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, 1997
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. [ ]
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
INDEX
<TABLE>
<CAPTION>
PART 1. Financial Information
<S> <C>
Condensed Balance Sheets
June 30, 1997 and December 31, 1996.........................................................1
Condensed Statements of Operations
for the three months and six months ended
June 30, 1997 and 1996......................................................................2
Condensed Statements of Cash Flows
for the six months ended
June 30, 1997 and 1996......................................................................3
Condensed Statements of Changes
in Partners' Equity for the
six months ended June 30, 1997..............................................................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>
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(unaudited)
June, 30 December, 31
1997 1996
------------ ------------
ASSETS
Cash and cash equivalents $ 849,608 $ 1,001,510
Receivables and other assets 377,050 499,213
------------ ------------
Total 1,226,658 1,500,723
------------ ------------
PROPERTY:
Land 1,529,374 2,160,676
Buildings and improvements 16,241,139 22,530,068
Furniture and equipment 1,298,139 2,076,669
------------ ------------
Total 19,068,652 26,767,413
Less accumulated depreciation 9,960,158 13,959,999
------------ ------------
Property - net 9,108,494 12,807,414
------------ ------------
TOTAL ASSETS $ 10,335,152 $ 14,308,137
============ ============
LIABILITIES AND PARTNERSHIP EQUITY
LIABILITIES:
Accounts payable and accrued liabilities $ 543,201 $ 884,977
Security deposits 92,725 141,163
Mortgage notes payable 9,141,620 14,510,958
------------ ------------
Total liabilities 9,777,546 15,537,098
------------ ------------
PARTNERS' EQUITY:
General Partner (531,419) (536,068)
Limited Partner 1,089,025 (692,893)
------------ ------------
Total partnership equity 557,606 (1,228,961)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' EQUITY $ 10,335,152 $ 14,308,137
============ ============
See notes to condensed financial statements.
<PAGE>
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,
1997 1996 1997 1996
---------- ---------- ---------- ----------
REVENUES
Rental income $1,149,005 $1,291,955 $2,447,999 $2,607,287
Interest income 14,073 6,333 27,706 15,771
Other income 58,874 70,538 122,363 136,676
Gain on sale of property 4,953,336 -- 4,953,336 --
---------- ---------- ---------- ----------
Total revenues 6,175,288 1,368,826 7,551,404 2,759,734
---------- ---------- ---------- ----------
OPERATING EXPENSES
Operating expenses 666,874 722,255 1,389,540 1,408,909
Interest expense 304,382 295,079 594,787 604,237
Depreciation and
amortization 302,331 242,176 541,699 484,355
---------- ---------- ---------- ----------
Total operating expenses 1,273,587 1,259,510 2,526,026 2,497,501
---------- ---------- ---------- ----------
NET INCOME 4,901,701 109,316 5,025,378 262,233
NET INCOME ALLOCATED
TO GENERAL PARTNER 46,951 5,466 53,135 13,112
---------- ---------- ---------- ----------
NET INCOME ALLOCATED
TO LIMITED PARTNERS $4,854,750 $ 103,850 $4,972,243 $ 249,121
========== ========== ========== ==========
NET INCOME PER LIMITED
PARTNERSHIP UNIT
(weighted average basis) $ 2,221.85 $ 47.49 $ 2,275.63 $ 113.91
========== ========== ========== ==========
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
For the Six Months
Ended June 30,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 5,025,378 $ 262,233
Adjustments to reconcile net income
to net cash provided by
operating activities:
Gain on sale of property (4,953,336) --
Depreciation and amortization 541,699 484,355
Decrease (increase) in receivables
and other assets 8,004 (44,260)
Increase (decrease) in accounts payable
and accrued liabilities (341,776) 73,899
Increase (decrease) in security deposits (48,438) 2,553
----------- -----------
Net cash provided by operating
activities 231,531 778,780
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (140,856) (182,515)
Proceeds from sale of property & equipment 8,365,572 --
----------- -----------
Net cash provided (used)
by investing activities 8,224,716 (182,515)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (3,238,811) (477,333)
Payments of principal mortgage notes payable (5,369,338) (142,633)
----------- -----------
Net cash used by financing activities (8,608,149) (619,966)
----------- -----------
DECREASE IN CASH AND CASH EQUIVALENTS (151,902) (23,701)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 1,001,510 1,044,305
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 849,608 $ 1,020,604
=========== ===========
CASH PAID DURING THE PERIOD FOR INTEREST $ 633,713 $ 606,030
=========== ===========
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(unaudited)
GENERAL LIMITED TOTAL
PARTNER PARTNERS PARTNERSHIP
PARTNERS' EQUITY (DEFICIT)
JANUARY 1, 1997 $ (536,068) $ (692,893) $ (1,228,961)
NET INCOME 53,135 4,972,243 5,025,378
DISTRIBUTIONS (48,486) (3,190,325) (3,238,811)
------- ---------- ----------
PARTNERS' EQUITY (DEFICIT)
JUNE 30, 1997 $ (531,419) $1,089,025 $ 557,606
========== ========== ===========
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1997
(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, 1997 and December 31, 1996 and the results of its operations
for the three months and six months ended June 30, 1997 and 1996 and its
cash flows for the six months ended June 30, 1997 and 1996.
The accounting policies followed by the Partnership are set forth in
Note 1 to the Partnership financial statements in the 1996 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, 1997 and 1996 relating to the
Griffin Companies:
1997 1996
---- ----
Management fees $152,236 $147,525
Supervisory fees $ 28,400 $ 24,457
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,
------------------
1997 1996
---- ----
Net income per statement
of operations $5,025,378 $ 262,233
Excess of book depreciation
over (under) tax depreciation 188,405 (28,275)
---------- ----------
Taxable income $5,213,783 $ 233,958
========== ==========
<PAGE>
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, 1997, the Partnership had cash and cash equivalents of $849,608
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 1997.
A quarterly distribution to partners of $100.00 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, 1997. Future cash distributions
will depend on future property operations. In addition, following the sales of
Candleridge and Villas of Patricia Park Apartments, sales proceeds of $1,285 per
unit were distributed on June 17, 1997.
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.
Candleridge and Villas of Patricia Park Apartments were sold on May 27, 1997.
The sales were reported on form 8-K to the SEC. With property sales occuring
before the end of the second quarter, results of operations are not easily
comparable from one year to the next. The $151,902 decrease in cash for the six
months ended June 30, 1997 is largely due to capital improvements made to the
remaining two properties owned by the Partnership.
Lunnonhaus Village Apartments continues to show good operating results, while
most of the approximately $44,000 of capital improvements are being used for
roof repairs. Operations at Olde English Village Apartments, however, have not
improved from the same six month period a year ago due to the soft rental market
in Des Moines. Capital Improvements so far in 1997 total approximately $97,000
and were spent mainly on the parking lot, roofs and exterior wood replacement.
<PAGE>
GRIFFIN REAL ESTATE FUND-II,
A LIMITED PARTNERSHIP
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
<TABLE>
<CAPTION>
1996 1997
------------------------------ ------------------------------
at at
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
<S> <C> <C> <C> <C> <C>
1. Villas of
Patricia Park Apts.
Urbandale, Iowa 96% 91% 95% 89% 84% *
2. Candleridge Apts.
Urbandale, Iowa 96% 95% 96% 94% 96% *
3. Lunnonhaus Village
Apartments
Golden, Colorado 100% 98% 100% 100% 99% 100%
4. Olde English Village
Apartments
W. Des Moines, Iowa 94% 92% 94% 87% 89% 91%
</TABLE>
* Indicates Partnership did not own property at end of quarter.
<PAGE>
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) Form 8-K was filed on June 12, 1997 to report the sales of
Candleridge and Villas of Patricia Park Apartments on May
27, 1997.
<PAGE>
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 14, 1997 By /s/ Larry D. Fransen
--------------------
Larry D. Fransen, for the
General Partner, Investment
Associates
Dated: August 14, 1997 By /s/ Larry D. Fransen
--------------------
Larry D. Fransen,
Managing General Partner of the
General Partner, Investment
Associates
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 849,608
<SECURITIES> 0
<RECEIVABLES> 377,050
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,226,658
<PP&E> 19,068,652
<DEPRECIATION> 9,960,158
<TOTAL-ASSETS> 10,335,152
<CURRENT-LIABILITIES> 635,926
<BONDS> 9,141,620
0
0
<COMMON> 0
<OTHER-SE> 557,606<F1>
<TOTAL-LIABILITY-AND-EQUITY> 10,335,152
<SALES> 0
<TOTAL-REVENUES> 7,523,698
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,931,239
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 567,081
<INCOME-PRETAX> 5,025,378
<INCOME-TAX> 0
<INCOME-CONTINUING> 5,025,378
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,025,378
<EPS-PRIMARY> 2,275.63<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>
