
                              Initial Cost (A)           Capitalized               Carried at Close of Period
                        ----------------------------        (Sold)        --------------------------------------------
                                         Buildings        Subsequent                       Buildings
                                            and               to                              and
     Description           Land        Improvements      Acquisition         Land        Improvements       Total(B)
----------------------  ----------     -------------     ------------     ----------     -------------     -----------
<S>                     <C>            <C>               <C>              <C>            <C>               <C>
Rancho Cucamonga, CA
  Tash Distribution
  Warehouse             $2,119,710      $ 5,559,861      $ (7,679,571)    $       --      $        --      $        --
Franklin, MA
  Thermo Instruments
  Office/Research
  Facility                 626,746        5,650,632        (6,277,378)            --               --               --
                        ----------     -------------     ------------     ----------     -------------     -----------
    Total               $2,746,456      $11,210,493      $(13,956,949)    $       --      $        --      $        --
                        ----------     -------------     ------------     ----------     -------------     -----------
                        ----------     -------------     ------------     ----------     -------------     -----------
 
<CAPTION>
 
                          Accumulated
     Description        Depreciation(C)
----------------------  ---------------
<S>                     <C>
Rancho Cucamonga, CA
  Tash Distribution
  Warehouse               $        --
Franklin, MA
  Thermo Instruments
  Office/Research
  Facility                         --
                        ---------------
    Total                 $        --
                        ---------------
                        ---------------
</TABLE>
 
(A) Initial cost represents the initial purchase price of the properties
    including acquisition fees.
 
(B) Reconciliation of Real Estate Owned:
 
<TABLE>
<CAPTION>
                                                          Year ended December 31,
                                                -------------------------------------------
                                                   1996            1995            1994
                                                -----------     -----------     -----------
    <S>                                         <C>             <C>             <C>
    Balance at Beginning of Year                $12,102,685     $12,800,501     $14,200,501
    Allocation of accumulated depreciation
      against the carrying amount of the
      properties based upon the
      reclassification of the properties as
      held for sale                              (3,009,417)             --              --
    Additions During Year                           285,463         302,184              --
    Write-downs During Year                              --      (1,000,000)     (1,400,000)
    Property Sold During Year                    (9,378,731)             --              --
                                                -----------     -----------     -----------
    Balance at End of Year                      $        --     $12,102,685     $12,800,501
                                                -----------     -----------     -----------
                                                -----------     -----------     -----------
</TABLE>
 
(C) Reconciliation of Accumulated Depreciation:
 
<TABLE>
<CAPTION>
                                                          Year ended December 31,
                                                -------------------------------------------
                                                   1996            1995            1994
                                                -----------     -----------     -----------
    <S>                                         <C>             <C>             <C>
    Balance at Beginning of Year                $ 3,009,417     $ 2,629,911     $ 2,250,387
    Additions During Year                                --         379,506         379,524
    Allocation of accumulated depreciation
      against the carrying amount of the
      properties based upon the
      reclassification of the properties as
      held for sale                              (3,009,417)             --              --
                                                -----------     -----------     -----------
    Balance at End of Year                      $        --     $ 3,009,417     $ 2,629,911
                                                -----------     -----------     -----------
                                                -----------     -----------     -----------
</TABLE>
 
Effective December 31, 1995, the Registrant reclassified its properties from
held for use to held for sale and ceased depreciating the properties for
financial statement purposes only.
 
                                       12
<PAGE>
 
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                   Schedule IV--Mortgage Loan on Real Estate
                               December 31, 1996
 
<TABLE>
<CAPTION>
                        -------------------------------------------------------
                                                                     Carrying
                                                     Interest         Amount
                        Description                    Rate        12/31/96(a)
                        ------------------------     --------      ------------
                        <S>                          <C>           <C>
                        First Mortgage:
                          Golden Valley,
                          Minnesota                      9%          $ --
                                                     --------      ------------
                                                     --------      ------------
</TABLE>
 
   The first mortgage loan on property in Golden Valley, Minnesota was assigned
to Mendelssohn Industries Properties, L.L.C. in April 1996. A provision for loss
of $89,000 was recorded as of March 31, 1996 to reflect the net proceeds
received by the Partnership, after selling expenses, of approximately $361,000.
 
<TABLE>
<CAPTION>
                                                                    Year ended December 31,
                                                          --------------------------------------------
                                                            1996             1995              1994
                                                          --------         --------         ----------
<S>  <C>                                                  <C>              <C>              <C>
(a)  Balance at Beginning of Year                         $450,000         $450,000         $  505,000
     Deductions:
     Collection of principal                                    --               --            (55,000)
     Allowance for loan loss                               (89,000)              --                 --
     Proceeds from assignment                             (361,000)              --                 --
                                                          --------         --------         ----------
     Balance at End of Year                               $     --         $450,000         $  450,000
                                                          --------         --------         ----------
                                                          --------         --------         ----------
</TABLE>
 
                                       13
<PAGE>
 
                                   SIGNATURES
 
   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
 
PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
 
By: Prudential-Bache Properties, Inc.
    A Delaware corporation, General Partner
     By: /s/ Eugene D. Burak                      Date: March 27, 1997
     ----------------------------------------
     Eugene D. Burak
     Vice President and Chief Accounting
     Officer
 
   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities (with respect to the General Partners) and on
the dates indicated.
 
By: Prudential-Bache Properties, Inc.
    A Delaware corporation, General Partner
     By: /s/ Thomas F. Lynch, III                 Date: March 27, 1997
     ----------------------------------------
     Thomas F. Lynch, III
     President, Chief Executive Officer,
     Chairman of the Board of Directors and
     Director

     By: /s/ Barbara J. Brooks                    Date: March 27, 1997
     ----------------------------------------
     Barbara J. Brooks
     Vice President-Finance and Chief
     Financial Officer

     By: /s/ Eugene D. Burak                      Date: March 27, 1997
     ----------------------------------------
     Eugene D. Burak
     Vice President

     By: /s/ Frank W. Giordano                    Date: March 27, 1997
     ----------------------------------------
     Frank W. Giordano
     Director

     By: Nathalie P. Maio                         Date: March 27, 1997
     ----------------------------------------
     Nathalie P. Maio
     Director
 
                                       14
<PAGE>
By: Prudential Realty Partnerships, Inc.
    A Delaware corporation, General Partner
     By: /s/ Joel W. Stoesser                     Date: March 27, 1997
     ----------------------------------------
     Joel W. Stoesser
     Chairman of the Board of Directors

     By: /s/ David Bradford                       Date: March 27, 1997
     ----------------------------------------
     David Bradford
     President and Director
     By: /s/ Kevin R. Smith                       Date: March 27,, 1997
     ----------------------------------------
     Kevin R. Smith
     Vice President and Director

     By: /s/ Jose Gener                           Date: March 27, 1997
     ----------------------------------------
     Jose Gener
     Vice President and Comptroller

     By: /s/ C. Edward Chaplin                    Date: March 27, 1997
     ----------------------------------------
     C. Edward Chaplin
     Treasurer

     By: /s/ Roger S. Pratt                       Date: March 27, 1997
     ----------------------------------------
     Roger S. Pratt
     Director

     By: /s/ Joseph D. Margolis                   Date: March 27, 1997
     ----------------------------------------
     Joseph D. Margolis
     Secretary
 
                                       15