<PAGE>
                       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 March 31, 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 0-14437
 
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
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             (Exact name of Registrant as specified in its charter)
 
Delaware                                        13-3236335
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(State or other jurisdiction 
of incorporation or organization)       (I.R.S. Employer Identification No.)
 
One Seaport Plaza, New York, New York           10292-0116
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(Address of principal executive offices)        (Zip Code)
 
Registrant's telephone number, including area code (212) 214-1016
 
                                      N/A
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Former name, former address and former fiscal year, if changed since last report
 
   Indicate by check CK 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 _CK_  No __

<PAGE>
                         Part I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                            STATEMENTS OF NET ASSETS
                          (in process of liquidation)
                                  (unaudited)
 
<TABLE>
<CAPTION>
                                                                        March 31,      December 31,
                                                                           1997            1996
<S>                                                                     <C>            <C>
---------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents                                               $  993,892      $1,074,383
Due from General Partners at liquidation                                   448,015         448,015
Other assets                                                                53,281          42,081
                                                                        ----------     ------------
Total assets                                                             1,495,188       1,564,479
                                                                        ----------     ------------
LIABILITIES
Estimated liquidation costs                                                277,000         277,000
Due to affiliates                                                           24,262          32,823
Other liabilities                                                           57,848         130,302
                                                                        ----------     ------------
Total liabilities                                                          359,110         440,125
                                                                        ----------     ------------
Contingencies
Net assets available to Limited and General Partners                    $1,136,078      $1,124,354
                                                                        ----------     ------------
                                                                        ----------     ------------
Limited partnership units issued and outstanding                            44,503          44,503
                                                                        ----------     ------------
                                                                        ----------     ------------
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</TABLE>
                       STATEMENT OF CHANGES IN NET ASSETS
                          (in process of liquidation)
                                  (unaudited)
<TABLE>
<S>                                                                                   <C>
-------------------------------------------------------------------------------------------------
Net assets--December 31, 1996                                                         $ 1,124,354
Changes in estimated liquidation value of assets and liabilities                           11,724
                                                                                      -----------
Net assets--March 31, 1997                                                            $ 1,136,078
                                                                                      -----------
                                                                                      -----------
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                 The accompanying notes are an integral part of these statements
</TABLE>
                                       2
<PAGE>
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                            STATEMENT OF OPERATIONS
                             (going concern basis)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                    Three months
                                                                                       ended
                                                                                     March 31,
                                                                                        1996
<S>                                                                                <C>
-------------------------------------------------------------------------------------------------
REVENUES
Rental income                                                                        $  263,461
Recovery of expenses                                                                     36,992
Interest income                                                                           3,155
Joint venture equity loss                                                              (521,077)
                                                                                   --------------
                                                                                       (217,469)
                                                                                   --------------
EXPENSES
Property operating                                                                       29,019
Real estate taxes                                                                        34,686
General and administrative                                                               65,926
Provision for loan loss                                                                  89,000
                                                                                   --------------
                                                                                        218,631
                                                                                   --------------
Net loss                                                                             $ (436,100)
                                                                                   --------------
                                                                                   --------------
ALLOCATION OF NET LOSS
Limited partners                                                                     $ (483,075)
                                                                                   --------------
                                                                                   --------------
General partners                                                                     $   46,975
                                                                                   --------------
                                                                                   --------------
Net loss per limited partnership unit                                                $   (10.85)
                                                                                   --------------
                                                                                   --------------
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                  The accompanying notes are an integral part of this statement
</TABLE>
                                       3
<PAGE>
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                            STATEMENT OF CASH FLOWS
                             (going concern basis)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                    Three months
                                                                                       ended
                                                                                     March 31,
<S>                                                                                <C>
                                                                                        1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Rental income received                                                               $  339,562
Recovery of expenses received                                                            97,652
Interest received                                                                         3,155
Real estate taxes paid                                                                  (62,835)
Property operating expenses paid                                                        (36,130)
General and administrative expenses paid                                               (135,610)
Security deposits paid                                                                  (52,000)
                                                                                   --------------
Net cash provided by operating activities                                               153,794
                                                                                   --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capitalized property expenditures                                                       (72,462)
Distributions from joint venture in excess of income                                    460,000
                                                                                   --------------
Net cash provided by investing activities                                               387,538
                                                                                   --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to partners                                                              (469,754)
                                                                                   --------------
Net increase in cash and cash equivalents                                                71,578
Cash and cash equivalents at beginning of period                                        164,475
                                                                                   --------------
Cash and cash equivalents at end of period                                           $  236,053
                                                                                   --------------
                                                                                   --------------
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RECONCILIATION OF NET LOSS TO NET CASH PROVIDED BY OPERATING ACTIVITIES
Net loss                                                                             $ (436,100)
                                                                                   --------------
Adjustments to reconcile net loss to net cash provided by operating activities:
Joint venture equity loss                                                               521,077
Provision for loan loss                                                                  89,000
Changes in:
Other assets                                                                            130,503
Accounts payable and accrued expenses                                                   (98,686)
Tenant security deposits                                                                (52,000)
                                                                                   --------------
Total adjustments                                                                       589,894
                                                                                   --------------
Net cash provided by operating activities                                            $  153,794
                                                                                   --------------
                                                                                   --------------
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                  The accompanying notes are an integral part of this statement
</TABLE>
                                       4
<PAGE>
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
                         NOTES TO FINANCIAL STATEMENTS
                          (in process of liquidation)
                                 MARCH 31, 1997
                                  (unaudited)
 
A. Basis of Presentation
 
   These financial statements have been prepared without audit. In the opinion
of Prudential-Bache Properties, Inc. ('PBP'), the financial statements for the
period ended March 31, 1997 contain all adjustments necessary to present fairly
such information subject to the effects of any further liquidation accounting
adjustments that would have been required had the current realizable values of
assets and the amounts of liabilities been known when Prudential Realty
Acquisition Fund II, L.P. (the 'Partnership) first adopted the liquidation basis
of accounting as of December 31, 1996. Prior to December 31, 1996, the books and
records of the Partnership were maintained on a going concern accrual basis of
accounting.
 
   Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted accounting
principles have been omitted. It is suggested that these financial statements be
read in conjunction with the financial statements and notes thereto included in
the Partnership's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1996.
 
B. Investment in Joint Venture
 
   The Partnership had a 46% interest in a joint venture with Prudential
Acquisition Fund I, L.P., an affiliated limited partnership ('Joint Venture').
The sale of the two shopping centers owned by the Joint Venture occurred on
March 26, 1996 at a gross sales price of $15,500,000 less costs to sell,
resulting in a $56,000 loss on the sale. Joint venture equity loss includes a
write-off of $718,000 during the three months ended March 31, 1996 of the
remaining Partnership costs incurred in the acquisition of the Joint Venture
investment that were in excess of its basis in the Joint Venture. The total
revenues and net income for the Joint Venture for the three months ended March
31, 1996 were $1,041,000 and $428,000, respectively.
 
   On December 18, 1996, an agreement was signed by and between the Partnership
and the affiliated limited partnership, outlining the terms of the dissolution
of the Joint Venture. As of December 31, 1996, all remaining assets of the Joint
Venture were distributed in liquidation in accordance with this agreement.
 
C. Mortgage Loan Receivable
 
   The first mortgage loan on property in Golden Valley, Minnesota was assigned
to Mendelssohn Industries Properties, L.L.C. on April 3, 1996 pursuant to an
agreement dated March 6, 1996 for $400,000. A provision for loss of $89,000 was
recorded as of March 31, 1996 to reflect the net proceeds received by the
Partnership, after selling expenses, of approximately $361,000.
 
D. Related Parties
 
   PBP and Prudential Realty Partnerships, Inc. ('PRP' and collectively, the
'General Partners') and their affiliates perform services for the Partnership
which include, but are not limited to: accounting and financial management,
registrar, transfer and assignment functions, asset management, investor
communications, printing and other administrative services. The amount of
reimbursement from the Partnership is limited by the provisions of the
Partnership Agreement. The costs and expenses incurred on behalf of the
Partnership which are reimbursable to the General Partners and their affiliates
at March 31, 1996 were $11,200 and $28,200 for PRP and its affiliates and PBP
and its affiliates, respectively.
 
   Estimated liquidation costs payable to the General Partners and their
affiliates were $125,000 as of March 31, 1997 and December 31, 1996.
 
   In addition, the General Partners and their affiliates performed similar
services for the Joint Venture prior to its dissolution. (See Note B). The
Partnership's allocable share of the costs and expenses incurred on behalf of
the Joint Venture which were reimbursable to the General Partners and their
affiliates were $7,500 for the three months ended March 31, 1996.
 
                                       5
<PAGE>
   Prudential Securities Incorporated ('PSI'), an affiliate of the General
Partners, owns 1,117 limited
partnership units at March 31, 1997.
 
E. Contingencies
 
   On March 5, 1997, a lawsuit captioned Madison Partnership Liquidity Investors
VIII, LLC ('Madison') v. Prudential-Bache Properties, Inc. was filed in the
Court of Chancery in the State of Delaware. The suit alleges a breach of
contract with Madison and a breach of fiduciary duty to Madison, as well as
intentional interference with the contract between Madison and the purported
tendering limited partners. The suit seeks injunctive and declaratory relief
demanding that the Partnership's transfer agent effectuate the purported
transfers to Madison pursuant to the tender offer made by Madison to the limited
partners. The lawsuit does not name the Partnership as a defendant but does name
PBP. The distribution amounts in excess of Madison's tender offer price, with
respect to the units that are the subject of this lawsuit, have been escrowed by
the Partnership's transfer agent pending a resolution of this issue. PBP has
filed an answer to the complaint.
 
                                       6
<PAGE>
                  PRUDENTIAL REALTY ACQUISITION FUND II, L.P.
                            (a limited partnership)
      ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
 
Liquidity and Capital Resources
 
   Pursuant to the plan of liquidation, the General Partners sold all of the
Partnership's properties in 1996. The Partnership has retained funds for a
contingency reserve and to meet current and future operating costs until the
liquidation of the Partnership. The Partnership intends to liquidate in 1997 and
will distribute any remaining funds at that time. Estimated costs expected to be
incurred through the date of liquidation of the Partnership have been accrued in
the accompanying financial statements.
 
   As of March 31, 1997, the Partnership had $993,892 of cash and cash
equivalents. Additionally, at March 31, 1997, the Partnership's net assets
include a receivable from the General Partners in the amount of $448,015. This
amount represents the maximum obligation of the General Partners, payable upon
the liquidation of the Partnership, in accordance with the Partnership
Agreement.
 
Results of Operations
 
   As a result of the Partnership adopting the liquidation basis of accounting
in accordance with generally accepted accounting principles as of December 31,
1996 and thus not reporting results of operations thereafter, there is no
management discussion comparing the corresponding 1997 and 1996 periods.
 
                                       7
<PAGE>
                           PART II. OTHER INFORMATION
 
Item 1.   Legal Proceedings--This information is incorporated by reference 
          to Note E to the financial statements filed herewith in Item 1 
          of Part I of the Registrant's Quarterly Report.
 
Item 2.   Changes in Securities--None
 
Item 3.   Defaults Upon Senior Securities--Not Applicable
 
Item 4.   Submission of Matters to a Vote of Security Holders--None
 
Item 5.   Other Information
 
          Thomas F. Lynch, III ceased to serve as President, Chief 
          Executive Officer, Chairman of the Board of Directors and 
          Director of Prudential-Bache Properties, Inc. effective May
          2, 1997. Effective May 2, 1997, Brian J. Martin was elected 
          President, Chief Executive Officer, Chairman of the Board of 
          Directors and Director of Prudential-Bache Properties, Inc.
 
Item 6.   Exhibits and Reports on Form 8-K
 
          a. Exhibits
          Description:
          3 and 4 Amended and Restated Agreement of Limited Partnership(1)
                  Amendment to Limited Partnership Agreement dated as of 
                  January 1, 1987(2)
          27      Financial Data Schedule (filed herewith)
 
          b. Reports on Form 8-K--None
---------------
(1) Incorporated by reference to Prospectus dated February 14, 1985, filed with
    the Commission pursuant to Rule 424(b) under the Securities Act of 1933
 
(2) Incorporated by reference to Exhibits 3 and 4 of Registrant's Annual Report
    on Form 10-K for the year ended December 31, 1988
 
                                       8
<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.
 
Prudential Realty Acquisition Fund II, L.P.
 
By: Prudential-Bache Properties, Inc.
    A Delaware corporation, General Partner
 
    By: /s/ Eugene D. Burak                       Date: May 15, 1997
    -----------------------------------------
    Eugene D. Burak
    Vice President
    Chief Accounting Officer for the Registrant
 
                                       9