UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549



FORM 10-KSB

(Mark One)

[X]

Annual Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934



For the fiscal year ended December 31, 2006



[ ]

Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934



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]



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [ ]  No [X]



State issuer's revenues for its most recent fiscal year $2,341,000



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, 2006.  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









The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission.



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"), a publicly traded real estate investment trust. 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 Apartments.



Commencing in February 1984 pursuant to the Prospectus, the Partnership offered 20,000 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 investment according to the number of Units held.



The Partnership 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.



Risk Factors



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 property.  The number and quality of competitive properties, including those that 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 Partnership's property 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.

















Laws benefiting disabled persons may result in the Partnership's incurrence of unanticipated expenses.  Under the Americans with Disabilities Act of 1990, or ADA, all places intended to be used by the public are required to meet certain Federal requirements related to access and use by disabled persons. Likewise, the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties first occupied after March 13, 1990 to be accessible to the handicapped.  These and other Federal, state and local laws may require modifications to the Partnership's property, or restrict renovations of the property.  Noncompliance with these laws could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although the General Partner believes that the Partnership's property is substantially in compliance with the present requirements, the Partnership may incur unanticipated expenses to comply with the ADA and the FHAA.



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.



From time to time, the Federal Bureau of Investigation, or FBI, and the United States Department of Homeland Security issue alerts regarding potential terrorist threats involving apartment buildings. Threats of future terrorist attacks, such as those announced by the FBI and the Department of Homeland Security, could have a negative effect on rent and occupancy levels at the Partnerships property. The effect that future terrorist activities or threats of such activities could have on the Partnerships operations is uncertain and unpredictable. If the Partnership were to incur a loss at the property as a result of an act of terrorism, the Partnership could lose all or a portion of the capital invested in the property, as well as the future revenue from the property.



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 property 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.



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















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 and second   | 203 units 
|                              |          | mortgages             |           



Schedule of Property



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



|                   |                |              |             |                |           | 
|------------------ | -------------- | ------------ | ----------- | -------------- | --------- | 
|                   | Gross          |              |             | Method         |          
|                   | Carrying       | Accumulated  | Depreciable | of             | Federal  
|Property           | Value          | Depreciation | Life        | Depreciation   | Tax Basis
|                   | (in thousands) |              |             | (in thousands)
|                   |                |              |             |                |          
|Presidential House |                |              |             |                |          
|Apartments         | $9,766         | $6,669       | 5-31.5 yrs  | SL             | $2,801   



See "Note A  Organization and Summary of Significant Accounting Policies" to the financial statements included in "Item 7. Financial Statements" for a description of the Partnership's capitalization and depreciation policies.



Schedule of Property Indebtedness



The following table sets forth certain information relating to the loans encumbering the Partnerships property.



|                 |                |          |           |          |                
|---------------- | -------------- | -------- | --------- | -------- | ---------------
|                 | Principal      |          |           |          |                
|                 | Balance At     |          |           |          | Principal      
|                 | December 31,   | Interest | Period    | Maturity | Balance Due    
|Property         | 2006           | Rate(1)  | Amortized | Date     | At Maturity (2)
|                 | (in thousands) |          |           |          | (in thousands) 
|                 |                |          |           |          |                
|Presidential     |                |          |           |          |                
|House Apartments |                |          |           |          |                
|1st mortgage     | $3,483         | 7.96%    | 20 yrs    | 07/01/20 | $     --       
|                 |                |          |           |          |                
|2nd mortgage     | 1,210          | 5.55%    | 17 yrs    | 07/01/20 | --             
|Total            | $4,693         |          |           |          | $--            



(1)

Fixed rate mortgage.



(2)

See "Item 7. Financial Statements - Note C  Mortgage Notes Payable" for specific details about the loans and information with respect to the Partnerships ability to prepay these loans.

















Rental Rates and Occupancy



Average annual rental rates and occupancy for 2006 and 2005 for the property were:



|                              |                |                |      |     
|----------------------------- | -------------- | -------------- | ---- | ----
|                              | Average Annual | Average Annual
|                              | Rental Rates   | Occupancy     
|                              | (per unit)     |                |     
|Property                      | 2006           | 2005           | 2006 | 2005
|                              |                |                |      |     
|Presidential House Apartments | $10,526        | $9,442         | 96%  | 98% 



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 property is an apartment complex which leases units for lease terms of 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 2006 for the property were:



|                              |                |      
|----------------------------- | -------------- | -----
|                              | 2006           | 2006 
|                              | Billing        | Rate 
|                              | (in thousands) |      
|                              |                |      
|Presidential House Apartments | $229           | 1.99%



Capital Improvements



Presidential House



During the year ended December 31, 2006, the Partnership completed approximately $581,000 of capital improvements at Presidential House consisting primarily of casualty repairs, kitchen, bath, and plumbing fixture upgrades and floor covering, appliance and balcony replacements. These improvements were funded from operating cash flow, insurance proceeds and advances from an affiliate of the General Partner. The Partnership regularly evaluates the capital improvement needs of the property.  While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007.  Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property.



Additional capital expenditures will be incurred only if cash is available from operations, Partnership reserves or advances from an affiliate of the General Partner. To the extent that capital improvements are completed, the Partnerships distributable cash flow, if any, may be adversely affected at least in the short term.



Item 3.

Legal Proceedings



AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties, L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties, L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues.  Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and that issue is now fully briefed.  The defendants anticipate that the Court will soon set oral argument on the defendants decertification motion.  Because the court denied plaintiffs motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court.  The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships financial condition or results of operations.



The Partnership is unaware of any pending or outstanding litigation matters involving it or its investment property that are 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, 2006, 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 Equity and Related Partner Matters



The Partnership, a publicly-held limited partnership, offered and sold 37,273 Limited Partnership Units (the Units) during its offering period through October 1984. The Partnership currently has 901 holders of record owning an aggregate of 37,273 Units. Affiliates of the General Partner owned 18,633 Units or 50.00% at December 31, 2006. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future.



There were no distributions during the years ended December 31, 2006 and 2005. Future cash distributions will depend on the levels of net cash generated from operations and the timing of the refinancing and/or property sale. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after capital expenditures to permit any distributions to its partners in the year 2007 or subsequent periods.  See Item 2. Description of Property  Capital Improvements for information relating to anticipated expenditures at the property.



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, 2006, the unpaid preferred return arrearage totaled approximately $12,216,000 or approximately $328 per Unit.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 18,633 Units in the Partnership representing 50.00% of the outstanding Units at December 31, 2006.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 50.00% of the outstanding Units at December 31, 2006, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.



Item 6.

Management's Discussion and Analysis or Plan of Operation



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



The Partnerships financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment property, interest rates on mortgage loans, costs incurred to operate the investment property, general economic conditions and weather. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment property to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expenses. 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, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership such as the local economic climate and weather can adversely or positively affect the Partnerships financial results.



Results of Operations



The Partnership realized net income of approximately $540,000 and 118,000 for the years ended December 31, 2006 and 2005, respectively.  The increase in net income is primarily due to an increase in total revenues offset by a slight increase in total expenses.



The increase in total revenues is due to an increase in both rental and other income as well as the recognition of a casualty gain, as discussed below.  Rental income increased due to an increase in the average rental rate at Presidential House Apartments partially offset by a slight decrease in occupancy and an increase in bad debt expense.  Other income increased due to an increase in late charges, non-refundable fees and lease cancellation fees at Presidential House Apartments.



In October 2005, Presidential House Apartments sustained damage from Hurricane Wilma.  During the year ended December 31, 2005, the Partnership estimated damages to be approximately $800,000, which included clean up costs of approximately $178,000.  The Partnership did not recognize a loss as insurance proceeds were anticipated to be sufficient to cover the cost of any damages.   The estimated clean up costs were included in operating expenses for the year ended December 31, 2005. During the year ended December 31, 2006 the Partnership revised its estimate of repair and cleanup costs. The revised estimate of capital damages is approximately $791,000, all of which had been incurred as of December 31, 2006. The revised estimate of cleanup costs is approximately $99,000 of which approximately $60,000 had been incurred as of December 31, 2005 and the balance of which was incurred for the year ended December 31, 2006. The reduction in estimated cleanup costs of approximately $79,000 was recorded in the year ended December 31, 2006 and is included as a reduction of operating expenses. The Partnership anticipates that insurance proceeds to be received will be sufficient to cover the estimated capital damages and no loss will result from this event. For the year ended December 31, 2006, the Partnership received initial insurance proceeds of approximately $250,000 related to this casualty event. Subsequent to December 31, 2006, the Partnership received additional insurance proceeds of approximately $146,000 and anticipates receiving additional insurance proceeds in 2007. The Partnership recognized a casualty gain of approximately $250,000 for the year ended December 31, 2006 as the damaged assets were fully depreciated.



In September 2005, Presidential House Apartments sustained water and landscaping damage from Hurricane Katrina.  The damages were approximately $57,000 which included cleanup costs of approximately $7,000.  The Partnership did not receive any insurance proceeds to cover the damages.  The damaged assets were fully depreciated so no casualty gain or loss was recorded during the years ended December 31, 2006 and 2005.  The original estimated cleanup costs of approximately $40,000 were included in operating expenses for the year ended December 31, 2005.  During the year ended December 31, 2006, the Partnership revised its estimate of repair and cleanup costs.  The revised estimate of cleanup costs is approximately $7,000 of which approximately $40,000 had been recognized as of December 31, 2005.  The reduction in estimated cleanup costs of approximately $33,000 was recorded in the year ended December 31, 2006 and is included as a reduction of operating expenses.



The increase in total expenses is due to increases in depreciation, interest and property tax expenses partially offset by a decrease in operating expenses. General and administrative expenses remained relatively constant for the comparable periods.



Operating expense decreased due to a reduction in estimated clean up costs from Hurricanes Katrina and Wilma partially offset by increases in advertising, administrative, insurance and maintenance expenses. Advertising expense increased due to an increase in national web advertising and referral costs.  Administrative expense increased due to increases in resident eviction costs and business licenses & permits. Insurance expense increased due to an increase in the hazard insurance premium. Maintenance expense increased due to increases in non-capitalized redevelopment costs and plumbing fixtures/repairs.



Depreciation expense increased due to assets placed into service over the past twelve months that are now being depreciated.  Interest expense increased for the year ended December 31, 2006 due to advances received from an affiliate of the General Partner during the year ended December 31, 2006 and during the second half of 2005 and an increase in the interest rate charged on such advances.  This increase in interest expense was partially offset by a decrease in interest expense associated with the mortgages encumbering the investment property as a result of scheduled principal payment, which have reduced the carrying balance of the mortgages.  Property tax expense increased due to an increase in the assessed value of the investment property.



Included in general and administrative expenses for the years ended December 31, 2006 and 2005 are management reimbursements to the General Partner as allowed under the Partnership Agreement.  Also included in general and administrative expenses for both periods are costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement.



Capital Resources and Liquidity



At December 31, 2006, the Partnership had cash and cash equivalents of approximately $178,000 compared to approximately $38,000 at December 31, 2005.  For the year ended December 31, 2006, cash and cash equivalents increased approximately $140,000.  The increase in cash and cash equivalents is due to approximately $250,000 and $259,000 of cash provided by operating and financing activities, respectively, partially offset by approximately $369,000 of cash used in investing activities.  Cash used in investing activities consisted of property improvements and replacements partially offset by insurance proceeds received.  Cash provided by financing activities consisted of advances from an affiliate of the General Partner partially offset by payments on the mortgages encumbering the Partnerships investment property and payment on advances from an affiliate of the General Partner.  The Partnership invests its working capital reserves in interest-bearing accounts.



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 asset and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The General Partner monitors developments in the area of legal and regulatory compliance. For example the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance.  The Partnership evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2007. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. The capital expenditures will be incurred only if cash is available from operations, Partnership reserves, or from advances from affiliates of the General Partner. To the extent that such capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term.



In accordance with the Partnership Agreement, an affiliate of the General Partner advanced the Partnership approximately $498,000 during the year ended December 31, 2006 to cover operating expenses and hurricane storm damage.  During the fourth quarter of 2005 an affiliate of the General Partner advanced the Partnership approximately $451,000 to cover operating expenses and hurricane storm damage. At December 31, 2006 the balance of the advances including accrued interest of approximately $49,000 was approximately $953,000 which is included in due to affiliates on the accompanying balance sheet included in Item 7. Financial Statements. Interest is charged at the prime rate plus 2% (10.25% at December 31, 2006). Interest expense of approximately $88,000 and $15,000 was recognized during the years ended December 31, 2006 and 2005, respectively.



The Partnership's assets are thought to be generally sufficient for any near-term needs (exclusive of capital improvements) of the Partnership.  At December 31, 2006, the first and second mortgage indebtedness encumbering the Partnerships investment property of approximately $4,693,000 requires monthly principal and interest payments until July 1, 2020 when the mortgage notes are scheduled to be fully amortized.



There were no distributions during the years ended December 31, 2006 and 2005. Future cash distributions will depend on the levels of net cash generated from operations and the timing of the refinancing and/or property sale. The Partnership's cash available for distribution is reviewed on a monthly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after capital expenditures to permit any distributions to its partners in the year 2007 or subsequent periods.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 18,633 Units in the Partnership representing 50.00% of the outstanding Units at December 31, 2006.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 50.00% of the outstanding Units at December 31, 2006, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.



Critical Accounting Policies and Estimates



A summary of the Partnerships significant accounting policies is included in "Note A  Organization and Summary of Significant Accounting Policies" which is included in the financial statements in "Item 7. Financial Statements".  The General Partner believes that the consistent application of these policies enables the Partnership to provide readers of the financial statements with useful and reliable information about the Partnerships operating results and financial condition.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Partnership to make estimates and assumptions.  These estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements as well as reported amounts of revenues and expenses during the reporting period.  Actual results could differ from these estimates.  Judgments and assessments of uncertainties are required in applying the Partnerships accounting policies in many areas.  The Partnership believes that of its significant accounting policies the following may involve a higher degree of judgment and complexity.



Impairment of Long-Lived Asset



Investment property is recorded at cost, less accumulated depreciation, unless the carrying amount of the asset is not recoverable. If events or circumstances indicate that the carrying amount of the property may not be recoverable, the Partnership will make an assessment of its recoverability by comparing the carrying amount to the Partnerships estimate of the undiscounted future cash flows, excluding interest charges, of the property.  If the carrying amount exceeds the aggregate undiscounted future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the estimated fair value of the property.



Real property investment is subject to varying degrees of risk.  Several factors may adversely affect the economic performance and value of the Partnerships investment property.  These factors include, but are not limited to, general economic climate; competition from other apartment communities and other housing options; local conditions, such as loss of jobs or an increase in the supply of apartments that might adversely affect apartment occupancy or rental rates; changes in governmental regulations and the related cost of compliance; increases in operating costs (including real estate taxes) due to inflation and other factors, which may not be offset by increased rents; and changes in tax laws and housing laws, including the enactment of rent control laws or other laws regulating multi-family housing.  Any adverse changes in these factors could cause impairment of the Partnerships asset.



Capitalized Costs Related to Redevelopment and Construction Projects



The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects. Costs including interest, property taxes and operating costs associated with redevelopment and construction projects are capitalized during periods in which redevelopment and construction projects are in progress in accordance with Statement of Financial Accounting Standards (SFAS) No. 34 Capitalization of Interest Costs and SFAS No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties. Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.



Revenue Recognition



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.

















Item 7.

Financial Statements



DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



LIST OF FINANCIAL STATEMENTS





Report of Independent Registered Public Accounting Firm



Balance Sheet - December 31, 2006



Statements of Operations - Years ended December 31, 2006 and 2005



Statements of Changes in Partners' Capital (Deficiency) - Years ended December 31, 2006 and 2005



Statements of Cash Flows - Years ended December 31, 2006 and 2005



Notes to Financial Statements

















Report of Independent Registered Public Accounting Firm







The Partners

Drexel Burnham Lambert Real Estate Associates II





We have audited the accompanying balance sheet of Drexel Burnham Lambert Real Estate Associates II as of December 31, 2006, and the related statements of operations, changes in partners capital (deficiency), and cash flows for each of the two years in the period ended December 31, 2006. 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 the standards of the Public Company Accounting Oversight Board (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.  We were not engaged to perform an audit of the Partnerships internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnerships internal control over financial reporting.  Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.



In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Drexel Burnham Lambert Real Estate Associates II at December 31, 2006, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2006, in conformity with U.S. generally accepted accounting principles.





/s/Ernst & Young LLP





Greenville, South Carolina

March 22, 2007















DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



BALANCE SHEET

(in thousands, except unit data)



December 31, 2006







|                                               |         |        
|---------------------------------------------- | ------- | -------
|Assets                                         |         |        
|Cash and cash equivalents                      |         | $   178
|Receivables and deposits                       |         | 98     
|Other assets                                   |         | 217    
|Investment property (Notes C, F and G):        |         |        
|Land                                           | $ 1,287 |        
|Buildings and related personal property        | 8,479   |        
|                                               | 9,766   |        
|Less accumulated depreciation                  | (6,669) | 3,097  
|                                               |         | $3,590 
|                                               |         |        
|Liabilities and Partners' Capital (Deficiency) |         |        
|                                               |         |        
|Liabilities                                    |         |        
|Accounts payable                               |         | $    36
|Tenant security deposit liabilities            |         | 82     
|Other liabilities                              |         | 63     
|Due to affiliates (Note B)                     |         | 953    
|Mortgage notes payable (Note C)                |         | 4,693  
|                                               |         |        
|Partners' Capital (Deficiency)                 |         |        
|General partner                                | $    52 |        
|Limited partners (37,273 units issued          |         |        
|and outstanding)                               | (2,289) | (2,237)
|                                               |         | $3,590 





See Accompanying Notes to Financial Statements



















DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



STATEMENTS OF OPERATIONS

(in thousands, except per unit data)













|                                               |                          |        
|---------------------------------------------- | ------------------------ | -------
|                                               | Years Ended December 31,
|                                               | 2006                     | 2005   
|Revenues:                                      |                          |        
|Rental income                                  | $ 1,966                  | $ 1,835
|Other income                                   | 125                      | 77     
|Casualty gain (Note G)                         | 250                      | --     
|Total revenues                                 | 2,341                    | 1,912  
|                                               |                          |        
|Expenses:                                      |                          |        
|Operating                                      | 843                      | 956    
|General and administrative                     | 98                       | 97     
|Depreciation                                   | 189                      | 161    
|Interest                                       | 440                      | 392    
|Property taxes                                 | 231                      | 188    
|Total expenses                                 | 1,801                    | 1,794  
|                                               |                          |        
|Net income (Note E)                            | $540                     | $118   
|                                               |                          |        
|Net income allocated to general partner (1%)   | $     5                  | $     1
|Net income allocated to limited partners (99%) | 535                      | 117    
|                                               |                          |        
|                                               | $540                     | $118   
|                                               |                          |        
|Net income per limited partnership unit        | $14.35                   | $3.14  





See Accompanying Notes to Financial Statements













DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIENCY)

(in thousands, except unit data)







|                                  |             |         |          |         
|--------------------------------- | ----------- | ------- | -------- | --------
|                                  | Limited     |         |          |         
|                                  | Partnership | General | Limited  |         
|                                  | Units       | Partner | Partners | Total   
|                                  |             |         |          |         
|Original capital contributions    | 37,273      | $1      | $18,637  | $18,638 
|                                  |             |         |          |         
|Partners' capital (deficiency) at |             |         |          |         
|December 31, 2004                 | 37,273      | $    46 | $(2,941) | $(2,895)
|                                  |             |         |          |         
|Net income for the year           |             |         |          |         
|ended December 31, 2005           | --          | 1       | 117      | 118     
|                                  |             |         |          |         
|Partners' capital (deficiency) at |             |         |          |         
|December 31, 2005                 | 37,273      | 47      | (2,824)  | (2,777) 
|                                  |             |         |          |         
|Net income for the year           |             |         |          |         
|ended December 31, 2006           | --          | 5       | 535      | 540     
|                                  |             |         |          |         
|Partners' capital (deficiency) at |             |         |          |         
|December 31, 2006                 | 37,273      | $52     | $(2,289) | $(2,237)





See Accompanying Notes to Financial Statements













DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



STATEMENTS OF CASH FLOWS

(in thousands)















|                                                           |                          |        
|---------------------------------------------------------- | ------------------------ | -------
|                                                           | Years Ended December 31,
|                                                           | 2006                     | 2005   
|                                                           |                          |        
|Cash flows from operating activities:                      |                          |        
|Net income                                                 | $   540                  | $   118
|Adjustments to reconcile net income to net cash provided   |                          |        
|by operating activities:                                   |                          |        
|Depreciation                                               | 189                      | 161    
|Amortization of loan costs                                 | 11                       | 11     
|Casualty gain                                              | (250)                    | --     
|Bad debt expense                                           | 86                       | 28     
|Change in accounts:                                        |                          |        
|Receivables and deposits                                   | (64)                     | (20)   
|Other assets                                               | (32)                     | 1      
|Accounts payable                                           | (100)                    | 134    
|Tenant security deposit liabilities                        | 7                        | (6)    
|Other liabilities                                          | (182)                    | 184    
|Due to affiliates                                          | 45                       | (67)   
|Net cash provided by operating activities                  | 250                      | 544    
|                                                           |                          |        
|Cash flows from investing activities:                      |                          |        
|Property improvements and replacements                     | (619)                    | (676)  
|Net withdrawals from restricted escrow accounts            | --                       | 15     
|Insurance proceeds received                                | 250                      | --     
|Net cash used in investing activities                      | (369)                    | (661)  
|                                                           |                          |        
|Cash flows from financing activities:                      |                          |        
|Payments on mortgage notes payable                         | (195)                    | (182)  
|Payments on advances from affiliates                       | (44)                     | (213)  
|Advances from affiliates                                   | 498                      | 451    
|Net cash provided by financing activities                  | 259                      | 56     
|                                                           |                          |        
|Net increase (decrease) in cash and cash equivalents       | 140                      | (61)   
|                                                           |                          |        
|Cash and cash equivalents at beginning of year             | 38                       | 99     
|Cash and cash equivalents at end of year                   | $178                     | $38    
|                                                           |                          |        
|Supplemental disclosure of cash flow information:          |                          |        
|Cash paid for interest, net of capitalized interest        | $384                     | $385   
|                                                           |                          |        
|Supplemental disclosure of non-cash activity:              |                          |        
|Property improvements and replacements in accounts payable | $2                       | $40    





See Accompanying Notes to Financial Statements













DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



NOTES TO FINANCIAL STATEMENTS



December 31, 2006





Note A - Organization and Summary of 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"), an affiliate of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust.



As of December 31, 2006, the Partnership owns and operates Presidential House Apartments, a residential apartment complex located in North Miami Beach, Florida.



Use of Estimates:



The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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.



Investment Property:



Investment property consists of one apartment complex and is stated at cost.  The Partnership capitalizes costs incurred in connection with capital expenditure activities, including redevelopment and construction projects, other tangible property improvements and replacements of existing property components.  Costs including interest, property taxes and operating costs associated with redevelopment and construction projects are capitalized during periods in which redevelopment and construction projects are in progress in accordance with Statement of Financial Accounting Standards (SFAS) No. 34 Capitalization of Interest Costs and SFAS No. 67, Accounting for Costs and the Initial Rental Operations of Real Estate Properties.  Costs incurred in connection with capital projects are capitalized where the costs of the project exceed $250.  Included in these capitalized costs are payroll costs associated with time spent by site employees in connection with the planning, execution and control of all capital expenditure activities at the property level.  The Partnership capitalized approximately $11,000 of interest during the year ended December 31, 2006. The Partnership did not capitalize any costs related to property taxes or operation costs during the year ended December 31, 2006. The Partnership did not capitalize any costs related to interest, property taxes or operating costs during the year ended December 31, 2005. Capitalized costs are depreciated over the useful life of the asset.  Expenditures for ordinary repairs, maintenance and apartment turnover costs are expensed as incurred.



In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the Partnership records impairment losses on long-lived assets used in operations when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.  No adjustments for impairment of value were recorded in the years ended December 31, 2006 or 2005.



Fair Value of Financial Instruments:



SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and Fair Value of Financial Instruments", requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate fair value. Fair value is defined in the SFAS as the amount at which the instruments could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. The Partnership believes that the carrying amount of its financial instruments (except for long-term debt) approximates their fair value due to the short term maturity of these instruments. The Partnership estimates the fair value of its long-term debt by discounting future cash flows using a discount rate commensurate with that currently believed to be available to the Partnership for similar term, fully amortizing long-term debt.  The fair value of the Partnership's long term debt at the Partnership's incremental borrowing rate is approximately $5,079,000.



Cash and Cash Equivalents:



Cash and cash equivalents include cash on hand and in banks. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $167,000 at December 31, 2006 that are maintained by an affiliated management company on behalf of affiliated entities in cash concentration accounts.



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.



Depreciation:



Depreciation is calculated by the straight-line method over the estimated lives of the investment property and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used for real property over 19 years for additions after May 8, 1985, and before 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 additions over 27.5 years, and (2) personal property additions over 5 years.



Deferred Costs:



Loan costs of approximately $208,000, less accumulated amortization of approximately $63,000, are included in other assets.  The loan costs are amortized over the terms of the related loan agreements. Amortization expense for each of the years ended December 31, 2006 and 2005 was approximately $11,000 and is included in interest expense on the accompanying statements of operations.  Amortization expense is expected to be approximately $11,000 for each of the years 2007 through 2011.



Leasing commissions and other direct costs incurred in connection with successful leasing efforts are deferred and amortized over the terms of the related leases.  Amortization of these costs is included in operating expenses.



Leases:



The Partnership generally leases apartment units for twelve-month terms or less.  The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area.  Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease.  The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants.



Advertising Costs:



The Partnership expenses the cost of advertising as incurred. Advertising costs of approximately $39,000 and $16,000 for the years ended December 31, 2006 and 2005, respectively, were charged to operating expense.



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. SFAS No. 131 also established standards for related disclosures about products and services, geographic areas, and major customers. As defined in SFAS No. 131, the Partnership has only one reportable segment.



Recent Accounting Pronouncement:



In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154 Accounting Changes and Error Corrections, which replaces APB Opinion No. 20 and SFAS No. 3, and changes the requirements for the accounting for and reporting of a change in accounting principle. This statement is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Partnership adopted SFAS No. 154 effective January 1, 2006. The adoption of SFAS No. 154 did not have a material effect on the Partnerships financial condition or results of operations.



In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. SFAS No. 157 applies whenever other standards require assets or liabilities to be measured at fair value and does not expand the use of fair value in any new circumstances. SFAS No. 157 establishes a hierarchy that prioritizes the information used in developing fair value estimates. The hierarchy gives the highest priority to quoted prices in active markets and the lowest priority to unobservable data, such as the reporting entitys own data. SFAS No. 157 requires fair value measurements to be disclosed by level within the fair value hierarchy. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007. The Partnershipdoes not anticipate that the adoption of SFAS No. 157 will have a material effect on the Partnerships financial statements.



In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. The objective is to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. The Partnership has not yet determined whether it will elect the fair value option for any of its financial instruments.



Note B - Transactions with Affiliated Parties



The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and for reimbursement of certain expenses incurred by affiliates of the General Partner on behalf of the Partnership.



Affiliates of the GeneralPartner receive 5% of gross receipts from the Partnerships residential property as compensation for providing property management services. The Partnership paid to such affiliates approximately $102,000 and $96,000 for the years ended December 31, 2006 and 2005, respectively, which is included in operating expenses.



An affiliate of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $161,000 and $91,000 for the years ended December 31, 2006 and 2005, respectively, which are included in general and administrative expenses and investment property.  The portion of these reimbursements included in investment property are construction management services provided by an affiliate of the General Partner of approximately $115,000 and $34,000 for the years ended December 31, 2006 and 2005, respectively.



In accordance with the Partnership Agreement, an affiliate of the General Partner advanced the Partnership approximately $498,000 during the year ended December 31, 2006, to cover operating expenses and hurricane storm damage.  During the fourth quarter of 2005 an affiliate of the General Partner advanced the Partnership approximately $451,000 to cover operating expenses and hurricane storm damage. At December 31, 2006 the balance of the advances including accrued interest of approximately $49,000 was approximately $953,000 which is included in due to affiliates on the accompanying balance sheet. Interest is charged at the prime rate plus 2% (10.25% at December 31, 2006). Interest expense of approximately $88,000 and $15,000 was recognized during the years ended December 31, 2006 and 2005, respectively.



The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the years ended December 31, 2006 and 2005, the Partnership was charged by AIMCO and its affiliates approximately $47,000 and $27,000, respectively, for insurance coverage and fees associated with policy claims administration.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 18,633 Units in the Partnership representing 50.00% of the outstanding units at December 31, 2006.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 50.00% of the outstanding Units at December 31, 2006, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.



Note C - Mortgage Notes Payable



The terms of the mortgage notes payable are as follows:



|                   |                |           |          |                |            
|------------------ | -------------- | --------- | -------- | -------------- | -----------
|                   | Principal      | Monthly   |          |                |            
|                   | Balance At     | Payment   |          |                | Principal  
|                   | December 31,   | Including | Interest | Maturity       | Balance Due
|Property           | 2006           | Interest  | Rate     | Date           | At Maturity
|                   | (in thousands) |           |          | (in thousands)
|Presidential House |                |           |          |                |            
|Apartments         |                |           |          |                |            
|1st mortgage       | $ 3,483        | $   35    | 7.96%    | 07/01/20       | $     --   

|             |        |     |       |          |    
|------------ | ------ | --- | ----- | -------- | ---
|2nd mortgage | 1,210  | 11  | 5.55% | 07/01/20 | -- 
|Total        | $4,693 | $46 |       |          | $--
|             |        |     |       |          |    
|             |        |     |       |          |    



The mortgage notes payable are fixed rate mortgages that are non-recourse and are secured by a pledge of the Partnerships rental property and by a pledge of revenues from the respective rental property.  The mortgage notes payable include a prepayment penalty if repaid prior to maturity.  Further, the property may not be sold subject to existing indebtedness.



Scheduled principal payments of the mortgage notes payable subsequent to December 31, 2006, are as follows (in thousands):



|           |        
|---------- | -------
|2007       | $   211
|2008       | 226    
|2009       | 243    
|2010       | 262    
|2011       | 281    
|Thereafter | 3,470  
|           | $4,693 













Note D - Partners' Capital



Pursuant to a public offering, 37,273 limited partnership units were sold at $500 per unit. The calculation of net income 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 refinancings, 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, 2006, the unpaid preferred return arrearage totaled approximately $12,216,000 or approximately $328 per unit.



Note E - 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 financial statements of the Partnership.



Taxable income or loss of the Partnership is reported in the income tax returns of its partners.



The following is a reconciliation between net income as reported in the financial statements and Federal net taxable income allocated to partners in the Partnerships tax return for the years ended December 31, 2006 and 2005 (in thousands, except unit data):



|                                          |                          |           
|----------------------------------------- | ------------------------ | ----------
|                                          | Years Ended December 31,
|                                          | 2006                     | 2005      
|                                          |                          |           
|Net income as reported                    | $  540                   | $  118    
|Depreciation and amortization differences | 12                       | (4)       
|Other                                     | (45)                     | 54        
|Casualty                                  | (250)                    | --        
|Federal net taxable income                | $257                     | $168      
|                                          |                          |           
|Federal taxable income per limited        |                          |           
|partnership unit                          | $22.82 (1)               | $5.61
	(1)











(1)

For 2006 and 2005 allocations under the Internal Revenue Code section 704(b) result in the limited partners being allocated a non-pro rata amount of taxable income.



The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net liabilities at December 31, 2006 (in thousands):



|                            |          
|--------------------------- | ---------
|                            | 2006     
|                            |          
|Net liabilities as reported | $ (2,237)
|Investment property         | (17)     
|Accumulated depreciation    | (279)    
|Syndication costs           | 2,051    
|Other assets & liabilities  | 5        
|                            |          
|Net liabilities - tax basis | $(477)   



Note F  Investment Property and Accumulated Depreciation





|                   |                |                |             |               
|------------------ | -------------- | -------------- | ----------- | --------------
|                   |                | Initial Cost   |            
|                   |                | To Partnership |            
|                   |                | (in thousands) |            
|                   |                |                | Buildings   | Cost          
|                   |                |                | and Related | Capitalized   
|                   |                |                | Personal    | Subsequent to 
|Description        | Encumbrances   | Land           | Property    | Acquisition   
|                   | (in thousands) |                |             | (in thousands)
|                   |                |                |             |               
|Presidential House |                |                |             |               
|Apartments         | $4,693         | $1,510         | $6,037      | $2,219        



|                 |                               |             |        |                |              |          |            
|---------------- | ----------------------------- | ----------- | ------ | -------------- | ------------ | -------- | -----------
|                 | Gross Amount At Which Carried |             |        |                |             
|                 | At December 31, 2006          |             |        |                |             
|                 | (in thousands)                |             |        |                |             
|                 |                               |             |        |                |              |          |            
|                 |                               | Buildings   |        |                |              |          |            
|                 |                               | And Related |        |                |              |          |            
|                 |                               | Personal    |        | Accumulated    | Year of      | Date     | Depreciable
|Description      | Land                          | Property    | Total  | Depreciation   | Construction | Acquired | Life       
|                 |                               |             |        | (in thousands) |              |          |            
|Presidential     |                               |             |        |                |              |          |            
|House Apartments | $1,287                        | $8,479      | $9,766 | $6,669         | 1967-1974    | 10/84    | 5-31.5 yrs 













Reconciliation of investment property and accumulated depreciation:



|                             |                          |        
|---------------------------- | ------------------------ | -------
|                             | Years Ended December 31,
|                             | 2006                     | 2005   
|                             | (in thousands)          
|Investment Property          |                          |        
|Balance at beginning of year | $ 9,630                  | $ 8,931
|Property improvements        | 581                      | 716    
|Disposal of property         | (445)                    | (17)   
|Balance at end of year       | $9,766                   | $9,630 
|                             |                          |        
|Accumulated Depreciation     |                          |        
|Balance at beginning of year | $ 6,925                  | $ 6,781
|Additions charged to expense | 189                      | 161    
|Disposal of property         | (445)                    | (17)   
|Balance at end of year       | $6,669                   | $6,925 



The aggregate cost of the real estate for Federal income tax purposes at December 31, 2006 and 2005, is approximately $9,749,000 and $9,428,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2006 and 2005, is approximately $6,948,000 and $6,772,000, respectively.



Note G  Casualty Gain



In October 2005, Presidential House Apartments sustained damage from Hurricane Wilma.  During the year ended December 31, 2005, the Partnership estimated damages to be approximately $800,000, which included clean up costs of approximately $178,000.  The Partnership did not recognize a loss as insurance proceeds were anticipated to be sufficient to cover the cost of any damages.   The estimated clean up costs were included in operating expenses for the year ended December 31, 2005. During the year ended December 31, 2006 the Partnership revised its estimate of repair and cleanup costs. The revised estimate of capital damages is approximately $791,000, all of which had been incurred as of December 31, 2006. The revised estimate of cleanup costs is approximately $99,000 of which approximately $60,000 had been incurred as of December 31, 2005 and the balance of which was incurred for the year ended December 31, 2006. The reduction in estimated cleanup costs of approximately $79,000 was recorded in the year ended December 31, 2006 and is included as a reduction of operating expenses. The Partnership anticipates that insurance proceeds to be received will be sufficient to cover the estimated capital damages and no loss will result from this event. For the year ended December 31, 2006, the Partnership received initial insurance proceeds of approximately $250,000 related to this casualty event. Subsequent to December 31, 2006, the Partnership received additional insurance proceeds of approximately $146,000 and anticipates receiving additional insurance proceeds in 2007. The Partnership recognized a casualty gain of approximately $250,000 for the year ended December 31, 2006 as the damaged assets were fully depreciated.



In September 2005, Presidential House Apartments sustained water and landscaping damage from Hurricane Katrina.  The damages were approximately $57,000 which included cleanup costs of approximately $7,000.  The Partnership did not receive any insurance proceeds to cover the damages.  The damaged assets were fully depreciated so no casualty gain or loss was recorded during the years ended December 31, 2006 and 2005.  The original estimated cleanup costs of approximately $40,000 were included in operating expenses for the year ended December 31, 2005.  During the year ended December 31, 2006, the Partnership revised its estimate of repair and cleanup costs.  The revised estimate of cleanup costs is approximately $7,000 of which approximately $40,000 had been recognized as of December 31, 2005.  The reduction in estimated cleanup costs of approximately $33,000 was recorded in the year ended December 31, 2006 and is included as a reduction of operating expenses.













Note H  Property Tax Refund



During both 2005 and 2004, the Partnership appealed the assessed value of the investment property. During the fourth quarter of both 2005 and 2004, the Partnership recorded a receivable of approximately $30,000 to reflect the expected refund of property taxes related to the 2005 and 2004 tax years, respectively.  During the year ended December 31, 2005, the Partnership received approximately $30,000 as a refund of property taxes paid during 2004. During the year ended December 31, 2006 the Partnership received approximately $30,000 as a refund for property taxes paid during 2005. The appeals for both years were settled during the year ended December 31, 2006.



Note I  Contingencies



AIMCO Properties, L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act (FLSA) by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call." Additionally, the complaint alleges AIMCO Properties, L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week.   In June 2005 the court conditionally certified the collective action on both the on-call and overtime issues.  Approximately 1,049 individuals opted in to the class. The defendants moved to decertify the collective action on both issues and that issue is now fully briefed.  The defendants anticipate that the Court will soon set oral argument on the defendants decertification motion.  Because the court denied plaintiffs motion to certify state subclasses, in September 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County), and in November 2005 in Montgomery County Maryland Circuit Court.  The California and Maryland cases have been stayed pending the outcome of the decertification motion in the District of Columbia case.  Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnerships financial condition or results of operations.



The Partnership is unaware of any pending or outstanding litigation matters involving it or its investment property that are not of a routine nature arising in the ordinary course of business.













Environmental



Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its property, the Partnership could potentially be liable for environmental liabilities or costs associated with its property.



Mold



The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements.  The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure.  Affiliates of the General Partner have implemented policies, procedures, third-party audits and training and the General Partner believes that these measures will prevent or eliminate mold exposure and will minimize the effects that mold may have on residents.  To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions.  Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnerships financial condition or results of operations.













Item 8.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure



None.



Item 8a.

Controls and Procedures



(a)

Disclosure Controls and Procedures. The Partnerships management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnerships disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnerships principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnerships disclosure controls and procedures are effective.



(b)

Internal Control Over Financial Reporting. There have not been any changes in the Partnerships internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of 2006 that have materially affected, or are reasonably likely to materially affect, the Partnerships internal control over financial reporting.



Item 8b.

Other Information



None.











PART III



Item 9.

Directors, Executive Officers, Promoters and Control Persons and Corporate Governance, Compliancewith Section 16(a) of the Exchange Act



Drexel Burnham Lambert Real Estate Associates II (the Partnership or Registrant)) does not have any directors or officers. 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 officers of DBL as of December 31, 2006, 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:



|                     |    |                                               
|-------------------- | -- | ----------------------------------------------
|Martha L. Long       | 47 | Director and Senior Vice President            
|Harry G. Alcock      | 44 | Director and Executive Vice President and     
|                     |    | Chief Investment Officer                      
|Timothy Beaudin      | 48 | Executive Vice President and Chief Development
|                     |    | Officer                                       
|Miles Cortez         | 63 | Executive Vice President, General Counsel     
|                     |    | and Secretary                                 
|Patti K. Fielding    | 43 | Executive Vice President  Securities and Debt
|Thomas M. Herzog     | 44 | Executive Vice President and Chief            
|                     |    | Financial Officer                             
|Robert Y. Walker, IV | 41 | Executive Vice President                      
|Scott Fordham        | 39 | Senior Vice President and Chief Accounting    
|                     |    | Officer                                       
|Stephen B. Waters    | 45 | Vice President                                



Martha L. Long was appointed as a Director of the General Partner in October 2004 and was appointed Senior Vice President of the General Partner in February 2004.  Ms. Long has been with AIMCO since October 1998 and has served in various capacities.  From 1998 to 2001, Ms. Long served as Senior Vice President and Controller of AIMCO and the General Partner.  During 2002 and 2003, Ms. Long served as Senior Vice President of Continuous Improvement for AIMCO.



Harry G. Alcock was appointed as a Director of the General Partner in October 2004 and was appointed Executive Vice President of the General Partner in February 2004 and has been Executive Vice President and Chief Investment Officer of AIMCO since October 1999.  Mr. Alcock has had responsibility for acquisition and financing activities of AIMCO since July 1994, serving as Vice President from July 1996 to October 1997 and as Senior Vice President from October 1997 to October 1999.



Timothy Beaudin was appointed Executive Vice President and Chief Development Officer of the General Partner and AIMCO in October 2005.  Prior to this time, beginning in 2005, Mr. Beaudin was with Catellus Development Corporation, a San Francisco, California-based real estate investment trust.  During his last five years at Catellus, Mr. Beaudin served as Executive Vice President, with management responsibility for development, construction and asset management.



Miles Cortez was appointed Executive Vice President, General Counsel and Secretary of the General Partner in February 2004 and of AIMCO in August 2001.  Prior to joining AIMCO, Mr. Cortez was the senior partner of Cortez Macaulay Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through September 2001.



Patti K. Fielding was appointed Executive Vice President - Securities and Debt of the General Partner in February 2004 and of AIMCO in February 2003.  Ms. Fielding was appointed Treasurer of AIMCO in January 2005.  Ms. Fielding previously served as Senior Vice President - Securities and Debt of AIMCO from January 2000 to February 2003.  Ms. Fielding joined AIMCO in February 1997 as a Vice President.



Thomas M. Herzog was appointed Chief Financial Officer of the General Partner and AIMCO in November 2005 and was appointed Executive Vice President of the General Partner and AIMCO in July 2005.  In January 2004, Mr. Herzog joined AIMCO as Senior Vice President and Chief Accounting Officer and of the General Partner in February 2004.  Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate, serving as Chief Accounting Officer & Global Controller from April 2002 to January 2004 and as Chief Technical Advisor from March 2000 to April 2002.  Prior to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990 to 2000.



Robert Y. Walker, IV was appointed Senior Vice President of the General Partner and AIMCO in August 2005 and served as the Chief Accounting Officer of the General Partner and AIMCO from November 2005 to January 2007. Mr. Walker was promoted to Executive Vice President of the General Partner and AIMCO in July 2006 and in January 2007 became the chief financial officer of Conventional Property Operations for AIMCO. From June 2002, until he joined AIMCO, Mr. Walker served as senior vice president and chief financial officer at Miller Global Properties, LLC, a Denver-based private equity, real estate fund manager.  From May 1997 to June 2002, Mr. Walker was employed by GE Capital Real Estate, serving as global controller from May 2000 to June 2002.



Scott W. Fordham was appointed Senior Vice President and Chief Accounting Officer in January 2007 of the General Partner and AIMCO. Prior to joining AIMCO, Mr. Fordham served as Vice President and Chief Accounting Officer of Brandywine Realty Trust. Prior to the merger of Prentiss Properties Trust with Brandywine Realty Trust, Mr. Fordham served as Senior Vice President and Chief Accounting Officer of Prentiss Properties Trust and was in charge of the corporate accounting and financial reporting groups. Prior to joining Prentiss Properties Trust in 1992, Mr. Fordham worked in public accounting with PricewaterhouseCoopers LLP.



Stephen B. Waters was appointed Vice President of the General Partner and AIMCO in April 2004.  Mr. Waters previously served as a Director of Real Estate Accounting since joining AIMCO in September 1999.  Mr. Waters has responsibility for partnership accounting with AIMCO and serves as principal financial officer of the General Partner.



One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further one or more of the above persons are also officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act.



The board of directors of the General Partner does not have a separate audit committee. As such, the board of directors of the General Partner fulfills the functions of an audit committee. The board of directors has determined that Martha L. Long meets the requirement of an "audit committee financial expert".



The directors and officers of the General Partner with authority over the Partnership are all employees of subsidiaries of AIMCO. AIMCO has adopted a code of ethics that applies to such directors and officers that is posted on AIMCO's website (www.AIMCO.com). AIMCO's website is not incorporated by reference to this filing.



Item 10.

Executive Compensation



Neither the directors nor officers received any remuneration from the General Partner during the year ended December 31, 2006.



Item 11.

Security Ownership of Certain Beneficial Owners and Management













Except as noted below, no person or entity was known by the Partnership to be the beneficial owner of more than 5% of the Limited Partnership Units of the Partnership as of December 31, 2006.



|                        |          |           
|----------------------- | -------- | ----------
|                        | Number   |           
|Entity                  | of Units | Percentage
|                        |          |           
|AIMCO IPLP, L.P.        | 10       | 0.03%     
|(an affiliate of AIMCO) |          |           
|AIMCO Properties, L.P.  | 18,623   | 49.97%    
|(an affiliate of AIMCO) |          |           



AIMCO IPLP, L.P. 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 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado 80237.



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



Item 12.

Certain Relationships and Related Transactions and Director Independence



The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for payments to affiliates for services and for reimbursement of certain expenses incurred by affiliates of the General Partner on behalf of the Partnership.



Affiliates of the GeneralPartner receive 5% of gross receipts from the Partnerships residential property as compensation for providing property management services. The Partnership paid to such affiliates approximately $102,000 and $96,000 for the years ended December 31, 2006 and 2005, respectively, which is included in operating expenses.



An affiliate of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $161,000 and $91,000 for the years ended December 31, 2006 and 2005, respectively, which are included in general and administrative expenses and investment property.  The portion of these reimbursements included in investment property are construction management services provided by an affiliate of the General Partner of approximately $115,000 and $34,000 for the years ended December 31, 2006 and 2005, respectively.



In accordance with the Partnership Agreement, an affiliate of the General Partner advanced the Partnership approximately $498,000 during the year ended December 31, 2006, to cover operating expenses and hurricane storm damage.  During the fourth quarter of 2005 an affiliate of the General Partner advanced the Partnership approximately $451,000 to cover operating expenses and hurricane storm damage. At December 31, 2006 the balance of the advances including accrued interest of approximately $49,000 was approximately $953,000 which is included in due to affiliates on the accompanying balance sheet. Interest is charged at the prime rate plus 2% (10.25% at December 31, 2006). Interest expense of approximately $88,000 and $15,000 was recognized during the years ended December 31, 2006 and 2005, respectively.



The Partnership insures its property up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its property above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the years ended December 31, 2006 and 2005, the Partnership was

charged by AIMCO and its affiliates approximately $47,000 and $27,000, respectively, for insurance coverage and fees associated with policy claims administration.



In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 18,633 Units in the Partnership representing 50.00% of the outstanding units at December 31, 2006.  A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 50.00% of the outstanding Units at December 31, 2006, AIMCO and its affiliates are in a position to control all voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder.



Neither of the General Partners directors is independent under the independence standards established for New York Stock Exchange listed companies as both directors are employed by the parent of the General Partner.



Item 13.

Exhibits



See Exhibit Index.



Item 14.

Principal Accountant Fees and Services



The General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for 2007.  The aggregate fees billed for services rendered by Ernst & Young LLP for 2006 and 2005 are described below.



Audit Fees.  Fees for audit services totaled approximately $32,000 and $28,000 for 2006 and 2005, respectively. Fees for audit services also include fees for the reviews of the Partnerships Quarterly Reports on Form 10-QSB.



Tax Fees.  Fees for tax services totaled approximately $6,000 for both 2006 and 2005.











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/Martha L. Long                         
| | Martha L. Long                                  
| | Senior Vice President                           
| |                                                 
| | By:   /s/Stephen B. Waters                      
| | Stephen B. Waters                               
| | Vice President                                  
| |                                                 
| | Date: March 23, 2007                            





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 dates indicated.





|                     |                        |                     
|-------------------- | ---------------------- | --------------------
|/s/Harry G. Alcock   | Director and Executive | Date: March 23, 2007
|Harry G. Alcock      | Vice President         |                     
|                     |                        |                     
|/s/Martha L. Long    | Director and Senior    | Date: March 23, 2007
|Martha L. Long       | Vice President         |                     
|                     |                        |                     
|/s/Stephen B. Waters | Vice President         | Date: March 23, 2007
|Stephen B. Waters    |                        |                     











DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II



EXHIBIT INDEX



Exhibit No.



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.



10.3

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



10.10

Multifamily Note dated June 29, 2000, by and between Drexel Burnham Lambert Estate Associates II, a New York limited partnership, and ARCS Commercial Mortgage Co., L.P., a California limited partnership is incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 30, 2000.



10.11

a)

Multifamily Note dated May 30, 2003 between Drexel Burnham Lambert Real Estate Associates II Limited Partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to Current Report on Form 8-K dated May 30, 2003).





b)

Limited Guaranty dated May 30, 2003 by AIMCO Properties, L.P. for the benefit of GMAC Commercial Mortgage Corporation. (Incorporated by reference to Current Report on Form 8-K dated May 30, 2003).





c)

Repair Escrow Agreement dated May 30, 2003 between Drexel Burnham Lambert Real Estate Associates II Limited Partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to Current Report on Form 8-K dated May 30, 2003).





d)

Replacement Reserve Agreement dated May 30, 2003 between Drexel Burnham Lambert Real Estate Associates II Limited Partnership and GMAC Commercial Mortgage Corporation. (Incorporated by reference to Current Report on Form 8-K dated May 30, 2003).



31.1

Certification of equivalent of Chief Executive Officer pursuant to  Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



31.2

Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



32.1

Certification of equivalent of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.











Exhibit 31.1

CERTIFICATION

I, Martha L. Long, certify that:

1.

I have reviewed this annual report on Form 10-KSB of Drexel Burnham Lambert Real Estate Associates II;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;



4.

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.



Date: March 23, 2007

/s/Martha L. Long

Martha L. Long

Senior Vice President of DBL Properties Corporation, equivalent of the chief executive officer of the Partnership











Exhibit 31.2

CERTIFICATION

I, Stephen B. Waters, certify that:

1.

I have reviewed this annual report on Form 10-KSB of Drexel Burnham Lambert Real Estate Associates II;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report;



4.

The small business issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have:



(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



(b)

Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



(c)

Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and



5.

The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):



(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and



(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.



Date:  March 23, 2007

/s/Stephen B. Waters

Stephen B. Waters

Vice President of DBL Properties Corporation, equivalent of the chief financial officer of the Partnership













Exhibit 32.1





Certification of CEO and CFO

Pursuant to 18 U.S.C. Section 1350,

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002







In connection with the Annual Report on Form 10-KSB of Drexel Burnham Lambert Real Estate Associates II (the "Partnership"), for the fiscal year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:



(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership.



| |                        
| | -----------------------
| | /s/Martha L. Long      
| | Name: Martha L. Long   
| | Date: March 23, 2007   
| |                        
| | /s/Stephen B. Waters   
| | Name: Stephen B. Waters
| | Date: March 23, 2007   



This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.