##### 



SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549

FORM 10-Q

|    |  |                                                                                             
|--- |  | --------------------------------------------------------------------------------------------
|[X] |  | (Mark One)
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
|    |  |                                                                                             
|or  |  |                                                                                             
|    |  |                                                                                             
|[ ] |  | Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934    
|    |  |                                                                                             
|    |  | for Quarterly Period Ended September 30, 2002
Commission file number 33-30312               

INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

|                                                                              |  |                                                
|----------------------------------------------------------------------------- |  | -----------------------------------------------
|NORTH CAROLINA
(State or other jurisdiction of
incorporation or organization) |  | 56-1681116
(I.R.S. Employer
Identification No.)

Wachovia Securities, NC0170
301 S. College St.  17th Floor
Charlotte, NC 28288-0170
(Address of principal executive offices)
(Zip Code)

(704) 715-7616
(Registrants telephone number, including area code)

Wachovia Securities, Three Wachovia Center  6th Floor
401 S. Tryon Street, Charlotte, NC 28288-1164
(Former name, former address and former fiscal year, if changed since last report)

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

Yes x
    No

Indicate the number of shares outstanding of each of the issuers classes of
common stock as of the latest practicable date.

7,650 limited partnership units outstanding at November 6, 2002

Page 1 of 9 Sequentially Numbered Pages





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##### 



INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Balance Sheets
As of September 30, 2002 and December 31, 2001

|                                        |                                             |   |               |   |              |   |           |   | 
|--------------------------------------- | ------------------------------------------- | - | ------------- | - | ------------ | - | --------- | - | 
|                                        |                                             |   | September 30, |   |              |   |          
|                                        |                                             |   | 2002          |   | December 31,
|                                        |                                             |   | (Unaudited)   |   | 2001        
|                                        |                                             |   |               |   |             
|                                        | ASSETS:                                     |   |               |   |              |   |           |   | 
|                                        |                                             |   |               |   |              |   |           |  
|Unimproved land to be held and used     |                                             | $ | 1,911,500     |   |              | $ | 1,911,500 |  
|Cash and Cash Equivalents               |                                             |   | 102,760       |   |              |   | 129,674   |  
|Other Assets                            |                                             |   | 0             |   |              |   | 0         |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             | $ | 2,014,260     |   |              | $ | 2,041,174 |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        | LIABILITIES AND PARTNERS EQUITY (DEFICIT): |   |               |   |              |   |           |   | 
|                                        |                                             |   |               |   |              |   |           |  
|Accrued Liabilities                     |                                             | $ | 20            |   |              | $ | 0         |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   | 20            |   |              |   | 0         |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   |               |   |              |   |           |  
|Class A Limited Partners Interest      |                                             |   | 2,014,384     |   |              |   | 2,041,315 |  
|Subordinated Limited Partners Interest |                                             |   | 71            |   |              |   | 71        |  
|General Partners Interest              |                                             |   | (215          | ) |              |   | (212      | )
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   | 2,014,240     |   |              |   | 2,041,174 |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             |   |               |   |              |   |           |  
|                                        |                                             | $ | 2,014,260     |   |              | $ | 2,041,174 |  
|                                        |                                             |   |               |   |              |   |           |  

See attached notes to the condensed financial statements

2



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##### 



INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statement of Operations
(Unaudited)

|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |           |  
|--------------------------------------------- | --------------------------------------------- | - | ------------- | ------- | ------------- | - | ------------- | ----- | ------------- | - | -------- | -------- | - | - | --------- | --------- | -
|                                              |                                               |   | Three         |         | Three         |   | Nine          |       | Nine         
|                                              |                                               |   | Months        |         | Months        |   | Months        |       | Months       
|                                              |                                               |   | Ended         |         | Ended         |   | Ended         |       | Ended        
|                                              |                                               |   | September 30, |         | September 30, |   | September 30, |       | September 30,
|                                              |                                               |   | 2002          |         | 2001          |   | 2002          |       | 2001         
|                                              |                                               |   |               |         |               |   |               |       |              
|INCOME:                                       |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|Sale of Real Estate                           |                                               | $ | 0             |         |               | $ | 0             |       |               | $ | 0        |          |   | $ | 4,338,360 |          
|Interest Income                               |                                               |   | 286           |         |               |   | 9,703         |       |               |   | 1,102    |          |   |   | 16,759    |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   | 286           |         |               |   | 9,703         |       |               |   | 1,102    |          |   |   | 4,355,119 |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|EXPENSES:                                     |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              | Property Taxes                                |   |               | 10      |               |   |               | 0     |               |   |          | 20       |   |   |           | 38        |  
|                                              | Cost of Real Estate Sale                      |   |               | 0       |               |   |               | 0     |               |   |          | 0        |   |   |           | 4,623,774 |  
|                                              | Insurance Expense                             |   |               | 0       |               |   |               | 0     |               |   |          | 250      |   |   |           | 263       |  
|                                              | Professional and Legal Fees                   |   |               | 250     |               |   |               | 300   |               |   |          | 9,930    |   |   |           | 12,949    |  
|                                              | Interest expense                              |   |               | 0       |               |   |               | 0     |               |   |          | 0        |   |   |           | 15,060    |  
|                                              | General and Administrative Costs              |   |               | 10,013  |               |   |               | 4,292 |               |   |          | 17,836   |   |   |           | 11,703    |  
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              | Total Expenses                                |   |               | 10,273  |               |   |               | 4,592 |               |   |          | 28,036   |   |   |           | 4,663,786 |  
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|NET INCOME (LOSS)                             |                                               |   | ($9,987       | )       |               | $ | 5,112         |       |               |   | ($26,934 | )        |   |   | ($308,667 | )        
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|NET INCOME (LOSS) ALLOCATION:                 |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|General Partners                              |                                               |   | ($1           | )       |               | $ | 1             |       |               |   | ($3      | )        |   |   | ($31      | )        
|Class A Limited Partners                      |                                               |   | (9,986        | )       |               |   | 5,111         |       |               |   | (26,931  | )        |   |   | (308,636  | )        
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              | Total Net Income (Loss)
Allocated to Partners |   |               | ($9,987 | )             |   | $             | 5,112 |               |   |          | ($26,934 | ) |   |           | ($308,667 | )
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|CLASS A LIMITED PARTNERSHIP
UNITS OUTSTANDING |                                               |   | 7,650         |         |               |   | 7,650         |       |               |   | 7,650    |          |   |   | 7,650     |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          
|NET LOSS PER CLASS A
LIMITED PARTNERSHIP UNIT |                                               |   | ($1.31        | )       |               | $ | 0.67          |       |               |   | ($3.52   | )        |   |   | ($40.35   | )        
|                                              |                                               |   |               |         |               |   |               |       |               |   |          |          |   |   |           |          

See attached notes to the condensed financial statements

3



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##### 



INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statements of Cash Flows
For the Nine Months ended September 30, 2002 and 2001

|                                                                            |                                            |   |               |    |               |   |            |            |  
|--------------------------------------------------------------------------- | ------------------------------------------ | - | ------------- | -- | ------------- | - | ---------- | ---------- | -
|                                                                            |                                            |   | Nine Months   |    | Nine Months  
|                                                                            |                                            |   | Ended         |    | Ended        
|                                                                            |                                            |   | September 30, |    | September 30,
|                                                                            |                                            |   | 2002          |    | 2001         
|                                                                            |                                            |   | (Unaudited)   |    | (Unaudited)  
|                                                                            |                                            |   |               |    |              
|CASH FLOW FROM OPERATING ACTIVITIES:                                        |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Net Income (Loss)                                                           |                                            |   | ($26,934      | )  |               |   | ($308,667  | )         
|Adjustments to reconcile net income (loss) to
net cash used for operations: |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            | Decrease in Accounts Receivable            |   |               | 0  |               |   |            | 17,427     |  
|                                                                            | Increase (Decrease) in Accrued Liabilities |   |               | 20 |               |   |            | (251,359   | )
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   | 20            |    |               |   | (233,932   | )         
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Net Cash used for Operating Activities                                      |                                            |   | (26,914       | )  |               |   | (542,599   | )         
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|CASH FLOW FROM INVESTING ACTIVITIES:                                        |                                            |   |               |    |               |   |            |           
|                                                                            | Sale of Real Estate                        |   |               | 0  |               |   |            | 4,329,479  |  
|                                                                            | Decrease in Interest Receivable            |   |               | 0  |               |   |            | 24,934     |  
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Net Cash Provided by Investing Activities                                   |                                            |   | 0             |    |               |   | 4,354,413  |           
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|CASH FLOW FROM FINANCING ACTIVITIES:                                        |                                            |   |               |    |               |   |            |           
|                                                                            | Distributions to Limited Partners          |   |               | 0  |               |   |            | (3,467,974 | )
|                                                                            | Increase (Decrease) in Note Payable        |   |               | 0  |               |   |            | (212,753   | )
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Net Cash Provided by Financing Activities                                   |                                            |   | 0             |    |               |   | (3,680,727 | )         
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Increase (Decrease) in Cash and Cash Equivalents                            |                                            |   | (26,914       | )  |               |   | 131,087    |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Cash and Cash Equivalents at Beginning of Period                            |                                            |   | 129,674       |    |               |   | 1,649      |           
|                                                                            |                                            |   |               |    |               |   |            |           
|                                                                            |                                            |   |               |    |               |   |            |           
|Cash and Cash Equivalents at End of Period                                  |                                            | $ | 102,760       |    |               | $ | 132,736    |           
|                                                                            |                                            |   |               |    |               |   |            |           

See attached notes to the condensed financial statements

4



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INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

Condensed Statement of Partners Equity (Deficit)
For the Nine Months ended September 30, 2002 and 2001
(Unaudited)

|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|-------------------------------------------------------------- |  | -------- | ----- | -------- |  | ------- | ---------- | ----- |  | ------------ | -- |  |  | - | ---------- | -
|                                                               |  |          |       |          |  |         |            |       |  | Subordinated |    |  |  |  
|                                                               |  | General  |       | Limited  |  | Limited |            |       |  |             
|                                                               |  | Partners |       | Partners |  | Partner |            | Total
|                                                               |  |          |       |          |  |         |            |      
|Partners Equity (Deficit)
at December 31, 2000                |  |          | ($160 | )        |  | $       | 6,029,973  |       |  | $            | 84 |  |  | $ | 6,029,897  |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|Net Income (Loss) for the Nine Months
Ended September 30, 2001 |  |          | (31   | )        |  |         | (308,636   | )     |  |              | 0  |  |  |   | (308,667   | )
|Less Cash Distributions                                        |  |          | (347  | )        |  |         | (3,467,628 | )     |  |              | 0  |  |  |   | (3,467,975 | )
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|PARTNERS EQUITY (DEFICIT)
AT SEPTEMBER 30, 2001               |  |          | ($538 | )        |  | $       | 2,253,709  |       |  | $            | 84 |  |  | $ | 2,253,255  |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|Partners Equity (Deficit)
at December 31, 2001                |  |          | ($212 | )        |  | $       | 2,041,315  |       |  | $            | 71 |  |  | $ | 2,041,174  |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|Net Income (Loss) for the Nine Months
Ended September 30, 2002 |  |          | (3    | )        |  |         | (26,931    | )     |  |              | 0  |  |  |   | (26,934    | )
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  
|PARTNERS EQUITY (DEFICIT)
AT SEPTEMBER 30, 2002               |  |          | ($215 | )        |  | $       | 2,014,384  |       |  | $            | 71 |  |  | $ | 2,014,240  |  
|                                                               |  |          |       |          |  |         |            |       |  |              |    |  |  |   |            |  

See attached notes to the condensed financial statements

5



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##### 



INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2002

1. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the nine month period ended September 30, 2002, are not
necessarily indicative of the results that may be expected for the year to end
December 31, 2002.

2. ORGANIZATION

Interstate Land Investors II Limited Partnership (Registrant or
Partnership) is a North Carolina limited partnership. The Partnership filed
registration statements in 1989 and 1990 and offered the sale of the limited
partnership interests to persons who were admitted as limited partners. The
initial offering became effective September 29, 1989, and was terminated
November 3, 1989. The post effective amendment was filed in August 1990,
approved in November 1990, and closed November 30, 1990. Capital contributions
of $100 were received from the general partners and $7,650,000 from the limited
partners. The limited partnership units were sold in $1,000 units. On
November 6, 2002, there were 775 unit holders of record. The Partnerships
business now consists of holding for investment, disposing and otherwise
dealing in the remaining 48 acres out of the original 145 acres of undeveloped
land (the Property) located in York County, South Carolina. As of May 10,
2001, the Partnership sold 97 acres of the property to Greenfield Development
Company and the Partnership now holds approximately 48 of the remaining acres
of the Property for sale.

ITEM 2MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

1. Liquidity and Capital Resources

As of September 30, 2002, the Registrant had $102,760 on hand in the form of
cash and cash equivalents. The Registrant will retain this cash to pay ongoing
partnership expenses. Until the Registrant disposes of the Property, its only
sources of additional capital are additional loans and proceeds from the sale
of resources (i.e., timber) on the property, if any.

On May 11, 2001, the Partnership sold 96.9 acres of the property to Greenfield
Development Company LLC. The gross sale price of the facility was $4,338,360. A
portion of the sale proceeds in the amount of $313,543 was used to pay debts to
the General Partner. Closing costs and pro-rations incurred at settlement
totaled $447,609 leaving net cash proceeds to the partnership of $3,577,208. On
June 14, 2001, a .33 acre right-of-way was purchased by South Carolina Dept. of
Transportation for $15,000.

On June 29, 2001, a distribution of $3,467,975 (representing $453 per unit) was
distributed to the limited partners.

6



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##### 



2. Results of Operations

For the nine months ended September 30, 2002, the Partnership reported a net
loss of $26,934 as compared to a net loss of $308,667 for the nine months ended
September 30, 2001. The loss for September 30, 2001 reflects the loss realized
on the sale of the 96.9 acres.

Professional and legal fees decreased from $12,949 as of September 30, 2001, to
$9,930 for the nine months ended September 30, 2002. The fees paid in 2001 are
higher due to the fees incurred for review of documents pertaining to the sale
of the property. Interest expense decreased from $15,060 for the nine months
ended September 30, 2001 to zero for the current year. This decrease reflects
the fact that the entire principal balance was repaid in 2001. General and
administrative costs were up from $11,703 as of September 30, 2001, to $17,836
for the current nine-month period. The increase is due to database maintenance
fees and a $3,890 real estate appraisal fee paid in the reporting quarter. All
other expenses were in line with those incurred during the third quarter 2001.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 2. Changes in Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Submissions of Matters to a vote of Securities Holders

None.

Item 5. Other Information.

In June 2000, the Partnership entered into a contract with Greenfield
Development Company, LLC, to sell 97 acres of the 145 acres unimproved land for
$45,000 per acre, subject to adjustments for wetlands acreage. The actual
proceeds from the sale totaled $4,338,360. The purchaser deposited $50,000
earnest money with a title agency. Under the terms of the contract, the
purchaser had until November 6, 2000, to complete their due diligence, however,
Greenfield requested two 90-day extensions of the closing date to provide them
time to obtain a wetlands permit from the U.S. Army Corps of Engineers which
permit was necessary to allow the proposed development. An additional $25,000
earnest money was deposited with the title agency for the first extension and
$50,000 was deposited for the second extension. The first extension expired on
March 6, 2001, and the sale was consummated on May 11, 2001. On June 29, 2001,
a cash distribution in the amount of $3,467,975 or $453 per unit was
distributed to the limited partners. Crosland Commercial continues to list and
market for sale the remaining approximate 48 acres of the property consisting
of Tract 1A and Tract 1D.

7



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##### 



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

| |  |     |  |                                                                                                  
| |  | --- |  | -------------------------------------------------------------------------------------------------
| |  | (a) |  | Exhibits                                                                                         
| |  |     |  |                                                                                                  
| |  |     |  | EX 99.1 Certification by Officer filed November 6, 2002.                                         
| |  |     |  |                                                                                                  
| |  | (b) |  | Reports on Form 8-K                                                                              
| |  |     |  |                                                                                                  
| |  |     |  | No reports on Form 8-K were required to be filed during the nine months ended
September 30, 2002.

8



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##### 



INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP

SIGNATURE

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

|                       |  |                                                  |  |                                 
|---------------------- |  | ------------------------------------------------ |  | --------------------------------
|                       |  | INTERSTATE LAND INVESTORS II LIMITED PARTNERSHIP
|                       |  |                                                  |  |                                 
|                       |  | By:                                              |  | ISC REALTY CORPORATION          
|                       |  |                                                  |  | As Principal Executive Officer, 
|                       |  |                                                  |  | Principal Financial Officer, and
|                       |  |                                                  |  | Principal Accounting Officer of 
|                       |  |                                                  |  | the Registrant                  
|                       |  |                                                  |  |                                 
|                       |  | By:                                              |  | /s/Jeffrey K. Harpel            
|                       |  |                                                  |  |                                 
|                       |  |                                                  |  | Jeffrey K. Harpel               
|Date: November 6, 2002 |  |                                                  |  |                                 

9



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##### 



EXHIBIT 99.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Interstate Land Investors II Limited
Partnership, on Form 10-Q for the period ending September 30, 2002, as filed
with the Securities and Exchange Commission on the date hereof (the Report),
I, Jeffrey K. Harpel, General Partner and Principal Executive Officer,
Principal Financial Officer of the Registrant, certify, pursuant to 18 U.S.C.
section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of
2002, that:



| | (1) |  | The Report fully complies with the requirements of section 13
(a) or 15 (d) of the Securities Exchange Act of 1934; and                                        
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations
of the Limited Partnership.

|                                                 |  | 
|------------------------------------------------ |  | 
|/s/ Jeffrey K. Harpel

Jeffrey K. Harpel         |  | 
|ISC Realty Corporation,                          |  | 
|General Partner and Principal Executive Officer, |  | 
|Principal Financial Officer of the Registrant    |  | 
|November 6, 2002                                 |  | 

10