UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1997. Commission file number 0-13426
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
Minnesota 41-1470203
510 Marquette Avenue, Suite 300
Minneapolis, Minnesota 55402
Registrant's telephone number (612) 338-2828
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
Securities registered pursuant to Section 12(g) of the act: $13,220,000
Indicate by check mark whether the registrant (1) has filed all reports required
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 such 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-K
or any amendment to this form 10-K. [ ]
Form 8-K dated July 1, 1997 is incorporated by reference in this report.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
PART I
Item 1 Business.................................................. 1-2
Item 2 Properties.................................................. 3
Item 3 Legal Proceedings........................................... 3
Item 4 Submission of Matters to a Vote
of Limited Partners......................................... 3
PART II
Item 5 Market for the Partnership's Limited Partnership
Interests and Related Limited Partner Matters............... 3
Item 6 Selected Financial Data..................................... 4-5
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 5-8
Item 8 Financial Statements and Supplementary Data................. 8
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure......................... 8
PART III
Item 10 The General Partner of the Partnership..................... 9-11
Item 11 Management Remuneration and Transactions.................. 11-12
Item 12 Limited Partnership Ownership of Certain
Beneficial Owners and Management........................... 12
Item 13 Certain Relationships and Related
Transactions............................................... 13
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K.................................... 13
SIGNATURES ............................................................ 14
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
PART I
Item 1. Business
The registrant, Griffin Real Estate Fund-IV, A Limited Partnership (the
"Partnership"), was organized on March 13, 1984 under the laws of the State of
Minnesota. The Partnership was formed by the general partner, Griffin
Associates-IV, a Minnesota limited partnership, to acquire existing,
income-producing real properties for rental purposes. On December 23, 1983 the
Partnership commenced an offering of $15,000,000 pursuant to a Registration
Statement on Form S-11 under the Securities Act of 1933. The offering terminated
December 22, 1984 upon the acceptance of 13,220 units ($13,220,000).
The Partnership is engaged solely in the business of real estate
investment, and is limiting its investment to the real property acquired at its
inception plus reasonable repairs and capital improvements. The goal of these
investments is to generate both capital gain income and current income from cash
flow. The Partnership does not invest in real estate mortgages, securities of or
interests in persons primarily engaged in real estate activities, or in other
securities. A presentation of information about industry segments is not
applicable and would not be material to an understanding of the Partnership's
business taken as a whole.
The General Partner manages and controls all of the affairs of the
Partnership, including deciding when and on what terms properties should be sold
or refinanced.
As of December 31, 1997 the Partnership has made the real property
investments set forth in the following table:
Name, type of property Date of Type of
and location (a) Size Purchase Ownership (b)
------------ ---- -------- -------------
1. Presidential Estates Apts. 244 units & 2 2/10/84 Mortgage Note
Indianapolis, Indiana office buildings
2. Brooklane Apartments 278 units 12/27/84 Mortgage Note
Brown Deer, Wisconsin
(a) Reference is made to Schedule III of this annual report.
(b) Reference is made to Note 3 of Notes to Financial Statements filed with
this annual report for the current outstanding principal balances and a
description of the long-term indebtedness secured by the Partnership's
real property investments;
The Partnership's real property investments are subject to competition
from similar types of properties in the vicinities in which they are located.
The Terms of Transactions between the Partnership and affiliates of the
General Partner are described in Item 11 to which reference is hereby made.
It is the Partnership's policy to conduct its business activities in
accordance with the Partnership Agreement which may not be changed without a
vote of a majority of the Limited Partnership units outstanding. Pursuant to the
Partnership Agreement, the Partnership may not issue senior securities, make
loans to other persons, invest in the securities of other entities for the
purposes of exercising control, underwrite the securities of others or offer
securities in exchange for property.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
As circumstances dictate, the Partnership has the right under the
Partnership Agreement to borrow money, and to use its investments in real
property as collateral for that debt. The amount of debt for acquisitions was
subject to a maximum of 75% loan to value. Although not required, the General
Partner intends to maintain this limit with any subsequent refinancings. No
refinancings occurred in 1997, 1996, or 1995. There is no limit on the number of
mortgages that may be taken out on any one piece of the Partnership's real
properties.
The Partnership Agreement provides for the redemption of limited
partnership units under certain circumstances. In 1997, 1996 and 1995 the
Partnership redeemed no units.
It is the policy of the General Partner to report on a quarterly
basis to the limited partners. Each interim report contains limited financial
reporting with a management discussion of operations and goals for the
Partnership. The annual report contains financial statements that are audited by
independent public accountants, and is accompanied by a management discussion of
operations and goals.
AVERAGE EFFECTIVE ANNUAL
RENTAL PER UNIT
- -------- -------------------- -------------------- --------------------
BROOKLANE APARTMENTS PRESIDENTIAL ESTATES RAVENWOOD APARTMENTS
BROWN DEER, WI INDIANAPOLIS, IN CINCINNATI, OH
- -------- -------------------- -------------------- --------------------
1997 $6,556 $5,853 $4,447
- -------- -------------------- -------------------- --------------------
1996 6,848 5,542 4,508
- -------- -------------------- -------------------- --------------------
1995 6,718 5,359 4,637
- -------- -------------------- -------------------- --------------------
1994 6,397 4,972 4,634
- -------- -------------------- -------------------- --------------------
1993 5,952 4,865 4,547
- -------- -------------------- -------------------- --------------------
SCHEDULE OF REAL
ESTATE TAXES
BROOKLANE PRESIDENTIAL RAVENWOOD (B)
APARTMENTS ESTATES APARTMENTS
BROWN DEER, WI INDIANAPOLIS, IN CINCINNATI, OH
- ------------ -------------- ------------------ --------------
1997
TAX RATE 30.99 (a) *
ASSESSMENT $275,556 (a) *
- ------------ -------------- ------------------ --------------
1996
TAX RATE 29.78 23.71 20.99
ASSESSMENT $265,046 $120,512 $75,889
- ------------ -------------- ------------------ --------------
1995
TAX RATE 38.59 24.04 20.57
ASSESSMENT $289,404 $135,204 $73,026
- ------------ -------------- ------------------ --------------
1994
TAX RATE 37.28 26.24 18.89
ASSESSMENT $279,600 $142,861 $66,989
- ------------ -------------- ------------------ --------------
1993
TAX RATE 35.41 25.85 18.60
ASSESSMENT $290,383 $148,552 $66,063
- ------------ -------------- ------------------ --------------
* Indicates the Partnership did not own the property at the time of
assessment.
(a) Data not yet available
(b) The Partnership is allocated 30% of the stated assessment. Griffin Real
Estate Fund-V, A Limited Partnership is allocated the remaining 70%.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
PART I
Item 2. Properties
The Partnership owns the real properties referred to in Item 1 to which
reference is hereby made.
Item 3. Legal Proceedings
On September 20, 1995 Everest Investors, LLC ("Everest") filed a
lawsuit in Hennepin County Minnesota's Fourth Judicial District Court against
Griffin Associates IV ("General Partner"), the general partner of Griffin Real
Estate Fund IV, 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 4. Submission of Matters to a Vote of Limited Partners
There were no matters submitted to a vote of the Limited Partners.
PART II
Item 5. Market for the Partnership's Limited Partnership Interests and Related
Limited Partner Matters
There are approximately 1,436 holders of record of units of the
Partnership. There is no public market for units and it is not anticipated that
a public market for units will develop. The General Partner will not redeem or
repurchase units except upon death of the original limited partner.
Reference is made to Item 6 in this annual report for a discussion of
cash distributions made to the Limited Partners.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
PART II
Item 6. Selected Financial Data
Griffin Real Estate Fund-IV, A Limited Partnership For the
Years Ended December 31, 1997, 1996, 1995, 1994, and 1993
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $3,820,818 $ 3,665,258 $ 3,600,899 $ 3,394,914 $ 3,244,941
Income (Loss) before
extra-ordinary item 154,728 12,823 (37,252) (103,729) (768,243)
Income (Loss) before
extra-ordinary item per
limited partner unit (c) 10 1 (3) (8) (57)
Extraordinary Item:
Loss on extinguishment
of debt - - - - (78,215)
Extraordinary item:
Loss on extinguishment
of debt per limited
partner unit (c) - - - - (6)
Net income (loss) 154,728 12,823 (37,252) (103,729) (846,458)
Net income (loss) per
limited partner unit (c) 10 1 (3) (8) (63)
Total assets $ 9,340,491 $10,637,967 $ 10,885,194 $11,049,378 $11,508,304
Mortgages and
contracts for deed 11,261,224 12,267,599 12,363,382 12,453,362 12,558,350
Cash distributions
per limited
partner unit (b)(c) 31 5 - - -
</TABLE>
a) The above selected financial data should be read in conjunction with the
financial statements and the related notes appearing in Exhibit 13 in this
annual report.
(b) Cash distributions of $212 per limited partnership unit have been made to
the Limited Partners since the inception of the Partnership. These distributions
have not resulted in taxable income to such Limited Partners and have therefore
all represented a return of capital under Generally Accepted Accounting
Principles. Each Partner's taxable income (or loss) from the Partnership in each
year is equal to his allocable share of the taxable income (loss) of the
Partnership, without regard to cash generated or distributed by the Partnership.
The Partnership's Taxable Income and Tax Losses (including net income and losses
from operations but not interest income earned on cash reserves and investments)
as well as Profit or Loss on the Sale of Properties will constitute passive
activity income and losses under the 1986 Act with respect to those taxpayers to
which the passive activity rules apply.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
PART II
(c) The net income (loss) and cash distribution per limited partnership unit are
based upon the weighted average number of limited partnership units outstanding
during the period.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
Summary of Operations - 1997 Compared to 1996
In 1997 the General Partner began marketing the properties for sale
resulting in the sale of one of the three apartment communities. The remaining
two continue to be marketed for sale. Quarterly distributions for 1997 were $20
per unit (including distributions paid in January 1998) or an annual return of
2% of the limited partners' original investment.
On June 16, 1997 the Partnership sold the Ravenwood Apartments. In
addition to the operational distributions the Partnership distributed an
additional $6 per unit in July of 1997 from the sales proceeds. Because of this
sale, comparison of results from one year to the next is not possible for the
Partnership taken as a whole. The following discussion is therefore limited to
the two remaining properties that were held for the entire year.
Brooklane Apartments:
Physical occupancy declined to the 90% range in the second quarter of
1997 due to increased construction of new apartments and single family homes.
The occupancy rate stayed there the rest of the year and ended at 89% as of
December 31, 1997. Gross potential rents increased 2.5% from 1996 over 1997.
However, due to the increased vacancy rate and a decrease in other income, gross
operating income declined 4.9% from 1996.
An increase in tenant turnover lead to a $14,159 increase in painting
and decorating expenses from $2,245 in 1996 to $16,404 in 1997. There was also a
$9,236 increase in advertising expense from $19,439 in 1996 to $28,675 in 1997,
which is a result of efforts to lease vacant apartments. Utilities increased
6.3% from $140,124 in 1996 to $149,002 in 1997. These and lesser increases in
other expenses were largely offset by a $24,358 decrease in real estate taxes
from $289,404 in 1996 to $265,046 in 1997. The real estate tax reduction
resulted from a complete reassessment in the Village of Brown Deer, Wisconsin in
1996 for taxes payable in 1997. Capital expenditures of $65,724 were for patio
and HVAC repairs and for pool remodeling.
On June 21, 1997 heavy rains caused flood damages and a subsequent
sewer backup. Damages were in excess of $236,000. Insurance reimbursements
totaled $202,357 and repairs were completed in 1997. The uninsured loss of over
$33,000 is part of the increase in repairs in maintenance. The above mentioned
tenant turnover also contributed to the increase in repairs. The total increase
was $109,612 going from $132,919 in 1996 to $242,531 in 1997.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
Presidential Estates:
The first quarter ended with an 88% physical occupancy rate. Occupancy
improved steadily throughout the year ending the year at 97%. Better occupancy
combined with a 3.3% increase in rental rates resulted in a 5% increase in
revenue from 1996 to 1997.
Real estate tax expense dropped by nearly $20,000 from 1996 to 1997
primarily because of a reduction obtained through a successful protest of the
assessment. Utilities dropped $9,941 from $91,784 in 1996 to $81,843 in 1997
mainly due to lower electrical expense. Payroll expense rose $19,608 from
$181,259 in 1996 to $200,867 in 1997 due primarily to an increase in maintenance
salaries and employee rental allowances. Capital expenditures of $141,738 were
used for landscaping, parking lot overlay, laundry room remodeling and for
carpeting decks and balconies.
YEAR 2000
The year 2000 compliance issue concerns the inability of computerized
information systems to accurately calculate, store or use a date after 1999.
This could result in a system failure or miscalculations causing disruptions of
operations. The General Partner is currently evaluating the accounting software
to find out if a Year 2000 problem exists. If the results of that evaluation
show that there is a problem, there will be a conversion to another software
that is widely used in the real estate industry, is readily available and is
Year 2000 compliant. Such a conversion, if necessary, would occur in 1999. The
General Partner's current estimate is that the costs associated with the Year
2000 issue, and the consequences of incomplete or untimely resolution of the
Year 2000 issue, will not have a material adverse affect on the results of
operations or financial position of the Partnership in any given year.
Summary of Operations - 1996 Compared to 1995
Rental rates of the property portfolio increased an average of 3.1%.
Individually, rental rates decreased 1.2% at Ravenwood Apartments due to lower
market rates, and increased 4.3% and 2.9% at Presidential Estates Apartments and
Brooklane Apartments respectively.
Average physical occupancy declined at all three properties, with the
largest drop at Ravenwood Apartments where the average occupancy rate went from
88.1% to 86.7%. Rent loss due to vacancy rose by approximately $41,800. As a
result of the overall increase in rental rates and despite a decrease in other
income, total revenues increased approximately $64,400.
Interest expense dropped slightly for all three properties since
payments are being made on steadily declining principal balances. Interest rates
averaged about the same throughout 1996 as they did for 1995.
Excluding the interest expense and the depreciation and amortization
expenses which are non-cash expenditures, total expenses increased slightly by
about $8,500. The improved revenue and stable expenses combined to increase Net
Income by about $50,000.
During 1996, the Partnership invested approximately $302,900 in
physical improvements to the properties. Most of these funds were spent on the
pool HVAC system and hall remodeling at Brooklane Apartments, and on the parking
lot and roofs at Presidential Estates Apartments.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
The overall performance of the Partnership's properties in 1996 added
approximately $255,600 to its cash reserves before distributions to the limited
partners.
An improved cash position has enabled the Partnership to resume
distributions to limited partners of record on September 30,1996 at $5 per unit.
This equates to an annual return of $20 or 2% per partnership unit. Unitholders
of record on December 31, 1996 were paid $10 per unit on January 24, 1997
consisting of the normal distribution of $5 and a bonus distribution of an
additional $5 per unit.
LIQUIDITY
The Partnership has approximately $410,299 of cash reserves on hand at
December 31, 1997. This should provide the Partnership with ample liquidity with
which to operate the Partnership and provide funds for capital improvements to
the properties in the near term and into the future. The Partnership has
committed approximately $130,000 to capital improvements at Brooklane Apartments
and approximately $150,000 at Presidential Estates Apartments.
Although there can be no assurance of continuing cash flow from
property operations, if anticipated cash flow is realized, the Partnership
intends to continue distributions in 1998 at an annual rate of $20 or 2% per
partnership unit.
Although there can be no assurance that sale will ultimately be
completed, the Partnership intends to sell the Brooklane and Presidential
Estates Apartments during 1998. Upon a successful completion of each sale, the
proceeds will be distributed.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
Brooklane Presidential Ravenwood
Apts. Estates Apts. Apts.
Brown Deer Indianapolis Cincinnati
Wisconsin Indiana Ohio
--------- ------------ ----------
3/31/97 94% 88% 85%
6/30/97 89% 92% *
9/30/97 90% 95% *
12/31/97 89% 97% *
3/31/96 92% 92% 87%
6/30/96 98% 88% 87%
9/30/96 99% 92% 87%
12/31/96 96% 89% 85%
3/31/95 95% 89% 86%
6/30/95 99% 95% 91%
9/30/95 98% 93% 91%
12/31/95 96% 90% 86%
3/31/94 93% 83% 91%
6/30/94 99% 85% 92%
9/30/94 96% 94% 90%
12/31/94 97% 91% 88%
3/31/93 89% 91% 92%
6/30/93 99% 93% 96%
9/30/93 99% 90% 94%
12/31/93 96% 87% 90%
* Indicates the Partnership did not own the property at the end of the quarter.
Item 8. Financial Statements and Supplementary Data
The Table of Contents to Financial Statements, Financial Statements and
Supplementary Data listed in Item 14 are referenced herein as included in the
exhibits attached to this report and are incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There have been no changes in independent auditors and as of the date
of the filing, there were no material disagreements with the current independent
auditors (Larson, Allen, Weishair & Co.,LLP) regarding any of the following:
1) Accounting principles or practices
2) Extent and quality of financial statement disclosure
3) Auditing scope or procedures
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
PART III
Item 10. The General Partner of the Partnership
The General Partner of the Partnership is Griffin Associates-IV, A
Limited Partnership, a Minnesota limited partnership formed in August of 1983 by
certain directors and officers of Griffin Companies for the sole purpose of
acting as General Partner of the Partnership. As General Partner, Griffin
Associates-IV manages and controls the affairs of the Partnership and has
general responsibility and authority in all matters affecting its business.
Griffin Companies, A Minnesota corporation organized in 1969, and its
affiliates are engaged in real estate brokerage, real estate investment
counseling, and management of commercial and residential real estate. Griffin
Companies and its Affiliates have organized and served as general partners in
thirty-two privately placed partnerships and six publicly offered partnerships,
which were formed for the purpose of real estate investment.
The General Partner and its Affiliates provide executive, supervisory
and certain administrative services for the Partnership's operations and the
General Partner is responsible for determining whether, when and on what terms
properties should be sold or refinanced. In addition, the books and records of
the Partnership are maintained by Griffin Companies, and are subject to audit by
independent certified public accountants. The partners of the General Partner
intend to devote only as much of their time to the business of the Partnership
as they determine to be reasonably required. Limited Partners have no right to
participate in the management of the Partnership.
Effective December 31, 1994, James R. Wadsworth, one of the partners of
the General Partner, withdrew as a partner.
The identity and business experience of each of the partners of the
General Partner is as follows:
Larry D. Fransen (age 57) founded Griffin Companies in 1969. He is a
Director and senior officer of each of its operating entities, in addition to
serving as Chairman. Since 1969, he has acted as general partner in many
partnerships investing in apartments, office buildings, warehouses, land and
motels.
Acting on behalf of Griffin Companies' clients, Mr. Fransen has
negotiated the acquisition and disposition of more than one billion dollars in
investment real estate properties nationwide.
He is a member of numerous professional organizations, including the
Greater Minneapolis Area Board of Realtors, the Minnesota Association of
Realtors, the National Association of Realtors (NAR), Minnesota Multi Housing
Association (MHA), National Multi-Housing Council (NMHC), the National Apartment
Association (NAA), Commercial and Investment Institute, National Association of
Real Estate Investment Trusts (NAREIT), and the Pension Real Estate Association
(PREA).
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
Mr. Fransen holds the CCIM (Certified Commercial Investment Member)
designation of the Commercial Investment Institute, as well as the SRS
(Specialist in Real Estate Securities) designation. For 13 years, he was an
instructor for the Commercial Investment Institute and served as the group's
national president in 1983. He has been awarded the Omega Tau Rho Medal of
Service for his years of service to the National Association of Realtors.
Robert S. Dunbar (age 58) is Chief Executive Officer of Griffin
Companies. Following several years with Control Data Corporation where he held
various administrative and management positions, he was named Executive Vice
President of the U.S. Jaycees in 1970, with responsibility for planning,
budgeting and administration of the national organization. In 1972, he joined
Ed. Phillips & Sons Company in Minneapolis, Minnesota as a sales manager. In
1975 he was elected President of Westland Capital Corporation, a Minneapolis
venture capital firm, where he was responsible for analyzing various companies
for potential investment opportunities. He joined Griffin Companies in 1977.
Mr. Dunbar is a member of the Institute of Real Estate Management
(IREM) and the Minnesota Multi Housing Association (MHA). He holds the Certified
Apartment Manager (CAM) designation of the National Apartment Association and is
a Certified Property Manager (CPM) as designated by the National Association of
Realtors. Mr. Dunbar also holds a Minnesota Real Estate Broker's License and has
completed the necessary course work for their prestigious Certified Commercial
Investment Member (CCIM) designation conferred by the Commercial Investment
Institute. He is a member of the National Multi-Housing Council and The
Executive Committee (T.E.C.). He also serves on the Board of Trustees of
Northwestern College.
Robert E. Christenson (age 61) served as a Senior Vice President of
Griffin Companies from April 1982 to March 1985. Since 1970 Mr. Christenson has
been active in the brokerage of commercial investment real estate at two
regional mortgage banking and investment real estate firms based in Minneapolis,
Minnesota.
Mr. Christenson holds the professional designation CCIM and is past
President of the Upper Midwest CCIM Chapter. He is a member of the Greater
Minneapolis Area Board of Realtors, the Minnesota Association of Realtors and
the National Association of Realtors where he currently serves on the Commercial
Investment Council. Mr. Christenson received the National Service Medal from the
National Association of Realtors in September 1980, and was awarded the William
J. Campbell Trophy for the National Commercial Transaction of the Year for 1982
by the Realtors National Marketing Institute.
Mr. Christenson is a member of the Real Estate Securities
Syndication Institute and serves as a member of its National Syndication Forum.
He is a member of the International Association for Financial Planning and is a
member and Director of the Twin Cities Association for Financial Planning.
Thomas A. Robeson (age 66) served as a Senior Vice President of Griffin
Companies, which he joined in April 1980, until his departure on February 29,
1988.
Mr. Robeson's previous business experience includes service in the
Investment Division of a national insurance company, from 1955 to 1957, and from
1957 to 1972, with IBM Corporation, where he held various sales and management
positions.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
Mr. Robeson entered the real estate field in 1972 when he joined a real
estate firm in St. Paul, Minnesota. His responsibilities included brokerage,
management and syndication of various types of real estate. In 1975, Mr. Robeson
joined a Minneapolis investment company where he was involved in the brokerage
of a wide range of commercial, industrial, and investment real estate. In 1978,
he was promoted to Vice President and Manager of the Commercial-Investment
Division of that company. He has experience in the acquisition and disposition
of shopping centers, apartment buildings, commercial office buildings, motels,
net leased industrial warehouse and manufacturing facilities, and industrial,
commercial and residential unimproved property.
Mr. Robeson holds the professional designation CCIM (Certified
Commercial Investment Member of the Realtors National Marketing Institute). He
is a member of the International Association for Financial Planning and of
several real estate organizations, including the National Association of
Industrial and Office Parks, the Upper Midwest Chapter of the Realtors National
Marketing Institute, the Greater Minneapolis Area Board of Realtors, the
Minnesota Association of Realtors and the National Association of Realtors.
Messrs. Fransen and Dunbar together own 100% of the issued and
outstanding shares of common stock of Griffin Companies. The partners of the
General Partner represent and warrant that they have a collective personal net
worth on an unaudited cost basis and on an unaudited estimated current value
basis (measured as total assets at estimated current value less all liabilities)
in excess of $1,500,000. The assets of the partners of the General Partner are
largely invested in interests in real property and in Griffin Companies.
Therefore, it may be difficult to precisely value such assets or to liquidate
such assets expeditiously or on terms favorable to the seller.
Item 11. Management Remuneration and Transactions
Partners of the General Partner receive no current or proposed direct
remuneration in such capacity. The Partnership is required to pay a management
fee to Griffin Companies and the General Partner is entitled to receive a share
of cash distributions, when and as cash distributions are made to the Limited
Partners, and a share of profits or losses as described below:
* Profits, losses, other than from refinancing or from the sale
of Partnership properties, are allocated 99% to the limited
partners and 1% to the general partner.
* Cash flow distributions, other than from refinancing or from
the sale of Partnership properties, are allocated 95% to the
limited partners and 5% to the general partner.
* Net proceeds from refinancing or from the sale of property
other than upon liquidation, less any necessary liability
reserves or debt payments, will be distributed in the
following order subject to the general partner receiving at
least 1% of the distributions:
** First, to the limited partners to the extent that
prior distributions are less than the original
capital contribution plus 6% per annum (as defined in
the Partnership Agreement);
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
** Second, any unpaid real estate commissions due to the
general partner on the resale of the Partnership
properties;
** Third, any remaining balance, 85% to the limited
partners and 15% to the general partner.
The Partnership is entitled to engage in various transactions involving
affiliates of the General Partner of the Partnership.
Griffin Companies ("Griffin"), an affiliate of the General Partner, may
be reimbursed for direct expenses relating to the administration of the
Partnership and operation of the Partnership real property investments. Griffin
received approximately $12,142, $11,756 and $ 11,781 in 1997, 1996, and 1995
respectively, for these expenses.
Reference is made to Note 5 of Notes to Financial Statements appearing elsewhere
in this annual report for a description of related party transactions.
Item 12. Limited Partnership Ownership of Certain Beneficial Owners and
Management
Everest Investors, LLC, located at 11755 Wilshire Boulevard, Suite 2360
Los Angles, California 90025, is the only person or "group" known by the
Partnership to own beneficially more than 5% of the outstanding units of the
Partnership. Everest Investors, LLC has only a financial interest in their units
which were asigned by the original owners of 722 units. Everest has not been
admitted as a limited partner of the Partnership.
Amount and Nature Percent of Class
of Beneficial Outstanding at
Title of Class Ownership December 31, 1997
-------------- --------- -----------------
Limited Partnership Units 722 Units 5.5%
The individual general partners of the General Partner as a group have
the following interest in the Partnership:
Amount and Nature Percent of Class
of Beneficial Outstanding at
Title of Class Ownership December 31, 1997
-------------- --------- -----------------
Limited Partnership Units 100 units purchased at .8%
$1,000 per unit
No partner of the General Partner possesses a right to acquire
beneficial ownership of interest of the Partnership. There exists no
arrangement, known to the Partnership, the operation of which may at subsequent
date result in a change in control of the Partnership.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
Item 13. Certain Relationships and Related Transactions
The partners of Griffin Associates-IV, the general partner of the
Partnership, are also owners and employees of Griffin Companies, a Minnesota
corporation. Accounts payable - affiliates consists of unpaid management fees to
and advances from Griffin Companies The following is a summary of approximate
fees incurred for the years ended December 31:
1997 1996 1995
---- ---- ----
Property management fees $189,103 $195,590 $ 192,305
Major improvement
supervisory fees 65,890 41,901 33,296
On April 26, 1985, Griffin Real Estate Fund-IV entered into a joint
venture with Griffin Real Estate Fund-V for the purpose of purchasing Ravenwood
Apartments, with Griffin Real Estate Fund-V designated as the managing partner.
Griffin Real Estate Fund-IV contributed $330,000 (30%) and Griffin Real Estate
Fund-V contributed $770,000 (70%) to the venture. All allocations of cash flow,
tax consequences, expenses, and contributions were in the ratio of 30% to 70%,
respectively. There are no remunerations between Griffin Real Estate Fund-IV and
Griffin Real Estate Fund-V in relation to the Ravenwood Joint Venture. After the
sale of Ravenwood Apartments on June 16, 1997 the joint venture terminated as of
December 31, 1997.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following documents are filed as part of this report:
Exhibit 13: Financial Statements and Schedules
Exhibit 27: Financial Data Schedule
An 8-K was filed on July 1, 1997 in regards to the sale of Ravenwood
Apartments on June 16, 1997. Proforma Financial Information was included with
this filing. No annual report or proxy material for the fiscal year 1997 has
been sent to the Partners of the Partnership. An annual report will be sent to
the Partners subsequent to this filing substantially similar to this form 10K.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 30, 1998 Griffin Real Estate Fund-IV,
A Limited Partnership
By: Larry Fransen \s\
Larry Fransen
for the General Partner
Griffin Associates-IV,
A Limited Partnership
Pursuant to the requirements of the Securities and Exchange Act of
1934, this Report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
Dated: March 30, 1998 By: Larry Fransen \s\
-----------------
Larry Fransen
Managing General Partner
of the General Partner
Griffin Associates-IV
A Limited Partnership
EXHIBIT 13
GRIFFIN REAL ESTATE FUND-IV, A LIMITED PARTNERSHIP
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
INCLUDED IN ANNUAL REPORT (FORM 10-K)
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
TABLE OF CONTENTS
Page
Independent Auditor's Report ........................................... 1
Balance Sheets, December 31, 1997 and 1996 ............................. 2
Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995 ....................................... 3
Statements of Cash Flows for the Years
Ended December 31, 1997, 1996 and 1995 ................................. 4
Statements of Changes in Partners' Deficit
for the Years Ended December 31, 1997, 1996 and 1995 ................... 5
Notes to Financial Statements .......................................... 6-11
Financial Statement Schedules .......................................... 12
III Real Estate and Accumulated Depreciation,
December 31, 1997.................................... 12
All schedules other than those indicated in the Table of Contents have been
omitted as the required information is inapplicable or the information is
presented in the financial statements or related notes.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Griffin Real Estate Fund-IV,
A Limited Partnership
Minneapolis, Minnesota
We have audited the accompanying balance sheets of Griffin Real Estate
Fund-IV, A Limited Partnership, as of December 31, 1997 and 1996, and the
related statements of operations, changes in partners' deficit, and cash flows
for each of the years in the three-year period ended December 31, 1997. Our
audits also included the financial statement schedules listed in the table of
contents at Exhibit 13. These financial statements and financial statement
schedules are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statments are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Griffin Real Estate
Fund-IV, A Limited Partnership, as of December 31, 1997 and 1996, and the
results of its operations and its cash flows for each of the years in the
three-year period ended December 31, 1997 in conformity with generally accepted
accounting principles. Also, in our opinion, the financial statement schedules,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
LARSON, ALLEN, WEISHAIR & CO., LLP
Minneapolis, Minnesota
March 10, 1998
-1-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
1997 1996
---- ----
ASSETS
------
Cash and cash equivalents $ 410,299 $ 609,754
Real estate tax, replacement reserve and
insurance escrow deposits 453,036 411,931
Receivables and other assets 47,242 49,028
------------ ------------
Total 910,577 1,070,713
------------ ------------
PROPERTY AND EQUIPMENT:
Land 1,065,093 1,203,093
Buildings and improvements 13,839,292 14,715,385
Furniture and equipment 889,787 1,009,394
------------ ------------
Total 15,794,172 16,927,872
Less accumulated depreciation 7,570,126 7,628,555
------------ ------------
Property and equipment - net 8,224,046 9,299,317
------------ ------------
Deferred expenses (net of accumulated
amortization - 1997, $142,082;
1996, $119,444) 205,868 267,937
------------ ------------
TOTAL ASSETS $ 9,340,491 $ 10,637,967
============ ============
LIABILITIES AND PARTNERS' DEFICIT
LIABILITIES:
Accounts payable:
Affiliate $ 9,834 $ 2,299
Other 109,814 90,445
Security deposits 75,750 88,396
Accrued expenses:
Real estate taxes 413,691 439,051
Interest 89,503 96,863
Mortgage notes payable 11,261,224 12,267,599
------------ ------------
Total liabilities 11,959,816 12,984,653
------------ ------------
PARTNERS' DEFICIT:
General Partner (218,239) (224,576)
Limited Partners (2,401,086) (2,122,110)
------------ ------------
Total Partners' Deficit (2,619,325) (2,346,686)
------------ ------------
TOTAL LIABILITIES AND PARTNERS'
DEFICIT $ 9,340,491 $ 10,637,967
============ ============
See Notes to Financial Statements
-2-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
REVENUES:
Rent (less vacancies: 1997, $364,819;
1996, $293,423; 1995, $251,583) $ 3,366,254 $ 3,514,289 $ 3,440,993
Interest 23,515 25,518 25,407
Other 142,231 125,451 134,499
Gain on sale of property and
equipment 288,818 -- --
----------- ----------- -----------
Total revenues 3,820,818 3,665,258 3,600,899
----------- ----------- -----------
EXPENSES:
Interest 1,102,676 1,148,724 1,160,354
Depreciation and amortization 635,694 631,352 625,432
Real estate taxes 404,715 449,127 426,059
Repairs and maintenance 452,626 331,065 322,587
Utilities 261,577 271,304 259,116
Salaries and employee benefits 398,680 416,257 412,491
Management fees:
Related parties 189,103 195,590 192,305
Administrative 125,273 109,610 111,913
Insurance 68,839 75,746 80,061
Bad debts 19,732 10,408 16,406
Other 7,175 13,252 31,427
----------- ----------- -----------
Total expenses 3,666,090 3,652,435 3,638,151
----------- ----------- -----------
NET INCOME (LOSS) $ 154,728 $ 12,823 $ (37,252)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO GENERAL PARTNER $ 24,504 $ 128 $ (373)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ 130,224 $ 12,695 $ (36,879)
=========== =========== ===========
PER UNIT:
NET INCOME (LOSS) $ 10 $ 1 $ (3)
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
-3-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 154,728 $ 12,823 $ (37,252)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Gain on sale of property
and equipment (288,818) -- --
Depreciation and amortization 635,694 631,352 625,432
Decrease (Increase) in:
Receivables, escrows and
other assets (39,319) 104,880 64,176
Increase (decrease) in:
Accounts payable 26,904 (31,816) 17,056
Security deposits (12,646) (4,399) (5,588)
Accrued expenses (32,720) (18,155) 18,247
----------- ----------- -----------
Net cash provided by
operating activities 443,823 694,685 682,071
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property
and equipment (207,462) (302,866) (199,278)
Proceeds from sale of property
and equipment 997,926 -- --
----------- ----------- -----------
Net cash provided (used) by
investing activities 790,464 (302,866) (199,278)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to partners (427,367) (69,476) --
Payments on mortgage notes (1,006,375) (95,783) (89,980)
Payments on notes payable -- (40,421) (66,667)
----------- ----------- -----------
Net cash used by financing
activities (1,433,742) (205,680) (156,647)
----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH (199,455) 186,139 326,146
EQUIVALENTS
CASH AND CASH EQUIVALENTS
- BEGINNING OF YEAR 609,754 423,615 97,469
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
- END OF YEAR $ 410,299 $ 609,754 $ 423,615
=========== =========== ===========
CASH PAID FOR INTEREST $ 1,110,036 $ 1,149,480 $ 1,146,795
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
-4-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
GENERAL LIMITED
PARTNER'S PARTNERS'
DEFICIT DEFICIT TOTAL
----------- ----------- -----------
PARTNERS' DEFICIT
DECEMBER 31, 1994 $ (220,855) $(2,031,926) $(2,252,781)
NET LOSS (373) (36,879) (37,252)
----------- ----------- -----------
PARTNERS' DEFICIT
DECEMBER 31, 1995 (221,228) (2,068,805) (2,290,033)
NET INCOME 128 12,695 12,823
DISTRIBUTIONS (3,476) (66,000) (69,476)
----------- ----------- -----------
PARTNERS' DEFICIT
DECEMBER 31, 1996 (224,576) (2,122,110) (2,346,686)
NET INCOME 24,504 130,224 154,728
DISTRIBUTIONS (18,167) (409,200) (427,367)
----------- ----------- -----------
PARTNERS' DEFICIT
DECEMBER 31, 1997 $ (218,239) $(2,401,086) $(2,619,325)
=========== =========== ===========
See Notes to Financial Statements
-5-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Partnership - Griffin Real Estate Fund-IV, A Limited
Partnership (the Partnership), was organized under the laws of the State of
Minnesota. The limited partnership offering terminated on December 22, 1984, at
which time 13,220 units had been sold at a value of $1,000 per unit. At December
31, 1997, there are 13,220 limited partnership units authorized and 13,200
limited partnership units outstanding.
Sale of Property - Griffin Ravenwood Joint Venture sold Ravenwood Apartments on
June 16, 1997 for $3,450,000. The Partnership's share of this sales price was
$1,035,000. Closing costs of $123,579 were associated with this sale, of which
the Partnership's obligation was $37,074.
Statements of Cash Flows - For the purpose of the statements of cash flows, the
Partnership considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents. Cash and cash
equivalents of $410,299 and $609,754 at December 31, 1997 and 1996 respectively,
consist of deposits in bank and government money market portfolios and are
recorded at cost which approximates market value. The Partnership places its
temporary cash investments with high credit quality financial institutions. At
times such investments may be in excess of the FDIC insurance limit.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements. Estimates also affect the reported amounts of revenue and expense
during the reported period. Actual results could differ from those estimates.
Financial Instruments - The carrying amounts for all financial instruments
approximates fair value. The carrying amounts for cash, receivables, accounts
payable and accrued liabilities, and loans payable approximate fair value
because of the short maturity of these instruments. The fair value of long-term
debt approximates the current rates at which the Partnership could borrow funds
with similar remaining maturities.
Properties and Depreciation - Properties are stated at cost including
capitalized acquisition fees and are depreciated using a straight-line method
over the estimated useful lives of the related assets (buildings, 25 years; land
improvements, 15 years; furnishings and equipment, 5 years). For income tax
purposes, the Partnership depreciates the buildings over 15 to 19 years using
the Accelerated Cost Recovery System. Building improvements made subsequent to
January 1, 1987 are depreciated over 27.5 years using the Modified Cost Recovery
System for tax purposes.
Prior to their refinancing in December of 1993, two of the properties' mortgages
and contracts for deed included contractual interest rates which were below
market for similar obligations and therefore were discounted to reflect
prevailing market rates at the date of property acquisitions. These discounts
are being amortized over the life of the obligations using the interest method.
-6-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
Leases - Apartment leases are generally renewable on a six month to one year
basis.
Offering Costs - Expenses incurred in connection with the registration and
offering of the partnership units, syndication costs, including selling
commissions and advertising, are recorded as a reduction of Partners' Equity.
Such costs are not deductible for income tax purposes by the Partnership nor its
partners.
Income Taxes - The financial statements of the Partnership do not include a
provision for income taxes as the income and losses of the Partnership are
allocated to the individual partners for inclusion in their income tax returns.
Net Income (Loss) Per Limited Partnership Unit - The net income (loss) per
limited partnership unit is computed by dividing the net income (loss) allocated
to limited partners by the weighted average number of limited partnership units
outstanding during the year.
2. ORGANIZATION
The Partnership was formed by the general partner, Griffin Associates-IV, a
Limited Partnership, to acquire existing, income-producing real properties for
rental purposes. Griffin Associates-IV is not required to make any capital
contributions to the Partnership.
The Limited Partnership Agreement and Certificate of Limited Partnership
(Partnership Agreement) contains certain provisions, among others, described as
follows:
* The management and general responsibility of operating the Partnership
business shall be vested exclusively in the general partner.
* Profits and losses, other than from refinancing or from the sale of
Partnership properties, are allocated 99% to the limited partners and
1% to the general partner.
* Cash flow distributions, other than from refinancing or from the sale
of Partnership properties, are allocated 95% to the limited partners
and 5% to the general partner.
* Net proceeds from refinancing or from the sale of property other than
upon liquidation, less any necessary liability reserves or debt
payments, will be distributed in the following order subject to the
general partner receiving at least 1% of the distributions:
** First, to the limited partners to the extent that prior
distributions are less than the original capital contribution
plus 6% per annum (as defined in the Partnership Agreement);
** Second, any unpaid real estate commissions due to the general
partner on the resale of the Partnership properties;
-7-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
** Third, any remaining balance, 85% to the limited partners and
15% to the general partner.
* The Partnership will terminate on December 31, 2024 or earlier upon the
sale of substantially all of the properties or the occurrence of
certain other events as stated in the Partnership Agreement.
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following at December 31:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Mortgage note (Presidential Estates
Apartments), monthly installments of
principal and interest (9.5375% at
December 31, 1997) due January 2004. $ 4,837,696 $ 4,879,063
Mortgage note (Brooklane Apartments),
monthly installments of principal and
interest (9.5375% at December 31, 1997) due
January 2004. 6,423,528 6,478,456
Mortgage note (Ravenwood Apartments),
monthly installments of principal and
interest (9.225% at June 16, 1997). The
Partnership's share of the note was
30% (See note 8). - 910,080
----------- -----------
Total mortgage notes payable $11,261,224 $12,267,599
=========== ===========
</TABLE>
All property is pledged as collateral to the mortgage notes payable.
Future principal maturities are as follows:
1998 $ 100,787
1999 110,769
2000 121,959
2001 134,280
2002 147,845
Later 10,645,584
-----------
Total $11,261,224
===========
The Ravenwood mortgage note was paid off upon the sale of Ravenwood Apartments
on June 16, 1997. (The Partnership share of the debt was 30% - see note 8).
All of the above debt is non-recourse to the individual partners.
-8-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
4. NOTES PAYABLE
In 1993 the Partnership entered into three separate promissory notes totaling
$415,500 to pay for some of the cost of refinancing the mortgage notes. These
three notes contained various repayment terms.
Two of these notes totalling $115,500 were paid prior to March 15, 1994. The
remaining note in the amount of $300,000 required interest only payments of 8%
through July 1, 1994. Commencing August 1, 1994, monthly principal and interest
payments were required with the entire balance due and payable December 31,
1996. This note was paid off on September 1, 1996.
The weighted average balance of these loans during 1996 and 1995 was $13,924 and
$73,755 respectively. The weighted average interest rate during 1996 and 1995
was 10.31% and 10.84%, respectively.
5. RELATED PARTY TRANSACTIONS
The partners of Griffin Associates-IV, the general partner of the Partnership,
are also owners and employees of Griffin Companies, a Minnesota corporation.
Accounts payable - affiliates consists of unpaid management fees to and advances
from Griffin Companies. The following is a summary of approximate fees incurred
for the years ended December 31:
1997 1996 1995
---- ---- ----
Property management fees $189,103 $195,590 $192,305
Major improvement
supervisory fees 65,890 41,901 33,296
-9-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
6. TAXABLE INCOME (LOSS)
The net loss shown on the financial statements is reconciled to the taxable
income (loss) as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) per
financial statements $ 154,728 $ 12,823 $ (37,252)
Excess of tax depreciation
over financial statement
depreciation (163,857) (239,560) (236,392)
Gain on sale of property and
equipment for tax purposes in
excess of financial statement gain 288,387 -- --
Accrued real estate taxes not
deducted for tax purposes -- 11,383 10,942
Real estate tax expense for tax
purposes in excess of financial
statement expense (11,383) (10,942) (9,894)
Prepaid rent recognized as
income for tax purposes 12,515 5,393 10,124
Rental income not recognized
for tax purposes (5,393) (10,124) (9,325)
Other (4) 1 --
----------- ----------- -----------
Taxable income (loss) $ 274,993 $ (231,026) $ (271,797)
=========== =========== ===========
7. PARTNERS' DEFICIT RECONCILIATION
Reconciliation of financial statement deficit to tax return deficit is
as follows:
1997 1996 1995
----------- ----------- -----------
Deficit per
financial statements $(2,619,325) $(2,346,686) $(2,290,033)
Cumulative excess of tax
depreciation over financial
statement depreciation (3,605,440) (3,729,970) (3,490,410)
Accrued real estate taxes not
deducted for tax purposes -- 11,383 10,942
Prepaid rent recognized as
income for tax purposes 49,187 36,672 31,279
Rental income not recognized
for tax purposes (37,046) (31,653) (21,529)
Other 266 270 269
----------- ----------- -----------
Deficit per tax return $(6,212,358) $(6,059,984) $(5,759,482)
=========== =========== ===========
</TABLE>
-10-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997, 1996 AND 1995
8. JOINT VENTURE
On April 26, 1985, Griffin Real Estate Fund-IV entered into a joint
venture with Griffin Real Estate Fund-V for the purpose of purchasing
Ravenwood Apartments, with Griffin Real Estate Fund-V designated as the
managing partner. Griffin Real Estate Fund-IV contributed $330,000
(30%) and Griffin Real Estate Fund-V contributed $770,000 (70%) to the
venture. All allocations of cash flow, tax consequences, expenses, and
contributions were in the ratio of 30% to 70%. After the sale of
Ravenwood Apartments on June 16, 1997, the joint venture terminated as
of December 31, 1997. Summarized financial information for the
Ravenwood Joint Venture for the years ended December 31, is as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Balance Sheet-
Property and equipment - net $ -- $ 2,432,944 $ 2,587,018
Other Assets -- 253,408 259,306
----------- ----------- -----------
Total Assets $ -- $ 2,686,352 $ 2,846,324
=========== =========== ===========
Mortgage notes payable $ -- $ 3,033,601 $ 3,057,287
Other liabilities -- 146,975 142,275
Partners' deficit -- (494,224) (353,238)
----------- ----------- -----------
Total Liabilities and
Partners' Deficit $ -- $ 2,686,352 $ 2,846,324
=========== =========== ===========
Statements of Operations
Operating revenues $ 1,361,033 $ 885,376 $ 908,745
Operating expenses 567,307 1,056,362 1,077,735
----------- ----------- -----------
Net Loss $ 793,726 $ (170,986) $ (168,990)
=========== =========== ===========
</TABLE>
The Partnership accounted for its 30% interest in the joint venture by including
its 30% share of the joint venture assets, liabilities and operations in the
Partnership financial statements. Such pro rata accounting was appropriate since
the controlling majority of each of the general partners of the joint venture
owners consisted of the same individuals.
-11-
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
SCHEDULE III
<TABLE>
<CAPTION>
Costs
Capitalized
Subsequent
Initial Cost to to Gross Amount at Which Carried
Partnership (a) Acquisition at Close of Period (b) (c)
--------------- ----------- --------------------------
Date
Bldgs/ Land/Bldg Buildings Accumulated of Date
Description Encumbrances Land Improve Improve Land & Improve Total Deprec.(d) Const Acquired
- ----------- ----------- ---------- ----------- ---------- ---------- ----------- ----------- ----------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INDIANAPOLIS, IN
Presidential
Estates Apts $ 4,837,696 $ 231,093 $ 6,765,021 $1,277,547 $ 231,093 $ 8,042,568 $ 8,273,661 $ 4,245,617 1978 2/10/84
BROWN DEER, WI
Brooklane Apts 6,423,528 834,000 7,487,670 1,211,098 834,000 8,698,768 9,532,768 4,412,874 1969 12/27/84
Discounts -- -- -- -- -- (2,012,257) (2,012,257) (1,088,365)
----------- ---------- ----------- ---------- ---------- ----------- ----------- -----------
Total $11,261,224 $1,065,093 $14,252,691 $2,488,645 $1,065,093 $14,729,079 $15,794,172 $ 7,570,126
=========== ========== =========== ========== ========== =========== =========== ===========
</TABLE>
(a) The cost to the Partnership represents the original purchase price of
the properties.
(b) The aggregate cost of real estate owned at December 31, 1997 for
federal income tax purposes is $17,806,429.
(c) Reconciliation of property:
<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Balance at beginning of period $ 16,425,728 $ 16,625,006 $ 16,927,872
Additions during period
Improvements 199,278 302,866 207,462
Dispositions -- -- (1,341,162)
------------ ------------ ------------
Balance at end of period $ 16,625,006 $ 16,927,872 $ 15,794,172
============ ============ ============
(d) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 6,449,249 $ 7,035,942 $ 7,628,555
Depreciation expense for period 586,693 592,613 573,625
Dispositions -- -- (632,054)
------------ ------------ ------------
Balance at end of period $ 7,035,942 $ 7,628,555 $ 7,570,126
============ ============ ============
</TABLE>
Depreciation calculated on 5-27.5 year lives using the straight-line
method on real property and accelerated for personal property.
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 410,299
<SECURITIES> 0
<RECEIVABLES> 47,242
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 910,577
<PP&E> 15,794,172
<DEPRECIATION> 7,570,126
<TOTAL-ASSETS> 9,340,491
<CURRENT-LIABILITIES> 698,592
<BONDS> 11,261,224
0
0
<COMMON> 0
<OTHER-SE> (2,619,325)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 9,340,491
<SALES> 0
<TOTAL-REVENUES> 3,797,303
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,563,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,079,161
<INCOME-PRETAX> 154,728
<INCOME-TAX> 0
<INCOME-CONTINUING> 154,728
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154,728
<EPS-PRIMARY> 10<F2>
<EPS-DILUTED> 0
<FN>
<F1>This entity is a limited partnership. The Other Stockholder Equity line
represents total Partnership equity.
<F2>The EPS Primary line represents net income per limited partnership unit.
</FN>
</TABLE>
