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 JUNE 30, 1996
COMMISSION FILE NUMBER 0-11200
GRIFFIN REAL ESTATE FUND-II, A LIMITED PARTNERSHIP
MINNESOTA 41-1398390
510 MARQUETTE AVENUE, SUITE 300
MINNEAPOLIS, MINNESOTA 55402
REGISTRANT'S TELEPHONE NUMBER (612) 338-2828
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
PART 1. Financial Information
Condensed Balance Sheets
June 30, 1996 and December 31, 1995.......................1
Condensed Statements of Operations
for the three months and six months ended
June 30, 1996 and 1995....................................2
Condensed Statements of Cash Flows
for the six months ended
June 30, 1996 and 1995....................................3
Condensed Statements of Changes
in Partners' Equity for the
six months ended June 30, 1996............................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
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(unaudited)
June, 30 December, 31
1996 1995
------------ ------------
ASSETS
Cash and cash equivalents $ 1,020,604 $ 1,044,305
Receivables and other assets 593,146 589,711
------------ ------------
Total 1,613,750 1,634,016
------------ ------------
PROPERTY:
Land 2,160,676 2,160,676
Buildings and improvements 22,211,499 22,028,985
Furniture and equipment 2,076,670 2,076,669
------------ ------------
Total 26,448,845 26,266,330
Less accumulated depreciation 13,506,199 13,062,669
------------ ------------
Property - net 12,942,646 13,203,661
------------ ------------
TOTAL ASSETS $ 14,556,396 $ 14,837,677
============ ============
LIABILITIES AND PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 912,511 $ 838,612
Security deposits 146,125 143,572
Mortgage notes payable 14,658,819 14,801,452
------------ ------------
Total liabilities 15,717,455 15,783,636
------------ ------------
PARTNERS' EQUITY:
General Partner (532,673) (521,918)
Limited Partner (628,386) (424,041)
------------ ------------
Total partnership equity (1,161,059) (945,959)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 14,556,396 $ 14,837,677
============ ============
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
REVENUES
Rental income $1,291,955 $1,270,333 $2,607,287 $2,529,799
Interest income 6,333 10,122 15,771 15,657
Other income 70,538 67,907 136,676 133,674
---------- ---------- ---------- ----------
Total revenues 1,368,826 1,348,362 2,759,734 2,679,130
---------- ---------- ---------- ----------
OPERATING EXPENSES
Operating expenses 722,255 817,665 1,408,909 1,438,673
Interest expense 295,079 259,680 604,237 620,934
Depreciation and
amortization 242,176 235,876 484,355 471,750
---------- ---------- ---------- ----------
Total operating expenses 1,259,510 1,313,221 2,497,501 2,531,357
---------- ---------- ---------- ----------
NET INCOME 109,316 35,141 262,233 147,773
NET INCOME ALLOCATED
TO GENERAL PARTNER 5,466 1,757 13,112 7,389
---------- ---------- ---------- ----------
NET INCOME ALLOCATED
TO LIMITED PARTNERS $ 103,850 $ 33,384 $ 249,121 $ 140,384
========== ========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT
(weighted average basis) $ 47.49 $ 15.25 $ 113.91 $ 64.13
========== ========== ========== ==========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months
Ended June 30,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 262,233 $ 147,773
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 484,355 471,750
Decrease (increase) in receivables
and other assets (44,260) 207,149
Increase (decrease) in accounts payable
and accrued liabilities 73,899 (39,197)
Increase in security deposits 2,553 6,350
----------- -----------
Net cash provided by operating
activities 778,780 793,825
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (182,515) (210,718)
----------- -----------
Net cash used by investing activities (182,515) (210,718)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of limited partner units -- (8,530)
Distributions to partners (477,333) (143,574)
Payments of principal mortgage notes payable (142,633) (131,767)
----------- -----------
Net cash used by financing activities (619,966) (283,871)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (23,701) 299,236
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,044,305 742,672
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,020,604 $ 1,041,908
=========== ===========
CASH PAID DURING THE PERIOD FOR INTEREST $ 606,030 $ 620,934
=========== ===========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(unaudited)
GENERAL LIMITED TOTAL
PARTNER PARTNERS PARTNERSHIP
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
JANUARY 1, 1996 $ (521,918) $ (424,041) $ (945,959)
NET INCOME 13,112 249,121 262,233
DISTRIBUTIONS (23,867) (453,466) (477,333)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
JUNE 30, 1996 $ (532,673) $ (628,386) $(1,161,059)
=========== =========== ===========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1996
(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
June 30, 1996 and December 31, 1995 and the results of its operations
for the three months and six months ended June 30, 1996 and 1995 and
its cash flows for the six months ended June 30, 1996 and 1995.
The accounting policies followed by the Partnership are set forth in
Note 1 to the Partnership financial statements in the 1995 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 six months ended June 30, 1996 and 1995 relating to
the Griffin Companies:
1996 1995
---- ----
Management fees $147,525 $147,395
Supervisory fees $ 24,457 $ 28,951
3. TAXABLE INCOME (LOSS)
The net income shown on the statement of operations is reconciled to
the taxable income (loss) as follows:
For the Six Months
Ended June 30,
1996 1995
---- ----
Net income per statement
of operations $262,233 $147,773
Excess of tax depreciation
over book depreciation (28,275) (102,085)
-------- --------
Taxable income $233,958 $ 45,688
======== ========
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 June 30, 1996, the Partnership had cash and cash equivalents of $1,020,604
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 1996.
A quarterly distribution to partners of $75.00 per limited partnership unit was
made following the first quarter and again following the end of the second
quarter to unit holders of record on June 30, 1996. 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 six months of 1996 were $2,759,734, an increase of
$80,604 or 3% over total revenues for the first six months of 1995. Revenues for
the second quarter alone increased $20,464 from the second quarter of 1995. Net
income for the first six months of 1996 was up $114,460 or 77% to $262,233. As a
result of the increase in revenue, net operating income increased $8,139 for the
second quarter 1996 compared to the second quarter 1995. The improvement in
operations of the Partnership and its properties generated cash flow for the
second quarter of $196,619 before distributions to partners.
Candleridge and Villas of Patricia Park Apartments are being marketed for sale.
Neither property is currently under any formal purchase contract.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
<TABLE>
<CAPTION>
1995 1996
at at
-------------------------- ------------------------------
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1. Villas of
Patricia Park Apts.
Urbandale, Iowa 93% 96% 98% 95% 96% 91%
2. Candleridge Apts.
Urbandale, Iowa 95% 99% 97% 99% 96% 95%
3. Lunnonhaus Village
Apartments
Golden, Colorado 100% 99% 99% 100% 100% 98%
4. Olde English Village
Apartments
W. Des Moines, Iowa 97% 99% 100% 97% 94% 92%
</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 in Hennepin County Minnesota's Fourth Judicial District Court against
Investment Associates ("General Partner"), the general partner of Griffin Real
Estate Fund-II, A Limited Partnership ("Partnership"). The lawsuit alleged that
the General Partner had wrongfully denied Everest access to the books and
records of the Partnership. The court 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 complied with this court
order. Everest continued to seek access to additional books and records of the
Partnership beyond the scope of the court order. The General Partner vigorously
defended the Partnership's right to keep its proprietary records from being
reviewed by Everest, who has not been admitted as a limited partner of the
Partnership despite having been assigned a financial interest in 126 units by
some original limited partners. The General Partner filed for a dismissal of the
matter. The court heard arguments on September 29, 1995, October 26, 1995 and
November 17, 1995. On November 27, 1995 the court dismissed Everest's lawsuit.
Everest appealed the dismissal in the Minnesota Court of Appeals on March 12,
1996. Briefs were filed and oral arguments were heard by the court on July 1,
1996. A decision is pending.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) 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
Dated: August 15, 1996 By /s/ Larry D. Fransen
--------------------
Larry D. Fransen, for the
General Partner, Investment
Associates
Dated: August 15, 1996 By /s/ Larry D. Fransen
--------------------
Larry D. Fransen,
A General Partner of the
General Partner, Investment
Associates
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,020,604
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 593,146
<PP&E> 26,448,845
<DEPRECIATION> 13,506,199
<TOTAL-ASSETS> 14,556,396
<CURRENT-LIABILITIES> 1,058,636
<BONDS> 14,658,819
0
0
<COMMON> 0
<OTHER-SE> (1,161,059)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 14,556,396
<SALES> 0
<TOTAL-REVENUES> 2,743,963
<CGS> 0
<TOTAL-COSTS> 1,893,264
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 588,466
<INCOME-PRETAX> 262,233
<INCOME-TAX> 0
<INCOME-CONTINUING> 262,233
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 262,233
<EPS-PRIMARY> 113.91<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 per limited partnership unit.
</FN>
</TABLE>
