UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
COMMISSION FILE NUMBER 0-11200
GRIFFIN REAL ESTATE FUND-II, A LIMITED PARTNERSHIP
MINNESOTA 41-1398390
750 NORTHLAND PLAZA
3800 WEST 80TH STREET, MINNEAPOLIS, MINNESOTA 55431
REGISTRANT'S TELEPHONE NUMBER (612) 896-3800
WATS NUMBER 800-328-3788
Indicate by check mark whether the registrant (1) has filed reports to be filed
by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to filing requirements for the
past 90 days.
Yes _x_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-Q
or any amendment to this Form 10-Q. [ ]
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
PART 1. Financial Information
<S> <C>
Condensed Balance Sheets
September 30, 1995 and December 31, 1994.................................................. 1
Condensed Statements of Operations
for the three months and nine months ended
September 30, 1995 and 1994............................................................... 2
Condensed Statements of Cash Flows
for the nine months ended
September 30, 1995 and 1994............................................................... 3
Condensed Statements of Changes
in Partners' Equity for the
nine months ended September 30, 1995...................................................... 4
Notes to Financial Statements................................................................ 5
Management's Discussion and Analysis of
Financial Conditions and Results
of Operations............................................................................. 6-7
PART II. Other Information............................................................................ 8
SIGNATURES...................................................................................................... 9
</TABLE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(unaudited)
September 30, December 31,
1995 1994
ASSETS
Cash and cash equivalents $ 984,614 $ 742,672
Receivables and other assets 555,433 956,175
Total 1,540,047 1,698,847
PROPERTY:
Land 2,160,676 2,160,676
Buildings and improvements 21,869,323 21,432,061
Furniture and equipment 2,076,669 2,076,669
Total 26,106,668 25,669,406
Less accumulated depreciation 12,831,155 12,183,949
Property - net 13,275,513 13,485,457
TOTAL ASSETS $ 14,815,560 $ 15,184,304
LIABILITIES AND PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 781,652 $ 815,536
Security deposits 143,822 131,777
Mortgage notes payable 14,869,926 15,067,907
Total liabilities 15,795,400 16,015,220
PARTNERS' EQUITY:
General Partner (523,618) (516,592)
Limited Partner (456,222) (314,324)
Total partnership equity (979,840) (830,916)
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 14,815,560 $ 15,184,304
See notes to condensed financial statements.
<TABLE>
<CAPTION>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 1,298,610 $1,226,953 $3,828,409 $3,573,498
Interest income 8,633 6,044 24,290 19,103
Other income 73,956 75,134 207,630 213,688
Total revenues 1,381,199 1,308,131 4,060,329 3,806,289
OPERATING EXPENSES
Operating expenses 836,820 762,738 2,275,493 2,077,505
Interest expense 309,005 262,372 929,939 937,835
Depreciation and
amortization 235,872 215,904 707,622 651,423
Total operating expenses 1,381,697 1,241,014 3,913,054 3,666,763
NET INCOME (LOSS) (498) 67,117 147,275 139,526
NET INCOME (LOSS)
ALLOCATED TO
GENERAL PARTNER (25) 3,356 7,364 6,976
NET INCOME (LOSS)
ALLOCATED TO
LIMITED PARTNERS $ (473) $ 63,761 $ 139,911 $ 132,550
NET INCOME (LOSS)
PER LIMITED
PARTNERSHIP UNIT $ (.19) $ 29.13 $ 63.94 $ 60.55
(weighted average basis)
</TABLE>
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Months
Ended September 30,
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 147,275 $ 139,526
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 707,622 651,423
Decrease (increase) in receivables
and other assets 340,326 (639,993)
Decrease in accounts payable
and accrued liabilities (33,884) (6,834)
Increase in security deposits 12,045 9,144
Net cash provided by operating activities 1,173,384 153,266
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (437,262) (384,962)
Net cash used by investing activities (437,262) (384,962)
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of limited partner units (8,530) --
Distributions to partners (287,669) --
Payments of mortgage notes payable (197,981) (5,714,589)
Proceeds from refinancing -- 5,600,000
Net cash used by financing activities (494,180) (114,589)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 241,942 (346,285)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 742,672 1,011,986
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 984,614 $ 665,701
CASH PAID DURING THE PERIOD FOR INTEREST $ 929,939 $ 937,835
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(unaudited)
GENERAL LIMITED TOTAL
PARTNER PARTNERS PARTNERSHIP
PARTNERS' EQUITY (DEFICIT)
JANUARY 1, 1995 $(516,592) $(314,324) $(830,916)
NET INCOME 7,364 139,911 147,275
REPURCHASE OF TWO UNITS -- (8,530) (8,530)
DISTRIBUTIONS (14,390) (273,279) (287,669)
PARTNERS' EQUITY (DEFICIT)
SEPTEMBER 30, 1995 $(523,618) $(456,222) $(979,840)
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(unaudited)
1. In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly Griffin
Real Estate Fund-II, A Limited Partnership's financial position as of
September 30, 1995 and December 31, 1994 and the results of its operations
for the three months and nine months ended September 30, 1995 and 1994 and
its cash flows for the nine months ended September 30, 1995 and 1994.
The accounting policies followed by the Partnership are set forth in Note
1 to the Partnership financial statements in the 1994 Griffin Real Estate
Fund-II, A Limited Partnership Form 10K.
2. RELATED PARTY TRANSACTIONS
The partners of Investment Associates, the general partner of the
Partnership, are also owners, directors, and officers of the Griffin
Companies, a Minnesota corporation. The following is a summary of fees
incurred for the nine months ended September 30, 1995 and 1994 relating to
the Griffin Companies and its affiliates:
1995 1994
Management fee $221,050 $199,682
Supervisory fees $ 73,405 $ 63,609
3. TAXABLE INCOME (LOSS)
The net income (loss) shown on the statement of operations is reconciled
to the taxable income (loss) as follows:
For the Nine Months
Ended September 30,
1995 1994
Net income per statement
of operations $ 147,275 $ 139,526
Excess of tax depreciation
over book depreciation (153,127) (148,778)
Taxable loss $ (5,852) $ (9,252)
4. TENDER OFFER
On April 21, 1995, Everest Investors, LLC, a California limited liability
company (the "Bidder") commenced a tender offer to purchase up to 600 of
the outstanding limited partnership interests (the "Units") at a purchase
price of $2,387.50 per Unit net to the seller in cash, subject to their
terms and conditions set forth in an Offer to Purchase dated April 21,
1995 by the Bidder. The General Partner of the Partnership determined that
the offer price was inadequate in comparison to the liquidation value of
the Units and recommended to the Limited Partners that they not tender any
Units in response to the Bidder's Offer to Purchase. The tender offer
expired on July 12, 1995, with the bidder acquiring a total of 126 units.
A complete discussion of the General Partner's response to the Bidder's
Offer to Purchase is contained in Partnership Schedule 14D-9.
The Bidder was also attempting to change the Partnership Agreement in
several ways by sending the Limited Partners a solicitation of consent,
which expired on August 18, 1995. The General Partner had determined that
the proposed changes were not in the interests of the Limited Partners and
recommended that consent to change not be given. The solicitation of
consent was unsuccessful.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1995, the Partnership had cash and cash equivalents of $984,614
which will be used for working capital requirements of the Partnership and its
properties. It is anticipated that the Partnership will be able to meet current
obligations and commitments from cash on hand and from cash generated from
operations during 1995.
A quarterly distribution to partners of $62.50 per limited partnership unit was
made following each quarter of 1995 to unit holders of record at the end of the
quarter. Although distributions are expected to continue, future cash
distributions will depend on future property operations.
RESULTS OF OPERATIONS
The General Partner, after reasonable inquiry, is not aware of any material
factors relating to any of the Partnership's properties or the operations of the
Partnership that would cause the financial information of the Partnership not to
be indicative of future operating results or of future financial conditions,
other than those discussed in the footnotes to the Partnership financial
statements filed with Form 10K.
Total revenues for the first nine months of 1995 were $4,060,329, an increase of
$254,040 or 7% over total revenues for the first nine months of 1994. Revenues
for the second quarter alone increased $73,068 from the second quarter of 1994.
The improvement in revenues was a result of improved occupancy and increases in
rental rates averaging 4%. Net income for the first nine months of 1995
increased $7,749 or 6%. Operations of the Partnership and its properties
generated cash flow for the first three quarters of $529,611 before
distributions to partners.
Future Partnership plans include the sale, if current market conditions do not
change, of its properties in the next 21 months.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
<TABLE>
<CAPTION>
1994 1995
----------------------------- ----------------------------
at at
<S> <C> <C> <C> <C> <C> <C> <C> <C>
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
1. Villas of
Patricia Park Apts.
Urbandale, Iowa 96% 95% 98% 98% 93% 96% 98% %
2. Candleridge Apts.
Urbandale, Iowa 90% 98% 96% 94% 95% 99% 97% %
3. Lunnonhaus Village
Apartments
W. Des Moines, Iowa 99% 99% 100% 99% 100% 99% 99% %
4. Olde English Village
Apartments
W. Des Moines, Iowa 92% 92% 99% 98% 97% 99% 100% %
</TABLE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
On September 20, 1995 Everest Investors, LLC ("Everest") filed a
lawsuit against Investment Associates ("General Partner"), the
general partner of Griffin Real Estate Fund-II, A Limited
Partnership ("Partnership"). The lawsuit alleges that the General
Partner has wrongfully denied Everest access to the books and
records of the Partnership. The court has granted, in part,
Everest's request for access to the books and records and ordered
the General Partner to provide Everest access to these records.
The General Partner has complied with this court order. Everest
continues to seek access to additional books and records of the
Partnership beyond the scope of the court order. The General
Partner is vigorously defending The Partnership's right to keep
its proprietary records from being reviewed by Everest, who is not
limited partner of the Partnership and, therefore, we believe, not
entitled to access to the books and records.
Although the Partnership was not a named defendant in the action,
the General Partner believes that it has a right to be indemnified
for the costs of this litigation by the Partnership under the
Partnership Agreement. Everest is contesting the General Partner's
right to indemnification.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial data schedule - for SEC use only.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
Date: November 15, 1995 By /s/ Larry D. Fransen
Larry D. Fransen, for the
General Partner, Investment
Associates
Date: November 15, 1995 By /s/ Larry D. Fransen
Larry D. Fransen, for the
General Partner, Investment
Associates
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 984,614
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,540,047
<PP&E> 26,106,668
<DEPRECIATION> 12,831,155
<TOTAL-ASSETS> 14,815,560
<CURRENT-LIABILITIES> 925,474
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> (979,840)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 14,815,560
<SALES> 0
<TOTAL-REVENUES> 4,036,039
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,983,115
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 905,649
<INCOME-PRETAX> 147,275
<INCOME-TAX> 0
<INCOME-CONTINUING> 147,275
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 147,275
<EPS-PRIMARY> 63.94<F2>
<EPS-DILUTED> 0
<FN>
<F1>This entity is a limited partnership. The Other Stockholders Equity line
represents total partnership equity.
<F2>The EPS-Primary line represents net income (loss) per limited partnership
unit.
</FN>
</TABLE>
