March 30, 2000



United States

Securities and Exchange Commission
Washington, D.C.  20549


RE:   Drexel Burnham Lambert Real Estates Associates II
      Form 10-KSB
      File No. 2-85829


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


                  FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER

                               SECTION 13 OR 15(d)

                                   FORM 10-KSB

(Mark One)
 [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 2-85829

                  DREXEL  BURNHAM  LAMBERT  REAL ESTATE  ASSOCIATES  II
                 (Name of small business issuer in its charter)

           New York                                              13-3202289
(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)

                    Issuer's telephone number (864) 239-1000

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

                                      None

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

                            Limited Partnership Units

                                (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 $1,518,000

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

                                     PART I

Item 1.     Description of Business

Drexel  Burnham  Lambert  Real  Estate  Associates  II  (the   "Partnership"  or
"Registrant")  was  organized  on  November  2,  1983  as  a  New  York  limited
partnership  pursuant to the Limited  Partnership Laws of the State of New York.
The general partner of the Partnership is DBL Properties  Corporation  ("DBL" or
the "General  Partner"),  an affiliate of Apartment  Investment  and  Management
Company  ("AIMCO") (see "Change in Control"  below).  The Partnership  Agreement
provides  that the  Partnership  is to terminate  on December  31, 2032,  unless
terminated prior to such date.

The  Partnership's  primary business is to operate and hold existing real estate
properties for investment. The Partnership acquired interests in five properties
during  1984  and  1985.  The  Partnership  continues  to own  and  operate  one
residential  property,  Presidential House, and it continues to hold a 50% joint
venture interest in Table Mesa, which was sold subsequent to December 31, 1999.

Commencing in February 1984 pursuant to the Prospectus,  the Partnership offered
20,000 in Limited Partnership Units (the "Units").  A total of 37,273 Units were
sold to the public at $500 per Unit aggregating to approximately $18,637,000. In
addition,  the  General  Partner  contributed  $1,000 for its 1% interest in the
Partnership.  The offering  closed on October 10, 1984.  No Limited  Partner has
made any additional  capital  contribution after that date. The Limited Partners
of the Partnership share in the benefits of ownership of the Partnership's  real
estate property investments according to the number of Units held.

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 such property  management
services.

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Partnership'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 property 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.

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 property 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.


<PAGE>




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

 Transfer of Control

On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation,  completed  its  merger  with and  into  Apartment  Investment  and
Management  Company  ("AIMCO"),  a publicly traded real estate investment trust,
with AIMCO being the surviving  corporation (the "Insignia Merger"). As a result
of the Insignia  Merger,  AIMCO acquired  control of IFGP  Corporation and, as a
result thereof,  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 Property

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

                                  Date of

Property                          Purchase      Type of Ownership        Use

Presidential House Apartments     10/22/84  Fee ownership subject    Apartments
  North Miami Beach, FL                     to first mortgage        203 units

Schedule of Properties

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

<TABLE>
<CAPTION>

                          Gross
                        Carrying    Accumulated                            Federal
Property                  Value    Depreciation      Rate      Method     Tax Basis
                            (in thousands)                             (in thousands)
<S>                       <C>          <C>        <C>           <C>      <C>

Presidential House       $7,970       $5,810      5-31.5 yrs     SL        $2,146
</TABLE>

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

Schedule of Property Indebtedness

The  following  table  sets  forth  certain  information  relating  to the  loan
encumbering the Registrant's property.

<TABLE>
<CAPTION>

                         Principal                                        Principal
                         Balance At                                        Balance
                        December 31,   Interest    Period    Maturity       Due At
Properties                  1999         Rate     Amortized    Date      Maturity (1)
                       (in thousands)                                   (in thousands)
<S>                        <C>           <C>       <C>        <C>           <C>

Presidential House         $3,122        8.00%     20 yrs    08/01/00       $3,047
</TABLE>

(1)   See "Item 7. Financial  Statement - Note F" for  Partnership's  ability to
      prepay this loan and other specific details about the loan.

Rental Rates and Occupancy

Average annual rental rate and occupancy for 1999 and 1998 for the property was:

                                     Average Annual              Average Annual
                                      Rental Rates                  Occupancy
                                       (per unit)
Properties                        1999             1998         1999        1998

Presidential House               $7,571          $7,210          94%         93%

As noted under "Item 1.  Description of Business",  the real estate  industry is
highly  competitive.  The Partnership's  property is subject to competition from
other  properties in the area. The General Partner believes that the property is
adequately insured. The multi-family  residential property's lease terms are for
one year or less.  No  residential  tenant  leases 10% or more of the  available
rental  space.  The property is in good  physical  condition,  subject to normal
depreciation and deterioration as is typical for assets of this type and age.

Real Estate Taxes and Rates

Real estate tax and rate in 1999 for the property was:

                                         1999                 1999
                                        Billing               Rate
                                    (in thousands)

       Presidential House                $142                 2.25%

Capital Improvements

Presidential House

The  Partnership  completed  approximately  $393,000 in capital  expenditures at
Presidential House Apartments as of December 31, 1999,  consisting  primarily of
structural  improvements,  roof replacements,  exterior painting, floor covering
replacements,  plumbing upgrades, and light fixture upgrades. These improvements
were funded  primarily from  operating  cash flow. 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 $60,900.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition of the property as well as operating  cash flow and  anticipated  cash
flow generated by the property.

Wendover II

The  Partnership  completed  approximately  $6,000 in  capital  expenditures  at
Wendover II prior to the sale date of September 9, 1999, consisting primarily of
HVAC replacements.

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 matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.

                                     PART II

Item 5.  Market for the Partnership's Common Equity and Related Security Partner
         Matters

The Partnership,  a publicly-held  limited partnership,  offered and sold 37,273
Individual  Investor Units during its offering  period through October 1984. The
Partnership  currently has 1,440 holders of record owning an aggregate of 37,273
Units. An affiliate of the Managing General Partner owns 6,900 Units or 18.512%.
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 (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               $  282 (1)           $ 7.57
       01/01/99 - 12/31/99                2,594 (2)            69.59

(1)   Distribution was made from cash from operations.

(2)   Consists  of   approximately   $235,000  of  cash  from   operations   and
      approximately $2,359,000 of sales proceeds from the sale of Wendover II in
      September 1999.

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

As of December 31, 1999, the remaining unpaid preferred return arrearage totaled
approximately $13,100,000 or approximately $453 per Unit.

Several tender offers were made by various parties,  including affiliates of the
General  Partner,  during the year ended December 31, 1999. As a result of these
tender offers,  AIMCO and its affiliates currently own 6,900 limited partnership
units in the Partnership  representing  18.512% 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.

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 financial  statements and other
items contained elsewhere in this report.

Results of Operations

The Partnership realized net income of approximately $1,803,000 and $122,000 for
the years ended  December 31, 1999 and 1998,  respectively.  The increase in net
income is primarily  attributable to the gain on sale of discontinued  operation
in  September  1999  partially  offset  by the  extraordinary  loss on the early
extinguishment of the debt and a decrease in income from discontinued operations
related  to the  sale.  The  Partnership  realized  income  before  discontinued
operations of approximately  $74,000 and $8,000 for the years ended December 31,
1999 and 1998,  and  extraordinary  item,  respectively.  The increase in income
before  discontinued  operations  and  extraordinary  item  for the  year  ended
December  31, 1999,  is due to an increase in total  revenues and an increase in
the  equity  in the net  income  of the  joint  venture  partially  offset by an
increase in total expenses. The increase in total revenues is due to an increase
in rental  income and other  income.  The increase in rental income is primarily
due to the increase in the average annual rental rate at Presidential House. The
increase in other income is primarily due to the increase in interest  income as
the result of higher  average cash balances in interest  bearing  accounts.  The
increase in the net income of the joint venture is primarily due to Table Mesa's
increase in rental  income and  decrease in interest  expense.  The  increase in
total  expenses is primarily  due to an increase in bad debt expense and general
and administrative  expense. The increase in bad debt expense is attributable to
delinquencies at Presidential  House. The increase in general and administrative
expenses  is due to  increased  professional  fees in 1999.  This was  partially
offset by a decrease in property tax expense. Property tax expense decreased due
to the receipt of a refund in 1999 for the 1998 taxes.

Included in general and  administrative  expenses at both  December 31, 1999 and
1998, are management  reimbursements  to the General  Partner  allowed under the
Partnership  Agreement.  In addition,  costs  associated  with the quarterly and
annual  communications  with  investors and  regulatory  agencies and the annual
audit required by the Partnership Agreement are included.

On September 9, 1999, the Partnership sold Wendover  Business Park II ("Wendover
II") to an unaffiliated third party for net proceeds of approximately $2,383,000
after payoff of the first mortgage and closing costs. The Partnership realized a
gain of  approximately  $1,804,000 on the sale during the third quarter of 1999.
The  Partnership  also realized a loss on the early  extinguishment  of the debt
encumbering  the property of  approximately  $45,000 during the third quarter of
1999 due to the write off of unamortized loan costs and a prepayment penalty.

The  discontinued  operation  of Wendover  II  incurred a loss of  approximately
$30,000  through  September 9, 1999,  the date of sale, as compared to income of
approximately  $114,000 for the year ended  December  31, 1998.  The increase in
this loss is primarily due to an increase in bad debt expense for the property.

The Partnership  also owned a 50% joint venture  interest in Table Mesa Shopping
Center ("Table Mesa") located in Boulder,  Colorado.  The  Partnership  sold its
interest in Table Mesa on March 17, 2000 to an unrelated  party for  $3,000,000,
the  General  Partner  estimates  a gain  of  approximately  $2,673,000  will be
recognized in the first quarter of 2000.

Effective  January 1, 1999, the Partnership  changed its method of accounting to
capitalize the cost of exterior  painting and major landscaping on a prospective
basis.  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  net income by  approximately  $52,000  ($1.38 per limited  partnership
unit). The cumulative effect, had this change been applied to prior periods,  is
not material.  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 the investment  property 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.

Capital Resources and Liquidity

At  December  31,  1999,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $691,000 as compared to  approximately  $613,000 at December  31,
1998. For the year ended December 31, 1999, cash and cash equivalents  increased
approximately  $78,000 from the Partnership's  year ended December 31, 1998. The
increase in cash and cash equivalents is due to approximately $3,418,000 of cash
provided by investing activities and approximately  $593,000 of cash provided by
operating  activities which was partially offset by approximately  $3,933,000 of
cash  used in  financing  activities.  Cash  provided  by  investing  activities
consists of proceeds from the sale of discontinued operations and a distribution
from the Table Mesa joint venture partially offset by property  improvements and
replacements.   Cash  used  in  financing   activities   consists  primarily  of
distributions to the partners,  and to a lesser extent,  repayment of a mortgage
note,  a  prepayment  penalty,  and  payments on the  mortgage  encumbering  the
Partnership's remaining investment property. The Partnership invests its working
capital reserves in a money market account.

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 property 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 property for the upcoming year.
The  minimum  amount to be  budgeted is expected to be $300 per unit or $60,900.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition of the property as well as operating  cash flow and  anticipated  cash
flow generated by the property.  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 Partnership.  At December 31,
1999, the mortgage  indebtedness of  approximately  $3,122,000  requires monthly
principal and interest payments and a balloon payment on August 1, 2000 at which
time the property will either be refinanced or sold.  The General  Partner is in
the process of securing financing for the Partnership's remaining property.

Distributions  paid to the limited  partners  during the year ended December 31,
1999 consisted of approximately $235,000 ($6.30 per limited partnership unit) of
cash  from  operations  and   approximately   $2,359,000   ($63.29  per  limited
partnership  unit) of sales  proceeds  from the sale of Wendover II in September
1999. During 1998, the Partnership  declared and paid cash  distributions to the
limited  partners  in the amount of  approximately  $282,000  ($7.57 per limited
partnership unit) including approximately $2,000 for withholding taxes on behalf
of the limited partners.  Future cash distributions will depend on the levels of
net cash  generated  from  operations,  and the  timing  of the  debt  maturity,
refinancing,  and/or property sale and the  availability  of cash reserves.  The
Partnership's  distribution policy is reviewed on a semi-annual basis. There can
be no assurance,  however,  that the Partnership will generate  sufficient funds
from operations after required capital  expenditures to permit any distributions
to its partners in the year 2000 or subsequent periods.

Several tender offers were made by various parties,  including affiliates of the
General  Partner,  during the year ended December 31, 1999. As a result of these
tender offers,  AIMCO and its affiliates currently own 6,900 limited partnership
units in the Partnership  representing  18.512% 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.

Subsequent Event

Sale of Investment in Joint Venture

On March 11, 2000, the Partnership  sold its investment in joint venture,  Table
Mesa  Shopping  Center  ("Table  Mesa").  The  Partnership  realized  a gain  of
approximately $2,673,000 on the sale during the first quarter of 2000.

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
business,  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 resulting from the Year 2000 issue.

Item 7.     Financial Statements

DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

LIST OF FINANCIAL STATEMENTS

      Independent Auditors' Report

      Balance Sheet - December 31, 1999

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

      Statements  of Changes in  Partners'  Capital - Years ended  December 31,
      1999 and 1998

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

      Notes to Financial Statements

                          Independent Auditors' Report

The Partners

Drexel Burnham Lambert Real Estate Associates II



We have audited the  accompanying  balance sheet of the Drexel  Burnham  Lambert
Real Estate  Associates II (the  "Partnership") as of December 31, 1999, and the
related  statements of operations,  changes in partners'  capital and cash flows
for  each of the  years in the  two-year  period  then  ended.  These  financial
statements  are  the  responsibility  of  the  Partnership's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  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 M to the financial statements,  the Partnership changed its
method of  accounting  to  capitalize  the cost of exterior  painting  and major
landscaping effective January 1, 1999.

                                                                     /s/KPMG LLP

Greenville, South Carolina
March 10, 2000

                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                                  BALANCE SHEET

                          (in thousands, except unit data)

                                December 31, 1999
<TABLE>
<CAPTION>

<S>                                                        <C>            <C>

Assets

  Cash and cash equivalents                                               $  691
  Receivables and deposits                                                   125
  Other assets                                                                31
  Investment in joint venture (Note D)                                       393
  Investment property (Notes F and I):
       Land                                               $ 1,287
       Buildings and related personal property              6,683
                                                            7,970

       Less accumulated depreciation                       (5,810)         2,160
                                                                         $ 3,400

Liabilities and Partners' Capital

Liabilities

  Accounts payable                                                        $  110
  Tenant security deposit liabilities                                         64
  Other liabilities                                                           96
  Mortgage note payable (Note F)                                           3,122

Partners' Capital

  General partner                                           $ 7
  Limited partners (37,273 units issued
       and outstanding)                                       1                8
                                                                         $ 3,400

                   See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                            STATEMENTS OF OPERATIONS

                          (in thousands, except unit data)

<TABLE>
<CAPTION>
                                                                     Years Ended
                                                                    December 31,

<S>                                                             <C>           <C>
                                                                1999          1998
Revenues:
  Rental income                                               $ 1,434       $ 1,347
  Other income                                                     84            57
     Total revenues                                             1,518         1,404

Expenses:
  Operating                                                       641           639
  General and administrative                                      145            85
  Depreciation                                                    294           278
  Interest                                                        276           286
  Property taxes                                                  123           141
  Bad debt                                                         56            11
     Total expenses                                             1,534         1,440

Loss before equity in net income of joint venture,
  discontinued operation, and extraordinary item                  (16)          (36)

Equity in net income of joint venture                              91            44

Income before discontinued operation and extraordinary
  item                                                             74             8
(Loss) income from discontinued operation                         (30)          114
Gain on sale of discontinued operation (Note E)                 1,804            --
Extraordinary loss on early extinguishment of debt of
  discontinued operation                                          (45)           --

Net income                                                    $ 1,803        $  122

Net income allocated to general partner                       $    --        $    1
Net income allocated to limited partners                        1,803           121
                                                              $ 1,803        $  122
Per limited partnership unit:

  Income before discontinued operation and extraordinary
   item                                                        $ 1.96        $  .21
  (Loss) income from discontinued operation                      (.80)         3.03
  Gain on sale of discontinued operation                        48.40            --
  Extraordinary loss on early extinguishment of debt of
   discontinued operation                                       (1.21)           --

            Net income                                        $ 48.37        $ 3.25

Distributions per limited partnership unit                    $ 69.59        $ 7.57

                   See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                     STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
                          (in thousands, except unit data)


<TABLE>
<CAPTION>

                                        Limited
                                       Partnership    General      Limited
                                          Units       Partner     Partners      Total
<S>                                      <C>           <C>        <C>          <C>
Original capital contributions            37,273        $   1      $18,637     $18,638

Partners' (deficit) capital at
  December 31, 1997                       37,273        $   6        $ 953      $   959

Distribution to limited partners              --           --         (282)       (282)

Net income for the year
  ended December 31,1998                      --            1          121         122

Partners' capital at
  December 31, 1998                       37,273            7          792         799

Distributions to limited partners             --           --       (2,594)     (2,594)

Net income for the year
  ended December 31, 1999                     --           --        1,803       1,803

Partners' capital at
  December 31, 1999                       37,273        $ 7          $ 1         $ 8

                   See Accompanying Notes to Financial Statements
</TABLE>


<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                            STATEMENTS OF CASH FLOWS

                                (in thousands)
<TABLE>
<CAPTION>

                                                             Years Ended December 31,
                                                                 1999         1998
Cash flows from operating activities:
<S>                                                             <C>          <C>

  Net income                                                    $ 1,803       $  122
  Adjustments to reconcile net income to net cash provided
   by operating activities:
   Depreciation                                                     413          463
   Amortization of loan costs and lease commissions                  39           46
   Equity in net income of joint venture                            (90)         (44)
   Bad debt expense                                                  56           11
   Gain on sale of discontinued operation                        (1,804)          --
   Extraordinary loss on early extinguishment of debt
      of discontinued operation                                      45           --
   Change in accounts:
      Receivables and deposits                                      180         (176)
      Other assets                                                    5          (26)
      Accounts payable                                               63           (9)
      Tenant security deposit payable                               (35)          (4)
      Accrued property taxes                                       (142)         142
      Other liabilities                                              27          (21)
          Net cash provided by operating activities                 560          504

Cash flows from investing activities:

  Proceeds from sale of discontinued operation                    3,542           --
  Property improvements and replacements                           (366)        (136)
  Distributions received from joint venture                         275          100
          Net cash provided by (used in) investing
            activities                                            3,451          (36)

Cash flows from financing activities:

  Payments of mortgage notes payable                               (148)        (151)
  Prepayment penalty                                                (32)          --
  Repayment of mortgage note payable                             (1,159)          --
  Distributions to partners                                      (2,594)        (282)
          Net cash used in financing activities                  (3,933)        (433)

Net increase in cash and cash equivalents                            78           35

Cash and cash equivalents at beginning of year                      613          578
Cash and cash equivalents at end of year                         $  691        $ 613

Supplemental disclosure of cash flow information:

  Cash paid for interest                                         $  327        $ 358

Supplemental disclosure of non-cash activity:
  Property improvements and replacements in accounts
   payable                                                       $  33         $  --


                   See Accompanying Notes to Financial Statements

</TABLE>

<PAGE>




                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                          Notes to Financial Statements

                                December 31, 1999

Note A - Organization and Significant Accounting Policies

Organization:

Drexel  Burnham  Lambert  Real  Estate  Associates  II  (the   "Partnership"  or
"Registrant") was organized as a limited partnership under the laws of the State
of New York pursuant to a Certificate of Limited  Partnership  dated November 2,
1983. The Partnership Agreement provides that the Partnership is to terminate on
December 31, 2032,  unless terminated prior to such date. The general partner of
the Partnership is DBL Properties Corporation ("DBL" or the "General Partner").

As of December 31, 1999, the Partnership owns and operates Presidential House at
Sky Lake ("Presidential") a residential apartment complex located in North Miami
Beach, Florida. The Partnership also owned a 50% joint venture interest in Table
Mesa  Shopping  Center  ("Table  Mesa")  located  in  Boulder,   Colorado.   The
Partnership  sold its interest in Table Mesa on March 17, 2000 (see "Note N" for
further discussion).

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:

Statement of Financial Accounting Standards ("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 at a current  market rate,
approximates its carrying balance.

Cash and Cash Equivalents:

Cash and cash  equivalents  include  cash on hand and 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 space
and is current on rental payments.

Investment Property:

The Partnership's  investment  property consists of one apartment complex stated
at  cost.  Acquisition  fees  are  capitalized  as a cost  of  real  estate.  In
accordance  with 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.   Costs  of  apartment  properties  that  have  been
permanently  impaired have been written down to appraised  value. No adjustments
for  impairment of value were  recorded in the years ended  December 31, 1999 or
1998.

Depreciation:

Depreciation is calculated by the straight-line  method over the estimated lives
of the investment  properties and related  personal  property ranging from 15 to
31.5 years for  buildings  and  improvements  and from three to seven  years for
furnishings.  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  prior to January 1, 1987.
As a result of the Tax Reform Act of 1986,  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  property  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 M").

Loan Costs:

Loan  costs  of  approximately  $153,000,   less  accumulated   amortization  of
approximately  $139,000 at December 31,  1999,  are included in other assets and
are being  amortized on a  straight-line  basis over the lives of the respective
loans.

Leases:

The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership recognizes income as earned on these leases.

The Partnership  leased  commercial  space to tenants under various lease terms.
For leases  containing  fixed rental  increases  during  their term,  rents were
recognized on a straight-line  basis over the terms of the leases. For all other
commercial leases, rents were recognized over the terms of the leases as earned.

In addition,  the General Partner's policy is to offer rental concessions during
particularly  slow months or in response to heavy competition from other similar
complexes  in the  area.  Concessions  are  charged  against  rental  income  as
incurred.

Advertising Costs:

Advertising  costs of  approximately  $32,000  in 1999 and  $18,000 in 1998 were
charged to expense as incurred and are included in operating expenses.

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 K"
for required disclosure.

Reclassifications:

Certain  reclassifications have been made to the 1998 balances to conform to the
1999 presentation.

Note B - Transfers of Control

On October 1, 1998, Insignia Financial Group, Inc., the sole shareholder of IFGP
Corporation,  completed  its  merger  with and  into  Apartment  Investment  and
Management  Company  ("AIMCO"),  a publicly traded real estate investment trust,
with AIMCO being the surviving  corporation (the "Insignia Merger"). As a result
of the Insignia  Merger,  AIMCO acquired  control of IFGP  Corporation and, as a
result thereof,  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 - Transactions with Affiliated Parties

The Registrant 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 certain  payments to  affiliates  for
services and  reimbursement of certain expenses incurred by affiliates on behalf
of the Partnership.

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

                                                             1999        1998
                                                              (in thousands)
Property management fees (included in operating
  expenses and income from discontinued operation)            $73         $90
Reimbursement for services of affiliates (included in
  general and administrative expenses)                         46          61

During the years ended  December  31, 1999 and 1998,  affiliates  of the General
Partner  were  entitled to receive 5% of gross  receipts  from the  Registrant's
residential property for providing property management services.  The Registrant
paid to such  affiliates  approximately  $73,000 and $69,000 for the years ended
December 31, 1999 and 1998,  respectively.  For the nine months ended  September
30, 1998  affiliates  of the General  Partner were  entitled to receive  varying
percentages  of gross  receipts from the  Registrant's  commercial  property for
providing property management  services.  The Registrant paid to such affiliates
approximately  $21,000 for the nine months ended  September 30, 1998.  Effective
October 1, 1998 (the effective  date of the Insignia  Merger) these services for
the commercial property were provided by an unrelated party.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses amounting to approximately  $46,000 and $61,000 for the
years ended December 31, 1999 and 1998, respectively.

Several tender offers were made by various parties,  including affiliates of the
General  Partner,  during the year ended December 31, 1999. As a result of these
tender offers,  AIMCO and its affiliates currently own 6,900 limited partnership
units in the Partnership  representing  18.512% 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 D - Investment in Joint Venture

Table Mesa Shopping Center Partnership was formed in 1985, as a joint venture to
own and operate a shopping center in Boulder,  Colorado.  The Partnership owns a
50%  interest  in this  joint  venture.  The  Partnership  accounts  for its 50%
investment in Table Mesa on the equity  method.  In  accordance  with the equity
method of accounting,  the  Partnership's  original  investment in Table Mesa is
increased  by  advances  to  Table  Mesa and by the  Partnership's  share of the
earnings of Table Mesa. The investment is decreased by distributions  from Table
Mesa and by the  Partnership's  share of losses of Table Mesa. The Partnership's
equity in the  operations of Table Mesa,  after an adjustment  for allocation of
depreciation  based  on its  basis  in  the  property,  amounted  to  income  of
approximately  $90,000 and $44,000  for the years  ended  December  31, 1999 and
1998, respectively.

The Table Mesa joint venture agreement  provides,  among other things,  that the
Partnership shall be entitled to receive a cash flow preference,  as defined, of
$252,000  per year,  which is  equivalent  to a 9%  return on the  Partnership's
initial  cash  investment.   This  annual  preference  is  not  cumulative.  The
Partnership  received  a  distribution  from the Table  Mesa  joint  venture  of
approximately  $275,000 and  $100,000 for the years ended  December 31, 1999 and
1998, respectively.

Summarized  financial  information  for Table Mesa at December 31,  1999,  is as
follows (in thousands):

Assets:
  Real and personal property, net of
   accumulated depreciation                    $ 5,191
  Other assets                                   1,210
      Total assets                                          $ 6,401

Liabilities:
  Mortgage payable                             $ 6,150
  Other liabilities                                517
      Total liabilities                                     $ 6,667

Partners' deficit                                           $  (266)

  Total liabilities and partners' deficit                   $ 6,401

Summarized  results of  operations  for Table Mesa for years ended  December 31,
1999 and 1998, are as follows (in thousands):

                                      1999           1998

      Total revenues                 $ 2,342        $ 2,257
      Total expenses                   1,945          1,958

         Net income                  $   397        $   299

Note E - Sale of Discontinued Operation

On September 9, 1999, the Partnership sold Wendover  Business Park II ("Wendover
II") to an unaffiliated third party for net proceeds of approximately $2,383,000
after payoff of the first mortgage and closing costs. The Partnership realized a
gain of  approximately  $1,804,000 on the sale during the third quarter of 1999.
The  Partnership  also realized a loss on the early  extinguishment  of the debt
encumbering  the property of  approximately  $45,000 during the third quarter of
1999 due to the write off of unamortized loan costs and a prepayment penalty.

Wendover  II was the  only  commercial  property  owned by the  Partnership  and
represented one segment of the Partnership's operations. Due to the sale of this
property,  the results of the commercial  segment have been shown as income from
discontinued operation and gain on sale of discontinued operation.  The revenues
of this  property  were  approximately  $263,000 and $571,000 for 1999 and 1998,
respectively.  The loss from operations was  approximately  $30,000 for 1999 and
the income from operations was approximately $114,000 for 1998.

Note F - Mortgage Note Payable

The principal terms of the mortgage note payable are as follows:

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

Presidential House     $ 3,122         $ 31       8.00%   08/01/00   $ 3,047

The  mortgage  note  payable  is  nonrecourse  and is  secured  by pledge of the
Partnership's  property  and by pledge of revenues  from the  respective  rental
property.  The mortgage  note  includes a prepayment  penalty if repaid prior to
maturity. Further the property may not be sold subject to existing indebtedness.
The  General   Partner  is  in  the  process  of  securing   financing  for  the
Partnership's remaining property.

The General  Partner is attempting to refinance the existing debt and is working
with a lender to refinance such debt. However,  there can be assurance that such
refinancing will be obtained.

Note G - Partners' Capital

Pursuant  to a public  offering,  37,273  units were sold at $500 per unit.  The
calculation  of net income  (loss) per limited  partner  unit is based on 37,273
units outstanding.

For income tax purposes the limited  partners share 99% and the General  Partner
1%  (subordinated  as defined in the  partnership  agreement)  in all profits or
losses from operations until the limited partners have received an 8% cumulative
preferred  return on their invested  capital.  Thereafter,  the limited partners
share 90% and the  General  Partner  shares 10% in the  profits  or losses  from
operations.

Cash  distributions  from  sales or  refinancing,  if any,  shall be made to the
partners to the extent available and, as more fully described in the partnership
agreement,  as follows:  first,  to each partner in an amount  equivalent to the
positive  amount of such partner's  capital  account on the date of distribution
after adjustment;  second,  to the limited partners,  until the limited partners
have received an amount equal to their original invested capital;  third, 99% to
the limited partners equal to any unpaid preferred return arrearage; and fourth,
as to any excess, 85% to the limited partners and 15% to the General Partner.

Distributions  in  liquidation  to the  partners  shall  be  made  pro  rata  in
accordance with the partners' capital accounts.

In accordance with the Agreement of Limited  Partnership,  limited  partners are
entitled  to  receive an 8%  cumulative  preferred  return on their  unrecovered
invested  capital.  No  distributions  have been made or accrued to the  General
Partner, since the limited partners must receive their original invested capital
plus any preferred return arrearage before payment to the General Partner. As of
December 31, 1999, the unpaid preferred return arrearage  totaled  approximately
$13,100,000.

Note H - Income Taxes

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, no provision for income taxes is made in the consolidated financial
statements of the  Partnership.  Taxable  income or loss of the  Partnership  is
reported in the income tax returns of its partners.

A  reconciliation  of the net income  per the  financial  statements  to the net
taxable income to partners is as follows (in thousands, except unit data):

                                                    Years Ended December 31,
                                                        1999         1998

      Net income as reported                          $ 1,803       $  122
      Depreciation and amortization differences         1,313           20
      Amount of tax loss under book loss of
        equity investees                                  151          143
      Allowance for bad debt                               22           --
      Prepaid rent                                         (1)         (10)
      Federal taxable net income                      $ 3,288       $  275

      Federal taxable income per limited
        partnership unit                              $ 88.21       $ 7.31


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

                                                         1999

      Net assets as reported                              $   8
        Fixed assets                                       (205)
        Accumulated depreciation                            189
         Investment in joint venture                        295
         Syndication costs                                2,050
         Other assets & liabilities                          20

      Net assets - tax basis                            $ 2,357

Note I - Real Estate and Accumulated Depreciation

                                                 Initial Cost
                                                To Partnership
                                                (in thousands)

<TABLE>
<CAPTION>
                                                         Buildings          Cost
                                                        and Related     Capitalized
                                                         Personal      Subsequent to
Description               Encumbrance        Land       Properties      Acquisition
                        (in thousands)                                 (in thousands)
<S>                         <C>            <C>             <C>             <C>

Presidential House          $ 3,122        $ 1,510        $ 6,037          $ 423

</TABLE>


                 Gross Amount At Which
                        Carried
                  At December 31, 1999
                     (in thousands)
<TABLE>
<CAPTION>

                       Buildings
                      And Related
                       Personal             Accumulated     Year of       Date     Depreciable
Description    Land    Property    Total    Depreciation  Construction  Acquired   Life-Years
                                           (in thousands)
<S>            <C>      <C>        <C>        <C>         <C>            <C>         <C>

Presidential
  House       $ 1,287   $ 6,683   $ 7,970     $ 5,810      1967-1974      10/84    5-31.5 yrs
</TABLE>



Reconciliation of Real Estate and Accumulated Depreciation:

                                              December 31,
                                           1999           1998
                                             (in thousands)
Investment Properties

Balance at beginning of year             $11,869        $11,733
  Property improvements                      399            136
  Disposition of discontinued
    operation                             (4,298)            --
Balance at end of year                   $ 7,970        $11,869

Accumulated Depreciation

Balance at beginning of year             $ 7,982        $ 7,519
  Additions charged to expense               413            463
  Disposition of discontinued

    operation                             (2,585)            --
Balance at end of year                   $ 5,810        $ 7,982


The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  1999 and  1998,  is  approximately  $7,766,000  and  $11,111,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December  31, 1999 and 1998,  is  approximately  $5,620,000  and  $8,549,000,
respectively.

Note J- Distributions

Distributions  paid to the limited  partners  during the year ended December 31,
1999 consisted of approximately $235,000 ($6.30 per limited partnership unit) of
cash  from  operations  and   approximately   $2,359,000   ($63.29  per  limited
partnership  unit) of sales  proceeds  from the sale of Wendover II in September
1999. During 1998, the Partnership  declared and paid cash  distributions to the
limited  partners  in the amount of  approximately  $282,000  ($7.57 per limited
partnership unit) including approximately $2,000 for withholding taxes on behalf
of the limited partners.

Note K - Segment Reporting

Description  of the types of products  and services  from which each  reportable
segment derives its revenues

The Partnership had two reportable segments: residential property and commercial
property.  The  Partnership's   residential  property  segment  consists  of  an
apartment complex in North Miami Beach, Florida. The Partnership rents apartment
units to  tenants  for  terms  that are  typically  twelve  months  or less.  On
September 9, 1999,  the  commercial  property  was sold to an  unrelated  party.
Therefore,  the commercial segment is reflected as discontinued  operations (see
"Note E" for further discussion regarding the sale).

Measurement of segment profit or loss

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

Factors management used to identify the enterprise's reportable segments

The  Partnership's  reportable  segments are  investment  properties  that offer
different products and services.  The reportable segments are managed separately
because  they provide  distinct  service  with  different  types of products and
customers.

Segment information for the years 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 the reportable segment.

<TABLE>
<CAPTION>

1999                              Residential    Commercial       Other       Totals
                                               (Discontinued)
<S>                                 <C>              <C>             <C>      <C>

Rental income                       $ 1,434         $   --        $   --     $ 1,434
Other income                             56             --            28          84
Interest expense                        276             --            --         276
Depreciation                            294             --            --         294
General and administrative
  expense                                --             --           145         145
Equity in net income of joint
  venture                                --             --            91          91
Gain on sale of discontinued
  operations                             --          1,804            --       1,804
Extraordinary loss on early
  extinguishment of debt of
  discontinued operation                 --            (45)           --         (45)
Loss from discontinued
  operation                              --            (30)           --         (30)
Segment profit (loss)                   100          1,729           (26)      1,803
Total assets                          2,338             --         1,062       3,400
Capital expenditures for
  investment properties                 393              6            --         399
</TABLE>


<TABLE>
<CAPTION>

1998                              Residential    Commercial       Other       Totals
                                               (Discontinued)
<S>                                 <C>             <C>            <C>        <C>

Rental income                       $ 1,347         $   --         $  --     $ 1,347
Other income                             40             --            17          57
Interest expense                        286             --            --         286
Depreciation                            278             --            --         278
General and administrative
  expense                                --             --            85          85
Equity in net income of joint
  venture                                --             --            44          44
Income from discontinued
  operations                             --            114            --         114
Segment profit (loss)                    32            114           (24)        122
Total assets                          2,454          2,022         1,076       5,552
Capital expenditures for
  investment properties                 112             24            --         136
</TABLE>

Note L - 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.

Note M - 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 on a prospective
basis.  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  net income by  approximately  $52,000  ($1.38 per limited  partnership
unit). The cumulative effect, had this change been applied to prior periods,  is
not material.  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.

Note N - Subsequent Event

Sale of Investment in Joint Venture

On March 11, 2000, the Partnership  sold its investment in joint venture,  Table
Mesa  Shopping  Center  ("Table  Mesa").  The  Partnership  realized  a gain  of
approximately $2,673,000 on the sale during the first quarter of 2000.

Item 8.     Changes in and Disagreements  with  Accountants  on  Accounting  and
            Financial Disclosure

            None.

                                    PART III

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

Drexel Burnham Lambert Real Estate  Associates II (the  "Partnership")  does not
have any  officers or  directors.  Management  and  administrative  services are
performed by DBL Properties Corporation ("DBL" or the "General Partner") and its
affiliates.  The General Partner has general responsibility and authority in all
matters affecting the business of the Partnership.

The names of the  directors  and  executive  officers of DBL as of December  31,
1999,  their ages and  nature of all  positions  presently  held by them are set
forth below. There are no family relationships between or among any officers and
directors:

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 officers  received any  remuneration  from the General
Partner during the year ended December 31, 1999.

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.

                                            Number
       Entity                              of Units            Percentage

       Insignia Properties LP                   10                .027%
         (an affiliate of AIMCO)
       AIMCO Properties LP                   6,890              18.485%
         (an affiliate of AIMCO)

Insignia  Properties LP is indirectly  ultimately  owned by AIMCO.  Its business
address is 55 Beattie Place, Greenville, South Carolina 29602.

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

No director or officer of the General Partner owns any Units.

Item 12.    Certain Relationships and Related Transactions

The Registrant 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 certain  payments to  affiliates  for
services and as  reimbursement  of certain  expenses  incurred by  affiliates on
behalf of the Partnership.

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

                                                             1999        1998
                                                              (in thousands)

Property management fees                                      $73         $90
Reimbursement for services of affiliates                       46          61

During the years ended  December  31, 1999 and 1998,  affiliates  of the General
Partner  were  entitled to receive 5% of gross  receipts  from the  Registrant's
residential property for providing property management services.  The Registrant
paid to such  affiliates  approximately  $73,000 and $69,000 for the years ended
December 31, 1999 and 1998,  respectively.  For the nine months ended  September
30, 1998,  affiliates of the General  Partner were  entitled to receive  varying
percentages  of gross  receipts from the  Registrant's  commercial  property for
providing property management  services.  The Registrant paid to such affiliates
approximately  $21,000 for the nine months ended  September 30, 1998.  Effective
October 1, 1998 (the effective  date of the Insignia  Merger) these services for
the commercial property were provided by an unrelated party.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses amounting to approximately  $46,000 and $61,000 for the
years ended December 31, 1999 and 1998, respectively.

Several tender offers were made by various parties,  including affiliates of the
General  Partner,  during the year ended December 31, 1999. As a result of these
tender offers,  AIMCO and its affiliates currently own 6,900 limited partnership
units in the Partnership  representing  18.512% 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.

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 during the fourth quarter of calendar year
            1999:

            None.

                                   SIGNATURES

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

                               DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II


                                    By:   DBL Properties Corporation
                                          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: March 29, 2000


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: March 29, 2000
Patrick J. Foye         and Director


/s/Martha L. Long       Senior Vice President         Date: March 29, 2000
Martha L. Long          and Controller



<PAGE>


                                  EXHIBIT INDEX

Exhibit No.


    2.1       Agreement and Plan of Merger,  dated as of October 1, 1998, by and
              between AIMCO and IPT in  Registrant's  Current Report on Form 8-K
              dated October 1, 1998.

    3.1       Prospectus of the Partnership filed pursuant to rule 424(b), dated
              December 30, 1983 is hereby incorporated herein by reference.

    3.2       Supplement dated October 10, 1984 to Prospectus dated December 30,
              1983 is hereby incorporated herein by reference.

    3.3       Form of Agreement of Limited   Partnership   of  the   Partnership
              reference is made to Exhibit A to the Prospectus.

    3.4       Certificate  of  Limited  Partnership  of the  Partnership,  which
              appears as Exhibit  3.2 to the  Registration  Statement  is hereby
              incorporated herein by the reference.

    10.1      Agreement  related to  purchase  by the  Partnership  of  Wendover
              Business  Park  Phase  II in  Greensboro,  North  Carolina,  which
              appears  as  Exhibit  2.1 to  the  Registration  Statement  of the
              Partnership is hereby incorporated herein by reference.

    10.2      Agreement related to purchase by the Partnership of an interest in
              the Sheraton Poste Inn in Cherry Hill,  New Jersey,  which appears
              as Exhibit 2.2 to the Registration Statement of the Partnership is
              hereby incorporated herein by reference.

    10.3      Agreement  relating to purchase by the Partnership of Presidential
              House at Sky Lake in  North  Miami  Beach,  Florida,  for  which a
              Report on Form 8-K was filed with the  Commission  on  November 5,
              1984, is hereby incorporated herein by reference.

    10.4      Agreement  relating to purchase by the  Partnership of an interest
              in Table Mesa Shopping  Center in Boulder,  Colorado,  for which a
              Report on Form 8-K was filed with the  Commission on May 21, 1985,
              is hereby incorporated herein by reference.

     10.5 Amendment No. 1, dated October 1, 1992, among the Partnership,  Coreal
          N.V., Inc. and Almanzil, Inc., to the Joint Venture Agreements,  dated
          April 4, 1984,  between  the  Partnership  and Coreal  relating to the
          Sheraton Poste Inn is  incorporated  by reference to the  Registrant's
          Annual  Report on Form 10-KSB for the fiscal year ended  December  31,
          1992.

    10.6      Contracts  related to refinancing of the debt of Wendover Business
              Park  Phase II were  filed as  Exhibit  10.6 to the report on Form
              10-KSB for the fiscal year ended December 31, 1993, and are hereby
              incorporated herein by reference:

              (a)  Mortgage note dated January 13, 1994 between  Drexel  Burnham
                   Lambert  Real  Estate  Associates  II,  a  New  York  limited
                   partnership,  and United  Family Life  Insurance  Company,  a
                   Georgia corporation.

              (b)  Deed of Trust and Security  Agreement  dated January 13, 1994
                   between Drexel Burnham  Lambert Real Estate  Associates II, a
                   New York  limited  partnership,  and Stewart  Title  Guaranty
                   Company  for the  benefit  of United  Family  Life  Insurance
                   Company, a Georgia corporation.

              (c)  Assignment of Leases, Rents, Contracts,  and Agreements dated
                   January  13,  1994 from Drexel  Burnham  Lambert  Real Estate
                   Associates  II, a New York  limited  partnership,  to  United
                   Family Life Insurance Company, a Georgia corporation.

              (d)  Hazardous  Material  Indemnification  Agreement dated January
                   13,  1994  between   Drexel   Burnham   Lambert  Real  Estate
                   Associates  II, a New York  limited  partnership,  and United
                   Family Life Insurance Company, a Georgia corporation.

              (e)  Escrow Agreement dated January 13, 1994 by and between United
                   Family Life Insurance Company, a Georgia corporation,  Drexel
                   Burnham Lambert Real Estate Associates II, a New York limited
                   partnership, and Dickinson, Logan, Todd and Barber, Inc. (the
                   "Escrow Agent").

    10.7      Purchase and Sale Contract between Registrant and SB Orchard, LLC,
              a Colorado limited liability company, dated May 20, 1999.

    10.8      Amendment to Purchase and Sale Contract between  Registrant and SB
              Orchard,  LLC, a Colorado limited liability company,  dated August
              2, 1999.

    10.9      Second Amendment to Purchase and Sale Contract between  Registrant
              and SB Orchard,  LLC, a Colorado limited liability company,  dated
              August 23, 1999.

    16        Letter dated  September  23, 1998,  from the  Registrant's  former
              independent   accountant   regarding  its  concurrence   with  the
              statements  made by the  Registrant in its Current  Report on Form
              8-K dated September 23, 1998.

    16.1      Letter  dated  October  21,  1998,  from the  Registrant's  former
              independent   accountant   regarding  its  concurrence   with  the
              statements  made by the  Registrant in its Current  Report on Form
              8-K dated September 23, 1998.

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

    27        Financial Data Schedule.

    99.1      Special  Report/Acquisition  Bulletin  dated May 9, 1985 regarding
              the  Purchase  by the  Partnership  of  interests  in  Table  Mesa
              Shopping Center in Boulder,  Colorado, and the 123 Office Building
              in  Tyson's  Corner,  Virginia  is hereby  incorporated  herein by
              reference.

    99.2      Report on Form 8-K filed  November 4, 1984  regarding the purchase
              of Presidential House at Sky Lake in North Miami Beach, Florida is
              hereby incorporated herein by reference.

    99.3      Report on Form 8-K filed May 21, 1985 regarding the acquisition of
              a 50% interest in Table Mesa Shopping Center in Boulder,  Colorado
              is hereby incorporated herein by reference.

    99.4      On May 17,  1988,  a report  on Form 8-K was filed  regarding  the
              refinancing  of the four loans  underlying the  Presidential  wrap
              mortgage is hereby incorporated herein by reference.

    99.5      On June 12,  1989,  a report on Form 8-K was filed  regarding  the
              modification of Table Mesa Promissory Note is hereby  incorporated
              herein by reference.

    99.7      On October 11, 1989, a report on Form 8-K was filed  regarding the
              change in control of the parent company of the General  Partner is
              hereby incorporated herein by reference.

    99.8      Second Note and Deed of Trust Revision Agreement dated December 3,
              1990 regarding Table Mesa Shopping Center in Boulder, Colorado.

    99.9      Report on Form 8-K filed  February 3, 1993  regarding  the sale of
              the   outstanding   stock  of  the   General   Partner  is  hereby
              incorporated herein by reference.

99.10         Report on Form 8-K filed  July 9,  1997,  regarding  the change in
              control of the Partnership.


<PAGE>






                                                                      Exhibit 18


March 10, 2000


Mr. Patrick J. Foye
Executive Vice President
DBL Properties Corporation

General Partner of Drexel Burnham Lambert Real Estate Associates II
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602

Dear Mr. Foye:

Note M of Notes to the  Financial  Statements  of Drexel  Burnham  Lambert  Real
Estate Associates 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