<PAGE>
                         UNITED STATES
               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, 1997
                               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:   0-17094

USAA Real Estate Income Investments II Limited Partnership
(Exact name of registrant as specified in its charter)

Texas                                 74-2473951
(State or other jurisdiction of     (I.R.S. Employer
incorporation or organization)     Identification No.)

8000 Robert F. McDermott Fwy., IH 10 West, Suite 600
San Antonio, Texas                           78230-3884
(Address of principal executive offices)     (Zip Code)

(210) 498-7391
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed
since last report.)

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.

                                             [X]  Yes   [ ]  No

                             1
<PAGE>
                             PART I
                 Item 1.  Financial Statements
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Balance Sheets
<CAPTION>
                                                             September 30,
                                                                  1997              June 30,
                                                              (Unaudited)             1997
<S>                                                       <C>                        <C>
Assets
Rental properties, net                                    $       9,099,107           9,177,883
Investment in joint venture                                       2,135,201           2,139,009
Temporary investments, at cost
   which approximates market value -
      Money market fund                                             906,117             848,892
Cash                                                                 36,152              33,288
   Cash and cash equivalents                                        942,269             882,180

Deferred charges and other assets                                   358,783             333,315

                                                          $      12,535,360          12,532,387


Liabilities and Partners' Equity
Accounts payable, including amounts due
   to affiliates of $7,858 and $6,722                     $          14,295              16,822
Accrued expenses and other liabilities                              141,201             129,354
         Total liabilities                                          155,496             146,176

Partners' equity:
   General Partner:
      Capital contribution                                            1,000               1,000
      Cumulative net income                                         805,139             779,387
      Cumulative distributions                                     (842,879)           (816,492)
                                                                    (36,740)            (36,105)

   Limited Partners (27,141 interests):
      Capital contributions, net of offering
         costs                                                   12,756,270          12,756,270
      Cumulative net income                                       7,246,242           7,014,471
      Cumulative distributions                                   (7,585,908)         (7,348,425)
                                                                 12,416,604          12,422,316
         Total Partners' equity                                  12,379,864          12,386,211
                                                          $      12,535,360          12,532,387
</TABLE>

See accompanying notes to condensed financial statements.

                                    2
<PAGE>
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Statements of Income
Three months ended September 30, 1997 and 1996
(Unaudited)
<CAPTION>

                                                                  1997                1996
<S>                                                       <C>                           <C>
Income
Rental income                                             $         351,330             352,621
Equity in earnings of joint venture                                  39,842              37,152
Interest income                                                      11,660               9,488
    Total income                                                    402,832             399,261

Expenses
Direct expenses, $3,717 and $3,878
  to affiliate (note 1)                                              20,928              22,370
Depreciation                                                         78,776              78,362
General and administrative, $26,788
  and $25,713 to affiliates (note 1)                                 45,605              45,930
    Total expenses                                                  145,309             146,662
Net income                                                $         257,523             252,599

Net income per limited partnership interest               $            8.54                8.38

</TABLE>

See accompanying notes to condensed financial statements.

                                    3


<PAGE>
<TABLE>
USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP
Condensed Statements of Cash Flows
Three months ended September 30, 1997 and 1996
(Unaudited)
<CAPTION>

                                                                  1997                1996
<S>                                                       <C>                          <C>
Cash flows from operating activities:  
   Net income                                             $         257,523             252,599
   Adjustments to reconcile net income to net
      cash provided by operating activities:
         Depreciation                                                78,776              78,362
         Amortization                                                   632                 632
         Earnings from joint venture                                (39,842)            (37,152)
         Distributions from joint venture                            43,650              43,650
         Increase in accounts receivable                                 --              (3,171)
         Increase in deferred charges and other assets              (26,100)            (26,941)
         Increase (decrease) in accounts payable and
            other liabilities                                         9,320             (55,137)
         Other adjustments                                               --                 500

            Cash provided by operating activities                   323,959             253,342

Cash flows used in financing activities -
   Payment of distributions                                        (263,870)           (263,871)

Net increase (decrease) in cash and cash equivalents                 60,089             (10,529)

Cash and cash equivalents at beginning of period                    882,180             835,558

Cash and cash equivalents at end of period                $         942,269             825,029

</TABLE>

See accompanying notes to condensed financial statements.

                                    4

<PAGE>
USAA Real Estate Income Investments II Limited Partnership
Notes to Condensed Financial Statements
September 30, 1997
(Unaudited)

1.  Transactions with Affiliates

  A  summary of transactions with affiliates follows for the
  three months ended September 30, 1997:

                                           Quorum
                             USAA         Real Estate
                         Real Estate       Services
                           Company        Corporation

Reimbursement
  of expenses (a)     $        16,972              468
Management fees                     -            3,249
Lease commissions                   -            9,816
    Total             $        16,972           13,533


  (a)  Reimbursement  of  expenses  represents  amounts  paid  or
     accrued  as reimbursement of expenses incurred on behalf  of
     the  Partnership  at actual cost and does  not  include  any
     mark-up or items normally considered as overhead.


2.  Other

  Reference  is  made to the financial statements in  the  Annual
  Report  filed as part of the Form 10-K for the year ended  June
  30,  1997  with respect to significant accounting and financial
  reporting  policies  as well as to other pertinent  information
  concerning  the  Partnership.  Information  furnished  in  this
  report reflects all normal recurring adjustments which are,  in
  the  opinion  of management, necessary for a fair  presentation
  of  the  results  for  the  periods  presented.   Further,  the
  operating results presented for these interim periods  are  not
  necessarily indicative of the results which may occur  for  the
  remaining  nine months of this fiscal year or any other  future
  period.

  The  financial information included in this interim  report  as
  of  September  30, 1997 and for the three-month  periods  ended
  September  30,  1997 and 1996 has been prepared  by  management
  without  audit by independent certified public accountants  who
  do  not  express  an opinion thereon. The Partnership's  annual
  report includes audited financial statements.

  Certain 1996 balances have been reclassified to conform to the
  1997 presentation.

                                    5

<PAGE>
                             PART I

   Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations

Liquidity and Capital Resources

At  September 30, 1997, the Partnership had cash of  $36,152  and
temporary investments of $906,117.  These funds were held in  the
working  capital  reserve for the payment of obligations  of  the
Partnership.   Deferred  charges and  other  assets  included  an
acquisition  fee  paid in 1988 to USAA Investors  II,  Inc.,  the
General  Partner,  in  connection with  the  acquisition  of  the
interest in the joint venture which owns Sequoia Plaza - Building
I.   Deferred charges also included deferred rent resulting  from
recognition   of   income  as  required  by  generally   accepted
accounting principles.  Accounts payable included amounts due  to
affiliates  for  reimbursable expenses and to third  parties  for
expenses  incurred  for operations.  Accrued expenses  and  other
liabilities  consisted primarily of a security  deposit,  prepaid
rent and property tax accruals.

During  the  quarter  ended September 30, 1997,  the  Partnership
distributed  $237,483  to Limited Partners  and  $26,387  to  the
General  Partner  for a total of $263,870.  Management  evaluates
reserves  and  the  availability of  funds  for  distribution  to
Partners  on  a  continuing basis based  on  anticipated  leasing
activity   and   cash  flows  available  from   the   Partnership
investments.

The  Continental Plastic Buildings in Elk Grove Village, Illinois
remain  100%  occupied with a lease expiration of February  2011.
The  tenant  is  planning to remodel parts  of  the  property  to
include upgrades to the lobby, office space and landscaping.  The
cost  of  these improvements will be paid by the tenant  and  are
estimated at approximately $250,000.

CST   Office  Products,  Inc.  currently  occupies  100%  of  the
Lakeland, Florida property with a lease expiration of July  1999.
Preliminary discussions with CST have commenced regarding renewal
of the lease.

As  previously  reported, Logicon, the major  tenant  at  Sequoia
Plaza  I  in Arlington, Virginia completed a merger with Northrop
Grumman Corporation.  Subsequently, Northrop Grumman and Lockheed
Martin   have  announced  a  merger  agreement  to  combine   the
companies.   Current indications are that the space  occupied  by
Logicon  will  not be impacted. This lease with  Logicon  expires
April 2008.

On  June 10, 1997, the Partnership signed a letter of intent with
American  Industrial Properties REIT [NYSE:  IND]  (the  "Trust")
contemplating   the   merger   of  four   real   estate   limited
partnerships,  including the Partnership, into  the  Trust.   The
four real estate limited partnerships are USAA Real Estate Income
Investments  I  Limited  Partnership,  USAA  Real  Estate  Income
Investments  II  Limited Partnership, USAA Income Properties  III
Limited   Partnership  and  USAA  Income  Properties  IV  Limited
Partnership  (collectively, the "RELPs").  Each of the  RELPs  is
affiliated  with USAA Real Estate Company, which  currently  owns
approximately 13.74% of the outstanding shares of the Trust.

                                   6     
<PAGE>
On  July  7,  1997, the Trust signed definitive merger agreements
with each of the RELPs pursuant to which the RELPs will be merged
into   the  Trust  (the  "Merger").    According  to  the  Merger
Agreements, the Trust will issue an aggregate of 4,412,829 shares
of beneficial interest at $13.125 per share (for a total value of
$57,918,385) in exchange for the limited partnership interests in
the  RELPs.  The number of Shares and per Share amount have  been
restated to reflect the impact of the one for five reverse 
split  approved  by the Trust shareholders on October  15,  1997.
The  number of Shares to be issued to each RELP will be equal  to
the  net  asset value for each RELP (as agreed by the  Trust  and
each  RELP)  divided  by $13.125.  The number  of  Shares  to  be
received  by  a Limited Partner in each RELP will be computed  in
accordance with such partner's percentage interest in  the  RELP.
The general partner of each RELP has waived any right it may have
to receive Shares to which it may be  entitled  in  exchange  for
its  general  partnership  interest.  The  Merger  is  a  taxable
transaction  to the partners in the RELPs. Prudential Securities,
Inc., on behalf of the Trust, and Houlihan, Lokey, Howard & Zukin
on   behalf  of  the  RELPs,  have  rendered  opinions  to  their
respective parties that the transaction is fair from a  financial
point of view.
     
The Merger, which has been approved by the Trust's Board of Trust
Managers  and  the  Board of Directors of  each  of  the  general
partners  of  the  RELPs, is subject to  due  diligence  by  both
parties and certain other conditions, including approval  by  the
Limited Partners of each of the RELPs and by the shareholders  of
the Trust. Accordingly, there can be no assurance that the merger
will ultimately be consummated.  There has been a meeting of  the
Limited Partners tentatively scheduled for early January 1998  to
consider a vote on the proposed transaction.
     
The  Partnership  has a 7.275% interest in the  Combined  Capital
Resources  Joint  Venture  (the "joint venture"),  the  owner  of
Sequoia Plaza I.  The joint venture interest will not be included
in  the  Merger but will be purchased by USAA Real Estate Company
("Realco")  or  an affiliate of Realco for $2.25 million  if  the
Merger  is  approved by the Limited Partners of the  Partnership.
This  purchase  price was determined using the  January  1,  1997
external  appraisal of Sequoia Plaza I at a total value of  $29.7
million and adjusted by an appreciation factor.

On  August  20,  1997,  a  purported class  action  lawsuit  (the
"Lawsuit"), which was filed in the Superior Court of the State of
Arizona,   was  served  upon  USAA  Real  Estate  Company,   USAA
Properties I, Inc. ("RELP GP I"), USAA Properties II, Inc. ("RELP
GP  II"),  USAA  Properties  III,  Inc.  ("RELP  GP  III"),  USAA
Properties IV, Inc. ("RELP GP IV", together with RELP GP I,  RELP
GP  II and RELP GP III, the "RELP GPs"), certain other affiliated
entities and the individual members of the boards of directors of
each  of  the RELP GPs.  The Trust was also named as a defendant.
The  Lawsuit  was subsequently removed to federal court  and  has
been  transferred to the Western District of Texas,  San  Antonio
Division.   The  suit  alleges among other  things,  breaches  of
fiduciary  duty in connection with the transactions  contemplated
by  merger  agreements entered into by the RELPs and  the  Trust,
dated as of June 30, 1997, whereby each RELP would be merged with
and into the Trust.

                                   7       
<PAGE>
The Lawsuit seeks, among other things, to enjoin the consummation
of   the  Merger  and  damages,  including  attorneys'  fees  and
expenses.  The defendants believe that the plantiffs' claims  are
without  merit  and  intend  to  defend  vigorously  against  the
Lawsuit.

Future  liquidity is expected to result from cash generated  from
operations of the properties and ultimately through the  sale  of
such  properties,  equity  in  earnings  of  the  joint  venture,
interest on temporary investments, and the possible participation
in  the  profits from the sale of the underlying  assets  of  the
joint venture.


Results of Operations

For  the  three months ended September 30, 1997 and 1996,  income
was  generated  from  rental  income  from  the  income-producing
properties,  earnings  from  the  joint  venture  investment  and
interest  income  earned  on  the  funds  invested  in  temporary
investments.

Expenses  incurred during the same periods were  associated  with
operation of the Partnership's properties and various other costs
required for administration of the Partnership.

Rental  properties at September 30, 1997 decreased from June  30,
1997  due to depreciation.  The increase in deferred charges  and
other  assets  at September 30, 1997 was due to  an  increase  in
deferred rent at Continental Plastic.  Accrued expenses and other
liabilities  increased at September 30, 1997 as a  result  of  an
increase  in  the accrual for property taxes for the  CST  Office
Products Building.

Equity  in  earnings increased for the three-month  period  ended
September  30, 1997 as compared to the three-month  period  ended
September  30, 1996 as a result of an increase in net  income  of
Sequoia I, the joint venture property.

Interest income increased as a result of higher cash balances for
the  period  ended  September 30, 1997 as compared  to  the  same
period ended September 30, 1996.

Direct  expenses  decreased  for  the  three-month  period  ended
September 30, 1997 as compared to the same period ended September
30,  1996 due to slight decreases in several expenses at the  CST
Office   Products  Building,  including  parking  lot   sweeping,
landscaping, property insurance and property tax services.

                                   8

<PAGE>
                             PART II

Item 6.    Exhibits and Reports on Form 8-K

(a) Exhibits

                                                 Sequentially
 Exhibit                                           Numbered
   No.                  Description                  Page

    4     Amended and Restated Agreement of
          Limited Partnership dated as of February
          11, 1988, attached as Exhibit A to
          the Partnership's Prospectus dated
          February 11, 1988, filed pursuant to
          Rule 424(b), Registration No. 33-16479
          and incorporated herein by this reference.  --

   27     Financial Data Schedule                     11


(b)  A  Current  Report  on  Form 8-K was  filed  July  21,  1997
      regarding the signed definitive merger agreements between the
      Partnership and American Industrial Properties REIT (the "Trust")
      pursuant to which the Partnership will be merged into the Trust.

      A  Current Report on Form 8-K was filed September  2,  1997
      regarding a purported class action lawsuit served upon  the
      Partnership  seeking  to  enjoin the  consummation  of  the
      Merger with the Trust.
      
                                   9      
      
<PAGE>
                           FORM 10-Q
                           SIGNATURES

   USAA REAL ESTATE INCOME INVESTMENTS II LIMITED PARTNERSHIP


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.



USAA REAL ESTATE INCOME INVESTMENTS II
LIMITED PARTNERSHIP (Registrant)

BY:  USAA Investors II, Inc.,
     General Partner


November 12, 1997     BY: /s/Edward B. Kelley
                      Edward B. Kelley
                      Chairman, President and
                      Chief Executive Officer



November 12, 1997     BY: /s/Martha J. Barrow
                      Martha J. Barrow
                      Vice President -
                      Administration and
                      Finance/Treasurer

                                    10