UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
_______________________________
Investment Company Act file number 811-21340
DWS RREEF Real Estate Fund II, Inc.
(Exact name of registrant as specified in charter)
345 Park Avenue
New York, NY 10154
(Address of principal executive offices) (Zip code)
Paul Schubert
345 Park Avenue
New York, NY 10154-0004
(Name and address of agent for service)
Registrant's telephone number, including area code:
(212) 454-7190
Date of fiscal year end:
12/31
Date of reporting period:
9/30/09
ITEM 1. SCHEDULE OF INVESTMENTS
Consolidated Investment Portfolio
|
as of September 30, 2009 (Unaudited)
|
DWS RREEF Real Estate Fund II, Inc.
|
Shares
|
|
Value ($)
|
|
|
|
Common Stocks 105.5%
|
|
Real Estate Investment Trusts (REITs) 105.5%
|
|
Apartments 16.1%
|
|
AvalonBay Communities, Inc.
|
|
29,100
|
|
2,116,443
|
|
BRE Properties, Inc.
|
|
62,650
|
|
1,960,945
|
|
Equity Residential
|
|
76,600
|
|
2,351,620
|
|
|
|
6,429,008
|
|
Diversified 17.9%
|
|
Digital Realty Trust, Inc.
|
|
11,782
|
|
538,555
|
|
Duke Realty Corp.
|
|
210,550
|
|
2,528,705
|
|
Starwood Property Trust, Inc.
|
|
115,750
|
|
2,343,938
|
|
Washington Real Estate Investment Trust
|
|
58,850
|
|
1,694,880
|
|
|
|
7,106,078
|
|
|
|
|
|
|
|
|
|
Health Care 19.4%
|
|
Cogdell Spencer, Inc.
|
|
144,528
|
|
693,734
|
|
HCP, Inc.
|
|
74,700
|
|
2,146,878
|
|
Health Care REIT, Inc.
|
|
27,600
|
|
1,148,712
|
|
LTC Properties, Inc.
|
|
48,350
|
|
1,162,334
|
|
Medical Properties Trust, Inc.
|
|
140,150
|
|
1,094,572
|
|
Senior Housing Properties Trust
|
|
78,200
|
|
1,494,402
|
|
|
|
7,740,632
|
|
Hotels 9.0%
|
|
Canyon Ranch Holdings LLC (Units) (a)
|
|
864,000
|
|
1,814,400
|
|
Hospitality Properties Trust
|
|
87,200
|
|
1,776,264
|
|
|
|
3,590,664
|
|
Industrial 11.4%
|
|
AMB Property Corp.
|
|
54,150
|
|
1,242,742
|
|
Liberty Property Trust
|
|
16,250
|
|
528,613
|
|
ProLogis
|
|
233,600
|
|
2,784,512
|
|
|
|
4,555,867
|
|
Office 8.3%
|
|
BioMed Realty Trust, Inc.
|
|
55,450
|
|
765,210
|
|
Government Properties Income Trust*
|
|
21,950
|
|
527,019
|
|
HRPT Properties Trust
|
|
94,296
|
|
709,106
|
|
Kilroy Realty Corp.
|
|
46,700
|
|
1,295,458
|
|
|
|
3,296,793
|
|
Regional Malls 5.6%
|
|
Simon Property Group, Inc.
|
|
32,187
|
|
2,234,743
|
|
Shopping Centers 12.5%
|
|
Inland Real Estate Corp.
|
|
199,650
|
|
1,748,934
|
|
Ramco-Gershenson Properties Trust
|
|
31,350
|
|
279,642
|
|
Regency Centers Corp.
|
|
49,350
|
|
1,828,418
|
|
Weingarten Realty Investors
|
|
56,700
|
|
1,129,464
|
|
|
|
4,986,458
|
|
Storage 5.3%
|
|
Sovran Self Storage, Inc.
|
|
68,850
|
|
2,095,106
|
|
|
Total Common Stocks
(Cost $55,541,428)
|
|
42,035,349
|
|
|
Preferred Stocks 31.7%
|
|
Real Estate Investment Trusts 31.7%
|
|
Apartments 6.9%
|
|
Associated Estates Realty Corp., Series II, 8.7%
|
|
118,300
|
|
2,763,488
|
|
Diversified 3.9%
|
|
NorthStar Realty Finance Corp., Series B, 8.25%
|
|
125,100
|
|
1,570,005
|
|
Health Care 0.2%
|
|
LTC Properties, Inc., Series F, 8.0%
|
|
3,000
|
|
70,200
|
|
Hotels 7.1%
|
|
FelCor Lodging Trust, Inc., Series C, 8.0%
|
|
43,100
|
|
517,200
|
|
Host Hotels & Resorts, Inc., Series E, 8.875%
|
|
91,800
|
|
2,295,000
|
|
|
|
2,812,200
|
|
Shopping Centers 13.6%
|
|
Cedar Shopping Centers, Inc., Series A, 8.875%
|
|
154,000
|
|
3,126,200
|
|
Saul Centers, Inc., Series B, 9.0%
|
|
94,200
|
|
2,272,104
|
|
|
|
5,398,304
|
|
|
Total Preferred Stocks
(Cost $15,470,244)
|
|
12,614,197
|
|
|
|
|
|
|
|
|
|
|
Cash Equivalents 0.2%
|
|
Cash Management QP Trust, 0.18% (b)
(Cost $67,548)
|
|
|
67,548
|
|
67,548
|
|
|
% of
Net Assets
|
|
Value ($)
|
|
|
Total Consolidated Investment Portfolio
(Cost $71,079,220)
|
137.4
|
|
54,717,094
|
|
Other Assets and Liabilities, Net
|
(2.2)
|
|
(897,363)
|
|
Preferred Stock, at Liquidation Value
|
(35.2)
|
|
(14,000,000)
|
|
|
Net Assets Applicable to Common Shareholders
|
100.0
|
|
39,819,731
|
|
For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent semi-annual or annual financial statements.
|
|
*
|
Non-income producing security.
|
|
|
The cost for federal income tax purposes was $74,552,923. At September 30, 2009, net unrealized depreciation for all securities based on tax cost was $19,835,829. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $7,958,649 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $27,794,478.
|
|
(a)
|
The Fund may purchase securities that are subject to legal or contractual restrictions on resale ("restricted securities"). Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security. Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell. This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund. The future value of these securities is uncertain and there may be changes in the estimated value of these
securities.
|
|
Schedule of
Restricted Securities
|
|
Acquisition Date
|
|
Acquisition Cost
|
|
Value ($)
|
|
Value as %
of Net Assets
|
|
Canyon Ranch Holdings LLC
|
|
|
|
|
|
|
|
|
|
(b)
|
Affiliated fund managed by Deutsche Investment Management Americas Inc. The rate shown is the annualized seven-day yield at period end.
|
|
|
|
|
|
|
|
At September 30, 2009, open interest rate swap contracts were as follows:
|
|
Effective/
Expiration
Dates
|
|
Notional
Amount ($)
|
|
Cash Flows
Paid by
the Fund
|
|
Cash Flows
Received by
the Fund
|
|
Unrealized
Depreciation ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Counterparty:
|
|
1
|
UBS Securities LLC
|
|
BBA: British Bankers' Association
|
|
LIBOR: London InterBank Offered Rate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in Subsidiary
The Fund invests a portion of its assets in a wholly owned subsidiary organized as a corporation under the laws of the State of Delaware (the "Subsidiary"). As of September 30, 2009, the Funds Subsidiary only holds limited liability company units of Canyon Ranch Holdings LLC. As of September 30, 2009, the Fund held $1,814,400 in the Subsidiary, representing 4.6% of the Fund's net assets. The Funds Investment Portfolio has been consolidated and includes the accounts of the Fund and the Subsidiary.
Fair Value Measurements
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used as of September 30, 2009 in valuing the Fund's investments:
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|
Assets
|
|
|
|
|
Common Stock and/or Other Equity Investments
|
|
|
|
|
|
Apartments
|
$ 9,192,496
|
$
|
$
|
$ 9,192,496
|
|
|
Diversified
|
8,676,083
|
|
|
8,676,083
|
|
|
Health Care
|
7,810,832
|
|
|
7,810,832
|
|
|
Hotels
|
4,588,464
|
|
1,814,400
|
6,402,864
|
|
|
Industrial
|
4,555,867
|
|
|
4,555,867
|
|
|
Office
|
3,296,793
|
|
|
3,296,793
|
|
|
Regional Malls
|
2,234,743
|
|
|
2,234,743
|
|
|
Shopping Centers
|
10,384,762
|
|
|
10,384,762
|
|
|
Storage
|
2,095,106
|
|
|
2,095,106
|
|
Short-Term Investments
|
|
67,548
|
|
67,548
|
|
Total
|
$ 52,835,146
|
$ 67,548
|
$ 1,814,400
|
$ 54,717,094
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Derivatives
(c)
|
$
|
$ (1,069,937)
|
$
|
$ (1,069,937)
|
|
Total
|
$
|
$ (1,069,937)
|
$
|
$ (1,069,937)
|
|
|
(c)
|
Derivatives include unrealized appreciation (depreciation) on open interest rate swap contracts.
|
|
|
|
|
|
|
|
|
|
The following is a reconciliation of the Fund's Level 3 investments for which significant unobservable inputs were used in determining value:
|
Investments in Securities
|
Balance as of December 31, 2008
|
$ 1,887,200
|
Total realized gain (loss)
|
14,954,105
|
Change in unrealized appreciation (depreciation)
|
(14,323,694)
|
Amortization premium/discount
|
|
Net purchases (sales)
|
(703,211)
|
Net transfers in (out) of Level 3
|
|
Balance as of September 30, 2009
|
$ 1,814,400
|
Net change in unrealized appreciation (depreciation) from investments still held as of September 30, 2009
|
$
|
Derivatives
The following table presents, by major type of derivative contract, the unrealized appreciation (depreciation) of the Fund's derivative instruments as of September 30, 2009 categorized by the primary underlying risk exposure.
Primary Underlying Risk Disclosure
|
Swaps
|
Interest Rate Contracts
|
$ (1,069,937)
|
ITEM 2.
|
CONTROLS AND PROCEDURES
|
|
|
|
(a) The Chief Executive and Financial Officers concluded that the Registrants Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
|
|
|
|
(b) There have been no changes in the registrants internal control over financial reporting that occurred during the registrants last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants internal controls over financial reporting.
|
|
|
ITEM 3.
|
EXHIBITS
|
|
|
|
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.
|
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Registrant:
|
DWS RREEF Real Estate Fund II, Inc.
|
|
|
By:
|
/s/Michael G. Clark
Michael G. Clark
President
|
|
|
Date:
|
November 19, 2009
|
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Registrant:
|
DWS RREEF Real Estate Fund II, Inc.
|
|
|
By:
|
/s/Michael G. Clark
Michael G. Clark
President
|
|
|
Date:
|
November 19, 2009
|
|
|
|
|
|
|
By:
|
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
|
|
|
Date:
|
November 19, 2009
|