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, 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
September 30, 1996 and December 31, 1995.........................1
Condensed Statements of Operations
for the three months and nine months ended
September 30, 1996 and 1995......................................2
Condensed Statements of Cash Flows
for the nine months ended
September 30, 1996 and 1995......................................3
Condensed Statements of Changes
in Partners' Equity for the
nine months ended September 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)
September, 30 December, 31
1996 1995
ASSETS ------------ ------------
Cash and cash equivalents $ 958,563 $ 1,044,305
Receivables and other assets 520,281 589,711
------------ ------------
Total 1,478,844 1,634,016
------------ ------------
PROPERTY:
Land 2,160,676 2,160,676
Buildings and improvements 22,349,221 22,028,985
Furniture and equipment 2,076,669 2,076,669
------------ ------------
Total 26,586,566 26,266,330
Less accumulated depreciation 13,727,965 13,062,669
------------ ------------
Property - net 12,858,601 13,203,661
------------ ------------
TOTAL ASSETS $ 14,337,445 $ 14,837,677
============ ============
LIABILITIES AND PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 794,011 $ 838,612
Security deposits 144,830 143,572
Mortgage notes payable 14,585,696 14,801,452
------------ ------------
Total liabilities 15,524,537 15,783,636
------------ ------------
PARTNERS' EQUITY:
General Partner (533,975) (521,918)
Limited Partner (653,117) (424,041)
------------ ------------
Total partnership equity (1,187,092) (945,959)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 14,337,445 $ 14,837,677
============ ============
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Rental income $ 1,330,766 $ 1,298,610 $ 3,938,053 $ 3,828,409
Interest income 10,983 8,633 26,754 24,290
Other income 77,341 73,956 214,017 207,630
----------- ----------- ----------- -----------
Total revenues 1,419,090 1,381,199 4,178,824 4,060,329
----------- ----------- ----------- -----------
OPERATING EXPENSES
Operating expenses 742,777 836,820 2,151,686 2,275,493
Interest expense 287,669 309,005 891,906 929,939
Depreciation and
amortization 242,177 235,872 726,532 707,622
----------- ----------- ----------- -----------
Total operating expenses 1,272,623 1,381,697 3,770,124 3,913,054
----------- ----------- ----------- -----------
NET INCOME (LOSS) 146,467 (498) 408,700 147,275
NET INCOME (LOSS) ALLOCATED
TO GENERAL PARTNER 7,323 (25) 20,435 7,364
----------- ----------- ----------- -----------
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ 139,144 $ (473) $ 388,265 $ 139,911
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT
(weighted average basis) $ 63.62 $ (.19) $ 177.53 $ 63.94
=========== =========== =========== ===========
See notes to condensed financial statements.
</TABLE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Months
Ended September 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 408,700 $ 147,275
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 726,532 707,622
Decrease in receivables
and other assets 8,194 340,326
Decrease in accounts payable
and accrued liabilities (44,601) (33,884)
Increase in security deposits 1,258 12,045
----------- -----------
Net cash provided by operating activities 1,100,083 1,173,384
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (320,236) (437,262)
----------- -----------
Net cash used by investing activities (320,236) (437,262)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Redemption of limited partner units -- (8,530)
Distributions to partners (649,833) (287,669)
Payments of principal mortgage notes payable (215,756) (197,981)
----------- -----------
Net cash used by financing activities (865,589) (494,180)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (85,742) 241,942
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,044,305 742,672
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 958,563 $ 984,614
=========== ===========
CASH PAID DURING THE PERIOD FOR INTEREST $ 893,457 $ 929,939
=========== ===========
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, 1996
(unaudited)
GENERAL LIMITED TOTAL
PARTNER PARTNERS PARTNERSHIP
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
JANUARY 1, 1996 $ (521,918) $ (424,041) $ (945,959)
NET INCOME 20,435 388,265 408,700
DISTRIBUTIONS (32,492) (617,341) (649,833)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
SEPTEMBER 30, 1996 $ (533,975) $ (653,117) $(1,187,092)
=========== =========== ===========
See notes to condensed financial statements.
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 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
September 30, 1996 and December 31, 1995 and the results of its
operations for the three months and nine months ended September 30, 1996
and 1995 and its cash flows for the nine months ended September 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 nine months ended September 30, 1996 and 1995 relating
to the Griffin Companies:
1996 1995
---- ----
Management fees $ 196,419 $ 221,050
Supervisory fees $ 56,485 $ 73,405
3. TAXABLE INCOME (LOSS)
The net income shown on the statement of operations is reconciled to the
taxable income (loss) as follows:
For the Nine Months
Ended September 30,
1996 1995
---- ----
Net income per statement
of operations $ 408,700 $ 147,275
Excess of tax depreciation
over book depreciation (42,412) (153,127)
--------- ---------
Taxable income (loss) $ 366,288 $ (5,852)
========= =========
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, 1996, the Partnership had cash and cash equivalents of $958,563
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 two quarters and again following the end of the third
quarter to unit holders of record on September 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 nine months of 1996 were $4,178,824, an increase of
$118,495 or 3% over total revenues for the first nine months of 1995. Revenues
for the third quarter alone increased $37,891 from the third quarter of 1995. An
improved interest rate climate as well as lower operating expenses also
contributed to the improvement in net income for the first three quarters of
1996. Net income rose to $408,700, up from $147,275 during the first three
quarters of 1995. The improvement in operations of the Partnership and its
properties generated cash flow for the third quarter of $110,459 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.
1995 1996
------------------------- --------------------------
at at
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% 91% 95%
2. Candleridge Apts
Urbandale, Iowa 95% 99% 97% 99% 96% 95% 96%
3. Lunnonhaus Village
Apartments
Golden, Colorado 100% 99% 99% 100% 100% 98% 100%
4. Olde English Village
Apartments
W. Des Moines, Iowa 97% 99% 100% 97% 94% 92% 94%
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. On September 10, 1996 the court affirmed the dismissal.
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: November 15, 1996 By /s/ Larry D. Fransen
---------------------------
Larry D. Fransen, for the
General Partner, Investment
Associates
Dated: November 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 958,563
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 520,281
<PP&E> 26,586,566
<DEPRECIATION> 13,727,965
<TOTAL-ASSETS> 14,337,445
<CURRENT-LIABILITIES> 938,841
<BONDS> 14,585,696
0
0
<COMMON> 0
<OTHER-SE> (1,187,092)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 14,337,445
<SALES> 0
<TOTAL-REVENUES> 4,152,070
<CGS> 0
<TOTAL-COSTS> 2,878,218
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 865,152
<INCOME-PRETAX> 408,700
<INCOME-TAX> 0
<INCOME-CONTINUING> 408,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 408,700
<EPS-PRIMARY> 177.53<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>
