For the Quarter ended June 30, 2002

Commission File Number 33-4682

(Exact name of registrant as specified in its charter)

State or other jurisdiction I.R.S. Employer

of organization Identification No.

(Address of Principal executive offices) (Zip Code)

Registrant's telephone number, including area code:

Former name, former address and former fiscal year, if changed since last year:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or 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.

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows:

The financial statements of Capital Builders Development Properties II (The "Partnership") are prepared on the accrual basis of accounting and therefore revenue is recorded as earned and costs and expenses are recorded as incurred.

Capital Builders Development Properties II, a California Limited Partnership, is owned under the laws of the State of California. The Managing General Partner is Capital Builders, Inc., a California corporation (CB).

The Partnership is in the business of real estate development and is not a significant factor in its industry. The Partnership's investment properties are located near major urban areas and, accordingly, compete not only with similar properties in their immediate areas but with hundreds of properties throughout the urban areas. Such competition is primarily on the basis of locations, rents, services and amenities. In addition, the Partnership competes with significant numbers of individuals and organizations (including similar companies, real estate investment trusts and financial institutions) with respect to the purchase and sale of land, primarily on the basis of the prices and terms of such transactions.

Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

The Partnership's investment property consists of commercial land, buildings and leasehold improvements that are carried net of accumulated depreciation. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives of three to forty years. The straight-line method of depreciation is followed for financial reporting purposes.

Included in other assets are loan fees. Loan fees are amortized over the life of the related note.

Lease commissions are costs associated with obtaining leases with terms in excess of one year. The Partnership capitalizes these costs and amortizes them on a straight line basis over their related lease term.

The Partnership has no provision for income taxes since all income or losses are reported separately on the individual Partners' tax returns.

Rental income is recognized on a straight-line basis over the life of the lease, which may differ from the scheduled rental payments.

The net loss per Limited Partnership Unit is computed based on the weighted average number of Units outstanding of 23,030 during the six months ending June 30, 2002 and 2001.

For purposes of the statement of cash flows, the Partnership considers all short-term investments with a maturity, at date of purchase, of three months or less to be cash equivalents.

The preparation of financial statements requires Partnership Management to make estimates and judgments that effect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Partnership Management evaluates its estimates, including those related to long lived assets, accounts receivable, and contingencies and litigation. Partnership Management bases its estimates on current information, historical experience and or various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recognition of revenue that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Managing General Partner (Capital Builders, Inc.) and the Associate General Partners are entitled to reimbursement of expenses incurred on behalf of the Partnership and certain fees from the Partnership. These fees include: a portion of the sales commissions payable by the Partnership with respect to the sale of the Partnership Units; an acquisition fee of up to 12.5% of gross proceeds from the sale of the Partnership Units; a property management fee up to 6% of gross rental revenues realized by the Partnership with respect to its properties; a subordinated real estate commission of up to 3% of the gross sales price of the properties; and a subordinated 25% share of the Partnership's distributions of cash from sales or refinancing. The property management fee currently being charged is 5% of gross rental revenues collected.

All acquisition fees and expenses, all underwriting commissions, and all offering and organizational expenses which can be paid are limited to 20% of the gross proceeds from sales of Partnership Units provided the Partnership incurs no borrowing to develop its properties. However, these fees may increase to a maximum of 33% of the gross offering proceeds based upon the total acquisition and development costs, including borrowing. Since the formation of the Partnership, 27.5% of these fees were paid to the Partnership's related parties, leaving a remaining maximum of 5.5% ($633,325) of the gross offering proceeds. The ultimate amount of these costs will be determined once the properties are fully developed and leveraged.

The total management fees paid to the Managing General Partner were $67,519 and $65,217 for the six months ended June 30, 2002 and 2001, respectively, while total reimbursement of expenses was $154,255 and $128,569 respectively.

Management fees are classified on the Statements of Operations as an Operating Expense. Reimbursement of expenses are primarily for investor services, preparation of SEC filings, audit coordination and other Partnership management functions. Expense reimbursements are classified as General and Administrative expenses on the Statements of Operations.

In accordance with the Partnership Agreement, the General Partner may hire outside consultants or perform the necessary accounting, reporting and investor service functions internally, and pass through the associated costs. It has been determined by the General Partner that if outside consultants were to perform these functions, the related costs would be substantially higher to the Partnership.

The Managing General Partner will reduce its future participation in proceeds from sales by an amount equal to the loss on the abandonment of option fees in 1988 ($110,000) and interest on the amount at a rate equal to that of the borrowed funds rate as determined by construction or permanent funds utilized by the Partnership.

The components of the investment property account are as follows:

The Partnership is in compliance with all restrictive debt covenants as of June 30, 2002.

Scheduled principal payments during the remainder of 2002 and 2003, 2004, 2005, 2006 and thereafter are $6,427,023, $1,310,966, $70,106, 75,904 and $3,874,621, respectively.

The Partnership's Highlands 80 Phase I mini-permanent and Phase II construction loans will become due during the fourth quarter of 2002. The properties secured by these loans currently have sufficient value and cash flow to either refinance on a short term or long-term basis. Management is currently working on a sales strategy that will list the properties for sale at a price substantially higher than the underlying debt on the properties. It is Management's intention to sell some or all of the properties prior to the properties' corresponding loan due dates.

The Partnership leases its properties under long term noncancelable operating leases to various tenants. The facilities are leased through agreements for rents based on the square footage leased. Minimum annual base rental payments under these leases for the full years ending December 31 are as follows:

The estimated fair values of the Partnership's financial instruments are as follows:

The Partnership is involved in litigation arising in the normal course of its business. In the opinion of management, the Partnership's recovery or liability if any, under any pending litigation would not materially affect its financial condition or results of operations.

The Partnership commenced operations on May 22, 1986 upon the sale of the minimum number of Limited Partnership Units. The Partnership's initial source of cash was from the sale of Limited Partnership Units. Through the offering of Units, the Partnership raised $11,515,000 (represented by 23,030 Limited Partnership Units). Cash generated from the sale of Limited Partnership Units was used to acquire land and for the development of a mixed use commercial project and a 40% interest in a commercial office project. In May 1997, the remaining 60% interest in the project was acquired.

The Partnership's primary current sources of cash are from cash balances, property rental income and construction financing for Phase II and Phase III improvements. As of June 30, 2002, the Partnership had $342,841 in cash and $1,171,365 in available construction loan draws for Highlands 80 Phase II and Phase III. It is the Partnership's investment goal to utilize existing capital resources for continued leasing operations (tenant improvements and leasing commissions). Both of the Partnership's projects have achieved occupancy and rental rates sufficient to meet its expected current and future debt service obligations.

The Partnership's scheduled principal and interest payments during the remainder of 2002 and 2003, 2004, 2005 and 2006 are $7,321,083, $1,643,052, $387,996, $387,996 and $3,900,355, respectively. The scheduled interest payments assume fixed rates of interest of 8.95% and 7.97% for fixed rate debt and a variable interest rate of 5.4% (effective as of June 30, 2002) for variable rate debt.

During the six months ended June 30, 2002, the Partnership expended $568,291 on improvements for both its properties. These improvements consisted of the construction of Highlands 80 Phase III (a 27,664 sq. foot office building) and tenant improvements for both of the Partnership's properties. The Partnership funded these improvements with $59,641 of cash provided by operations and $508,652 from construction loan proceeds. The Partnership's remaining cash provided from operations ($20,465) was utilized to pay scheduled principal payments on its permanent loans.

The Partnership could continue to incur improvement costs as the Phase III building is leased. The total projected tenant improvement costs that could be incurred to lease up Phase III is estimated to be $810,000. These costs would be funded with construction loan draws, if incurred.

Management is currently evaluating a strategy to sell the Phase III building during 2002 to a possible owner/user. The Partnership could potentially not incur any additional lease-up costs for Phase III if this is achieved.

Management anticipates cash provided from operations to continue to remain positive. The Partnership's properties' occupancy rates as of June 30, 2002 are 81% for Highlands 80 and 100% for Capital Professional Center. The occupancy rate for Highlands 80 decreased to 81% from 92% at first quarter of 2002 due to adding the newly constructed 27,664 square foot Phase III building to the project's occupancy base.

The Partnership's ability to maintain or improve cash flow is dependent upon its ability to maintain and improve the occupancy of its investment properties. Management believes the Partnership's financial resources should be adequate to meet 2002's obligations and no adverse change in liquidity is foreseen. The Partnership's properties' current market values are in excess of its total liabilities. Management is currently working on a sale strategy that could potentially involve selling the entire Highlands 80 project by year-end 2002, and selling Capital Professional Center by the first quarter of 2003.

During the first quarter of 2002, the Highlands 80 Phase III building shell and site were finalized, completing the development of the Highlands 80 project. The Partnership potentially could incur costs for the Phase III interior buildout (i.e. - tenant improvements and lobby corridors) since the building currently has no signed tenants; and, as lease-up occurs, costs will be incurred. Although leasing has not been completed for Phase III, Management has begun its strategy of selling the Partnership's properties and making distributions to its Limited Partners.

Management's strategy for selling the Partnership's assets involves:

1) Parcelizing Highlands 80 so each building can potentially be sold to individual buyers, which could increase the Partnership's ability to achieve higher sales prices;

2) Preparing the properties for sale;

3) Listing the properties for sale with a major brokerage firm;

4) Begin selling the properties by the beginning of the third quarter 2002, potentially having all the buildings, including Capital Professional Center, sold by the end of first quarter 2003; and

5) Subsequent to the final property sale, distribute sales net proceeds, net of Partnership obligations, to limited partners (estimated to be during the first or second quarter of 2003).

As of to date, Management has accomplished the property's parcelization; has prepared the properties for sale; and released, through their listing broker, the properties for sale on the market on July 15, 2002.

Management began the parcelization of Capital Professional Center at the end of the second quarter 2002. After the sale of the Highlands 80 buildings are underway, Management will choose a listing broker for the sale of Capital Professional Center.

Management has and will not adopt a strategy for dissolving the Partnership until such time as a majority of the Partnership's properties have been sold.

The Partnership's Highlands 80 Phase I mini-permanent and Phase II construction loans will become due in the fourth quarter of 2002, and the Phase III construction loan will become due in the first quarter of 2003. The properties secured by these loans currently have sufficient value and cash flow to refinance on a short-term basis. In case the sales of these buildings take longer than anticipated and the loans become due, Management has already started preliminary negotiations with the existing lender to extend the loan due dates.

The Partnership's discussion and analysis of its financial condition and results of operations are based upon the Partnership's financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements requires Partnership Management to make estimates and judgments that effect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, Partnership Management evaluates its estimates, including those related to long lived assets, accounts receivable, deferred revenue, and contingencies and litigation. Additionally, on an on-going basis Partnership Management also evaluates the debt obligations of the Partnership and evaluates the Partnership's ability to satisfy these obligations. Partnership Management bases its estimates on current information, historical experience and or various other assum ptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the recognition of revenue that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Partnership believes the following critical accounting policy affects its more significant judgments and estimates used in the preparation of its financial statements:

Valuation of Investment Property (Long-Lived Assets):

Investment property is evaluated for impairment on a continual basis based on the property's occupancy levels, annual cash flows, and projected cash flows based on the rental market and other factors including prospective new tenants.

Debt Obligations:

Partnership management also believes that the evaluation of the Partnership's debt obligations and the Partnership's ability to satisfy these obligations is critical in the preparation of its financial statements.

Partnership Management evaluates the debt obligations of the Partnership continually and determines the Partnership's ability to satisfy debt obligations through either refinancing, repayment, or various other strategic methods including potential sale of the property.

During the six months ended June 30, 2002 as compared to June 30, 2001, the Partnership's total revenues increased by $28,426 (2.1%), while its expenses increased by $252,270 (18.8%), resulting in an increase in net loss of $223,844.

The increase in revenue is primarily due to rent increases at Highlands 80 and Capital Professional Center.

Expenses increased for the six months ended June 30, 2002, as compared to June 30, 2001, primarily due to the net effect of:

During the second quarter ended June 30, 2002 as compared to June 30, 2001, revenues increase by $958 (.1%), while expenses also increased $179,910 (26.9%).

The increase in expenses is primarily due to the sale preparation of Highlands 80. The detailed expense fluctuations are explained in the comparison for June 30, 2002 to June 30, 2001, above.

The Partnership does not have a material market risk due to financial instruments held by the Partnership. The Partnership has two variable rate instruments, both for Highlands 80 construction loans; the Phase II loan in the amount of $1,890,758 and $1,863,759 at June 30, 2002 and December 31, 2001, respectively and the Phase III loan in the amount of $1,257,877 and $776,225 at June 30, 2002 and December 31, 2001, respectively.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has dully caused this report to be signed on its behalf by the undersigned, hereunto dully authorized.

CAPITAL BUILDERS DEVELOPMENT PROPERTIES II

a California Limited Partnership

By: Capital Builders, Inc.

Its Corporate General Partner

Date: August 8, 2002 By:_____________________________________

Michael J. Metzger

President

Date: August 8, 2002 By:_____________________________________

Kenneth L. Buckler

Chief Financial Officer