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, 1998
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
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-IV,
A LIMITED PARTNESHIIP
INDEX
PART I. Financial Information
Condensed Balance Sheets
June 30, 1998 and December 30, 1997..............................1
Condensed Statements of Operations
for the three months and six months ended
June 30, 1998 and 1997...........................................2
Condensed Statements of Cash Flows
for the six months ended
June 30, 1998 and 1997...........................................3
Condensed Statements of Changes
in Partners' Equity for the
six months ended June 30, 1998...................................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
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
CONDENSED BALANCE SHEETS
(unaudited)
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
ASSETS
- ------
Cash and Cash Equivalents $ 548,615 $ 410,299
Receivables and Other Assets 604,859 706,146
------------ ------------
Total 1,153,474 1,116,445
------------ ------------
PROPERTY:
Land 1,065,093 1,065,093
Buildings and Improvements 13,839,292 13,839,292
Furniture and Equipment 889,787 889,787
------------ ------------
Total 15,794,172 15,794,172
Less Accumulated Depreciation 7,847,963 7,570,126
------------ ------------
Property - Net 7,946,209 8,224,046
------------ ------------
TOTAL ASSETS $ 9,099,683 $ 9,340,491
============ ============
LIABILITIES AND PARTNERSHIP EQUITY
- ----------------------------------
LIABILITIES:
Accounts Payable and Accrued Liabilities $ 556,626 $ 622,842
Security Deposits 72,546 75,750
Mortgage Notes Payable 11,211,950 11,261,224
------------ ------------
Total Liabilities 11,841,122 11,959,816
------------ ------------
PARTNERS' EQUITY:
General Partner (226,686) (218,239)
Limited Partner (2,514,753) (2,401,086)
------------ ------------
Total Partners Deficit (2,741,439) (2,619,325)
------------ ------------
TOTAL LIABILITIES AND PARTNERS' DEFICIT $ 9,099,683 $ 9,340,491
============ ============
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
1998 1997 1998 1997
-------------------------- -------------------------
REVENUES
<S> <C> <C> <C> <C>
Rental Income $ 810,698 $ 846,048 $ 1,642,494 $ 1,719,837
Interest Income 7,020 6,574 13,656 12,505
Other Income 21,083 26,347 212,708 49,964
Gain on Sale of Property -- 291,087 -- 291,087
----------- ----------- ----------- -----------
Total Revenues 838,801 1,170,056 1,868,858 2,073,393
----------- ----------- ----------- -----------
OPERATING EXPENSES
Operating Expenses 512,000 451,730 972,432 947,038
Interest Expense 315,567 282,162 542,673 564,696
Depreciation and
amortization 147,618 181,584 295,235 339,796
----------- ----------- ----------- -----------
Total Operating Expenses 975,185 915,476 1,810,340 1,851,530
----------- ----------- ----------- -----------
NET INCOME (LOSS) (136,384) 254,580 58,518 221,863
NET INCOME ALLOCATED (LOSS)
TO GENERAL PARTNER (1,364) 1,086 585 (550)
----------- ----------- ----------- -----------
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ (135,020) $ 253,494 $ 57,933 $ 222,413
=========== =========== =========== ===========
NET INCOME (LOSS) PER LIMITED
PARTNERSHIP UNIT
(weighted average basis) $ (10.23) $ 19.20 $ 4.39 $ 16.85
=========== =========== =========== ===========
</TABLE>
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
FOR THE SIX MONTHS
ENDED JUNE 30,
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 58,518 $ 221,863
Adjustments to reconcile Net Income
to Net Cash Provided by Operating Activities:
Gain on Sale of Property -- (291,087)
Depreciation and Amortization 295,235 339,796
Decrease in other assets - net 83,889 16,531
Decrease in Accounts Payable
and Accrued Liabilities (66,216) (85,329)
Decrease in Security Deposits (3,204) (8,609)
----------- -----------
Net Cash Provided by Operating Activities 368,222 193,165
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Property -- (40,998)
Proceeds from Sale of Property and Equipment -- 1,000,195
----------- -----------
Net Cash Provided by Investing Activities -- 959,197
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Reduction in mortgage payable (49,274) (958,063)
Distributions to partners (180,632) (208,419)
----------- -----------
Net Cash Used by Financing Activities (229,906) (1,166,482)
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 138,316 (14,120)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 410,299 609,754
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 548,615 $ 595,634
=========== ===========
CASH PAID DURING THE PERIOD FOR INTEREST $ 541,897 $ 574,617
=========== ===========
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARNTERSHIP
CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(unaudited)
General Limited Total
Partner Partners Partnership
Partner's Equity (Deficit)
January 1, 1998 $ (218,239) $(2,401,086) $(2,619,325)
Net Income 585 57,933 58,518
Distributions (9,032) (171,600) (180,632)
----------- ----------- -----------
Partners' Equity (Deficit)
June 30, 1998 $ (226,686) $(2,514,753) $(2,741,439)
=========== =========== ===========
See notes to condensed financial statements.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 1998
(unaudited)
1. Griffin Real Estate Fund-IV, A Limited Partnership (the Partnership) was
formed by Griffin Associates-IV, A Limited Partnership (the General
Partner) on March 13, 1984 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. As of June 30,
1998 there were 13,200 limited partnership units outstanding.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly Griffin Real
Estate Fund-IV, A Limited Partnership's financial position as of June 30,
1998 and December 31, 1997 and the results of its operations for the three
months and six months ended June 30, 1998 and 1997 and its cash flows for
the six months ended June 30, 1998 and 1997.
The accounting policies followed by the Partnership are set forth in Note 1
to the Partnership financial statements in the 1997 Griffin Real Estate
Fund-IV, A Limited Partnership Form 10K.
2. RELATED PARTY TRANSACTIONS
The partners of Griffin Associates-IV, A Limited Partnership, 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, 1998 and 1997 relating to
the Griffin Companies and its affiliates:
1998 1997
---- ----
Management fees $ 115,598 $ 97,745
Supervisory fees $ 11,527 $ 20,189
3. TAXABLE LOSS
The net loss shown on the statement of operations is reconciled to the
taxable loss as follows:
FOR THE SIX MONTHS
ENDED JUNE 30,
1998 1997
---- ----
Net income (loss) per statement of operations $ 58,518 $ 221,863
Excess of tax depreciation over
book depreciation (38,996) (43,346)
--------- -----------
Taxable income (loss) $ 19,522 $ 178,517
======= ==========
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1998, the Partnership had cash and cash equivalents of $548,615
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 1998.
Distribution to partners of $5 per Limited Partnership unit were made following
the first quarter and again following the second quarter of 1998 to unit holders
of record on June 30, 1998. 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.
On June 16, 1997 the Partnership sold its interest in the Ravenwood Apartments,
therefore 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 still held in the second quarter of
1998.
Brooklane Apartments:
For the first half of 1998 rental rates were up about 3.3%. However, physical
occupancy was down from 89% to 85%. As a result, total revenues including rents
and other income declined by $67,111 from $962,271 to $895,160 in 1998. With the
exception of real estate taxes and management fees, operating expenses for the
first half increased across the board, about 11.4% in total, from $436,811 to
$486,627. The largest increases were in the categories of Repairs and
Maintenance and in Painting and Decorating expenses. These two combined for an
increase of $33,750 from $32,273 in 1997 to $66,023 in 1998. This is a direct
result of the above mentioned decline in occupancy which leads to more expense
in the effort to get apartments rent ready after move-outs.
On June 16, 1998, a formal sales contract was executed for the sale of Brooklane
Apartments. Although there can be no assurance a closing will ultimately occur,
a closing of the sale is expected during the month of September. A Securities
and Exchange Commission Form 8-K will be filed following the closing which will
detail the transaction.
Presidential Estates
Rental rates increased less than 3% from the first half of 1997 to the first
half of 1998. Nevertheless, physical occupancy increased from 92% to 94% for
same period. These two factors along with a small increase in Other Income
resulted in an increase of 13.6% in total revenues. The management fee which is
calculated on revenues increased $11,714 from $36,430 to $48,144 in the first
half of 1998, and Painting and Decorating increased $9,690 from $7,305 to
$16,995. Other operating expenses changed little during the first half of 1998
as compared to the first half of 1997.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On June 15, 1998, a formal sales contract was executed for the sale of
Presidential Estates. Although there can be no assurance a closing will
ultimately occur, a closing of the sale is expected during the month of August.
A Securities and Exchange Commission Form 8-K will be filed following the
closing which will detail the transaction.
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 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.
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
<TABLE>
<CAPTION>
1997 1998
at at
---------------------------- ----------------------------
3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31
<S> <C> <C> <C> <C> <C> <C>
1. Presidential
Estates Apts.
Indianapolis, IN 88% 92% 95% 97% 99% 94%
2. Brooklane Apts.
Brown Deer, WI 94% 89% 90% 89% 84% 85%
3. Ravenwood Apts.
Cincinnati, OH 85% * * * * *
</TABLE>
* Indicates the Partnership did not own this property at the end of the quarter.
<PAGE>
GRIFFIN REAL ESTATE FUND-IV,
A LIMITED PARTNERSHIP
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
As of June 30, 1998 an individual was pursuing a legal action against the
Partnership for the injuries sustained in a fall. The individual is attempting
to recover monetary damages and to receive reimbursement for medical costs. any
judgment against the Partnership would be covered by insurance.
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.
<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-IV
A LIMITED PARTNERSHIP
Dated: August 14, 1998 By: /s/ Larry D. Fransen
-------------------------------------
Larry D. Fransen, for the
General Partner, Griffin
Associates-IV, A Limited
Partnership
Dated: August 14, 1998 By: /s/ Larry D. Fransen
-------------------------------------
Larry D. Fransen,
Managing General Partner of the
General Partner Griffin Associates-IV
A Limited Partnership
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 548,615
<SECURITIES> 0
<RECEIVABLES> 604,859
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,153,474
<PP&E> 15,794,172
<DEPRECIATION> 7,847,963
<TOTAL-ASSETS> 9,099,683
<CURRENT-LIABILITIES> 629,172
<BONDS> 11,211,950
0
0
<COMMON> 0
<OTHER-SE> (2,741,439)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 9,099,683
<SALES> 0
<TOTAL-REVENUES> 1,855,232
<CGS> 0
<TOTAL-COSTS> 1,267,667
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 529,017
<INCOME-PRETAX> 58,518
<INCOME-TAX> 0
<INCOME-CONTINUING> 58,518
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 58,518
<EPS-PRIMARY> 4.39<F2>
<EPS-DILUTED> 0.00
<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>
