FORM 10-KSB-ANNUAL OR TRANSITIONAL REPORT UNDER
                                SECTION 13 OR 15(d)

                                   FORM 10-KSB

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

                    For the fiscal year ended December 31, 2001

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

                   For the transition period from_______to_______

                         Commission file number 2-85829

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

   New York                                                      13-3202289
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                          55 Beattie Place, P.O. Box 1089
                        Greenville, South Carolina 29602
                      (Address of principal executive offices)

                    Issuer's telephone number (864) 239-1000

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

                                      None

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

                            Limited Partnership Units
                                (Title of class)

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act of 1934 during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes X No ___

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year $1,724,000

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, 2001. No market exists for the limited partnership
interests of the Registrant,  and,  therefore,  no aggregate market value can be
determined.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None


<PAGE>





                                     PART I

Item 1.     Description of Business

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

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

The  real  estate  business  in which  the  Partnership  is  engaged  is  highly
competitive.  There are other  residential  properties within the market area of
the Partnership's properties.  The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner,  in
such  market  area  could have a  material  effect on the rental  market for the
apartments  at the  Registrant's  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.

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

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

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


<PAGE>




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

Item 2.     Description of Property

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

                                  Date of
Property                          Purchase      Type of Ownership    Use

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

Schedule of Properties

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

<TABLE>
<CAPTION>

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

<S>                      <C>          <C>         <C>                      <C>
Presidential House       $8,386       $6,332      5-31.5 yrs     SL        $ 2,044
</TABLE>

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

Schedule of Property Indebtedness

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

<TABLE>
<CAPTION>

                             Principal
                            Balance At
                           December 31,       Interest       Period       Maturity
Properties                   2001 (1)           Rate       Amortized        Date
                          (in thousands)

<S>                           <C>               <C>          <C>          <C>   <C>
Presidential House            $4,072            7.96%        20 yrs       07/01/20
</TABLE>

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

On  June  30,  2000,  the  Partnership   refinanced  the  mortgage   encumbering
Presidential House Apartments.  Interest on the new mortgage is 7.96%.  Interest
on the  old  mortgage  was  8.00%.  The  refinancing  replaced  indebtedness  of
approximately  $3,057,000  with a new  mortgage  in the  amount  of  $4,200,000.
Payments of  approximately  $35,000 are due on the first day of each month until
the loan fully amortizes on July 1, 2020. The prior note matured in August 2000.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$168,000.


<PAGE>


Rental Rates and Occupancy

Average annual rental rate and occupancy for 2001 and 2000 for the property was:

                                     Average Annual              Average Annual
                                      Rental Rates                  Occupancy
                                       (per unit)
Properties                        2001            2000          2001        2000

Presidential House               $8,445          $7,861          97%         97%

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

Real Estate Taxes and Rates

Real estate tax and rate in 2001 for the property was:

                                         2001                 2001
                                        Billing               Rate
                                    (in thousands)

       Presidential House                $133                 2.11%

Capital Improvements

Presidential House

During the year ended December 31, 2001, the Partnership completed approximately
$204,000 of capital improvements  consisting primarily of plumbing enhancements,
office computers,  air conditioning  replacements,  counter tops,  swimming pool
improvements, and appliance and floor covering replacements.  These improvements
were funded from operating cash flow.  The  Partnership is currently  evaluating
the capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted  is  expected  to be $300 per unit or $60,900.  Additional
improvements may be considered and will depend on the physical  condition of the
property as well as Partnership  reserves and anticipated cash flow generated by
the property.


Item 3.     Legal Proceedings

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

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

During the quarter ended December 31, 2001, no matter was submitted to a vote of
unit holders through the solicitation of proxies or otherwise.


<PAGE>


                                     PART II

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

The Partnership,  a publicly-held  limited partnership,  offered and sold 37,273
Individual  Investor Units during its offering  period through October 1984. The
Partnership  currently has 1,237 holders of record owning an aggregate of 37,273
Units.  Affiliates  of the  General  Partner  owned  11,221  Units or  30.10% at
December 31, 2001. No public trading market has developed for the Units,  and it
is not anticipated that such a market will develop in the future.

The following table sets forth the distributions made by the Partnership for the
years ended December 31, 2000 and 2001 (see "Item 6. Management's Discussion and
Analysis or Plan of Operation" for further details):

                                                Distributions
                                                           Per Limited
                                        Aggregate        Partnership Unit
                                      (in thousands)
       01/01/00 - 12/31/00               $4,614 (1)          $123.79
       01/01/01 - 12/31/01                  340 (2)             9.12

(1)   Consists of approximately $663,000 of cash from operations,  approximately
      $981,000 of cash from refinancing the note encumbering  Presidential House
      Apartments  and  approximately  $2,970,000  of  proceeds  from the sale of
      interest in the joint venture.

(2)   Consists of cash from operations.

Future cash  distributions  will depend on the levels of net cash generated from
operations,  the  availability  of cash  reserves  and the  timing  of the  debt
maturity,  refinancing,  and/or property sale. The Partnership's  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 required capital  expenditures to permit any distributions to its partners
in the year 2002 or subsequent periods.

As of December 31, 2001, the remaining unpaid preferred return arrearage totaled
approximately $9,741,000 or approximately $261 per Unit.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 11,221 limited  partnership  units
(the "Units") in the Partnership representing 30.10% of the outstanding units at
December  31,  2001.  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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.


<PAGE>


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

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

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

Results of Operations

The Partnership realized net income of approximately $263,000 and $2,774,000 for
the years ended  December 31, 2001 and 2000,  respectively.  The decrease in net
income is primarily attributable to the equity in net income of joint venture of
approximately $37,000 and the gain on sale of investment in the joint venture of
approximately $2,680,000 in March 2000, as discussed below. Excluding the equity
in net income of the joint  venture  and the gain on sale of  investment  in the
joint venture  during 2000, the  Partnership  realized  income of  approximately
$263,000  and  $57,000  for  the  years  ended   December  31,  2001  and  2000,
respectively.  The  increase  in income  before  equity  in net  income of joint
venture  and  gain on sale  of  investment  in the  joint  venture  is due to an
increase in total  revenues  and a decrease in total  expenses.  The increase in
total revenues is due to an increase in rental income which was partially offset
by a decrease in other income. The increase in rental income is primarily due an
increase in the average annual rental rates charged by the investment  property.
Rental  income also  increased  due to a decrease  in bad debt due to  increased
collection  efforts by the  management at  Presidential  House  Apartments.  The
decrease in other income is due to a decrease in interest  income as a result of
lower  average cash  balances  maintained  in interest  bearing  accounts at the
Partnership.

The decrease in total  expenses is primarily  due to a decrease in  depreciation
and  general  and  administrative  expenses  partially  offset by an increase in
interest expense and operating expense.  The decrease in depreciation expense is
due to assets becoming fully depreciated during the current year at Presidential
House Apartments.  The increase in interest expense is due to the refinancing of
the mortgage  encumbering  Presidential House Apartments during 2000.  Operating
expense  increased due to an increase in property expense and insurance  expense
which was  partially  offset by a  decrease  in  maintenance  expense.  Property
expense  increased  due to an increase in employee  salaries and benefits and an
increase  in  contract  labor  used by the  investment  property  for  security.
Insurance  expense  increased  due to an increase in  insurance  premiums on the
policy covering the investment  property.  Maintenance  expense decreased due to
the  reduction in contract  labor used for interior  painting and a reduction in
the use of supplies and materials.

The decrease in general and administrative expense is due to a decrease in legal
and  professional  expenses  partially  offset  by  an  increase  in  management
reimbursements  to the General Partner allowed under the Partnership  Agreement.
Also included in general and  administrative  expenses at both December 31, 2001
and 2000, are costs associated with the quarterly and annual communications with
investors  and  regulatory  agencies  and  the  annual  audit  required  by  the
Partnership Agreement.

The Partnership owned a 50% joint venture interest in Table Mesa Shopping Center
("Table Mesa") located in Boulder,  Colorado.  The Partnership sold its interest
in Table  Mesa on March  17,  2000 to an  unrelated  party for net  proceeds  of
approximately $3,000,000, and the Partnership recognized a gain of approximately
$2,680,000 in 2000 as a result of the sale.

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

Capital Resources and Liquidity

At  December  31,  2001,  the  Partnership  had  cash and  cash  equivalents  of
approximately  $177,000 as compared to  approximately  $320,000 at December  31,
2000. For the year ended December 31, 2001, cash and cash equivalents  decreased
approximately  $143,000 from the Partnership's year ended December 31, 2000. The
decrease in cash and cash equivalents is due to  approximately  $432,000 of cash
used  in  financing  activities  and  approximately  $204,000  of  cash  used in
investing  activities which was partially  offset by  approximately  $493,000 of
cash  provided  by  operating  activities.  Cash  used in  financing  activities
consisted of distributions to the partners, and to a lesser extent,  payments on
the mortgage encumbering  Presidential House Apartments.  Cash used in investing
activities consisted of property improvements and replacements.  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 assets
and other operating  needs of the Registrant and to comply with Federal,  state,
and local  legal and  regulatory  requirements.  The  Partnership  is  currently
evaluating the capital  improvement needs of the property for the upcoming year.
The  minimum  amount to be  budgeted is expected to be $300 per unit or $60,900.
Additional  improvements  may be  considered  and will  depend  on the  physical
condition  of the  property as well as  anticipated  cash flow  generated by the
property.  The capital  expenditures  will be incurred only if cash is available
from operations or from Partnership  reserves.  To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.

On  June  30,  2000,  the  Partnership   refinanced  the  mortgage   encumbering
Presidential House Apartments.  Interest on the new mortgage is 7.96%.  Interest
on the  old  mortgage  was  8.00%.  The  refinancing  replaced  indebtedness  of
approximately  $3,057,000,  with a new  mortgage  in the  amount of  $4,200,000.
Payments of  approximately  $35,000 are due on the first day of each month until
the loan fully amortizes on July 1, 2020. The prior note matured in August 2000.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$168,000.

The  Registrant's  current assets are thought to be sufficient for any near-term
needs (exclusive of capital  improvements)  of the Partnership.  At December 31,
2001, the mortgage  indebtedness of  approximately  $4,072,000  requires monthly
principal  and  interest  payments  until July 1, 2020 at which it will be fully
amortized.  The General  Partner  will attempt to  refinance  such  indebtedness
and/or sell the property prior to such maturity date. If the property  cannot be
refinanced or sold for a sufficient amount, the Partnership will risk losing the
property through foreclosure.

The Partnership  distributed cash from operations of  approximately  $340,000 to
the limited partners ($9.12 per limited  partnership unit) during the year ended
December 31, 2001. The Partnership distributed  approximately  $4,614,000 to the
limited partners  ($123.79 per limited  partnership  unit) during the year ended
December 31, 2000. These  distributions  consisted of  approximately  $2,970,000
($79.68  per  limited  partnership  unit)  of  proceeds  from  the  sale  of the
Partnership's investment in the Table Mesa joint venture, approximately $981,000
($26.32  per  limited  partnership  unit) of proceeds  from the  refinancing  of
Presidential  House Apartments in June 2000 and  approximately  $663,000 ($17.79
per limited partnership unit) of cash from operations. Future cash distributions
will depend on the levels of net cash generated from operations, availability of
cash reserves and the timing of the debt maturity,  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 required capital  expenditures to permit
any distributions to its partners in the year 2002 or subsequent periods.

In addition to its  indirect  ownership of the general  partner  interest in the
Partnership,  AIMCO and its affiliates  owned 11,221 limited  partnership  units
(the "Units") in the Partnership representing 30.10% of the outstanding units at
December  31,  2001.  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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144
provides  accounting  guidance for  financial  accounting  and reporting for the
impairment or disposal of long-lived  assets.  SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years  beginning
after  December  15, 2001.  The General  Partner  does not  anticipate  that its
adoption  will have a material  effect on the  financial  position or results of
operations of the Partnership.


<PAGE>


Item 7.     Financial Statements

DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

LIST OF FINANCIAL STATEMENTS


Independent Auditors' Report

Balance Sheet - December 31, 2001

Statements of Operations - Years ended December 31, 2001 and 2000

Statements of Changes in Partners'  Capital (Deficit) - Years ended December 31,
2001 and 2000

Statements of Cash Flows - Years ended December 31, 2001 and 2000

Notes to Financial Statements



<PAGE>


                          Independent Auditors' Report



The Partners
Drexel Burnham Lambert Real Estate Associates II


We have audited the  accompanying  balance sheet of the Drexel  Burnham  Lambert
Real Estate  Associates II (the  "Partnership") as of December 31, 2001, and the
related  statements of operations,  changes in partners'  capital  (deficit) and
cash  flows for each of the  years in the  two-year  period  then  ended.  These
financial statements are the responsibility of the Partnership's management. Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of the Partnership as of December
31, 2001,  and the results of its  operations and its cash flows for each of the
years in the two-year period then ended in conformity with accounting principles
generally accepted in the United States of America.


                                                                     /s/KPMG LLP


Greenville, South Carolina
February 28, 2002


<PAGE>





                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                                  BALANCE SHEET
                          (in thousands, except unit data)

                                December 31, 2001



Assets
  Cash and cash equivalents                                              $  177
  Receivables and deposits                                                   10
  Other assets                                                              184
  Investment property (Notes D and G):
       Land                                               $ 1,287
       Buildings and related personal property              7,099
                                                            8,386
       Less accumulated depreciation                       (6,332)        2,054
                                                                        $ 2,425

Liabilities and Partners' Capital (Deficit)

Liabilities
  Accounts payable                                                       $   19
  Tenant security deposit liabilities                                        83
  Other liabilities                                                         160
  Mortgage note payable (Note D)                                          4,072

Partners' Capital (Deficit)
  General partner                                           $ 38
  Limited partners (37,273 units issued
       and outstanding)                                    (1,947)       (1,909)
                                                                        $ 2,425
                   See Accompanying Notes to Financial Statements


<PAGE>



                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                            STATEMENTS OF OPERATIONS
                          (in thousands, except unit data)

<TABLE>
<CAPTION>

                                                                     Years Ended
                                                                    December 31,
                                                                2001          2000

Revenues:
<S>                                                           <C>           <C>
  Rental income                                               $ 1,636       $ 1,489
  Other income                                                     88           125
     Total revenues                                             1,724         1,614

Expenses:
  Operating                                                       665           634
  General and administrative                                      131           169
  Depreciation                                                    200           322
  Interest                                                        336           304
  Property taxes                                                  129           128
     Total expenses                                             1,461         1,557

Income before equity in net income of joint venture
  and gain on sale of investment in joint venture                 263            57

Equity in net income of joint venture                              --            37

Income before gain on sale of investment in joint
  venture                                                         263            94
Gain on sale of investment in joint venture (Note C)               --         2,680

Net income                                                     $ 263        $ 2,774

Net income allocated to general partner (1%)                    $ 3           $ 28
Net income allocated to limited partners (99%)                    260         2,746
                                                               $ 263        $ 2,774

Net income per limited partnership unit                        $ 6.98       $ 73.67

Distributions per limited partnership unit                     $ 9.12       $123.79

                   See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

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


<TABLE>
<CAPTION>

                                        Limited
                                       Partnership    General      Limited
                                          Units       Partner     Partners      Total

<S>                                       <C>           <C>        <C>         <C>
Original capital contributions            37,273        $ 1        $18,637     $18,638

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

Distribution to limited partners              --           --       (4,614)     (4,614)

Net income for the year
  ended December 31, 2000                     --           28        2,746       2,774

Partners' capital (deficit) at
  December 31, 2000                       37,273           35       (1,867)     (1,832)

Distributions to limited partners             --           --         (340)       (340)

Net income for the year
  ended December 31, 2001                     --            3          260         263

Partners' capital (deficit) at
  December 31, 2001                       37,273        $ 38       $(1,947)    $(1,909)

                   See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                            STATEMENTS OF CASH FLOWS
                                   (in thousands)
<TABLE>
<CAPTION>

                                                             Years Ended December 31,
                                                                 2001         2000

Cash flows from operating activities:
<S>                                                              <C>         <C>
  Net income                                                     $ 263       $ 2,774
  Adjustments to reconcile net income to net cash provided
   by operating activities:
     Depreciation                                                   200          322
     Amortization of loan costs                                       8           14
     Equity in net income of joint venture                           --          (37)
     Gain on sale of investment in joint venture                     --       (2,680)
     Change in accounts:
      Receivables and deposits                                        2          113
      Other assets                                                   (7)          (7)
      Accounts payable                                              (31)         (27)
      Tenant security deposit payable                                 9           10
      Other liabilities                                              49           15
          Net cash provided by operating activities                 493          497

Cash flows from investing activities:
  Proceeds from sale of investment in joint venture                  --        3,000
  Property improvements and replacements                           (204)        (245)
  Distributions received from joint venture                          --          117
          Net cash (used in) provided by investing
             activities                                            (204)       2,872

Cash flows from financing activities:
  Payments of mortgage notes payable                                (92)        (101)
  Proceeds from mortgage note payable                                --        4,200
  Repayment of mortgage note payable                                 --       (3,057)
  Loan costs paid                                                    --         (168)
  Distributions to partners                                        (340)      (4,614)
          Net cash used in financing activities                    (432)      (3,740)

Net decrease in cash and cash equivalents                          (143)        (371)

Cash and cash equivalents at beginning of year                      320          691
Cash and cash equivalents at end of year                         $  177        $ 320

Supplemental disclosure of cash flow information:
  Cash paid for interest                                         $ 355        $ 283

                   See Accompanying Notes to Financial Statements
</TABLE>

<PAGE>


                  DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II

                          NOTES TO FINANCIAL STATEMENTS

                                December 31, 2001


Note A - Organization and Significant Accounting Policies

Organization:

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

As of December 31, 2001, the Partnership  owns and operates  Presidential  House
Apartments at Sky Lake  ("Presidential") a residential apartment complex located
in North Miami Beach,  Florida.  The Partnership sold its interest in Table Mesa
Shopping Center on March 17, 2000 (see "Note C" for further discussion).

Use of Estimates:

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

Fair Value of Financial Instruments:

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

Cash and Cash Equivalents:

Cash and cash  equivalents  include cash on hand and in banks. At certain times,
the amount of cash deposited at a bank may exceed the limit on insured deposits.
Cash  balances  included  approximately  $92,000 at  December  31, 2001 that are
maintained by the 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.  Deposits are refunded when the tenant  vacates,  provided the tenant has
not damaged the space and is current on rental payments.

Investment Property:

The Partnership's  investment  property consists of one apartment complex stated
at  cost.  Acquisition  fees  are  capitalized  as a cost  of  real  estate.  In
accordance  with SFAS No. 121,  "Accounting  for the  Impairment  of  Long-Lived
Assets and for  Long-Lived  Assets to Be Disposed Of", the  Partnership  records
impairment  losses on  long-lived  assets  used in  operations  when  events and
circumstances  indicate  that the assets might be impaired and the  undiscounted
cash flows  estimated to be generated by those assets are less than the carrying
amounts of those assets.  Costs of apartment  properties that have been impaired
have been written down to appraised  value.  No  adjustments  for  impairment of
value were  recorded in the years ended  December 31, 2001 or 2000.  See "Recent
Accounting Pronouncements" below.

Depreciation:

Depreciation is calculated by the straight-line  method over the estimated lives
of the investment  properties and related personal property.  For Federal income
tax purposes, the accelerated cost recovery method is used (1) for real property
over 19 years for additions  after May 8, 1985,  and before January 1, 1987, and
for additions after 1986, the modified  accelerated cost recovery method is used
for  depreciation  of (1)  real  property  over 27 1/2  years  and (2)  personal
property additions over 5 years.

Loan Costs:

Loan  costs  of  approximately  $168,000,   less  accumulated   amortization  of
approximately  $12,000,  are included in other assets and are amortized over the
life of the loan.

Leases:

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

Advertising Costs:

Advertising  costs of  approximately  $29,000  in 2001 and  $28,000 in 2000 were
charged to expense as incurred and are included in operating expenses.

Segment Reporting:

SFAS  No.  131,   "Disclosure  about  Segments  of  an  Enterprise  and  Related
Information"  established standards for the way that public business enterprises
report information about operating  segments in annual financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments in interim financial reports. It also 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. The
General Partner  believes that  segment-based  disclosures  will not result in a
more  meaningful   presentation  than  the  financial  statements  as  currently
presented.

Reclassifications

Certain  reclassifications have been made to the 2000 balances to conform to the
2001 presentation.

Recent Accounting Pronouncements

In August 2001, the Financial  Accounting  Standards  Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived  Assets".  SFAS No. 144
provides  accounting  guidance for  financial  accounting  and reporting for the
impairment or disposal of long-lived  assets.  SFAS No. 144 supersedes  SFAS No.
121,  "Accounting  for the  Impairment of Long-Lived  Assets and for  Long-Lived
Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years  beginning
after  December  15, 2001.  The General  Partner  does not  anticipate  that its
adoption  will have a material  effect on the  financial  position or results of
operations of the Partnership.

Note B - Transactions with Affiliated Parties

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

The following  payments were made to the General  Partner and affiliates  during
the years ended December 31, 2001 and 2000:

                                                             2001        2000
                                                              (in thousands)
Property management fees (included in operating
  expenses)                                                   $91         $77
Reimbursement for services of affiliates (included in
  general and administrative expenses and investment
  property)                                                   184          65
Loan costs (included in other assets)                          --          42

During the years ended  December  31, 2001 and 2000,  affiliates  of the General
Partner  were  entitled to receive 5% of gross  receipts  from the  Registrant's
residential property for providing property management services.  The Registrant
paid to such  affiliates  approximately  $91,000 and $77,000 for the years ended
December 31, 2001 and 2000, respectively.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses amounting to approximately $184,000 and $65,000 for the
years ended December 31, 2001 and 2000, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the General  Partner of  approximately  $121,000  and $8,000 for the years ended
December 31, 2001 and 2000,  respectively.  The construction  management service
fees are  calculated  based on a  percentage  of current and certain  prior year
additions to investment  property and are being depreciated over their estimated
useful lives.

The Partnership  paid an affiliate of the General Partner $42,000 for loan costs
associated  with the refinancing of Presidential  House  Apartments  during 2000
(see "Note D").

Beginning in 2001,  the  Partnership  began  insuring 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 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 year ended December 31, 2001,
the  Partnership  paid  AIMCO  and  its  affiliates  approximately  $24,000  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 11,221 limited  partnership  units
(the "Units") in the Partnership representing 30.10% of the outstanding units at
December  31,  2001.  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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.

Note C - Investment in Joint Venture and Sale of Investment in Joint Venture

Table Mesa Shopping Center Partnership was formed in 1985, as a joint venture to
own and operate a shopping center in Boulder,  Colorado. The Partnership owned a
50% interest in this joint venture.  The Partnership's  equity in the operations
of Table Mesa,  after an adjustment for allocation of depreciation  based on its
basis in the property,  amounted to income of approximately $37,000 for the year
ended December 31, 2000.

The Table Mesa joint venture agreement  provides,  among other things,  that the
Partnership  was  entitled to receive a cash flow  preference,  as  defined,  of
$252,000  per year,  which is  equivalent  to a 9%  return on the  Partnership's
initial  cash  investment.  This  annual  preference  was  not  cumulative.  The
Partnership  received  a  distribution  from the Table  Mesa  joint  venture  of
approximately $117,000 during the year ended December 31, 2000, respectively.

Summarized  results  of  operations  for  Table  Mesa for the  period  up to the
disposition  of  the  Partnership's  investment  in  2000  are  as  follows  (in
thousands):

                                     2000

      Total revenues                 $ 451
      Total expenses                    346
         Net income                  $ 105

On March 17, 2000, the  Partnership  sold its investment in the Table Mesa joint
venture. The Partnership realized a gain of approximately $2,680,000 on the sale
during the first quarter of 2000.


<PAGE>



Note D - Mortgage Note Payable

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

<TABLE>
<CAPTION>

                                Principal Monthly
                               Balance At Payment
                          December 31,       Including      Interest       Maturity
Property                      2001           Interest         Rate           Date
                                 (in thousands)
<S>                         <C>                <C>            <C>          <C>   <C>
Presidential House          $ 4,072            $ 35           7.96%        07/01/20
</TABLE>

On  June  30,  2000,  the  Partnership   refinanced  the  mortgage   encumbering
Presidential House Apartments.  Interest on the new mortgage is 7.96%.  Interest
on the  old  mortgage  was  8.00%.  The  refinancing  replaced  indebtedness  of
approximately  $3,057,000  with a new  mortgage  in the  amount  of  $4,200,000.
Payments of  approximately  $35,000 are due on the first day of each month until
the loan fully amortizes on July 1, 2020. The prior note matured in August 2000.
Capitalized  loan costs incurred for the refinancing in 2000 were  approximately
$168,000.

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

Scheduled principal payments of the mortgage note payable subsequent to December
31, 2001, are as follows (in thousands):

                                   2002         $   100
                                   2003             108
                                   2004             117
                                   2005             127
                                   2006             137
                                Thereafter        3,483
                                                $ 4,072

Note E - Partners' Capital

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

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

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

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

In accordance with the Agreement of Limited  Partnership,  limited  partners are
entitled  to  receive an 8%  cumulative  preferred  return on their  unrecovered
invested  capital.  No  distributions  have been made or accrued to the  General
Partner, since the limited partners must receive their original invested capital
plus any preferred return arrearage before payment to the General Partner. As of
December 31, 2001, the unpaid preferred return arrearage  totaled  approximately
$9,741,000.

Note F - 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.

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

                                                    Years Ended December 31,
                                                        2001         2000

      Net income as reported                           $ 263       $ 2,774
      Depreciation and amortization differences           (20)          25
      Amount of tax loss under book loss of
        equity investees                                   --         (290)
      Allowance for bad debt                               --          (18)
      Prepaid rent                                        (22)          23
      Federal taxable net income                       $ 221       $ 2,514

      Federal taxable income per limited
        partnership unit                               $ 5.88      $ 66.78

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

                                                         2001
      Net liabilities as reported                      $ (1,909)
        Fixed assets                                       (204)
        Accumulated depreciation                            194
         Syndication costs                                2,051
         Other assets & liabilities                           7

      Net assets - tax basis                           $    139



<PAGE>


Note G - Real Estate and Accumulated Depreciation

<TABLE>
<CAPTION>

                                                 Initial Cost
                                                To Partnership
                                                (in thousands)

                                                         Buildings          Cost
                                                        and Related     Capitalized
                                                         Personal      Subsequent to
Description               Encumbrance        Land       Properties      Acquisition
                        (in thousands)                                 (in thousands)

<S>                         <C>            <C>            <C>              <C>
Presidential House          $ 4,072        $ 1,510        $ 6,037          $ 839
</TABLE>


<TABLE>
<CAPTION>

                 Gross Amount At Which
                        Carried
                  At December 31, 2001
                     (in thousands)

                       Buildings
                      And Related
                       Personal             Accumulated     Year of     Date   Depreciable
Description    Land    Property    Total    Depreciation  ConstructionAcquired Life-Years
                                           (in thousands)
Presidential
<S>           <C>       <C>       <C>         <C>          <C>  <C>    <C>     <C>
  House       $ 1,287   $ 7,099   $ 8,386     $ 6,332      1967-1974   10/84   5-31.5 yrs
</TABLE>


Reconciliation of Real Estate and Accumulated Depreciation:


                                              December 31,
                                           2001           2000
                                             (in thousands)
Investment Properties
Balance at beginning of year             $ 8,182        $ 7,970
  Property improvements                      204            212
Balance at end of year                     8,386          8,182

Accumulated Depreciation
Balance at beginning of year             $ 6,132        $ 5,810
  Additions charged to expense               200            322
Balance at end of year                   $ 6,332        $ 6,132

The  aggregate  cost of the real  estate  for  Federal  income tax  purposes  at
December  31,  2001  and  2000,  is  approximately  $8,182,000  and  $7,978,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December  31, 2001 and 2000,  is  approximately  $6,138,000  and  $5,917,000,
respectively.

Note H - Distributions

The Partnership  distributed cash from operations of  approximately  $340,000 to
the limited partners ($9.12 per limited  partnership unit) during the year ended
December 31, 2001. The Partnership distributed  approximately  $4,614,000 to the
limited partners  ($123.79 per limited  partnership  unit) during the year ended
December 31, 2000. These  distributions  consisted of  approximately  $2,970,000
($79.68  per  limited  partnership  unit)  of  proceeds  from  the  sale  of the
Partnership's investment in the Table Mesa joint venture, approximately $981,000
($26.32  per  limited  partnership  unit) of proceeds  from the  refinancing  of
Presidential  House in June 2000 and approximately  $663,000 ($17.79 per limited
partnership unit) of cash from operations.

Note I - Legal Proceedings

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



<PAGE>




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

            None.


<PAGE>





                                    PART III

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

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

The names of the  directors  and  executive  officers of DBL as of December  31,
2001,  their ages and  nature of all  positions  presently  held by them are set
forth below. There are no family relationships between or among any officers and
directors:

Name                   Age     Position

Patrick J. Foye        44      Executive Vice President and Director

Martha L. Long         42      Senior Vice President and Controller

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

Martha L. Long has been  Senior Vice  President  and  Controller  of the General
Partner since October 1998 as a result of the acquisition of Insignia  Financial
Group, Inc. As of February 2001, Ms. Long was also appointed head of the service
business for AIMCO.  From June 1994 until January 1997,  she was the  Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997,  retaining  that title until  October  1998.  From 1988 to June
1994,  Ms. Long was Senior Vice  President and  Controller for The First Savings
Bank, FSB in Greenville, South Carolina.

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
directors and/or 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  executive  officers  and  director  of  the  General  Partner  fulfill  the
obligations  of the Audit  Committee  and  oversee the  Partnership's  financial
reporting  process on behalf of the General Partner.  Management has the primary
responsibility for the financial  statements and the reporting process including
the systems of internal controls. In fulfilling its oversight  responsibilities,
the executive  officers and director of the General Partner reviewed the audited
financial  statements with management including a discussion of the quality, not
just the  acceptability,  of the accounting  principles,  the  reasonableness of
significant  judgments,   and  the  clarity  of  disclosures  in  the  financial
statements.


<PAGE>



The  executive  officers and director of the General  Partner  reviewed with the
independent  auditors,  who are  responsible  for  expressing  an opinion on the
conformity  of  those  audited  financial  statements  with  generally  accepted
accounting  principles,  their  judgments  as  to  the  quality,  not  just  the
acceptability, of the Partnership's accounting principles and such other matters
as are required to be discussed with the Audit Committee or its equivalent under
generally  accepted  auditing  standards.   In  addition,  the  Partnership  has
discussed  with  the  independent  auditors  the  auditors'   independence  from
management and the Partnership  including the matters in the written disclosures
required by the Independence Standards Board and considered the compatibility of
non-audit services with the auditors' independence.

The executive  officers and director of the General  Partner  discussed with the
Partnership's  independent auditors the overall scope and plans for their audit.
In  reliance on the reviews and  discussions  referred to above,  the  executive
officers and director of the General  Partner have approved the inclusion of the
audited financial  statements in the Form 10-KSB for the year ended December 31,
2001 for filing with the Securities and Exchange Commission.

The General  Partner has reappointed  KPMG LLP as independent  auditors to audit
the financial  statements of the  Partnership  for the current fiscal year. Fees
for the last  fiscal  year were audit  services  of  approximately  $29,000  and
non-audit services (tax-related) of approximately $14,000.

Item 10.    Executive Compensation

Neither the  director nor officers  received any  remuneration  from the General
Partner during the year ended December 31, 2001.

Item 11.    Security Ownership of Certain Beneficial Owners and Management

Except as noted below, no person or entity was known by the Registrant to be the
beneficial  owner  of  more  than 5% of the  Limited  Partnership  Units  of the
Registrant as of December 31, 2001.

                                            Number
       Entity                              of Units            Percentage

       Insignia Properties LP                   10                0.02%
         (an affiliate of AIMCO)
       AIMCO Properties LP                  11,211               30.08%
         (an affiliate of AIMCO)

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

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

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


<PAGE>



Item 12.    Certain Relationships and Related Transactions

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

The following  payments were made to the General  Partner and affiliates  during
the years ended December 31, 2001 and 2000:

                                                             2001        2000
                                                              (in thousands)

Property management fees                                      $91         $77
Reimbursement for services of affiliates                      184          65
Loan costs                                                     --          42

During the years ended  December  31, 2001 and 2000,  affiliates  of the General
Partner  were  entitled to receive 5% of gross  receipts  from the  Registrant's
residential property for providing property management services.  The Registrant
paid to such  affiliates  approximately  $91,000 and $77,000 for the years ended
December 31, 2001 and 2000, respectively.

An  affiliate  of the General  Partner  received  reimbursement  of  accountable
administrative  expenses amounting to approximately $184,000 and $65,000 for the
years ended December 31, 2001 and 2000, respectively.  Included in these amounts
are fees related to construction management services provided by an affiliate of
the General  Partner of  approximately  $121,000  and $8,000 for the years ended
December 31, 2001 and 2000,  respectively.  The construction  management service
fees are  calculated  based on a  percentage  of current and certain  prior year
additions to investment  property and are being depreciated over their estimated
useful lives.

The Partnership  paid an affiliate of the General Partner $42,000 for loan costs
associated  with the refinancing of Presidential  House  Apartments  during 2000
(see "Item 7. Financial Statements - Note D").

Beginning in 2001,  the  Partnership  began  insuring 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 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 year ended December 31, 2001,
the  Partnership  paid  AIMCO  and  its  affiliates  approximately  $24,000  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 11,221 limited  partnership  units
(the "Units") in the Partnership representing 30.10% of the outstanding units at
December  31,  2001.  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 make one or more additional offers to acquire additional limited
partnership  interests in the  Partnership  for cash or in exchange for units in
the operating partnership of AIMCO. Under the Partnership Agreement, unitholders
holding a majority of the Units are  entitled  to take action with  respect to a
variety of matters,  which would  include  voting on certain  amendments  to the
Partnership  Agreement and voting to remove the General Partner.  When voting on
matters,  AIMCO would in all  likelihood  vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.


<PAGE>



Item 13.    Exhibits and Reports on Form 8-K

      (a)   Reports on Form 8-K filed during the fourth quarter of calendar year
            2001:

            None.


<PAGE>


                                   SIGNATURES



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


                                DREXEL BURNHAM LAMBERT REAL ESTATE ASSOCIATES II


                                    By:   DBL Properties Corporation
                                          Its General Partner


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


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


                                    Date:


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


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


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



<PAGE>


                                  EXHIBIT INDEX


Exhibit No.

     2.1      Agreement and Plan of Merger,  dated as of October 1, 1999, by and
              between AIMCO and IPT in  Registrant's  Current Report on Form 8-K
              dated October 1, 1998.

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

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

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

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

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

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

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

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

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

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



<PAGE>


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

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

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

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

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

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

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

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

    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 period ended
              June 30, 2000.

    10.11     Purchase and Sale Contract  between  Registrant and Drexel Burnham
              Lambert  Estate  Associates  II, a New York  limited  partnership,
              dated March 17, 2000.

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

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


<PAGE>


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

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

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

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

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

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

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

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

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