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 MARCH 31, 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
<TABLE>
<CAPTION>
PART 1. Financial Information
<S> <C>
Condensed Balance Sheets
March 31, 1996 and December 31, 1995..................................................... 1
Condensed Statements of Operations
for the three months ended
March 31, 1996 and 1995.................................................................. 2
Condensed Statements of Cash Flows
for the three months ended
March 31, 1996 and 1995.................................................................. 3
Condensed Statements of Changes
in Partners' Equity for the
three months ended March 31, 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
</TABLE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(unaudited)
March 31, December 31,
1996 1995
------------ ------------
ASSETS
Cash and cash equivalents $ 996,485 $ 1,044,305
Receivables and other assets 585,221 589,711
------------ ------------
Total 1,581,706 1,634,016
------------ ------------
PROPERTY:
Land 2,160,676 2,160,676
Buildings and improvements 22,028,985 22,028,985
Furniture and equipment 2,076,669 2,076,669
------------ ------------
Total 26,266,330 26,266,330
Buildings and improvements 22,028,985 22,028,985
Furniture and equipment 2,076,669 2,076,669
------------ ------------
Total 26,266,330 26,266,330
Less accumulated depreciation 13,284,435 13,062,669
------------ ------------
Property - net 12,981,895 13,203,661
------------ ------------
TOTAL ASSETS $ 14,563,601 $ 14,837,677
============ ============
LIABILITIES AND PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 775,518 $ 838,612
Security deposits 143,315 143,572
Security deposits 143,315 143,572
Mortgage notes payable 14,742,643 14,801,452
------------ ------------
Total liabilities 15,661,476 15,783,636
------------ ------------
PARTNERS' EQUITY:
General Partner (529,514) (521,918)
Limited Partner (568,361) (424,041)
------------ ------------
Total partnership equity (1,097,875) (945,959)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 14,563,601 $ 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
Ended March 31,
1996 1995
---------- ----------
REVENUES
Rental income $1,315,332 $1,259,466
(less vacancies - 1996
$43,073; 1995 $30,747)
Interest income 9,438 5,535
Other income 66,138 65,767
---------- ----------
Total revenues 1,390,908 1,330,768
---------- ----------
OPERATING EXPENSES
Operating expenses 686,654 675,468
Interest expense 309,158 306,794
Depreciation and amortization 242,179 235,874
---------- ----------
Total operating expenses 1,237,991 1,218,136
---------- ----------
NET INCOME 152,917 112,632
NET INCOME ALLOCATED TO
GENERAL PARTNER 7,646 5,632
---------- ----------
NET INCOME ALLOCATED TO
LIMITED PARTNERS $ 145,271 $ 107,000
========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT
(weighted average basis) $ 66.42 $ 48.88
========== ==========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Three Months
Ended March 31,
1996 1995
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 152,917 $ 112,632
Adjustments to reconcile
to net cash provided by
operating activities:
Depreciation and amortization 242,179 235,874
Increase in receivables and other assets (15,923) (1,880)
Increase (decrease) in accounts payable
and accrued liabilities (63,094) 6,157
Increase (decrease) in security deposits (257) 3,715
----------- -----------
Net cash provided by operating activities 315,822 356,498
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment -- (61,465)
----------- -----------
Net cash used by investing activities -- (61,465)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (304,833) --
Payments of principal (58,809) (67,711)
----------- -----------
Net cash used by financing activities (363,642) (67,711)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (47,820) 227,322
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,044,305 742,672
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 996,485 $ 969,994
=========== ===========
CASH PAID DURING THE PERIOD FOR INTEREST $ 310,548 $ 361,254
=========== ===========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1996
(unaudited)
GENERAL LIMITED TOTAL
PARTNER PARTNERS PARTNERSHIP
PARTNERS' DEFICIT
JANUARY 1, 1996 $(521,918) $(424,041) $ (945,959)
NET INCOME 7,646 145,271 152,917
DISTRIBUTIONS (15,242) (289,591) (304,833)
------- -------- --------
PARTNERS' DEFICIT
MARCH 31, 1996 $ (529,514) $(568,361) $(1,097,875)
========= ======== ==========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 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
March 31, 1996 and December 31, 1995 and the results of its operations for
the three months ended March 31, 1996 and 1995 and its cash flows for the
three months ended March 31, 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
three months ended March 31, 1996 and 1995 relating to the Griffin
Companies:
1996 1995
---- ----
Management fees $ 73,263 $ 71,258
Supervisory fees $ 11,074 $ 19,736
3. TAXABLE INCOME (LOSS)
The net income shown on the statement of operations is reconciled to the
taxable income (loss) as follows:
For the Three Months
Ended March 31,
1996 1995
---- ----
Net income per statement
of operations $ 152,917 $ 112,632
Excess of tax depreciation
over book depreciation (14,137) (51,042)
------- -------
Taxable income (loss) $ 138,780 $ (61,590)
======= =======
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 March 31, 1996, the Partnership had cash and cash equivalents of $996,485
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.
Distributions to partners were made during the first quarter of 1996 in the
amount of $132.50 per limited partnership unit to holders of units on December
31, 1995. Distributions were made in April following the close of the first
quarter of 1996 in the amount of $75.00 per limited Partnership unit to holders
of units on March 31, 1996.
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 below and in the footnotes to the Partnership
financial statements filed with Form 10K.
Gross rental income was $1,358,405 and $1,290,213 for the first quarter of 1996
and 1995 respectively. This is an increase of $68,192 or 5.3% in the average
apartment rental rates for the properties. Vacancy was $43,073 or 3.2% and
$30,747 or 2.4% for the first quarter of 1996 and 1995 respectively. Although
there was an increase in vacancy, this was more than offset by increased rental
rates resulting in a $55,866 increase in rental income. The decrease in
occupancy is a result of two factors. The first, and most significant factor, is
the residents' purchases of homes. Over the course of the last two years, market
rental rates have been rising while mortgage interest rates have been falling.
This combination has made home ownership a viable and attractive option for
residents that have the ability to make a down payment. The second, and less
significant factor, is the construction of new multifamily housing. Interest
rates have begun to rise which may limit home purchases. We expect those
residents that could afford to buy homes to have now done so.
Operating expenses were $686,654 and $675,468 for the first quarter of 1996 and
1995 respectively. The increase of just $11,186 was due to an increase in real
estate taxes.
Net operating income was $152,917 and $112,632 in the first quarter of 1996 and
1995 respectively. The increase of $40,285 was due mainly to rising revenue
which was a result of increased rental rates.
Candleridge and Villas of Partricia 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
<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 93% 96% 98% 95% 96%
2. Candleridge Apts.
Urbandale, Iowa 95% 99% 97% 99% 96%
3. Lunnonhaus Village
Apartments
Golden, Colorado 100% 99% 99% 100% 100%
4. Olde English Village
Apartments
W. Des Moines, Iowa 97% 99% 100% 97% 94%
</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 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 is not a
limited partner of the Partnership. 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 on
March 12, 1996 and a decision is pending.
On February 9, 1996 Everest filed a proxy solicitation with the
Securities and Exchange Commission. It was revised and re-filed on
April 2, 1996.
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
Date: May 15, 1996 By /s/ Larry D. Fransen
--------------------
Larry D. Fransen, for the
General Partner, Investment
Associates
Date: May 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 996,485
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,581,706
<PP&E> 26,266,330
<DEPRECIATION> 13,284,435
<TOTAL-ASSETS> 14,563,601
<CURRENT-LIABILITIES> 918,833
<BONDS> 14,742,643
0
0
<COMMON> 0
<OTHER-SE> (1,097,875)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 14,563,601
<SALES> 0
<TOTAL-REVENUES> 1,381,470
<CGS> 0
<TOTAL-COSTS> 928,833
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 299,720
<INCOME-PRETAX> 152,917
<INCOME-TAX> 0
<INCOME-CONTINUING> 152,917
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 152,917
<EPS-PRIMARY> 66.42<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>
