SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q
(Mark One)

  X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 1996
                               ------------------
                                      OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
-----
     EXCHANGE ACT OF 1934.

For the transition period from              to             
                               ------------    ------------
Commission file number 0-10225
                       -------

                          BALCOR PENSION INVESTORS-II         
          -------------------------------------------------------
           (Exact name of registrant as specified in its charter)

          Illinois                                     36-3114027
-------------------------------                     ------------------- 
(State or other jurisdiction of                      (I.R.S. Employer  
incorporation or organization)                      Identification No.)

2355 Waukegan Road
Bannockburn, Illinois                                      60015    
----------------------------------------            ------------------- 
(Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code (847) 267-1600
                                                   --------------

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes   X    No     
    -----     -----
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)

                                BALANCE SHEETS
                   September 30, 1996 and December 31, 1995
                                  (UNAUDITED)

                                    ASSETS

                                               1996             1995
                                          --------------   --------------
Cash and cash equivalents                 $  10,249,911    $   2,901,014
Cash and cash equivalents - Early
  Investment Incentive Fund                   1,188,018          308,993
Escrow deposits                                 208,542          113,962
Accounts and accrued interest receivable        673,796          250,265
Prepaid expenses                                113,742           77,752
Deferred expenses, net of accumulated 
  amortization of $225,806 in 1996  
  and $195,352 in 1995                          121,376          151,830
                                          --------------   --------------
                                             12,555,385        3,803,816
                                          --------------   --------------
Investment in loan receivable:
  Wrap-around loan receivable                                 11,324,000
Less:
  Loan Payable - underlying mortgage                           3,254,087
  Allowance for potential loan losses                          3,302,517
                                                           --------------
Net investment in loan receivable                              4,767,396

Real estate held for sale (net of
  allowance of $767,000 in 1996 
  and $500,000 in 1995)                      22,406,022       27,518,370
                                          --------------   --------------
                                             22,406,022       32,285,766
                                          --------------   --------------
                                          $  34,961,407    $  36,089,582
                                          ==============   ==============

                       LIABILITIES AND PARTNERS' CAPITAL

Accounts payable                          $     178,671    $     197,880
Due to affiliates                                49,466           19,370
Other liabilities                               281,632          154,471
Mortgage notes payable                       12,009,488       12,138,360
                                          --------------   --------------
     Total liabilities                       12,519,257       12,510,081
                                          --------------   --------------
Limited Partners' capital (85,010 
  Interests issued)                          28,599,146       29,692,815
Less Interests held by Early Investment
  Incentive Fund (8,079 in 1996  
  and 7,310 in 1995)                         (5,002,199)      (4,725,704)
                                          --------------   --------------
                                             23,596,947       24,967,111
General Partner's deficit                    (1,154,797)      (1,387,610)
<PAGE>
                                          --------------   --------------
     Total partners' capital                 22,442,150       23,579,501
                                          --------------   --------------
                                          $  34,961,407    $  36,089,582
                                          ==============   ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)
                                               
                       STATEMENTS OF INCOME AND EXPENSES
             for the nine months ended September 30, 1996 and 1995
                                  (UNAUDITED)

                                               1996             1995
                                          --------------   --------------
Income:
  Interest on loans receivable            $     994,707    $   1,402,772
  Less interest on loans payable - 
    underlying mortgages                        177,681          247,221
                                          --------------   --------------
  Net interest income on loans                  817,026        1,155,551
  Income from operations of real estate 
    held for sale                             1,389,302        1,804,085
  Interest on short-term investments            163,266          312,726
  Participation income                          410,493          240,377
  Recovery of loss on loan                    3,302,517
                                          --------------   --------------
    Total income                              6,082,604        3,512,739
                                          --------------   --------------
Expenses:                                    
  Provision for potential loss on
    real estate                                 267,000
  Administrative                                515,272          275,087
                                          --------------   --------------
    Total expenses                              782,272          275,087
                                          --------------   --------------
Income before gain on sale of loan 
  receivable and gain on sale of real 
  estate                                      5,300,332        3,237,652
Gain on sale of loan receivable                 306,759
Gain on sale of real estate                   3,731,149
                                          --------------   --------------
Net income                                $   9,338,240    $   3,237,652
                                          ==============   ==============
Net income allocated to 
  General Partner                         $     700,368    $     242,824
                                          ==============   ==============
Net income allocated to 
  Limited Partners                        $   8,637,872    $   2,994,828
                                          ==============   ==============
Net income per average number of Limited
  Partnership Interests outstanding  
  (77,524 in 1996 and 78,939 in 1995)     $      111.42    $       37.94
                                          ==============   ==============
Distributions to General Partner          $     467,555    $     403,798
                                          ==============   ==============
Distributions to Limited Partners         $   9,731,541    $   7,734,441
                                          ==============   ==============
Distributions per Limited Partnership 
  Interest outstanding                    $      126.00    $       98.18
                                          ==============   ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)
                                               
                       STATEMENTS OF INCOME AND EXPENSES
              for the quarters ended September 30, 1996 and 1995
                                  (UNAUDITED)

                                                1996             1995
                                          --------------   --------------
Income:
  Interest on loans receivable            $     258,647    $     368,030
  Less interest on loans payable - 
    underlying mortgages                         42,622           75,252
                                          --------------   --------------
  Net interest income on loans                  216,025          292,778
  Income from operations of real estate 
    held for sale                               190,621          574,585
  Interest on short-term investments             96,178           60,035
  Participation income                          160,092
  Recovery of loss on loan                    3,302,517
                                          --------------   --------------
    Total income                              3,965,433          927,398
                                          --------------   --------------
Expenses:                                    
  Provision for potential loss on
    real estate                                 267,000
  Administrative                                182,517           87,803
                                          --------------   --------------
    Total expenses                              449,517           87,803
                                          --------------   --------------
Income before gain on sale of loan
  receivable                                  3,515,916          839,595
Gain on sale of loan receivable                 306,759
                                          --------------   --------------
Net income                                $   3,822,675    $     839,595
                                          ==============   ==============
Net income allocated to 
  General Partner                         $     286,701    $      62,970
                                          ==============   ==============
Net income allocated to 
  Limited Partners                        $   3,535,974    $     776,625
                                          ==============   ==============
Net income per average number of Limited
  Partnership Interests outstanding  
  (77,182 in 1996 and 78,563 in 1995)     $       45.81    $        9.91
                                          ==============   ==============
Distribution to General Partner           $     382,545    $     332,956
                                          ==============   ==============
Distribution to Limited Partners          $   8,799,137    $   4,963,984
                                          ==============   ==============
Distribution per Limited Partnership 
  Interest outstanding                    $      114.00    $       63.18
                                          ==============   ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)
                                        
                           STATEMENTS OF CASH FLOWS
             for the nine months ended September 30, 1996 and 1995
                                  (UNAUDITED)

                                                1996             1995
                                          --------------   --------------
Operating activities:                      
  Net income                              $   9,338,240    $   3,237,652
  Adjustments to reconcile net income to
    net cash provided by operating 
    activites:
      Gain on sale of loan receivable          (306,759)
      Gain on sale of real estate            (3,731,149)
      Recovery of loss on loan               (3,302,517)
      Provision for potential loss on      
        real estate                             267,000
      Amortization of deferred expenses          30,454           38,535
      Net change in:                       
       Escrow deposits                          (94,580)         (82,250)
       Escrow deposits - restricted                               81,159
       Accounts and accrued interest         
         receivable                            (423,531)         (24,486)
       Prepaid expenses                         (35,990)        (139,677)
       Accounts payable                         (19,209)          10,677
       Due to affiliates                         30,096          (60,938)
       Accrued liabilities                                       255,711
       Other liabilities                        127,161          (23,155)
                                          --------------   --------------
  Net cash provided by operating             
    activities                                1,879,216        3,293,228
                                          --------------   --------------
Investing activities:                      
  Collection of principal on
    loans receivable                                           2,400,000
  Proceeds from sale of loan receivable       9,153,755
  Costs incurred in connection with sale
    of loan receivable                         (339,500)
  Improvements to real estate                  (327,184)         (94,710)
  Proceeds from sale of real estate           9,200,000
  Costs incurred in connection with
    sale of real estate                        (296,319)
                                          --------------   --------------
  Net cash provided by investing
    activities                               17,390,752        2,305,290
                                          --------------   --------------
Financing activities:                      
  Distributions to Limited Partners          (9,731,541)      (7,734,441)
  Distributions to General Partner             (467,555)        (403,798)
  Increase in cash and cash equivalents -  
    Early Investment Incentive Fund            (879,025)        (347,637)
  Repurchase of Limited Partnership        
    Interests                                  (276,495)        (408,010)
  Principal payments on underlying         
    loans payable                              (437,583)        (364,738)
<PAGE>
  Repayment of underlying loan payable                          (943,416)
  Principal payments on mortgage           
    notes payable                              (128,872)        (117,344)
                                          --------------   --------------
  Net cash used in financing activities     (11,921,071)     (10,319,384)
                                          --------------   --------------
Net change in cash and cash equivalents       7,348,897       (4,720,866)
Cash and cash equivalents 
  at beginning of year                        2,901,014        7,699,482
                                          --------------   --------------
Cash and cash equivalents at end of
  period                                  $  10,249,911    $   2,978,616
                                          ==============   ==============

The accompanying notes are an integral part of the financial statements.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)

                         NOTES TO FINANCIAL STATEMENTS

1. Accounting Policy:

In the opinion of management, all adjustments necessary for a fair presentation
have been made to the accompanying statements for the nine months and quarter
ended September 30, 1996, and all such adjustments are of a normal and
recurring nature.

2. Interest Expense:

During the nine months ended September 30, 1996 and 1995, the Partnership
incurred interest expense on mortgage notes payable on properties owned by the
Partnership of $846,311 and $857,839 and paid interest expense of $846,311 and
$851,565, respectively.

3. Transactions with Affiliates:

Fees and expenses, paid and payable by the Partnership to affiliates during the
nine months and quarter ended September 30, 1996 were:

                                           Paid
                                   -----------------------
                                    Nine Months    Quarter    Payable
                                    ------------  ---------  ----------     
   Mortgage servicing fees             $  8,011   $  2,492       None
   Reimbursement of expenses to
     the General Partner, at cost        77,514     17,286    $49,466

4. Sale of Loan Receivable:

In August 1996, the Partnership sold its interest in the $11,324,000 Alzina
Office Building loan for $9,153,755. The purchaser acquired the Alzina Office
Building loan receivable subject to the existing underlying mortgage loan in
the amount of $2,816,504. From the proceeds of the sale, the Partnership paid
$339,500 in selling costs. For financial statement purposes, the Partnership
recognized a gain of $306,759 from the sale of its interest in this loan.
<PAGE>
5. Sale of Real Estate:

In June 1996, the Partnership sold the Cumberland Pines Apartments in an all
cash sale for $9,200,000. From the proceeds of the sale, the Partnership paid
$296,319 in selling costs. The basis of the property was $5,172,532. For
financial statement purposes, the Partnership recognized a gain of $3,731,149
from the sale of this property.

6. Contingency:

A proposed settlement has been reached with respect to the class action
complaint, Paul Williams and Beverly Kennedy, et al, v. Balcor Pension
Investors, et al. between counsel for the Class and counsel for the defendants.
Notice of the proposed settlement terms was sent to Class members in September
1996. A final hearing on the proposed settlement is expected to be held in
November 1996. The General Partner does not believe that the proposed
settlement will have a material adverse impact on the Partnership.

7. Subsequent Events:

(a) In October 1996, the Partnership paid $7,395,876 to the holders of Limited
Partnership Interests, representing the quarterly distribution of Cash Flow of
$6.00 per Interest for the third quarter of 1996 and special distributions of
$81.00 per Interest consisting of $29.00 per Interest from Cash Flow and $52.00
per Interest from Mortgage Reductions received in connection with the sale of
the Partnership's interest in the Alzina Office Building loan. 

(b) In October 1996, the Partnership sold the Sherwood Acres - Phases I and II
apartment complexes in an all cash sale for $18,725,000. From the proceeds of
the sale, the Partnership paid $11,348,198 to the third party mortgage holder
in full satisfaction of the first mortgage loans, $426,541 in selling costs and
$453,928 in prepayment penalties. For financial statement purposes, the
Partnership will recognize a gain of approximately $3,794,000 during the fourth
quarter of 1996.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)

                     MANAGEMENT'S DISCUSSION AND ANALYSIS

Balcor Pension Investors-II (the "Partnership") is a limited partnership formed
in 1981 to invest in wrap-around mortgage loans and, to a lesser extent, other
junior mortgage loans and first mortgage loans. The Partnership raised
$85,010,000 through the sale of Limited Partnership Interests and used these
proceeds to originally fund thirty-three loans. Proceeds from prior loan
repayments were used to fund three additional mortgage loans. The Partnership
sold the Cumberland Pines and Sherwood Acres - Phases I and II apartment
complexes in June and October 1996, respectively, and its interest in the
Alzina Office Building loan in August 1996. Currently, the Partnership is
operating two properties acquired through foreclosure.

Inasmuch as the management's discussion and analysis below relates primarily to
the time period since the end of the last fiscal year, investors are encouraged
to review the financial statements and the management's discussion and analysis
contained in the annual report for 1995 for a more complete understanding of
the Partnership's financial position.

Operations
----------

Summary of Operations
---------------------

The Partnership recognized a recovery of loss related to the Alzina Office
Building loan to provide for changes in the estimate of its fair value during
the third quarter of 1996, which was the primary reason for the increase in net
income during the nine months and quarter ended September 30, 1996 as compared
to the same periods in 1995. In addition, the Partnership recognized a gain on
the June 1996 sale of Cumberland Pines Apartments which further contributed to
the increase in net income during the nine months ended September 30, 1996.
Further discussion of the Partnership's operations is summarized below.

1996 Compared to 1995
---------------------

Unless otherwise noted, discussions of fluctuations between 1996 and 1995 refer
to both the nine months and quarters ended September 30, 1996 and 1995.

The repayment of the Stonegate Austin Mobile Home Park wrap-around loan in
March 1995 and the sale of the Partnership's interest in the Alzina Office
Building wrap-around loan in August 1996 resulted in a decrease in net interest
income on loans receivable during 1996 as compared to 1995. 
<PAGE>
Provisions are charged to income when the General Partner believes an
impairment has occurred to the value of its properties or in a borrower's
ability to repay a loan or in the value of the collateral property.
Determinations of fair value are made periodically on the basis of performance
under the terms of the loan agreement and assessments of property operations.
Determinations of fair value represent estimations based on many variables
which affect the value of real estate, including economic and demographic
conditions. During the nine months ended September 30, 1996, the Partnership
recognized a recovery of $3,302,517 related to the Alzina Office Building loan
and recognized a provision of $267,000 related to the Hollowbrook Apartments to
provide for changes in the estimate of their fair value. The Partnership did
not recognize any provisions for potential losses related to its loans or real
estate held for sale during the nine months ended September 30, 1995.

Operations of real estate held for sale represent the net operations of those
properties acquired by the Partnership through foreclosure. At September 30,
1996, the Partnership was operating four properties. Original funds advanced by
the Partnership total approximately $11,693,000 for these four properties,
representing approximately 12% of original funds advanced. The Partnership sold
the Cumberland Pines Apartments, which had been generating income, in June
1996.  In addition, repair and maintenance expense increased at the Sherwood
Acres - Phases I and II apartment complexes due to the replacement of floor
coverings and the completion of structural, asphalt and pool repairs in an
effort to prepare the property for sale.  These were the primary reasons for
the decrease in income from operations of real estate held for sale during 1996
as compared to 1995.

Primarily due to lower average cash balances and lower average interest rates
on short-term interest bearing instruments, interest income on short-term
investments decreased during the nine months ended September 30, 1996 as
compared to the same period in 1995. Proceeds received from the August 1996
sale of the Partnership's interest in the Alzina Office Building loan were
invested in short-term investments prior to their distribution in October 1996
and resulted in increased interest income during the quarter ended September
30, 1996 as compared to the same period in 1995.

The Alzina Office Building loan bore interest at a contractually-fixed interest
rate. The loan also provided for participation by the Partnership in increases
in value of the collateral property when the loan was repaid or refinanced. In
addition, the loan agreement allowed the Partnership to receive a percentage of
rental income exceeding a base amount. This participation income was reflected
in the accompanying Statements of Income and Expenses when received. The
Partnership received participation income on the Alzina Office Building loan
during the nine months ended September 30, 1996 and 1995.

The Partnership incurred higher legal, consulting, printing and postage costs
in connection with its response to a tender offer and certain related
litigation during 1996. As a result, administrative expenses increased during
1996 as compared to 1995. 

During the third quarter of 1996, the Partnership recognized a gain of $306,759
in connection with the sale of its interest in the Alzina Office Building loan.

During the second quarter of 1996, the Partnership recognized a gain of
$3,731,149 in connection with the sale of Cumberland Pines Apartments.
<PAGE>
Liquidity and Capital Resources
-------------------------------

The cash position of the Partnership increased by approximately $7,349,000 as
of September 30, 1996 when compared to December 31, 1995 primarily due to the
sale of the Partnership's interest in the Alzina Office Building loan. The
Partnership generated cash flow totaling approximately $1,879,000 from its
operating activities primarily as a result of the net interest income earned on
its investment in loan receivable, the operations of its properties, and the
interest received on its short-term investments, net of the payment of
administrative expenses. The Partnership also generated cash flow from its
investing activities of approximately $17,391,000 primarily due to the receipt
of proceeds totaling approximately $8,904,000 from the sale of the Cumberland
Pines Apartments and $8,814,000 from the sale of the Partnership's interest in
the Alzina Office Building loan. The Partnership's financing activities
consisted of the payment of distributions totaling approximately $10,199,000 to
the Partners, repurchases of Limited Partnership Interests totaling
approximately $276,000 and principal payments on the underlying loan and
mortgage notes payable totaling approximately $566,000. The Partnership also
made a special distribution to Limited Partners from Cash Flow and Mortgage
Reductions in October 1996 as described below.

The Partnership defines cash flow generated from its properties as an amount
equal to the properties' revenue receipts less property related expenditures,
which include debt service payments. During the nine months ended September 30,
1996 and 1995, all four of the Partnership's remaining properties generated
positive cash flow. The Cumberland Pines Apartments, which was sold in June
1996, generated positive cash flow during the nine months ended September 30,
1995 and prior to its sale in 1996.

As of September 30, 1996, the occupancy rates of the Partnership's remaining
residential properties ranged from 94% to 97%, while the occupancy rate of the
Parkway Distribution Center was 99%. Many rental markets continue to remain
extremely competitive; therefore, the General Partner's goals are to maintain
high occupancy levels, while increasing rents where possible, and to monitor
and control operating expenses and capital improvement requirements at the
properties.    

As previously reported, the Partnership is in its liquidation stage. The
General Partner believes that the market for multifamily housing properties is
favorable to sellers of these properties and the General Partner's strategy is
to sell or otherwise dispose of all assets by the end of 1996. During 1996, the
Partnership sold the Cumberland Pines and Sherwood Acres - Phases I and II
apartment complexes. Currently, the Partnership has entered into contracts to
sell the Hollowbrook Apartments and the Parkway Distribution Center for sale
prices of $3,000,000 and $6,050,000, respectively. In addition, the Partnership
sold its interest in the wrap-around loan collateralized by the Alzina Office
Building in August 1996. Proceeds will be distributed to Limited Partners upon
the sale or disposition of the remaining assets. 

Changing interest rates can impact real estate values in several ways.
Generally, declining interest rates may lower the cost of capital allowing
buyers to pay more for a property whereas rising interest rates may increase
the cost of capital and lower the price of real estate.
<PAGE>
As mentioned above, during June 1996, the Partnership sold the Cumberland Pines
Apartments in an all cash sale for $9,200,000. From the proceeds of the sale,
the Partnership paid $296,319 in selling costs. The remainder of the proceeds
were distributed to the Partners in July 1996. See Note 5 of Notes to Financial
Statements for additional information.

During October 1996, the Partnership sold the Sherwood Acres - Phases I and II
apartment complexes in an all cash sale for $18,725,000. From the proceeds of
the sale, the Partnership paid $11,348,198 to the third party mortgage holder
in full satisfaction of the first mortgage loans, paid $426,541 in selling
costs, and paid $453,928 of prepayment penalties. Pursuant to the terms of the
sale, $250,000 of the proceeds will be retained by the Partnership until
February 1997. See Note 7(b) of Notes to Financial Statements for additional
information.

During August 1996, the Partnership sold its interest in the Alzina Office
Building loan for $9,153,755. The purchaser acquired the Alzina Office Building
loan receivable subject to the existing underlying mortgage loan in the amount
of $2,816,504. From the proceeds of the sale, the Partnership paid $339,500 in
selling costs. A majority of the remaining proceeds were distributed to the
Partners in October 1996. See Note 4 of the Notes to the Financial Statements
for additional information.

In October 1996, the Partnership paid $7,395,876 to the holders of Limited
Partnership Interests representing the quarterly distribution of Cash Flow of
$6.00 per Interest for the third quarter of 1996 and special distributions of
$81.00 per Interest consisting of $29.00 per Interest from Cash Flow and $52.00
per Interest from Mortgage Reductions received in connection with the sale of
the Partnership's interest in the Alzina Office Building loan. The level of the
regular quarterly distribution remained unchanged from the amount distributed
to Limited Partners during the second quarter of 1996. Including the October
1996 distribution, Limited Partners have received distributions totaling
$1,569.68 per $1,000 Interest. Of this amount $1,046.50 represents Cash Flow
from operations and $523.18 represents a return of Original Capital. In October
1996, the Partnership also paid $247,946 to the General Partner as its
distributive share of Cash Flow distributed for the third quarter of 1996 and
made a contribution to the Early Investment Incentive Fund in the amount of
$82,649.

The Partnership expects to continue making cash distributions; however, the
level of such future distributions will be dependent upon the Cash Flow
generated by the receipt of property cash flow, less the payment of
administrative expenses. The General Partner believes it has retained, on
behalf of the Partnership, an appropriate amount of working capital to meet
cash or liquidity requirements which may occur.

During the nine months ended September 30, 1996, the General Partner on behalf
of the Partnership used amounts placed in the Early Investment Incentive Fund
to repurchase 769 Interests from Limited Partners at a total cost of $276,495.

Inflation has several types of potentially conflicting impacts on real estate
investments. Short-term inflation can increase real estate operating costs
which may or may not be recovered through increased rents and/or sales prices,
depending on general or local economic conditions. In the long-term, inflation
can be expected to increase operating costs and replacement costs and may lead
to increased rental revenues and real estate values.
<PAGE>
                          BALCOR PENSION INVESTORS-II
                       (An Illinois Limited Partnership)

                          PART II - OTHER INFORMATION


Item 1.  Legal Proceedings
--------------------------

Proposed Class and Derivative Action Lawsuits
---------------------------------------------

On June 14, 1996, a proposed class and derivative action complaint was filed,
Dee vs. Walton Street Capital Acquisition II, LLC (Circuit Court of Cook
County, Illinois, County Department, Chancery Division ("Chancery Court"), Case
No. 96 CH 06283) (the "Dee Case"), naming the General Partner and the general
partners (the "Balcor Defendants") of nine other limited partnerships sponsored
by The Balcor Company (together with the Partnership, the "Affiliated
Partnerships"), as well as the Affiliated Partnerships, as defendants.
Additional defendants were Insignia Management Group ("Insignia") and Walton
Street Capital Acquisition II, LLC ("Walton") and certain of their affiliates
and principals (collectively, the "Walton and Insignia Defendants"). The
complaint alleged, among other things, that the tender offers for the purchase
of limited partnership interests in the Affiliated Partnerships made by a joint
venture consisting of affiliates of Insignia and Walton were coercive and
unfair.  

On July 1, 1996, another proposed class action complaint was filed in the same
court, Anderson vs. Balcor Mortgage Advisors (Case No. 96 CH 06884) (the
"Anderson Case").  An amended complaint consolidating the Dee and Anderson
Cases (the "Dee/Anderson Case") was filed on July 25, 1996.  

The complaint seeks to assert class and derivative claims again the Walton and
Insignia Defendants and alleges that, in connection with the tender offers, the
Walton and Insignia Defendants misused the Balcor Defendants' and Insignia's
fiduciary positions and knowledge in breach of the Walton and Insignia
Defendants' fiduciary duty and in violation of the Illinois Securities and
Consumer Fraud Acts. The plaintiffs amended their complaint on October 8, 1996,
adding additional claims. The plaintiffs request certification as a class and
derivative action, unspecified compensatory damages and rescission of the
tender offers. Each of the defendants have filed motions to dismiss the
complaint. The court has not yet ruled on these motions.

The Balcor Defendants intend to vigorously contest this action. No class has
been certified as of this date. Management of each of the Balcor Defendants
believes they have meritorious defenses to contest the claims. It is not
determinable at this time whether or not an unfavorable decision in this action
would have a material adverse impact on the Partnership.
<PAGE>
Item 5.  Other Information
--------------------------

Sherwood Acres Apartments, Phases I and II
------------------------------------------

As previously reported, on October 14, 1996, the Partnership contracted to sell
Sherwood Acres Apartments, Phases I and II, to an unaffiliated party, New Plan
Realty Trust, a Massachusetts business trust, for a sale price of $18,875,000.
The Partnership and purchaser agreed to reduce the sale price to $18,725,000.
The purchaser assigned its rights under the agreement of sale to an affiliate,
New Plan Realty of Louisiana, Inc., a Delaware corporation, and the sale closed
on October 31, 1996. The purchaser received a $308,693 credit against the sale
price relating to fire damage at the property. The Partnership retains all
rights to any insurance proceeds relating to the damage.

From the proceeds of the sale, the Partnership paid the total outstanding
balances of the two first mortgage loans collateralized by the property of
$11,348,198, along with prepayment penalties of $453,928. In addition, the
Partnership paid $234,062 to an unaffiliated party as a brokerage commission,
$140,438 to an affiliate of the third party providing property management
services for the property as a fee for services rendered in connection with the
sale of the property, and other selling costs totaling $52,041. The Partnership
received the remaining $6,496,333 of sale proceeds. Of such proceeds, $250,000
will be retained by the Partnership and will not be available for use or
distribution by the Partnership until 120 days after closing.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

(a) Exhibits:

(4) Form of Subscription Agreement previously filed as Exhibit 4(a) to
Amendment No. 1 to the Registrant's Registration Statement on Form S-11 dated
May 7, 1981 (Registration No. 2-70841) and Form of Confirmation regarding
Interests in the Registrant set forth as Exhibit 4.2 to the Registrant's Report
on Form 10-Q for the quarter ended September 30, 1992 (Commission File No.
0-10225) are incorporated herein by reference.

(10) (i)(a) Agreement of Sale and attachment thereto relating to the sale of
Cumberland Pines Apartments, Atlanta, Georgia, previously filed as Exhibit (10)
to the Registrant's Report on Form 10-Q for the quarter ended March 31, 1996,
is incorporated herein by reference.

(b) First, Second and Third Amendments to Agreement of Sale and Escrow Trust
Instructions relating to the sale of Cumberland Pines Apartments, Atlanta,
Georgia, previously filed as Exhibits (99)(a)(b) and (c) to the Registrant's
Report on Form 8-K dated June 28, 1996, is incorporated herein by reference.

(ii) Purchase and Sale Agreement regarding the sale of the Partnership's
interest in the Alzina Office Building loan, previously filed as Exhibit (10)
(iii) to the Registrant's Report on Form 10-Q for the quarter ended June 30,
1996, is incorporated herein by reference.

(iii)(a)Agreement of Sale and attachment thereto and Amendment to Agreement of
Sale and Escrow Agreement relating to the sale of Parkway Commerce Center, Fort
Lauderdale, Florida, previously filed as Exhibits 2(a) and 2(b) to the
<PAGE>
Registrant's Current Report on Form 8-K dated August 13, 1996, are incorporated
herein by reference.

(b) Second Amendment to Agreement of Sale and Escrow Agreement relating to the
sale of Parkway Commerce Center, Fort Lauderdale, Florida, previously filed as
Exhibit (99) to the Registrant's Report on Form 8-K dated September 17, 1996,
is incorporated herein by reference.

(iv)(a) Agreement of Sale and attachment thereto and First Amendment to
Agreement of Sale relating to the sale of Hollowbrook Apartments, Orlando,
Florida, previously filed as Exhibits 2(a) and 2(b) to the Registrant's Current
Report on Form 8-K dated September 17, 1996, are incorporated herein by
reference.

(b) Letter Agreement relating to the sale of Hollowbrook Apartments, Orlando,
Florida, previously filed as Exhibit (99) to the Registrant's Current Report on
Form 8-K dated October 14, 1996, is incorporated herein by reference.

(v)(a) Agreement of Sale and attachment thereto relating to the sale of
Sherwood Acres Apartments, Phases I and II, Baton Rouge, Louisiana, previously
filed as Exhibit (2) to the Registrant's Current Report on Form 8-K dated
October 14, 1996, is incorporated herein by reference.

(b) First Amendment to Agreement of Sale relating to the sale of Sherwood Acres
Apartments, Phases I and II, Baton Rouge, Louisiana, is attached hereto.

(c) Second Amendment to Agreement of Sale relating to the sale of Sherwood
Acres Apartments, Phases I and II, Baton Rouge, Louisiana, is attached hereto.

(27) Financial Data Schedule of the Registrant for the nine-month period ended
September 30, 1996 is attached hereto.

(b) Reports on Form 8-K:

(i) A Current Report on Form 8-K dated June 28, 1996, was filed reporting a
contract to sell Sherwood Acres Apartments, Phases I and II, Baton Rouge,
Louisiana, which was subsequently terminated, and the closing of the sale of
Cumberland Pines Apartments, Atlanta, Georgia.

(ii) A Current Report on Form 8-K dated August 13, 1996 was filed reporting the
contract to sell Parkway Commerce Center, Fort Lauderdale, Florida and the
termination of the contract to sell Sherwood Acres Apartments, Phases I and II,
Baton Rouge, Louisiana.

(iii) A Current Report on Form 8-K dated September 17, 1996 reporting the
contract to sell Hollowbrook Apartments (formerly known as Curry Ford
Apartments), Orlando, Florida; the amendment to the contract to sell Parkway
Commerce Center, Fort Lauderdale, Florida; and the closing of the sale of the
Partnership's interest in the Alzina Office Building loan.

(iv) A Current Report on Form 8-K dated October 14, 1996, was filed reporting a
contract to sell Sherwood Acres Apartments, Phases I and II, Baton Rouge,
Louisiana, and a letter agreement relating to Hollowbrook Apartments, Orlando,
Florida.
<PAGE>
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                              BALCOR PENSION INVESTORS-II



                              By: /s/Thomas E. Meador
                                  ---------------------------------------
                                  Thomas E. Meador
                                  President and Chief Executive Officer
                                  (Principal Executive Officer) of
                                  Balcor Mortgage Advisors, the General
                                  Partner



                              By: /s/Jayne A. Kosik
                                  ----------------------------------------
                                  Jayne A. Kosik
                                  Vice President, and Chief Financial Officer
                                  (Principal Accounting Officer) of Balcor
                                  Mortgage Advisors, the General Partner



Date: November 13, 1996
      -------------------------------
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