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UNITED
    STATES
 SECURITIES
    AND EXCHANGE COMMISSION
 Washington, D.C.
    20549
 FORM
    10-Q
  (Mark
    one)
 x
    QUARTERLY
    REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934  For the quarterly
    period ended September 30, 2006.
  OR
  o
    TRANSITION
    REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934  For the
    transition period from
    
    to
     .
  Commission file
    no. 0-16190
  DEL
    TACO RESTAURANT PROPERTIES II
 a California
    limited partnership
 (Exact
    name of registrant as specified in its charter)
  California

33-0064245(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification Number)25521 Commercentre Drive, Lake
    Forest, California

92630(Address of principal executive
    offices)

(Zip Code)   (949) 462-9300
 (Registrants telephone
    number, including area code)
  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 þ  No o
  Indicate by check
    mark whether the registrant is a large accelerated filer, an
    accelerated filer, or a non-accelerated filer. See definition of
    accelerated filer and large accelerated filer in
    Rule 12b-2
    of the Exchange Act (check one):
 Large accelerated
    filer o     Accelerated
    filer o     Non-accelerated
    filer þ
  Indicate by check
    mark whether the registrant is a shell company (as defined in
    Rule 12b-2
    of the Exchange
    Act).  Yes o  No þ




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##### 



DEL TACO RESTAURANT PROPERTIES II
 PAGE NUMBERPART I. FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Balance Sheets at September 30, 2006 (Unaudited) and
December 31, 2005
    
    
    3Condensed Statements of Income for the three and nine months ended
September 30, 2006 and 2005 (Unaudited)
    
    
    4Condensed Statements of Cash Flows for the nine months ended
September 30, 2006 and 2005 (Unaudited)
    
    
    5Notes to Condensed Financial Statements (Unaudited)
    
    
    6Item 2. Managements Discussion and Analysis of
Financial Condition and Results of Operations
    
    
    9Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    12Item 4. Controls and Procedures
    
    
    12PART II. OTHER INFORMATIONItem 6. Exhibits and Reports
    
    
    13SIGNATURE
    
    
    14EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1
  -2-




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PART I. FINANCIAL INFORMATION
 
 ITEM I. FINANCIAL STATEMENTS
 DEL TACO RESTAURANT PROPERTIES II
 
 CONDENSED BALANCE SHEETS
 September 30,
    
    
    December 31,2006
    
    
    2005(Unaudited)ASSETSCURRENT ASSETS:Cash
    
    $
    199,404
    
    
    $
    198,980Receivable from Del Taco LLC
    
    
    49,732
    
    
    
    56,703Deposits
    
    
    1,837
    
    
    
    1,000Total current assets
    
    
    250,973
    
    
    
    256,683PROPERTY AND EQUIPMENT:Land and improvements
    
    
    1,806,006
    
    
    
    1,806,006Buildings and improvements
    
    
    1,238,879
    
    
    
    1,238,879Machinery and equipment
    
    
    898,950
    
    
    
    898,9503,943,835
    
    
    
    3,943,835Lessaccumulated depreciation
    
    
    1,964,346
    
    
    
    1,923,7111,979,489
    
    
    
    2,020,124$
    2,230,462
    
    
    $
    2,276,807LIABILITIES AND PARTNERS EQUITYCURRENT LIABILITIES:Payable to limited partners
    
    $
    40,247
    
    
    $
    36,815Accounts payable
    
    
    10,385
    
    
    
    10,511Total current liabilities
    
    
    50,632
    
    
    
    47,326PARTNERS EQUITY:Limited partners; 27,006 units outstanding at September 30, 2006
and December 31, 2005
    
    
    2,207,082
    
    
    
    2,256,236General partner-Del Taco LLC
    
    
    (27,252
    )
    
    
    (26,755
    )2,179,830
    
    
    
    2,229,481$
    2,230,462
    
    
    $
    2,276,807
  -3-




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DEL TACO RESTAURANT PROPERTIES II
 
 CONDENSED STATEMENTS OF INCOME
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005RENTAL REVENUES
    
    $
    159,228
    
    
    $
    175,543
    
    
    $
    484,199
    
    
    $
    522,254EXPENSES:General and administrative
    
    
    9,474
    
    
    
    10,840
    
    
    
    62,301
    
    
    
    61,722Depreciation
    
    
    13,545
    
    
    
    13,545
    
    
    
    40,635
    
    
    
    40,63523,019
    
    
    
    24,385
    
    
    
    102,936
    
    
    
    102,357Operating income
    
    
    136,209
    
    
    
    151,158
    
    
    
    381,263
    
    
    
    419,897OTHER INCOME:Interest
    
    
    1,027
    
    
    
    575
    
    
    
    2,506
    
    
    
    1,861Other
    
    
    450
    
    
    
    200
    
    
    
    1,075
    
    
    
    1,400Net income
    
    $
    137,686
    
    
    $
    151,933
    
    
    $
    384,844
    
    
    $
    423,158Net income per limited
partnership unit (note 2)
    
    $
    5.05
    
    
    $
    5.57
    
    
    $
    14.11
    
    
    $
    15.51Number of units used in computing
per unit amounts
    
    
    27,006
    
    
    
    27,006
    
    
    
    27,006
    
    
    
    27,006
  -4-




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DEL TACO RESTAURANT PROPERTIES II
 
 CONDENSED STATEMENTS OF CASH FLOWS
 (Unaudited)
 Nine Months EndedSeptember 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIES:Net income
    
    $
    384,844
    
    
    $
    423,158Adjustments to reconcile net income to net
cash provided by operating activities:Depreciation
    
    
    40,635
    
    
    
    40,635Changes in operating assets and liabilities:Receivable from Del Taco LLC
    
    
    6,971
    
    
    
    562Deposits
    
    
    (837
    )
    
    
    660Payable to limited partners
    
    
    3,432
    
    
    
    (1,957
    )Accounts payable
    
    
    (126
    )
    
    
    (4,034
    )Net cash provided by operating activities
    
    
    434,919
    
    
    
    459,024CASH FLOWS FROM FINANCING ACTIVITIES:Cash distributions to partners
    
    
    (434,495
    )
    
    
    (450,146
    )Net increase in cash
    
    
    424
    
    
    
    8,878Beginning cash balance
    
    
    198,980
    
    
    
    197,784Ending cash balance
    
    $
    199,404
    
    
    $
    206,662
  -5-




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DEL TACO RESTAURANT PROPERTIES II
 
 NOTES TO CONDENSED FINANCIAL STATEMENTS
 FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
 UNAUDITED
 NOTE 1  BASIS OF PRESENTATION
  NOTE 2  NET INCOME PER LIMITED PARTNERSHIP UNIT
   -6-




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DEL TACO RESTAURANT PROPERTIES II
 NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED
 FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
 UNAUDITED
 NOTE 3  LEASING ACTIVITIES
  
  NOTE 4  TRANSACTIONS WITH DEL TACO
    -7-




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DEL TACO RESTAURANT PROPERTIES II
 NOTES TO CONDENSED FINANCIAL STATEMENTS  CONTINUED
 FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
 UNAUDITED
 NOTE 5  DISTRIBUTIONS
  NOTE 6  PAYABLE TO LIMITED PARTNERS
  NOTE 7  CONCENTRATION OF RISK
  NOTE 8  ACQUISITION OF GENERAL PARTNER
  -8-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Liquidity and Capital Resources
   -9-




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations -
continued
 Results of Operations
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Bear Valley Rd., Victorville, CA
    
    $
    28,670
    
    
    $
    32,414
    
    
    $
    87,700
    
    
    $
    95,095West Valley Blvd., Colton, CA
    
    
    35,969
    
    
    
    39,862
    
    
    
    106,222
    
    
    
    122,716Palmdale Blvd., Palmdale, CA
    
    
    19,759
    
    
    
    22,034
    
    
    
    58,728
    
    
    
    63,877DeAnza Country Shopping Center, Pedley, CA
    
    
    36,114
    
    
    
    34,624
    
    
    
    104,603
    
    
    
    100,567Varner Road, Thousand Palms, CA
    
    
    38,716
    
    
    
    46,609
    
    
    
    126,946
    
    
    
    139,999Total
    
    $
    159,228
    
    
    $
    175,543
    
    
    $
    484,199
    
    
    $
    522,254
  -10-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations -
continued
  Percentage of TotalGeneral & Administrative ExpenseThree Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005Accounting fees
    
    
    57.59
    %
    
    
    54.38
    %
    
    
    70.41
    %
    
    
    69.63
    %Distribution of information
to Limited Partners
    
    
    42.41
    %
    
    
    45.62
    %
    
    
    29.59
    %
    
    
    30.37
    %100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
   Recent Accounting Pronouncements
  Off-Balance Sheet Arrangements
  Critical Accounting Policies and Estimates
  -11-




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations -
continued
 Property and Equipment:
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of disclosure controls and procedures:
  (b)
    
    Changes in internal controls:
  (c)
    
    Asset-Backed issuers:
  -12-




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PART II. OTHER INFORMATION
  
  (a)
    
    Exhibits
 31.1
    
    Shirlene Lopezs Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Steven L. Brakes Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
 (b)
    
    ReportsNone.
 -13-




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SIGNATURE
  DEL TACO RESTAURANT PROPERTIES II
(a California limited partnership)
Registrant
Del Taco LLC
General PartnerDate:  November 13, 2006
    /s/ Steven L. BrakeSteven L. BrakeTreasurer -14-




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Exhibit Index
  Exhibits
    
    Description31.1
    
    Shirlene Lopezs Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Steven L. Brakes Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to subsections (a) and (b) of Section 1350,
Chapter 63 of Title 18, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002