<PAGE>

                                   FORM 10-QSB
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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


For the quarterly period ended     September 30, 1999
                                   ------------------


Commission file number                0-11973
                                   -------------


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
--------------------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)




           Maryland                                     52-1321492
-----------------------------------------         ------------------------
     (State or other jurisdiction of                (I.R.S. Employer
     incorporation or organization)                Identification No.)



11200 Rockville Pike, Rockville, Maryland                 20852
-----------------------------------------         ------------------------
(Address of principal executive offices)                (Zip Code)



                                 (301) 468-9200
--------------------------------------------------------------------------
                (Issuer's telephone number, including area code)


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

     State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.


     Not applicable                            Not applicable
--------------------------         ---------------------------------------
        (Class)                      (Outstanding at September 30, 1999)
<PAGE>


                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                              INDEX TO FORM 10-QSB

                    FOR THE QUARTER ENDED SEPTEMBER 30, 1999



                                                            PAGE
                                                            ----

PART I.   Financial Information

Item 1.   Financial Statements

          Balance Sheets - September 30, 1999 and
            December 31, 1998 . . . . . . . . . . . . .        1

          Statements of Operations and Accumulated Losses
            - for the three and nine months ended
            September 30, 1999 and 1998 . . . . . . . .        2

          Statements of Cash Flows - for the nine
            months ended September 30, 1999 and 1998  .        4

          Notes to Financial Statements - September 30, 1999
            and 1998  . . . . . . . . . . . . . . . . .        5

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations . . . .        21

PART II.  Other Information

Item 3.   Defaults Upon Senior Securities . . . . . . .        27

Item 5.   Other Information . . . . . . . . . . . . . .        30

Item 6.   Exhibits and Reports on Form 8-K  . . . . . .        30

Signature   . . . . . . . . . . . . . . . . . . . . . .        31

Exhibit Index . . . . . . . . . . . . . . . . . . . . .        32
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          ---------------------

                CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                                BALANCE SHEETS

                                   ASSETS

<TABLE>
<CAPTION>
                                                                                                  September 30,   December 31,
                                                                                                      1999           1998
                                                                                                  ------------    ------------
                                                                                                   (Unaudited)
<S>                                                                                               <C>             <C>
Investments in and advances to partnerships                                                       $    714,171    $  3,218,015
Investment in partnership held for sale                                                                 39,653              --
Partnership interests held in escrow                                                                 1,183,855       1,044,007
Cash and cash equivalents                                                                            7,412,832       7,596,031
Acquisition fees, principally paid to related parties, net of
  accumulated amortization of $402,620 and $416,201, respectively                                      355,096         405,472
Property purchase costs, net of accumulated amortization of
  $275,663 and $271,968, respectively                                                                  256,734         279,650
Other assets                                                                                                --           3,781
                                                                                                  ------------    ------------
      Total assets                                                                                $  9,962,341    $ 12,546,956
                                                                                                  ============    ============

                       LIABILITIES AND PARTNERS' DEFICIT

Due on investments in partnerships                                                                $ 13,162,422    $ 16,377,994
Accrued interest payable                                                                            21,669,016      26,777,037
Accounts payable and accrued expenses                                                                  125,959         120,654
                                                                                                  ------------    ------------
      Total liabilities                                                                             34,957,397      43,275,685
                                                                                                  ------------    ------------

Commitments and contingencies

Partners' capital (deficit):

  Capital paid in:
    General Partners                                                                                     2,000           2,000
    Limited Partners                                                                                50,015,000      50,015,000
                                                                                                  ------------    ------------
                                                                                                    50,017,000      50,017,000

  Less:
    Accumulated distributions to partners                                                           (2,753,062)     (2,753,062)
    Offering costs                                                                                  (5,278,980)     (5,278,980)
    Accumulated losses                                                                             (66,980,014)    (72,713,687)
                                                                                                  ------------    ------------
      Total partners' deficit                                                                      (24,995,056)    (30,728,729)
                                                                                                  ------------    ------------
      Total liabilities and partners' deficit                                                     $  9,962,341    $ 12,546,956
                                                                                                  ============    ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       -1-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          ---------------------

                  CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                             STATEMENTS OF OPERATIONS
                              AND ACCUMULATED LOSSES

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                               For the three months ended          For the nine months ended
                                                                      September 30,                       September 30,
                                                              -----------------------------      -----------------------------
                                                                  1999             1998              1999             1998
                                                              ------------     ------------      ------------     ------------
<S>                                                           <C>              <C>               <C>              <C>
Share of (loss) income from partnerships                      $   (309,832)    $    325,353      $  1,860,598     $  4,821,560
                                                              ------------     ------------      ------------     ------------

Other revenue and expenses:

  Revenue:
    Interest and other income                                       83,842          173,289           273,079          407,504
                                                              ------------     ------------      ------------     ------------

  Expenses:
    Interest                                                       398,694          963,953         1,251,354        2,891,859
    Management fee                                                  62,499           62,499           187,497          187,497
    General and administrative                                      46,746           62,385           163,601          201,632
    Professional fees                                               29,249           22,733            60,474           81,770
    Amortization of deferred costs                                  10,751           11,445            33,639           34,333
                                                              ------------     ------------      ------------     ------------
                                                                   547,939        1,123,015         1,696,565        3,397,091
                                                              ------------     ------------      ------------     ------------
       Total other revenue and expenses                           (464,097)        (949,726)       (1,423,486)      (2,989,587)
                                                              ------------     ------------      ------------     ------------

(Loss) income before extraordinary gain from
  extinguishment of debt                                          (773,929)        (624,373)          437,112        1,831,973

Extraordinary gain from extinguishment of debt                   4,771,567               --         5,296,561               --
                                                              ------------     ------------      ------------     ------------

Net income (loss)                                                3,997,638         (624,373)        5,733,673        1,831,973

Accumulated losses, beginning of period                        (70,977,652)     (73,266,521)      (72,713,687)     (75,722,867)
                                                              ------------     ------------      ------------     ------------

Accumulated losses, end of period                             $(66,980,014)    $(73,890,894)     $(66,980,014)    $(73,890,894)
                                                              ============     ============      ============     ============
</TABLE>

                                    (Continued)




                   The accompanying notes are an integral part
                         of these financial statements.

                                       -2-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          ---------------------

                  CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                             STATEMENTS OF OPERATIONS
                        AND ACCUMULATED LOSSES - Continued

                                    (Unaudited)

<TABLE>
<CAPTION>
                                                               For the three months ended          For the nine months ended
                                                                      September 30,                       September 30,
                                                              -----------------------------      -----------------------------
                                                                  1999             1998              1999             1998
                                                              ------------     ------------      ------------     ------------
<S>                                                           <C>              <C>               <C>              <C>
Net income (loss) allocated to General Partners (1.51%)       $     60,364     $     (9,428)     $     86,578     $     27,663
                                                              ============     ============      ============     ============

Net income (loss) allocated to Initial and Special
  Limited Partners (1.49%)                                    $     59,565     $     (9,303)     $     85,432     $     27,296
                                                              ============     ============      ============     ============

Net income (loss) allocated to Additional Limited
  Partners (97%)                                              $  3,877,709     $   (605,642)     $  5,561,663     $  1,777,014
                                                              ============     ============      ============     ============

Net income (loss) per unit of Additional Limited
  Partner Interest based on 50,000 units
  outstanding                                                 $      77.55     $     (12.11)     $     111.23     $      35.54
                                                              ============     ============      ============     ============
</TABLE>

























                   The accompanying notes are an integral part
                         of these financial statements.

                                       -3-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 1.   FINANCIAL STATEMENTS
          ---------------------

                   CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                             STATEMENTS OF CASH FLOWS

                                    (Unaudited)
<TABLE>
<CAPTION>
                                                                                                   For the nine months ended
                                                                                                          September 30,
                                                                                                 -----------------------------
                                                                                                     1999             1998
                                                                                                 ------------     ------------
<S>                                                                                              <C>              <C>
Cash flows from operating activities:
  Net income                                                                                     $  5,733,673     $  1,831,973

  Adjustments to reconcile net income to net cash used in operating activities:
    Share of income from partnerships                                                              (1,860,598)      (4,821,560)
    Amortization of deferred costs                                                                     33,639           34,333
    Amortization of discount on purchase money notes                                                       --        1,116,048
    Extraordinary gain from extinguishment of debt                                                 (5,296,561)              --

    Changes in assets and liabilities:
      Decrease in other assets                                                                          3,781           51,110
      Increase in accrued interest payable                                                          1,251,354        1,775,811
      Payment of purchase money note interest                                                         (25,322)        (392,200)
      Increase in accounts payable and accrued expenses                                                 5,305           51,261
                                                                                                 ------------     ------------
        Net cash used in operating activities                                                        (154,729)        (353,224)
                                                                                                 ------------     ------------

Cash flows from investing activities:
  Receipt of distributions from partnerships                                                        4,224,591        5,775,301
  Advances made to local partnerships                                                                (120,642)        (789,000)
  Collection of advances made to local partnerships                                                   120,642          639,000
                                                                                                 ------------     ------------
        Net cash provided by investing activities                                                   4,224,591        5,625,301
                                                                                                 ------------     ------------

Cash flows from financing activities:
  Pay-off of purchase money notes and related interest                                             (1,410,000)              --
  Payment of purchase money note principal and related interest                                    (2,843,061)        (250,000)
                                                                                                 ------------     ------------
        Net cash used in financing activities                                                      (4,253,061)        (250,000)
                                                                                                 ------------     ------------
Net (decrease) increase in cash and cash equivalents                                                 (183,199)       5,022,077

Cash and cash equivalents, beginning of period                                                      7,596,031        7,969,815
                                                                                                 ------------     ------------
Cash and cash equivalents, end of period                                                         $  7,412,832     $ 12,991,892
                                                                                                 ============     ============
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest                                                       $  4,096,626     $    392,200
                                                                                                 ============     ============
</TABLE>

                   The accompanying notes are an integral part
                         of these financial statements.

                                       -4-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


1.   BASIS OF PRESENTATION

     In the opinion of C.R.I., Inc. (CRI), the Managing General Partner, the
accompanying unaudited financial statements reflect all adjustments, consisting
of normal recurring accruals, necessary for a fair presentation of the financial
position of Capital Realty Investors-II Limited Partnership (the Partnership) as
of September 30, 1999, and the results of its operations for the three and nine
months ended September 30, 1999 and 1998, and its cash flows for the nine months
ended September 30, 1999 and 1998.  The results of operations for the interim
period ended September 30, 1999, are not necessarily indicative of the results
to be expected for the full year.

     The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and with the
instructions to Form 10-QSB.  Certain information and accounting policies and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such instructions.  These condensed financial statements
should be read in conjunction with the financial statements and notes thereto
included in the Partnership's annual report on Form 10-KSB at December 31, 1998.

     Certain amounts in the financial statements for the year ended December 31,
1998 have been reclassified to conform to the 1999 presentation.


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS

a.   Due on investments in partnerships
     ----------------------------------

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having a principal balance of
$13,162,422 plus accrued interest of $21,669,016 as of September 30, 1999, are
payable in full upon the earliest of:  (1) sale or refinancing of the respective
Local Partnership's rental property; (2) payment in full of the respective Local
Partnership's permanent loan; or (3) maturity.  Purchase money notes in the
aggregate principal amounts of $1,050,000 and $950,000 matured on December 31,
1996 and December 31, 1997, respectively, and were paid off, at a discount, on
October 5, 1998, as discussed below.  Purchase money notes in the aggregate
principal amounts of $1,050,000 and $950,000 matured on December 31, 1996 and
1997, respectively, were extended to January 5, 2001, but were paid off, at a
discount, on September 30, 1999, as discussed below.  Purchase money notes in
the aggregate principal amounts of $2,380,000 and $3,150,000 matured on January
1, 1998 and June 1, 1998, respectively, and have not been paid or extended, as
discussed below.  Purchase money notes in the aggregate principal amounts of
$4,600,000 and $1,927,500 matured on August 31, 1998, were partially paid down,
with the balances extended to August 31, 2003, as discussed below.  Purchase
money notes in the aggregate principal amount $1,450,000 matured on September 1,
1998, and have been extended to September 1, 2003, as discussed below.  Purchase
money notes in the aggregate principal amount of $840,178 matured on January 1,
1999 and were paid off, at a discount, on February 5, 1999.  Purchase money
notes in the aggregate principal amount of $500,000 matured on January 1, 1999
and have not been paid or extended, as discussed below.


                                       -5-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships.  There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due.  If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to
renegotiate the terms of repayment or risk losing its partnership interest in
the Local Partnership.  The Partnership's inability to pay certain of the
purchase money note principal and accrued interest balances when due, and the
resulting uncertainty regarding the Partnership's continued ownership interest
in the related Local Partnerships, does not adversely impact the Partnership's
financial condition because the purchase money notes are nonrecourse and secured
solely by the Partnership's interest in the related Local Partnerships.
Therefore, should the investment in any of the Local Partnerships with maturing
purchase money notes not produce sufficient value to satisfy the related
purchase money notes, the Partnership's exposure to loss is limited because the
amount of the nonrecourse indebtedness of each of the maturing purchase money
notes exceeds the carrying amount of the investment in, and advances to, each of
the related Local Partnerships.  Thus, even a complete loss of the Partnership's
interest in one of these Local Partnerships would not have a material adverse
impact on the financial condition of the Partnership.  See further discussion of
certain purchase money notes, below.

     The following chart presents information related to purchase money notes
which have matured or are scheduled to mature through September 30, 2000, and
which remain unpaid or unextended as of November 10, 1999.  Excluded from the
following chart are purchase money notes which matured through September 30,
1999, and which have been paid off or extended on or before November 10, 1999.

























                                       -6-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

<TABLE>
<CAPTION>
                                            Carrying Amount
                                            of Partnership's
                                             Investment in                  Aggregate                 Aggregate
                                            and Advances to                 Principal                  Accrued
                   Number of                Underlying Local                 Balance                   Interest
   Purchase        Underlying               Partnerships as                   as of                  Balance as of
   Money Note        Local      Percentage    of September    Percentage     September   Percentage    September     Percentage
 (PMN) Maturity   Partnerships   of Total       30, 1999       of Total      30, 1999     of Total     30, 1999       of Total
----------------  ------------  ----------  ----------------  ----------   -----------   ----------  -------------   ----------
<S>               <C>           <C>         <C>               <C>          <C>           <C>         <C>             <C>
1st Quarter 1998        2            10%     $            --       --      $ 2,380,000         18%   $   3,074,160        14%
2nd Quarter 1998        1             5%                  --       --        3,150,000         24%       5,533,809        26%
1st Quarter 1999        1             5%                  --       --          500,000          4%       1,501,081         7%
                     ----         -----      ---------------    -----      -----------      -----    -------------     -----
Total through
  9/30/2000             4            20%     $            --       --      $ 6,030,000         46%   $  10,109,050        47%
                     ====         =====      ===============    =====      ===========      =====    =============     =====

Total, Local
  Partnerships         20           100%     $       714,171      100%     $13,162,422        100%   $  21,669,016       100%
                     ====         =====      ===============    =====      ===========      =====    =============     =====
</TABLE>

     The Managing General Partner is continuing to investigate possible
alternatives to reduce the Partnership's debt obligations.  These alternatives
include, among others, retaining the cash available for distribution to meet the
purchase money note requirements, paying off certain purchase money notes at a
discounted price, extending the due dates of certain purchase money notes,
refinancing the respective properties' underlying debt or selling the underlying
real estate and using the Partnership's share of the proceeds to pay or buy down
certain purchase money note obligations.  Although the Managing General Partner
has had some success applying these strategies in the past, the Managing General
Partner cannot assure that these strategies will be successful in the future.
Based on preliminary discussions with the holders of purchase money notes
maturing through September 30, 2000, the Managing General Partner anticipates
that, at least in some instances, the noteholders may not be willing to
negotiate any extension or discounted payoff.  In such instances, upon maturity
of the purchase money notes, if the purchase money notes remain unpaid, the
noteholders may have the right to foreclose on the Partnership's interest in the
related Local Partnerships.  In the event of a foreclosure, the excess of the
nonrecourse indebtedness over the carrying amount of the Partnership's
investment in the related Local Partnership would be deemed cancellation of
indebtedness income which would be taxable to Limited Partners at a federal tax
rate of up to 39.6%.  Additionally, in the event of a foreclosure, the
Partnership would lose its investment in the Local Partnership and, likewise,
its share of any future cash flow distributed by the Local Partnership from
rental operations, mortgage debt refinancings, or the sale of the real estate.
Of the 20 Local Partnerships in which the Partnership is invested as of both
September 30, 1999 and December 31, 1998, the four local Partnerships with
associated purchase money notes which mature through September 30, 2000 and

                                      -7-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

which remain unpaid or unextended as of November 10, 1999, represent the
following percentages of the Partnership's total distributions received from
Local Partnerships and share of income from Local Partnerships.

<TABLE>
<CAPTION>


                           Percentage of Total       Partnership's Share of
     For the Nine Month   Distributions Received       Income (loss) from
       Periods Ending     from Local Partnerships      Local Partnerships
     -----------------    -----------------------    ----------------------
     <S>                  <C>                        <C>
     September 30, 1999             0%                      $ 139,959
     September 30, 1998             0%                         12,158

</TABLE>

     Interest expense on the Partnership's purchase money notes was $398,694 and
$1,251,354 for the three and nine months ended September 30, 1999, respectively,
and $963,953 and $2,891,859 for the three and nine months ended September 30,
1998, respectively.  Amortization of discount on purchase money notes increased
interest expense by $372,016 and $1,116,048 during the three and nine months
ended September 30, 1998, respectively.  There was no amortization of discount
on purchase money notes during the three and nine months ended September 30,
1999 as all discounts on purchase money notes were fully amortized as of
December 31, 1998.  The accrued interest on the purchase money notes of
$21,669,016 and $26,777,037 as of September 30, 1999 and December 31, 1998,
respectively, is due on the respective maturity dates of the purchase money
notes or earlier, in some instances, if (and to the extent of a portion thereof)
the related Local Partnership has distributable net cash flow, as defined in the
relevant Local Partnership agreements.

                               Beech Hill I and II
                               -------------------

     The Partnership defaulted on its purchase money notes aggregating
$2,380,000 related to Beech Hill Development Co. (Beech Hill I) and Beech Hill
Development Co. II (Beech Hill II) on August 1, 1995 when the notes matured and
were not paid.  On March 29, 1996, the noteholders agreed to extend the purchase
money note due dates to January 1, 1998.  Under the agreement, the Partnership
pays the noteholders of Beech Hill I and Beech Hill II all annual cash flow
distributions received from the related Local Partnerships in excess of $5,000
and $2,500, respectively, to be applied against the notes.  The Partnership did
not receive any cash flow distributions from Beech Hill I or Beech Hill II
during the nine months ended September 30, 1999 or 1998.







                                       -8-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

     Under the extension agreement, documents transferring the Partnership's
interests in Beech Hill I and Beech Hill II to the noteholders were placed in
escrow to be released to the noteholders upon a future default by the
Partnership on the respective purchase money notes.  On January 1, 1998, the
Partnership defaulted on its purchase money notes related to Beech Hill I and
Beech Hill II when the notes, as extended, matured and were not paid.  The
default amount included principal and accrued interest of $1,480,000 and
$1,687,578, respectively, for Beech Hill I and $900,000 and $1,072,113,
respectively, for Beech Hill II.  On September 30, 1999, the noteholders
instructed the escrow agent to release to them the transfer documents on October
5, 1999, and the escrow agent complied with those instructions.  Accordingly,
the Partnership's interests in Beech Hill I and Beech Hill II were transferred
to the noteholders on October 5, 1999.  As of that date, principal and accrued
interest totaling $1,480,000 and $1,902,848, respectively, related to Beech Hill
I and $900,000 and $1,191,999, respectively, related to Beech Hill II were due.

     Due to the impending transfer of the Partnership's interests in the Local
Partnerships to the noteholders, the Partnership's basis in each of these Local
Partnerships as of September 30, 1999, which was $737,092 and $446,763 for Beech
Hill I and Beech Hill II, respectively, was classified as partnership interests
held in escrow in the accompanying financial statements.

     The purchase money notes related to Beech Hill I and Beech Hill II are
nonrecourse and secured solely by the Partnership's interests in the related
Local Partnerships.  The release of the Partnership's purchase money note
obligations as a result of the loss of ownership interest in the Local
Partnerships will result in net financial statement gains of approximately $2.6
million and $1.7 million for Beech Hill I and Beech Hill II, respectively,
during the fourth quarter of 1999.  The federal tax gains are estimated to be
approximately $4.9 million and $3.0 million for Beech Hill I and Beech Hill II,
respectively.

                                   Chevy Chase
                                   -----------

     The Partnership defaulted on its two purchase money notes related to Chevy
Chase Park, Limited (Chevy Chase) on December 31, 1996 when the notes matured
and were not paid.  The aggregate default amount included principal and accrued
interest of $2,100,000 and $3,553,912, respectively.  The Managing General
Partner successfully negotiated an extension of one of the purchase money notes
(First Chase Note) in the principal amount of $1,050,000 effective December 1,
1997.  In connection with the extension agreement, the Partnership made an
interest payment to the noteholder.  The terms of the extension agreement
extended the maturity date to January 2, 2000.   On December 17, 1998, the
Partnership exercised its right, pursuant to the extension agreement, to further
extend the maturity date to January 5, 2001 by making an additional payment,
applied to accrued interest, to the noteholder.

     On February 10, 1998, the Partnership was served with a complaint by the
two holders of the second purchase money note (Second Chase Note) filing suit
against the Partnership, the Managing General Partner and C.R.H.C., Incorporated
(CRHC), an affiliate of the Managing General Partner, for damages and seeking

                                       -9-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

foreclosure on the Partnership's interest in the Local Partnership.  On July 29,
1998, the parties agreed to a settlement which involved a discounted payoff to
the holders of the Second Chase Note, subject to the Partnership's satisfaction
with the results of its due diligence.  On October 5, 1998, pursuant to such
settlement agreement, the Partnership paid the holders of the Second Chase Note
a discounted amount in full settlement of the Second Chase Note and the lawsuit.
In connection with this settlement, the local general partners withdrew from the
Local Partnership, assigning their combined one percent interests (which were
converted to a limited partner interest) in the Local Partnership to the
Partnership, and the property management agent, which is an affiliate of the
local general partners, was terminated effective April 1, 1999.  CRHC is the
sole remaining general partner of the Local Partnership.  Further, the
Partnership received the interests of the local general partners, the holders of
the Second Chase Note, and their respective affiliates in the First Chase Note,
which is approximately 10.808%.  On May 28, 1999, the Partnership filed suit
against the holder of the First Chase Note, seeking payment of the Partnership's
10.808% share of payments made on the First Chase Note since October 1, 1997.
On September 30, 1999, as part of the settlement of the litigation, the
Partnership paid off, at a discount, the First Chase Note.  The discounted
payoff resulted in extraordinary gain from extinguishment of debt of
approximately $2.4 million in 1999.  The discounted payoff will also result in
cancellation of indebtedness income of approximately $2.4 million for federal
tax purposes in 1999.

                                 Four Winds West
                                 ---------------

     The Partnership defaulted on its purchase money note related to Four Winds
West Company Limited (Four Winds West) on January 1, 1999 when the note matured
and was not paid.  The default amount included aggregate principal and accrued
interest of $462,178 and $532,673, respectively.  On February 5, 1999, the
Partnership paid off, at a discount, the purchase money note related to Four
Winds West.  The discounted payoff resulted in extraordinary gain from
extinguishment of debt of approximately $305,000 in 1999.  The discounted payoff
will also result in cancellation of indebtedness income of approximately
$300,000 for federal tax purposes in 1999.

















                                      -10-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                              Frenchman's Wharf II
                              --------------------

     The Partnership defaulted on its purchase money notes related to
Frenchman's Wharf Associates II Limited Partnership (Frenchman's Wharf II) on
June 1, 1998 when the notes matured and were not paid.  The default amount
included principal and accrued interest of $3,150,000 and $5,071,731,
respectively.  The purchase money notes, initially due to mature on June 1,
1988, were previously extended to mature on June 1, 1998.  As of November 10,
1999, principal and accrued interest totaling $3,150,000 and $5,572,019,
respectively, were due.  The Partnership is currently negotiating with the
purchase money noteholders to extend the notes to be coterminous with the
workout agreement for the Local Partnership's mortgage loan, which is scheduled
to expire on May 31, 2000.  As of November 10, 1999, the noteholders had not
consented to an extension agreement and there is no assurance that any agreement
will be reached with the noteholders.  There is no assurance that the
Partnership will be able to retain its interest in Frenchman's Wharf II.  The
uncertainty regarding the continued ownership of the Partnership's interest in
Frenchman's Wharf II does not adversely impact the Partnership's financial
condition, as discussed above.

                                    Princeton
                                    ---------

     The Partnership defaulted on its purchase money note related to Princeton
Community Village Associates (Princeton) on January 1, 1999 when the note
matured and was not paid.  The default amount included principal and accrued
interest of $500,000 and $1,422,064, respectively.  As of November 10, 1999,
principal and accrued interest of $500,000 and $1,512,740, respectively, were
due.

     The Managing General Partner is currently negotiating with the noteholder
to extend the maturity date of the purchase money note related to Princeton.
There is no assurance that an agreement for an extension of the purchase money
note will be obtained.  The uncertainty regarding the continued ownership of the
Partnership's interest in Princeton does not adversely impact the Partnership's
financial condition, as discussed above.

            Rolling Green at Fall River and Rolling Green at Amherst
            --------------------------------------------------------

     The Partnership defaulted on its purchase money notes related to Roberts
Fall River Associates (Rolling Green at Fall River) and Roberts Amherst
Associates (Rolling Green at Amherst) on August 31, 1998 when the notes matured
and were not paid.  The default amount included principal and accrued interest
of $4,600,000 and $8,750,764, respectively, for Rolling Green at Fall River and
$1,927,500 and $3,661,147, respectively, for Rolling Green at Amherst.  The
Managing General Partner and the trustees representing the noteholders agreed to
extend the maturity dates of the purchase money notes to February 28, 2001,
subject to a further extension to August 31, 2003 if the Local Partnerships
complete a refinancing of their mortgage loans, which refinancings have
occurred.  However, the noteholders have the right to accelerate the maturity of

                                      -11-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

the notes upon not less than one year's prior notice.  Accordingly, the purchase
money notes for Rolling Green at Fall River and Rolling Green at Amherst
presently mature on August 31, 2003, subject to the respective noteholder's
right to accelerate the maturity.  As part of the agreement, the Partnership
agreed that all refinancing mortgage loan proceeds payable to the Partnership by
the respective Local Partnerships, as well as all net cash flow payable to the
Partnership from the respective Local Partnerships in excess of $10,000 per
year, shall be applied to the balance of the respective purchase money notes,
and further agreed to waive certain rights granted in the respective Local
Partnerships' limited partnership agreements.  The mortgage loan on Rolling
Green at Fall River was refinanced in March 1999; refinancing proceeds of
$2,708,983 were used to pay down purchase money note principal and capitalized
interest in March 1999.  The mortgage loan on Rolling Green at Amherst was
refinanced in August 1998; refinancing proceeds of $1,503,496 were used to pay
down purchase money note principal and capitalized interest in 1998.

                                   Troy Manor
                                   ----------

     The Partnership defaulted on its purchase money note related to Troy
Apartments Limited (Troy Manor) on January 1, 1999 when the note matured and was
not paid.  The default amount included aggregate principal and accrued interest
of $378,000 and $227,420, respectively.  On February 5, 1999, the Partnership
paid off, at a discount, the purchase money note related to Troy Manor.  The
discounted payoff resulted in extraordinary gain from extinguishment of debt of
approximately $220,000 in 1999.  The discounted payoff will also result in
cancellation of indebtedness income of approximately $200,000 for federal tax
purposes in 1999.

                                    Westgate
                                    --------

     In June, 1998, the holder of the purchase money note related to Westgate
Tower Limited Dividend Housing Associates (Westgate) accepted the Managing
General Partner's offer to extend the maturity date of the purchase money note
for five years from its scheduled maturity date of September 1, 1998.  However,
the noteholder has since refused to execute the documentation formally extending
the maturity date.  As of November 10, 1999, principal and accrued interest of
$1,450,000 and $2,113,028, respectively, were due.  In December, 1998, the
noteholder's attorney notified the Managing General Partner of its position,
which the Managing General Partner disputes, that the noteholder's prior
agreement to extend the maturity date is not binding on the noteholder.  The
parties are exploring settlement possibilities, but the Managing General Partner
is prepared to vigorously defend its position that the agreement to extend the
maturity date for five years is binding on the noteholder.  There is no
assurance that the parties will be able to settle this dispute or that the
Partnership would prevail in any resulting litigation if a settlement is not
reached.  Accordingly, there can be no assurance that the Partnership will be
able to retain its interest in the Local Partnership.  The uncertainty about the
continued ownership of the Partnership's interest in the related Local
Partnership does not adversely impact the Partnership's financial condition, as
discussed above.

                                      -12-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                                  Wexford Ridge
                                  -------------

     The Partnership defaulted on its three purchase money notes relating to
Wexford Ridge Associates (Wexford Ridge) on December 31, 1997 when the notes
matured and were not paid.  The aggregate default amount included principal and
accrued interest of $1,900,000 and $3,478,549, respectively.  The Managing
General Partner successfully negotiated an extension on one of the purchase
money notes (First Wexford Note) in the principal amount of $950,000 effective
April 9, 1998; the First Wexford Note was paid off, at a discount, on September
30, 1999.  The discounted payoff resulted in extraordinary gain from
extinguishment of debt of approximately $2.4 million in 1999.  The discounted
payoff will also result in cancellation of indebtness income of approximately
$2.4 million for federal tax purposes in 1999.

     On April 7, 1998, the Partnership was served with a complaint by the holder
of the second and third purchase money notes (collectively, Second and Third
Wexford Notes) filing suit against the Partnership, the Managing General Partner
and C.R.H.C., Incorporated (CRHC), an affiliate of the Managing General Partner,
for damages and seeking foreclosure on the Partnership's interest in the Local
Partnership.  On July 29, 1998, the parties agreed to a settlement which
involved a discounted payoff to the holder of the Second and Third Wexford
Notes, subject to the Partnership's satisfaction with the results of its due
diligence.  On October 5, 1998, pursuant to such settlement agreement, the
Partnership paid the holder of the Second and Third Wexford Notes a discounted
amount in full settlement of the Second and Third Wexford Notes and the lawsuit.
In connection with this settlement, the local general partner withdrew from the
Local Partnership, assigning his one percent interest (which was converted to a
limited partner interest) in the Local Partnership to the Partnership, and the
property management agent, which is an affiliate of the local general partner,
agreed to a termination of the property management agreement effective April 1,
1999.  CRHC is the sole remaining general partner of the Local Partnership.
Further, the Partnership received the interests of the local general partner,
the holder of the Second and Third Wexford Notes, and their respective
affiliates in the First Wexford Note, which is approximately 4.85%.
On May 28, 1999, the Partnership filed suit against the holder of the First
Wexford Note, seeking payment of the Partnership's 4.85% share of payments
made on the First Wexford Note since October 1, 1997.  On September 30, 1999,
the Partnership paid off, at a discount, the First Wexford Note (see above).

b.   Advances to Local Partnerships
     ------------------------------

     As of both September 30, 1999 and December 31, 1998, the Partnership had
advanced funds to Local Partnerships totaling $474,410.  Interest accrued on
these advances was $187,372 as of both September 30, 1999 and December 31, 1998.
For financial reporting purposes, these loans have been reduced to zero by the
Partnership as a result of losses from the related Local Partnerships.




                                      -13-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                             Arrowhead and Moorings
                             ----------------------

     On March 19, 1998, the Partnership advanced loan application fees and
deposits for refinancing costs totaling $14,000 to each of Arrowhead Apartments
Associates Limited Partnership (Arrowhead) and Moorings Apartments Associates
Limited Partnership (Moorings).  On May 7, 1998, the Partnership advanced
additional amounts for rate lock fees to Arrowhead and Moorings in the amounts
of $140,000 and $166,000, respectively.  The loan refinancings closed on May 14,
1998, and a portion of the proceeds were used to repay the above advances to the
Partnership.  See further discussion of the refinancings below.

                                   Chevy Chase
                                   -----------

     On January 7, 1999, the Partnership advanced $120,642 to Chevy Chase to
cover required repairs and maintenance expenses pending reimbursement from a
capital improvement escrow.  The advance was repaid to the Partnership on April
8, 1999.

                              Frenchman's Wharf II
                              --------------------

     To cover operating deficits incurred in prior years for Frenchman's Wharf
II, the Partnership advanced funds totaling $324,410 as of both September 30,
1999 and December 31, 1998.  No advances have been made to Frenchman's Wharf II
since March 1987, and the Partnership does not expect to advance any additional
funds to the Local Partnership.  These loans, together with accrued interest of
$187,372 as of both September 30, 1999 and December 31, 1998, are payable from
cash flow of Frenchman's Wharf II after payment of first mortgage debt service
and after satisfaction by the Partnership of certain other interest obligations
on the purchase money notes relating to the Local Partnership.  No interest has
been accrued since 1992 due to the uncertainty of future collection.  There is
no assurance that the Local Partnership, upon expiration of the workout of its
mortgage loan, will be able to repay the loans in accordance with the terms
thereof.  For financial reporting purposes, these loans have been reduced to
zero by the Partnership as a result of losses at the Local Partnership level
during prior years.















                                      -14-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                           Posada Vallarta Apartments
                           --------------------------

     The Managing General Partner and the local managing general partner of
Posada Associates Limited Partnership (Posada Vallarta Apartments) refinanced
the property's mortgage loan on May 26, 1998.  In connection with such
refinancing, the Partnership advanced the Local Partnership $450,000 for
application and rate lock fees.  As of September 30, 1999, $300,000 of the
advances had been repaid to the Partnership.  For financial reporting purposes,
the remaining advance has been reduced to zero by the Partnership as a result of
losses at the Local Partnership level.

c.   Property matters
     ----------------

                             Arrowhead and Moorings
                             ----------------------

     On May 7, 1998, Arrowhead Apartments Associates Limited Partnership
(Arrowhead) and Moorings Apartments Associates Limited Partnership (Moorings)
closed on refinancings of their respective first mortgage loans.  A portion of
the proceeds were subsequently used to pay, at a discount, purchase money note
obligations of the related Local Partnerships.  These discounted payoffs
resulted in cancellation of indebtedness income for the Partnership's 1998 tax
year.  Additionally, during the second and third quarters of 1998, the
Partnership received $1,536,059 and $3,511,550 from Arrowhead and Moorings,
respectively, from the net proceeds of the refinancings.  The aggregate
refinancing proceeds received by the Partnership exceeded the Partnership's
remaining investments in Arrowhead and Moorings by approximately $1.4 million
and $3.3 million, respectively, and have been included in share of income from
partnerships in the 1998 statement of operations.

                                   Chevy Chase
                                   -----------

     The Managing General Partner and the local managing general partner are
both exploring various options to refinance the U. S. Department of Housing and
Urban Development (HUD) Section 236 interest rate subsidized mortgage loan
related to Chevy Chase.  Additionally, the Managing General Partner commissioned
a rental market study and is evaluating the feasibility of converting the
property to market rate.  No conclusion has been reached as of November 10,
1999.  There is no assurance that the property will be converted, nor is there
any assurance that a refinancing of the mortgage loan will occur.

                              Frenchman's Wharf II
                              --------------------

     The report of the auditors on the financial statements of Frenchman's Wharf
II for the year ended December 31, 1998 indicated that substantial doubt exists
about the ability of the Local Partnership to continue as a going concern due to
the Local Partnership's default on its mortgage loan and the expiration of its
Section 8 Rental Housing Assistance Payments (HAP) contract with HUD on November

                                      -15-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

30, 1999.  [The contract subsequently was extended for another year.]  The
uncertainty about the Local Partnership's continued ownership of the property
does not adversely impact the Partnership's financial condition, as discussed
above.

                                Orangewood Plaza
                                ----------------

     The 1983 construction loan related to Orangewood Plaza, a 40-unit apartment
building in Orange Cove, California, was never formally converted to a permanent
loan.  It is anticipated that this loan will be restructured, and that the
restructuring may result in cancellation of indebtedness income to the
Partnership in the amount of approximately $163,000 during 1999.  Additionally,
the Partnership had pledged its interest in the Local Partnership as security on
a promissory note, in the amount of $170,000, made by the Local Partnership.
The note, which matured on August 5, 1998, is currently in default.  The parties
are currently negotiating a restructuring of this loan, which is anticipated to
be formalized concurrent with the restructuring of the construction loan.  The
local managing general partner has had a rental market study prepared and is
evaluating the feasibility of converting the property to market-rate.  No
conclusion has been reached as of November 10, 1999.  There is no assurance that
either restructuring will be formalized, or that the property will be converted
to market rate.  Accordingly, there is no assurance that the Partnership will be
able to retain its interest in Orangewood Plaza.  This uncertainty does not
adversely impact the Partnership's financial condition, as discussed above.

                                    Princeton
                                    ---------

     The report of the auditors on the financial statements of Princeton for the
year ended December 31, 1998 indicated that substantial doubt exists about the
ability of the Local Partnership to continue as a going concern due to the Local
Partnership's default on its mortgage loan and the Partnership's default on the
purchase money notes related to this Local Partnership, as discussed above.  The
uncertainty about the Local Partnership's continued ownership of the property
does not adversely impact the Partnership's financial condition, also as
discussed above.

                            Rolling Green at Amherst
                            ------------------------

     The mortgage loan on Rolling Green at Amherst was refinanced in August
1998; refinancing proceeds of $1,503,496 were used to pay down purchase money
note principal and capitalized interest in August 1998.  See the discussion
above for additional information pertaining to this refinancing and pay down.








                                      -16-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                           Rolling Green at Fall River
                           ---------------------------

     The mortgage loan on Rolling Green at Fall River was refinanced in March
1999; refinancing proceeds of $2,708,983 were used to pay down purchase money
note principal and capitalized interest in March 1999.  See the discussion above
for additional information pertaining to this refinancing and pay down.

                                  Wexford Ridge
                                  -------------

     Wexford Ridge Associates has received an offer to sell its property, and
the parties have executed a sales contract as of July 8, 1999, with a projected
closing date in December, 1999.  The contract is subject to customary
contingencies.  Accordingly, there is no assurance that a sale will take place.
In the event of a sale of this property, the Partnership's investment in and
advances to partnerships would be reduced accordingly.  Of the 20 Local
Partnerships in which the Partnership had invested as of September 30, 1999 and
December 31, 1998, Wexford Ridge represented approximately 0% and 0%,
respectively, of the total investment in and advances to partnerships.  For both
the nine months ended September 30, 1999 and 1998, distributions from Wexford
Ridge represented approximately 0% of total distributions from Local
Partnerships.  The Partnership's share of income from Wexford Ridge was $0 and
$0 for the three and nine months ended September 30, 1999, respectively, and $0
and $0 for the three and nine months ended September 30, 1998, respectively.

     Due to the impending and likely sale of the property related to the
Partnership's investment in Wexford Ridge, the net unamortized amounts of
acquisition fees and property purchase costs related to Wexford Ridge, which
totaled $39,653, have been reclassified to investment in partnership held for
sale in the accompanying balance sheet at September 30, 1999.

d.   Summarized financial information
     --------------------------------

     Combined statements of operations for the 20 Local Partnerships in which
the Partnership is invested as of both September 30, 1999 and 1998, follow.  The
combined statements have been compiled from information supplied by the
management agents of the projects and are unaudited.














                                      -17-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


2.   INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS - Continued

                        COMBINED STATEMENTS OF OPERATIONS
                                  (Unaudited)
<TABLE>
<CAPTION>

                                         For the three months ended          For the nine months ended
                                                September 30,                       September 30,
                                        -----------------------------      -----------------------------
                                            1999             1998              1999             1998
                                        ------------     ------------      ------------     ------------
<S>                                     <C>              <C>               <C>              <C>
Revenue:
  Rental revenue                        $  6,528,105     $  6,058,020      $ 19,830,717     $ 18,857,383
  Other                                      313,137          311,679           981,061          916,673
                                        ------------     ------------      ------------     ------------
    Total revenue                          6,841,242        6,369,699        20,811,778       19,774,056
                                        ------------     ------------      ------------     ------------

Expenses:
  Operating                                4,833,101        4,032,865        13,366,697       12,513,478
  Interest                                 1,624,329        1,752,413         4,873,006        5,257,248
  Depreciation and amortization            1,213,663        1,241,975         3,640,989        3,725,932
                                        ------------     ------------      ------------     ------------
    Total expenses                         7,671,093        7,027,253        21,880,692       21,496,658
                                        ------------     ------------      ------------     ------------
Net loss                                $   (829,851)    $   (657,554)     $ (1,068,914)    $ (1,722,602)
                                        ============     ============      ============     ============

</TABLE>

     As of both September 30, 1999 and December 31, 1998, the Partnership's
share of cumulative losses to date for 15 of the 20 Local Partnerships exceeded
the amount of the Partnership's investments in and advances to those Local
Partnerships by $24,799,013 and $23,529,345, respectively.  As the Partnership
has no further obligation to advance funds or provide financing to these Local
Partnerships, the excess losses have not been reflected in the accompanying
financial statements.


3.   AFFORDABLE HOUSING LEGISLATION

     President Clinton signed the Fiscal Year 1998 HUD appropriations bill into
law, effective October 1, 1997.  The legislation allowed all Section 8 HAP
contracts with rents at less than 100% of fair market rents which expired
between October 1997 and September 1998 to be renewed for one year.  In the case
of Section 8 HAP contracts with rents that exceeded 100% of fair market rents,
these contracts could be renewed for one year, but these rents were reduced to
100% of fair market rents (Mark-to-Market).  As of the beginning of Fiscal Year
1999 (October 1, 1998), all expiring contracts with rents exceeding comparable
market rents, and properties with mortgage loans insured by the Federal Housing
Administration (FHA), were subject to the Mark-to-Market legislation.


                                      -18-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


3.   AFFORDABLE HOUSING LEGISLATION - Continued

     Mark-to-Market implementation will reduce rental income at properties which
are currently subsidized at higher-than-market rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses.
Each affected property will undergo debt restructuring according to terms
determined by an individual property and operations evaluation.  This will
involve reducing the first mortgage loan balance to an amount supportable by the
property, taking into account the property's operating expenses and reduced
income.  The balance of the amount written down from the first mortgage loan
will be converted to a non-performing but accruing (soft) second mortgage loan.

     The Section 8 HAP contracts for the following properties have expired or
will expire during the government's fiscal year 1998 or 1999, and have been
renewed as indicated.








































                                      -19-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


3.   AFFORDABLE HOUSING LEGISLATION - Continued

<TABLE>
<CAPTION>
                                              Units Authorized for            Original                    Renewed
                              Number of      Rental Assistance Under    Expiration of Section 8     Expiration of Section 8
Property                     Rental Units         Section 8                  HAP Contract                HAP Contract
--------                     ------------    -----------------------    -----------------------     -----------------------
<S>                          <C>             <C>                        <C>                         <C>
Beech Hill I (1)                 200                    39                    08/31/98                   02/29/00
Beech Hill II (1)                120                    24                    08/31/98                   02/29/00
Chevy Chase                      232                   228                    03/23/98                   04/22/00
Four Winds West                   62                    62                    04/14/98                   10/14/00
Frenchman's Wharf II             324                    31                    11/30/98                   11/30/00
Princeton Community Village      239                    26                    07/01/98                   10/01/24
Wexford Ridge                    246                   242                    09/30/98                   09/30/99
                               -----                   ---
     Total                     1,423                   652
                               =====                   ===
</TABLE>

     (1)  As discussed previously, the Partnership's interests in these Local
          Partnerships were transferred on October 5, 1999, to the noteholders.

     With the uncertainty of continued project-based Section 8 subsidies for
properties with expiring HAP contracts, there is no assurance that these rental
properties will be able to maintain the rental income and occupancy levels
necessary to pay operating costs and debt service.  As a result, it is not
possible to predict the impact on the Local Partnerships and the resulting
impact on the Partnership at this time.

     There is a new HUD-sponsored initiative known as the Emergency Initiative
to Preserve Below-Market Project Based Section 8 Multifamily Housing Stock
("Mark-up-to-Market").  Under this initiative, properties with expiring Section
8 contracts which are located in high-rent areas as defined by HUD are eligible
for rent increases which would be necessary to bring Section 8 rents in line
with market rate rents.  For properties with subsidized FHA loans, the market
rents are reduced to take into account the benefits the property is already
receiving from the below-market rate interest rate by means of a HUD determined
Interest Subsidy Adjustment Factor.  The purpose of this initiative is to
incentivize owners of properties with expiring Section 8 contracts not to
convert these properties to market rate housing.

     In return for receiving market rate rents under Mark-up-to-Market, the
property owner must enter into a five year conditional Section 8 contract with
HUD, subject to the annual availability of funding by Congress.  In addition,
property owners who enter into the Mark-up-to-Market program will receive a
waiver from the cash flow restriction imposed on the property by the limited
dividend limitation.






                                    -20-
<PAGE>
                 CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP

                          NOTES TO FINANCIAL STATEMENTS

                           SEPTEMBER 30, 1999 AND 1998

                                   (Unaudited)


4.   RELATED-PARTY TRANSACTIONS

     In accordance with the terms of the Partnership Agreement, the Partnership
is obligated to reimburse the Managing General Partner for its direct expenses
in managing the Partnership.  The Partnership paid $32,459 and $115,576 for the
three and nine months ended September 30, 1999, respectively and $47,329 and
$154,357 for the three and nine months ended September 30, 1998, respectively,
as direct reimbursement of expenses incurred on behalf of the Partnership.  Such
expenses are included in the accompanying statements of operations as general
and administrative expenses.  Additionally, in accordance with the terms of the
Partnership agreement, the Partnership is obligated to pay the Managing General
Partner an annual incentive management fee (the Management Fee) after all other
expenses of the Partnership are paid.  The Partnership paid the Managing General
Partner a Management Fee, as discussed above, of $62,499 and $187,497 for the
three and nine months ended September 30, 1999, respectively, and like amounts
for the three and nine months ended September 30, 1998, respectively.

     The Managing General Partner and/or its affiliates may receive a fee of not
more than 2% of the sales price of an investment in a Local Partnership or the
property it owns, payable under certain conditions upon the sale of an
investment in a Local Partnership or the property it owns.  The payment of the
fee is subject to certain restrictions, including the achievement of a certain
level of sales proceeds and making certain minimum distributions to limited
partners.  In accordance with the distribution provision of the Moorings Local
Partnership agreement, CRHC, a wholly-owned affiliate of the Managing General
Partner, was paid an additional incentive management fee of $331,073 on August
7, 1998.




























                                      -21-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS
               -----------------------------------

     Capital Realty Investors-II Limited Partnership's (the Partnership)
Management's Discussion and Analysis of Financial Condition and Results of
Operations section contains information that may be considered forward looking,
including statements regarding the effect of governmental regulations.  Actual
results may differ materially from those described in the forward looking
statements and will be affected by a variety of factors including national and
local economic conditions, the general level of interest rates, governmental
regulations affecting the Partnership and interpretations of those regulations,
the competitive environment in which the Partnership operates, and the
availability of working capital.

                                     General
                                     -------

     Some of the rental properties owned by the Local Partnerships are financed
by state housing agencies.  The Managing General Partner has been working to
develop strategies to sell or refinance certain properties pursuant to programs
developed by these agencies.  These programs may include opportunities to sell a
property to a qualifying purchaser who would agree to maintain the property as
low to moderate income housing in perpetuity, or to refinance a property, or to
obtain supplemental financing.  The Managing General Partner continues to
monitor certain state housing agency programs, and/or programs provided by
certain lenders, to ascertain whether the properties would qualify within the
parameters of a given program and whether these programs would provide an
appropriate economic benefit to the limited partners of the Partnership.

     Some of the rental properties owned by the Local Partnerships are dependent
on the receipt of project-based Section 8 rental Housing Assistance Payments
(HAP) provided by the U.S. Department of Housing and Urban Development (HUD)
pursuant to Section 8 HAP contracts.  President Clinton signed the Fiscal Year
1998 HUD appropriations bill into law, effective October 1, 1997.  The
legislation allowed all Section 8 HAP contracts with rents at less than 100% of
fair market rents which expired between October 1997 and September 1998 to be
renewed for one year.  In the case of Section 8 HAP contracts with rents that
exceeded 100% of fair market rents, these contracts could be renewed for one
year, but these rents were reduced to 100% of fair market rents
(Mark-to-Market).  As of the beginning of Fiscal Year 1999 (October 1, 1998),
all expiring contracts with rents exceeding comparable market rents, and
properties with mortgage loans insured by the Federal Housing Administration
(FHA), were subject to the Mark-to-Market legislation.

     Mark-to-Market implementation will reduce rental income at properties which
are currently subsidized at higher-than-market rental rates, and will therefore
lower cash flow available to meet mortgage payments and operating expenses.
Each affected property will undergo debt restructuring according to terms
determined by an individual property and operations evaluation.  This will
involve reducing the first mortgage loan balance to an amount supportable by the
property, taking into account the property's operating expenses and reduced
income.  The balance of the amount written down from the first mortgage loan
will be converted to a non-performing but accruing (soft) second mortgage loan.







                                      -22-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

     In many instances, the Mark-to-Market rental rate restructuring may require
the write down of an FHA-insured mortgage loan, which would trigger cancellation
of indebtedness income to the partners, a taxable event, even though no actual
cash is received.  Additionally, if the existing first mortgage loan is
bifurcated into a second mortgage loan, the newly created second mortgage loan
will accrue interest at a below-market rate; however, the Internal Revenue
Service issued a ruling in July 1998 that concluded that the below-market rate
of interest will not generate additional ordinary income.  Each property subject
to Mark-to-Market will be affected in a different manner, and it is very
difficult to predict the exact form of restructuring, or potential tax
liabilities to the limited partners, at this time.

     There is a new HUD-sponsored initiative known as the Emergency Initiative
to Preserve Below-Market Project Based Section 8 Multifamily Housing Stock
("Mark-up-to-Market").  Under this initiative, properties with expiring Section
8 contracts which are located in high-rent areas as defined by HUD are eligible
for rent increases which would be necessary to bring Section 8 rents in line
with market rate rents.  For properties with subsidized FHA loans, the market
rents are reduced to take into account the benefits the property is already
receiving from the below-market rate interest rate by means of a HUD determined
Interest Subsidy Adjustment Factor.  The purpose of this initiative is to
incentivize owners of properties with expiring Section 8 contracts not to
convert these properties to market rate housing.

     In return for receiving market rate rents under Mark-up-to-Market, the
property owner must enter into a five year conditional Section 8 contract with
HUD, subject to the annual availability of funding by Congress.  In addition,
property owners who enter into the Mark-up-to-Market program will receive a
waiver from the cash flow restriction imposed on the property by the limited
dividend limitation.

     The Managing General Partner is considering new strategies to deal with the
ever changing environment of affordable housing policy.  The Section 236 and
Section 221(d)(3) mortgage loans may be eligible for pre-payment in their 18th
year or later.  Properties with expiring Section 8 HAP contracts may become
convertible to market rate apartment properties.  Currently, there are few
lenders that will provide financing either to prepay existing mortgage loans of
these types or provide additional funds to allow a property to convert to
market rate units.  Where opportunities exist, the Managing General Partner will
continue to work with the Local Partnerships to develop strategies that make
economic sense for all parties involved.

                          Financial Condition/Liquidity
                          -----------------------------

     The Partnership's liquidity, with unrestricted cash resources of $7,412,832
($143.81 per Additional Limited Partner unit) and $7,596,031 ($147.36 per
Additional Limited Partner unit) as of September 30, 1999 and December 31, 1998,
respectively, along with anticipated future cash distributions from the Local
Partnerships, are expected to be adequate to meet its current and anticipated
operating cash needs.  As of November 10, 1999, there were no material
commitments for capital expenditures.

     The Partnership's obligations with respect to its investments in Local
Partnerships, in the form of purchase money notes having a principal balance of
$13,162,422 plus accrued interest of $21,669,016 as of September 30, 1999, are

                                      -23-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

payable in full upon the earliest of:  (1) sale or refinancing of the respective
Local Partnership's rental property; (2) payment in full of the respective Local
Partnership's permanent loan; or (3) maturity.  Purchase money notes in the
aggregate principal amounts of $1,050,000 and $950,000 matured on December 31,
1996 and December 31, 1997, respectively, and were paid off, at a discount, on
October 5, 1998, as discussed below.  Purchase money notes in the aggregate
principal amounts of $1,050,000 and $950,000 matured on December 31, 1996 and
1997, respectively, and were extended to January 5, 2001, but were paid off, at
a discount, on September 30, 1999, as discussed below.  Purchase money notes in
the aggregate principal amounts of $2,380,000 and $3,150,000 matured on January
1, 1998 and June 1, 1998, respectively, and have not been paid or extended, as
discussed below.  Purchase money notes in the aggregate principal amounts of
$4,600,000 and $1,927,500 matured on August 31, 1998, were partially paid down,
with the balances extended to August 31, 2003, as discussed in the notes to the
financial statements.  Purchase money notes in the aggregate principal amount
$1,450,000 matured on September 1, 1998, and have been extended to September 1,
2003, as discussed below.  Purchase money notes in the aggregate principal
amount of $840,178 matured on January 1, 1999 and were paid off, at a discount,
on February 5, 1999.  Purchase money notes in the aggregate principal amount of
$500,000 matured on January 1, 1999 and have not been paid or extended, as
discussed below.  See the notes to the financial statements for additional
information pertaining to these purchase money notes.

     The purchase money notes, which are nonrecourse to the Partnership, are
generally secured by the Partnership's interest in the respective Local
Partnerships.  There is no assurance that the underlying properties will have
sufficient appreciation and equity to enable the Partnership to pay the purchase
money notes' principal and accrued interest when due.  If a purchase money note
is not paid in accordance with its terms, the Partnership will either have to
renegotiate the terms of repayment or risk losing its partnership interest in
the Local Partnership.  The Partnership's inability to pay certain of the
purchase money note principal and accrued interest balances when due, and the
resulting uncertainty regarding the Partnership's continued ownership interest
in the related Local Partnerships, does not adversely impact the Partnership's
financial condition because the purchase money notes are nonrecourse and secured
solely by the Partnership's interest in the related Local Partnerships.
Therefore, should the investment in any of the Local Partnerships with maturing
purchase money notes not produce sufficient value to satisfy the related
purchase money notes, the Partnership's exposure to loss is limited because the
amount of the nonrecourse indebtedness of each of the maturing purchase money
notes exceeds the carrying amount of the investment in, and advances to, each of
the related Local Partnerships.  Thus, even a complete loss of the Partnership's
interest in one of these Local Partnerships would not have a material adverse
impact on the financial condition of the Partnership.

     The following chart presents information related to purchase money notes
which have matured or are scheduled to mature through September 30, 2000, and
which remain unpaid or unextended as of November 10, 1999.  Excluded from the
following chart are purchase money notes which matured through September 30,
1999, and which have been paid off or extended on or before November 10, 1999.







                                      -24-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

<TABLE>
<CAPTION>
                                            Carrying Amount
                                            of Partnership's
                                             Investment in                  Aggregate                 Aggregate
                                            and Advances to                 Principal                  Accrued
                   Number of                Underlying Local                 Balance                   Interest
   Purchase        Underlying               Partnerships as                   as of                  Balance as of
   Money Note        Local      Percentage    of September    Percentage     September   Percentage    September     Percentage
 (PMN) Maturity   Partnerships   of Total       30, 1999       of Total      30, 1999     of Total     30, 1999       of Total
----------------  ------------  ----------  ----------------  ----------   -----------   ----------  -------------   ----------
<S>               <C>           <C>         <C>               <C>          <C>           <C>         <C>             <C>
1st Quarter 1998        2            10%     $            --       --      $ 2,380,000         18%   $   3,074,160        14%
2nd Quarter 1998        1             5%                  --       --        3,150,000         24%       5,533,809        26%
1st Quarter 1999        1             5%                  --       --          500,000          4%       1,501,081         7%
                     ----         -----      ---------------    -----      -----------      -----    -------------     -----
Total through
  9/30/2000             4            20%     $            --       --      $ 6,030,000         46%   $  10,109,050        47%
                     ====         =====      ===============    =====      ===========      =====    =============     =====

Total, Local
  Partnerships         20           100%     $       714,171      100%     $13,162,422        100%   $  21,669,016       100%
                     ====         =====      ===============    =====      ===========      =====    =============     =====
</TABLE>

     The Managing General Partner is continuing to investigate possible
alternatives to reduce the Partnership's debt obligations.  These alternatives
include, among others, retaining the cash available for distribution to meet the
purchase money note requirements, paying off certain purchase money notes at a
discounted price, extending the due dates of certain purchase money notes,
refinancing the respective properties' underlying debt or selling the underlying
real estate and using the Partnership's share of the proceeds to pay or buy down
certain purchase money note obligations.  Although the Managing General Partner
has had some success applying these strategies in the past, the Managing General
Partner cannot assure that these strategies will be successful in the future.
Based on preliminary discussions with the holders of purchase money notes
maturing through September 30, 2000, the Managing General Partner anticipates
that, at least in some instances, the noteholders may not be willing to
negotiate any extension or discounted payoff.  In such instances, upon maturity
of the purchase money notes, if the purchase money notes remain unpaid, the
noteholders may have the right to foreclose on the Partnership's interest in the
related Local Partnerships.  In the event of a foreclosure, the excess of the
nonrecourse indebtedness over the carrying amount of the Partnership's
investment in the related Local Partnership would be deemed cancellation of
indebtedness income which would be taxable to Limited Partners at a federal tax
rate of up to 39.6%.  Additionally, in the event of a foreclosure, the
Partnership would lose its investment in the Local Partnership and, likewise,
its share of any future cash flow distributed by the Local Partnership from
rental operations, mortgage debt refinancings, or the sale of the real estate.
Of the 20 Local Partnerships in which the Partnership is invested as of both
September 30, 1999 and December 31, 1998, the four local Partnerships with
associated purchase money notes which mature through September 30, 2000 and
which remain unpaid or unextended as of November 10, 1999, represent the
following percentages of the Partnership's total distributions received from
Local Partnerships and share of income from Local Partnerships.


                                      -25-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

<TABLE>
<CAPTION>


                            Percentage of Total      Partnership's Share of
     For the Nine Month    Distributions Received      Income (loss) from
       Periods Ending      from Local Partnerships     Local Partnerships
     ------------------    -----------------------   ----------------------
     <S>                   <C>                       <C>
     September 30, 1999              0%                     $ 139,959
     September 30, 1998              0%                        12,158

</TABLE>

     The Managing General Partner continues to address the maturity and
impending maturity of its debt obligations and to seek strategies which will
provide the most favorable outcome to the Additional Limited Partners.  However,
there can be no assurance that these strategies will be successful.

     The Partnership closely monitors its cash flow and liquidity position in an
effort to ensure that sufficient cash is available for operating requirements.
For the nine months ended September 30, 1999 and 1998, the receipt of
distributions from Local Partnerships was adequate to support operating cash
requirements.  Cash and cash equivalents decreased slightly during the nine
months ended September 30, 1999, as net cash used in operating activities and
cash used to pay off or pay down five of the Partnership's purchase money notes
exceeded receipt of distributions from partnerships.

     The Partnership made a cash distribution of $1,700,000 ($34.00 per
Additional Limited Partner unit) to the Additional Limited Partners on October
29, 1999, to holders of record as of October 1, 1999.  The Managing General
Partner intends to retain all of the Partnership's remaining undistributed cash
for the possible repayment, prepayment or retirement of the Partnership's
outstanding purchase money notes related to the Local Partnerships.

                              Results of Operations
                              ---------------------

     The Partnership recognized net income for the three months ended September
30, 1999 as opposed to net loss during the corresponding period in 1998
primarily due to gain on extinguishment of debt related to the discounted
payoffs of the Chevy Chase and Wexford purchase money notes in September 1999,
as discussed in the notes to the financial statements.   Contributing to the
Partnership's net income was a decrease in interest expense due to the discount
on purchase money notes being fully amortized as of December 31, 1998, and a
decrease in general and administrative expenses due to lower reimbursed payroll
costs.  Offsetting the Partnership's net income were a decrease in share of










                                      -26-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

income from partnerships primarily due increased operating expenses at one
property, and a decrease in interest and other income due to generally lower
rates earned on cash and cash equivalents and lower cash and cash equivalents
balances during 1999.

     The Partnership's net income for the nine months ended September 30, 1999
increased as compared to the net income during the corresponding period in 1998
primarily due to gain on extinguishment of debt related to the discounted
payoffs of the Four Winds West and Troy Manor purchase money notes during the
first quarter, and the discounted payoffs of the Chevy Chase and Wexford
purchase money notes, as discussed above.  Contributing to the increase in the
Partnership's net income were a decrease in interest expense and general and
administrative expenses, also as discussed above, and a decrease in professional
fees primarily due to a decrease in legal fees related to the Chevy Chase and
Wexford litigation in 1998.  Offsetting the increase in the Partnership's net
income was a decrease in share of income from partnerships due to the receipt of
proceeds from the refinancing of the first mortgage loans on Arrowhead and
Moorings during the second quarter of 1998, and also due to a decrease in
interest and other income, as discussed above.

     For financial reporting purposes, the Partnership, as a limited partner in
the Local Partnerships, does not record losses from the Local Partnerships in
excess of its investment to the extent that the Partnership has no further
obligation to advance funds or provide financing to the Local Partnerships.  As
a result, the Partnership's recognized losses for the three and nine months
ended September 30, 1999 did not include losses of $509,357 and $1,269,668,
respectively, compared to excluded losses of $593,694 and $1,781,083,
respectively, for the three and nine months ended September 30, 1998.

     No other significant changes in the Partnership's operations have taken
place during this period.

                            Year 2000 Computer Issue
                            ------------------------

     The Year 2000 ("Y2K") computer issue refers to the inability of many
computer systems in use today to recognize "00" in the date field as the year
2000 and to recognize the year 2000 as a leap year.  The Y2K problem arose
because, for many years, computer software programs, including programs embedded
in hardware, utilized only the last two digits to specify the year with the
assumption that the first two digits were "19."  As a result, such programs may
not be able to recognize and process dates beyond 1999; rather, they may
recognize and process "00," "01," "02,", etc., incorrectly as 1900, 1901, 1902,
instead of as 2000, 2001, 2002.  In the opinion of computer experts, this could
cause such programs to create erroneous results, malfunction, or fail completely
unless corrective measures are taken.

     The Partnership utilizes software and related computer technologies
essential to its operations that will be affected by the Y2K issue.  To address
the issue, the Managing General Partner has developed and is currently
implementing a plan (the "Y2K Project") designed to ensure that the Y2K date
change will not have an adverse impact on the Partnership's operations.  The Y2K
Project is on schedule and the Managing General Partner expects completion by
the end of 1999.  The Y2K Project consists of four phases -- Planning,
Assessment, Implementation and Testing.  The Planning Phase began early in 1998
and is complete.  Under the Planning Phase, the Managing General Partner

                                      -27-
<PAGE>
PART I.   FINANCIAL INFORMATION
          ---------------------
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          -------------------------------------------------
               CONDITION AND RESULTS OF OPERATIONS - Continued
               -----------------------------------

conducted an inventory of all internal hardware and software systems, data
interfaces, business operations and non-information technology functions which
may be susceptible to the Y2K issue.  This phase was completed at the end of
November 1998.  Under the next phase, the Assessment Phase, all applications and
functions identified in the Planning Phase were analyzed to determine Y2K
compliance and the materiality of each identified risk.  In the event of
noncompliance for material risks, timetables for corrective action, as well as
estimated costs to achieve compliance, were determined.  This phase was
completed during the first quarter of 1999.  The Implementation Phase is now
underway.  Renovation and replacement of existing internal hardware and software
systems has begun and completion is expected by December 1999.  Additionally,
the Managing General Partner is currently working with third party vendors,
service providers, Local Partnership managing general partners, and Local
Partnership property managers, to verify their Y2K compliance, with completion
expected by December 1999.  The Testing Phase, which includes testing of
internal applications as well as some third party systems, began during January
1999 and will continue throughout 1999.  Contingency planning commenced during
the fourth quarter 1998 and will be completed by year-end 1999.  The Managing
General Partner does not expect the expense associated with the Y2K Project to
be material.


PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES
          -------------------------------

                               Beech Hill I and II
                               -------------------

     The Partnership defaulted on its purchase money notes aggregating
$2,380,000 related to Beech Hill Development Co. (Beech Hill I) and Beech Hill
Development Co. II (Beech Hill II) on August 1, 1995 when the notes matured and
were not paid.  On March 29, 1996, the noteholders agreed to extend the purchase
money note due dates to January 1, 1998.  Under the agreement, the Partnership
pays the noteholders of Beech Hill I and Beech Hill II all annual cash flow
distributions received from the related Local Partnerships in excess of $5,000
and $2,500, respectively, to be applied against the notes.  The Partnership did
not receive any cash flow distributions from Beech Hill I or Beech Hill II
during the nine months ended September 30, 1999 or 1998.

     Under the extension agreement, documents transferring the Partnership's
interests in Beech Hill I and Beech Hill II to the noteholders were placed in
escrow to be released to the noteholders upon a future default by the
Partnership on the respective purchase money notes.  On January 1, 1998, the
Partnership defaulted on its purchase money notes related to Beech Hill I and
Beech Hill II when the notes, as extended, matured and were not paid.  The
default amount included principal and accrued interest of $1,480,000 and
$1,687,578, respectively, for Beech Hill I and $900,000 and $1,072,113,
respectively, for Beech Hill II.  On September 30, 1999, the noteholders
instructed the escrow agent to release to them the transfer documents on October
5, 1999, and the escrow agent complied with those instructions.  Accordingly,
the Partnership's interests in Beech Hill I and Beech Hill II were transferred
to the noteholders on October 5, 1999.  As of that date, principal and accrued
interest totaling $1,480,000 and $1,902,848, respectively, related to Beech Hill
I and $900,000 and $1,191,999, respectively, related to Beech Hill II were due.

                                      -28-
<PAGE>
PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES - Continued
          -------------------------------

     Due to the impending transfer of the Partnership's interests in the Local
Partnerships to the noteholders, the Partnership's basis in each of these Local
Partnerships as of September 30, 1999, which was $737,092 and $446,763 for Beech
Hill I and Beech Hill II, respectively, was classified as partnership interests
held in escrow in the accompanying financial statements.

     The purchase money notes related to Beech Hill I and Beech Hill II are
nonrecourse and secured solely by the Partnership's interests in the related
Local Partnerships.  The release of the Partnership's purchase money note
obligations as a result of the loss of ownership interest in the Local
Partnerships will result in net financial statement gains of approximately $2.6
million and $1.7 million for Beech Hill I and Beech Hill II, respectively,
during the fourth quarter of 1999.  The federal tax gains are estimated to be
approximately $4.9 million and $3.0 million for Beech Hill I and Beech Hill II,
respectively.

                              Frenchman's Wharf II
                              --------------------

     The Partnership defaulted on its purchase money notes related to
Frenchman's Wharf Associates II Limited Partnership (Frenchman's Wharf II) on
June 1, 1999 when the notes matured and were not paid.  The default amount
included principal and accrued interest of $3,150,000 and $5,071,731,
respectively.  The purchase money notes, initially due to mature on June 1,
1988, were previously extended to mature on June 1, 1998.  As of November 10,
1999, principal and accrued interest totaling $3,150,000 and $5,572,019,
respectively, were due.  The Partnership is currently negotiating with the
purchase money noteholders to extend the notes to be coterminous with the
workout agreement for the Local Partnership's mortgage loan, which is scheduled
to expire on May 31, 2000.  As of November 10, 1999, the noteholders had not
consented to an extension agreement and there is no assurance that any agreement
will be reached with the noteholders.  There is no assurance that the
Partnership will be able to retain its interest in Frenchman's Wharf II.  The
uncertainty regarding the continued ownership of the Partnership's interest in
Frenchman's Wharf II does not adversely impact the Partnership's financial
condition, as discussed above.

     The report of the auditors on the financial statements of Frenchman's Wharf
II for the year ended December 31, 1998 indicated that substantial doubt exists
about the ability of the Local Partnership to continue as a going concern due to
the Local Partnership's default on its mortgage loan and the expiration of its
Section 8 Rental Housing Assistance Payments (HAP) contract with HUD on November
30, 1999.  [The contract subsequently was extended for another year.]  The
uncertainty about the Local Partnership's continued ownership of the property
does not adversely impact the Partnership's financial condition, as discussed
above.

                                    Princeton
                                    ---------

     The Partnership defaulted on its purchase money note related to Princeton
Community Village Associates (Princeton) on January 1, 1999 when the note
matured and was not paid.  The default amount included principal and accrued
interest of $500,000 and $1,422,064, respectively.  As of November 10, 1999,
principal and accrued interest of $500,000 and $1,512,740, respectively, were
due.



                                      -29-
<PAGE>
PART II.  OTHER INFORMATION
          -----------------
ITEM 3.   DEFAULTS UPON SENIOR SECURITIES - Continued
          -------------------------------

     The Managing General Partner is currently negotiating with the noteholder
to extend the maturity date of the purchase money note related to Princeton.
There is no assurance that an agreement for an extension of the purchase money
note will be obtained.  The uncertainty regarding the continued ownership of the
Partnership's interest in Princeton does not adversely impact the Partnership's
financial condition, as discussed above.

                                    Westgate
                                    --------

     In June, 1998, the holder of the purchase money note related to Westgate
Tower Limited Dividend Housing Associates (Westgate) accepted the Managing
General Partner's offer to extend the maturity date of the purchase money note
for five years from its scheduled maturity date of September 1, 1998.  However,
the noteholder has since refused to execute the documentation formally extending
the maturity date.  As of November 10, 1999, principal and accrued interest of
$1,450,000 and $2,113,028, respectively, were due.  In December, 1998, the
noteholder's attorney notified the Managing General Partner of its position,
which the Managing General Partner disputes, that the noteholder's prior
agreement to extend the maturity date is not binding on the noteholder.  The
parties are exploring settlement possibilities, but the Managing General Partner
is prepared to vigorously defend its position that the agreement to extend the
maturity date for five years is binding on the noteholder.  There is no
assurance that the parties will be able to settle this dispute or that the
Partnership would prevail in any resulting litigation if a settlement is not
reached.  Accordingly, there can be no assurance that the Partnership will be
able to retain its interest in the Local Partnership.  The uncertainty about the
continued ownership of the Partnership's interest in the related Local
Partnership does not adversely impact the Partnership's financial condition, as
discussed above.





























                                      -30-
<PAGE>
PART II.  OTHER INFORMATION
          -----------------
ITEM 5.   OTHER INFORMATION
          -----------------

     The Partnership's investment units are not publicly traded on any
registered stock exchange but can be traded on an informal secondary market.
During 1999, a number of investors sold their investment units in the
Partnership to other investors.  If more than 5% of the total outstanding
investment units in the Partnership are transferred in any one calendar year
(not counting certain exempt transfers), the Partnership could be taxed as a
"publicly traded partnership," with potentially severe tax implications for the
Partnership and its investors.  Specifically, the Partnership would be taxed as
a corporation and the income and losses from the Partnership would no longer be
considered a passive activity.  From January 1, 1999 through June 1, 1999,
approximately 4.9% of outstanding investment units were sold.  Accordingly, to
remain within the 5% safe harbor, effective June 1, 1999, the General Partner of
the Partnership halted recognition of any transfers that exceed the safe harbor
limit through December 31, 1999.  As a result, transfers of investment units due
to sales transactions will not be recognized by the Partnership until after
December 31, 1999.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

     a.   None

     b.   No Reports on Form 8-K were filed with the Commission during the
          quarter ended September 30, 1999.

     All other items are not applicable.
































                                      -31-
<PAGE>

                                    SIGNATURE


     In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                         CAPITAL REALTY INVESTORS-II LIMITED PARTNERSHIP
                         -----------------------------------------------
                         (Registrant)

                         by: C.R.I., Inc.
                             -------------------------------------------
                             Managing General Partner



November 10, 1999            by: /s/ Michael J. Tuszka
-----------------                ---------------------------------------
DATE                             Michael J. Tuszka
                                   Vice President
                                   and Chief Accounting Officer
                                   (Principal Financial Officer
                                   and Principal Accounting Officer)







































                                      -32-
<PAGE>


                                  EXHIBIT INDEX
                                  -------------


Exhibit                                         Method of Filing
-------                                   -----------------------------

27        Financial Data Schedule         Filed herewith electronically






















































                                      -33-