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, 1996. Commission file number 2-95118
GRIFFIN REAL ESTATE FUND-V, A LIMITED PARTNERSHIP
Minnesota 41-1507989
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: $19,173,000
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. [ ]
GRIFFIN REAL ESTATE FUND-V, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PART I
Item 1 Business................................................ 1-3
Item 2 Properties.............................................. 3
Item 3 Legal Proceedings....................................... 3
Item 4 Submission of Matters to a Vote
of Limited Partners....................................... 4
PART II
Item 5 Market for the Partnership's Limited Partnership
Interests and Related Limited Partner Matters............. 4
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............. 9
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................... 9
PART III
Item 10 The General Partner of the Partnership................. 9-10
Item 11 Management Remuneration and Transactions............... 10-11
Item 12 Limited Partnership Ownership of Certain
Beneficial Owners and Management.......................... 11
Item 13 Certain Relationships and Related
Transactions.............................................. 12
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K................................... 12
SIGNATURES .......................................................... 13
PART I
Item 1. Business
The registrant, Griffin Real Estate Fund-V, A Limited Partnership (the
"Partnership"), was organized on January 31, 1985 under the laws of the State of
Minnesota and became effective on April 15, 1985. The Partnership was formed by
the General Partners, Griffin Equity Partners, A Minnesota Partnership and
Guardian Investment Corporation, A Minnesota Corporation, to acquire existing,
income-producing real properties for rental purposes. On March 5, 1985 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
March 4, 1986 upon the acceptance of 38,346 units $19,173,000).
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, 1996 the Partnership has made the real property
investments set forth in the following table:
<TABLE>
<CAPTION>
Name, type of property Date of Type of
and location (a) Size Purchase Ownership (b)
---------------- ---- -------- -------------
<S> <C> <C> <C> <C>
1. Ravenwood Apartments (c) 192 units 4/30/85 Mortgage Note
Cincinnati, Ohio
2. Country Club Apartments 180 units 5/14/86 Mortgage Note
Anderson, South Carolina
3. Savannah Oaks Apartments 200 units 9/30/86 Mortgage Note
Marietta, Georgia
4. Desert Pines Apartments 272 units 2/02/87 Mortgage Note
Tucson, Arizona
</TABLE>
(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;
(c) The Partnership has a 70% interest in this property. The other 30%
interest is owned by Griffin Real Estate Fund-IV, A Limited
Partnership.
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 Partners 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.
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. Country Club Apartments
was refinanced on October 24, 1995. No other refinancings occurred in 1996,
1995, or 1994. 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 1996, 1995, and 1994 the Partnership
redeemed thirty, zero and twenty units respectively.
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.
<TABLE>
<CAPTION>
AVERAGE EFFECTIVE ANNUAL
RENTAL PER UNIT
SAVANNAH
DESERT RAVENWOOD OAKS KERRYBROOK RALEIGH
COUNTRY CLUB PINES APARTMENTS APARTMENTS APARTMENTS FORREST
APARTMENTS APARTMENTS CINCINNATI, MARIETTA, KANSAS CITY APARTMENTS
ANDERSON, SC TUCSON, AZ OH GA MO MEMPHIS, TN
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
1996 $ 5,292 $ 4,696 $ 4,508 $ 6,341 * *
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
1995 5,118 4,805 4,637 5,996 * *
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
1994 4,877 4,570 4,634 5,528 * *
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
1993 4,764 4,263 4,547 5,085 * *
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
1992 4,510 3,868 4,463 4,800 $ 3,504 $ 3,522
- --------- ------------------- ------------------- ------------------ ------------------ ------------------- ------------------
</TABLE>
* Indicates the Partnership did not own the property at any time during the
year.
SCHEDULE OF REAL
ESTATE TAXES
<TABLE>
<CAPTION>
SAVANNAH
RAVENWOOD OAKS RALEIGH
COUNTRY CLUB DESERT PINES APARTMENTS APARTMENTS KERRYBROOK FORREST
APARTMENTS APARTMENTS CINCINNATI MARIETTA, APARTMENTS APARTMENTS
ANDERSON, SC TUCSON, AZ OH (a) GA KANSAS CITY, MO MEMPHIS, TN
- --------------------- ----------------- ---------------- ----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1996
TAX RATE 20.36 17.65 20.99 11.55 * *
ASSESSMENT $73,282 $96,005 $75,889 $57,760 * *
- --------------------- ----------------- ---------------- ----------------- ---------------- ----------------- ------------------
1995
TAX RATE 19.67 17.57 20.57 11.56 * *
ASSESSMENT $70,802 $92,053 $73,026 $54,902 * *
- --------------------- ----------------- ---------------- ----------------- ---------------- ----------------- ------------------
1994
TAX RATE 19.23 17.42 18.89 11.02 * *
ASSESSMENT $69,245 $84,284 $66,989 $52,356 * *
- --------------------- ----------------- ---------------- ----------------- ---------------- ----------------- ------------------
1993
TAX RATE 19.41 18.32 18.60 10.97 * *
ASSESSMENT $69,867 $79,286 $66,063 $52,115 * *
- --------------------- ----------------- ---------------- ----------------- ---------------- ----------------- ------------------
1992
TAX RATE 18.61 19.14 20.22 11.22 51.73 58.40
ASSESSMENT $73,845 $74,206 $71,304 $53,295 $57,992 $86,712
</TABLE>
* Indicates the Partnership did not own the property at any time during
the year.
(a) The Partnership is allocated 70% of the stated assessment. Griffin Real
Estate Fund IV, A Limited Partnership is allocated the remaining 30%.
It is the opinion of the General Partner that the Partnership's
properties are adequately covered by insurance.
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
Equity Partners and Guardian Investment Corporation ("General Partner"), the
general partner of Griffin Real Estate Fund-V, 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 10 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 2,000 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.
Item 6. Selected Financial Data
Griffin Real Estate Fund-V, A Limited Partnership
For the Years Ended December 31, 1996, 1995, 1994, 1993, and 1992
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total revenues (d) $ 4,198,088 $ 4,412,009 $ 4,006,285 $ 3,773,002 $ 4,455,887
Income (Loss) before extraordinary item (190,249) (127,619) 111,727 578,873 (1,855,501)
Income (Loss) before extraordinary item
per limited partner unit (4.92) (3.30) 2.89 14.96 (47.97)
Extraordinary Item:
Loss on foreclosure of property - - - - (207,500)
Extraordinary item:
Loss on foreclosure of property
per limited partner unit (c) - - - - (5.37)
Net income (loss) (190,249) (127,619) 111,727 578,873 (2,063,001)
Net income (loss) per limited partner unit (c) (4.92) (3.30) 2.89 14.96 (53.34)
Total assets 14,871,592 15,201,548 15,453,497 15,555,146 14,847,349
Mortgage notes payable 13,025,497 13,171,774 13,055,496 13,117,472 13,073,418
</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 $50 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 Principals. 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.
(c) The net loss and cash distribution per limited partnership unit are based
upon the weighted average number of limited partnership units outstanding
during the period.
(d) The 1992 figures reflect the foreclosure of Raleigh Forrest Apartments and
the sale of Kerrybrooke Apartments.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
Summary of Operations - 1996 Compared to 1995
Rental rates of the property portfolio increased an average of 4.1%. Rental
rate increases at individual properties ranged from a decline of 1.2% at
Ravenwood Apartments to 7.4% at Savannah Oaks Apartments. The Ravenwood rental
rate decline was a result of holding on rental rates and foregoing the
anticipated market rate increases. Occupancy average for the entire property
portfolio declined in 1996 to 93.1% compared to 95.5% for 1995. Occupancy at
Country Club Apartments and Savannah Oaks Apartments declined slightly, but
remained in the high 90% range. Desert Pines occupancy continued the trend
established at the end of 1995 and declined from 96.3% to 91.5%. Ravenwood
Apartments occupancy also declined from 88.1% in 1995 to 86.7% in 1996. The
weakness in the Ravenwood rental market area from 1995 remained throughout 1996.
Although vacancies increased by $120,078 from 1995 to 1996, these were more than
offset by rental increases resulting in a increase of net rents of $53,264.
Excluding the $246,635 of recognition of deferred revenue in 1995, total
revenues increased for 1996 compared to 1995 by $32,714.
Total expenses for 1996 compared to 1995 decreased by $151,291 or 3.3%. This
was essentially due to a substantial decline in interest expense of $171,317.
Individually interest expense decreased at all four properties. The largest
decrease coming at Country Club Apartments with a decrease of interest expense
of $120,066. This decrease was a result of refinancing the mortgage debt in
October 1995 described below. Savannah Oaks Apartments interest expense declined
$44,109 as a result of the loan modification in June 1995. A decrease in
interest expense at Desert Pines Apartments and Ravenwood Apartments totaled
$7,144 which resulted from a slight decline in 1996 of the adjustable interest
rates.
Excluding the recognition of deferred revenue in 1995 the 1996 revenue
increase of $32,714 and the decrease in operating expenses of $151,291 resulted
in a overall decrease of $184,005 in the net loss for the Partnership.
During 1996 the Partnership commenced the active sale of Ravenwood
Apartments. A formal agreement for the sale was executed on February 11, 1997.
Currently the purchase is contingent upon the satisfactory approval of the due
diligence by the purchaser. Although there can be no assurance a closing will
take place, if all goes according to schedule a sale of the property will be
concluded during the month of April 1997.
Summary of Operations - 1995 Compared to 1994
Rental rates of the property portfolio increased an average of 5.2%. Rental
rate increases at individual properties ranged from the smallest increase of
2.5% at Ravenwood Apartments to the largest of 7.1% at Savannah Oaks Apartments.
Occupancy average for the entire property portfolio remained essentially stable
at 95.2% and 95.5% for 1995 and 1994 respectively. Occupancy at Country Club
Apartments and Savannah Oaks Apartments remained steady in the high 90% range.
Desert Pines occupancy began to decline at year-end. The Tucson market where
Desert Pines Apartments is located weakened at the end of 1995 after
strengthening during 1994 and early 1995. This change is attributable to
construction of new multi-family properties and competition from home purchases
as interest rates on home mortgage loans trended downward in the second half of
1995. Slightly lower occupancy is expected at Desert Pines Apartments in 1996.
Ravenwood Apartments occupancy declined in a generally weakening rental market
area. The overall rental market occupancy where Ravenwood Apartments is located
is at best in the mid to high 80% range.
Interest income declined approximately $13,600 as a result of no longer
receiving interest payments in 1995 on a $308,993 note receivable which was
collected in January 1995. The deferred revenue associated with this receivable
of $246,635 was recognized upon collection and is reflected in the 1995
Statement of Operations. As a result of increased rents and stable occupancy,
total revenue (excluding deferred revenue) increased approximately $159,100.
The total increase in interest expense was approximately $254,900.
Individually, interest expenses increased at all four properties. The Country
Club Apartments interest expense increased approximately $44,900. This increase
was a result of the interest rate increase on the prior mortgage whose rate
increased from 9.55% at the beginning of 1994 to 12.76% in 1995 until the
property debt was refinanced in October 1995 at a rate of 7.94%. Additional
details regarding the refinancing follow later in this discussion. In addition
to the interest rate increase, the interest expense includes approximately
$23,400 for the prepayment penalty associated with the pay-off of the prior
debt. The Desert Pines Apartment's interest expense increased approximately
$53,700. This was a result of increasing interest rates. The terms of the
mortgage debt include an adjustable interest rate feature.
Rates increased from a low of 6.2% at the beginning of 1994 to the highest rate
of 8.73% in 1995. Interest rates have begun to trend back down with an interest
rate of 8.58% at year-end. The Ravenwood Apartment's interest expense increased
approximately $34,900. This was a result of increasing interest rates. The terms
of the mortgage debt include an adjustable interest rate feature. The interest
rate increased from a low of 7.1% at the beginning of 1994 to a high of 9.48% in
1995. Interest rates have begun to trend back down with an interest rate of
9.16% after year-end. The Savannah Oaks Apartment's interest expense increased
approximately $121,400. This was a result of increased interest rates. The terms
of the mortgage debt note includes an annual adjustment in the interest rate. In
February of 1994, the annual interest rate was set at 7.3%. In February of 1995,
the annual interest rate increased to 11.26%. In June 1995, the debt was
restructured with the lender, and the interest rate was reset and fixed at 9.25%
for the remaining five years of the loan term.
The $238,000 recovery in 1994 of the property value provision represents
the recovery of the balance of the provision created in prior years.
The administrative expense increased approximately $33,400. This was a result
of professional fees paid of approximately $19,000 for the successful protest of
the Country Club Apartments and Savannah Oaks Apartments real estate tax
assessments. The balance of the increase is attributable to an increase in legal
fees relating to the failed first refinancing attempt of Country Club
Apartments, the legal proceedings against Everest Investors, LLC as discussed in
Item 3 to which reference is hereby made, and other miscellaneous legal fees
incurred throughout the year.
The increase in bad debt expense of approximately $45,500 is attributable to
two factors. In total, uncollectible rents at all of the properties increased by
approximately $15,500. The balance of $30,000 is attributable to the write-off
of two $15,000 notes receivable arising from the disposition of Kerrybrooke
Apartments in 1992 which were deemed uncollectible in 1995.
Although revenue increased by approximately $159,100 (excluding the
recognition of deferred revenue), the increase in operating expenses excluding
the valuation adjustment provision and depreciation and amortization (all
non-cash items) of approximately $407,100, the majority of which was interest
expense, resulted in a decline in income of approximately $248,000. However, as
a result of the collection of the note receivable, Partnership total cash
increased by approximately $194,400.
On October 24, 1995, the Partnership replaced the Country Club Apartments
mortgage debt. The terms of the new $3,245,000 loan include a fixed rate of
interest at 7.94% for the ten year term of the loan. The new financing provided
funds to retire the $3,056,000 prior debt, cover the approximate $118,000 cost
of placing the new loan, and provided $71,000 for property improvements. As a
condition of the loan, the lender required that $126,000 be expended on property
improvements. These funds have been escrowed with the lender.
LIQUIDITY
The Partnership has approximately $450,906 of cash reserves on hand at
December 31, 1996. 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.
No distributions were made in 1996. Future distributions will depend on the
cash flow from property operations and from property sales.
Although there can be no assurance that a sale will ultimately be completed,
the partnership has entered into a purchase agreement dated February 11, 1997
for the sale of its share of Ravenwood Apartments. Upon a successful completion
of a sale, the proceeds will be distributed. Reference is made to Note 1 of the
Notes to Financial Statements filed with this annual report. The partnership has
no other plans for property sales in the near term.
<TABLE>
<CAPTION>
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
Country Club Desert Pines Savannah Oaks Ravenwood
Apartments Apartments Apartments Apartments
Anderson, SC Tucson, AZ Marietta, GA Cincinnati, OH
------------ ---------- ------------ --------------
<S> <C> <C> <C> <C>
3/31/96 99% 94% 97% 87%
6/30/96 97% 89% 98% 87%
9/30/96 97% 93% 96% 87%
12/31/96 98% 90% 96% 85%
3/31/95 97% 99% 97% 86%
6/30/95 98% 95% 99% 91%
9/30/95 98% 96% 99% 91%
12/31/95 99% 95% 97% 86%
3/31/94 93% 98% 100% 91%
6/30/94 98% 95% 95% 92%
9/30/94 98% 96% 99% 90%
12/31/94 98% 96% 99% 90%
3/31/93 98% 96% 94% 92%
6/30/93 99% 92% 92% 96%
9/30/93 99% 96% 96% 94%
12/31/93 96% 97% 97% 90%
3/31/92 98% 93% 93% 92%
6/30/92 99% 83% 94% 91%
9/30/92 99% 90% 96% 96%
12/31/92 98% 94% 96% 96%
</TABLE>
Raleigh Forest Kerrybrooke
Apartments Apartments
Memphis, TN Kansas City, MO
----------- ---------------
3/31/96 * *
6/30/96 * *
9/30/96 * *
12/31/96 * *
3/31/95 * *
6/30/95 * *
9/30/95 * *
12/31/95 * *
3/31/94 * *
6/30/94 * *
9/30/94 * *
12/31/94 * *
3/31/93 * *
6/30/93 * *
9/30/93 * *
12/31/93 * *
3/31/ 92% 78%
6/30/92 81% *
9/30/92 * *
12/31/92 * *
* 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
PART III
Item 10. The General Partner of the Partnership
The General Partners of the Partnership are Griffin Equity Partners, a
Minnesota general partnership formed in October of 1984 by the owners of Griffin
Companies to act, along with Guardian Investment Corporation, a Minnesota
corporation and a wholly owned subsidiary of Griffin Companies ("General
Partner"), as the General Partner for various limited partnerships sponsored by
Griffin Companies. As General Partner, Griffin Equity Partners and Guardian
Investment Corporation manage and control the affairs of the Partnership and
have 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 multi-family 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 Partners are 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 principals 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.
The identity and business experience of each of the partners of the General
Partner is as follows:
Larry D. Fransen (age 56) 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).
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 (57) 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.
Messrs. Fransen and Dunbar together own 100% of the issued and outstanding
shares of common stock of Griffin Companies. The principals of the General
Partners 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 principals of the General Partners 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
Principals 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 Partners 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;
.. 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 $13,868, $18,504 and $16,797 in 1996, 1995 and 1994
respectively, for these expenses.
Reference is made to Note 6 of Notes to Financial Statements filed
with this annual report for a description of related party transactions.
Item 12. Limited Partnership Ownership of Certain Beneficial Owners and
Management
No person or any "group" is known by the Partnership to own beneficially
more than 5% of the outstanding units of the Partnership.
The individual principals 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 31,1996
-------------- --------- ----------------
Limited Partnership Units 100 units purchased at .3%
$500 per unit
No principal 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.
Item 13. Certain Relationships and Related Transactions
The partners of Griffin Equity Partners, and the shareholder of
Guardian Investment Corporation, 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:
1996 1995 1994
---- ---- ----
Property management fees $221,068 $222,740 $212,246
Major improvement supervisory fees 83,307 78,018 76,680
On April 26, 1985, Griffin Real Estate Fund-V entered into a joint
venture with Griffin Real Estate Fund-IV 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 future contributions are to be in the ratio of
30% to 70%. There are no remunerations between Griffin Real Estate Fund-IV and
Griffin Real Estate Fund-V in relation to the Ravenwood Joint Venture.
PART IV
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
No annual report or proxy material for the fiscal year 1996 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.
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 25, 1997 Griffin Real Estate Fund-V,
A Limited Partnership
By: Larry Fransen \s\
-----------------
Larry Fransen
for the General Partner
Griffin Equity Partners
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 25, 1997 By: Larry Fransen \s\
----------------
Larry Fransen
Managing General Partner
of the General Partner
Griffin Equity Partners
EXHIBIT 13
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
INCLUDED IN ANNUAL REPORT (FORM 10-K)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
TABLE OF CONTENTS
Page
Independent Auditor's Report.............................................. 1
Balance Sheets, December 31, 1996 and 1995................................ 2
Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994.......................................... 3
Statements of Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994.................................... 4
Statements of Changes in Partners' Equity (Deficit)
for the Years Ended December 31, 1996, 1995 and 1994...................... 5
Notes to Financial Statements............................................. 6-12
Financial Statement Schedules............................................. 12
III Real Estate and Accumulated Depreciation,
December 31, 1996.............................................. 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.
INDEPENDENT AUDITOR'S REPORT
Griffin Real Estate Fund-V,
A Limited Partnership
Minneapolis, Minnesota
We have audited the accompanying balance sheets of Griffin Real Estate Fund-V, A
Limited Partnership, as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners' equity (deficit), and cash flows
for each of the years in the three-year period ended December 31, 1996. 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
resonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statments. 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-V, A
Limited Partnership, as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1996 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 14, 1997
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
ASSETS
Cash and cash equivalents $ 450,906 $ 501,306
Escrow deposits 200,490 266,823
Receivables and other assets 41,527 43,091
---------- ----------
Total 692,923 811,220
---------- ----------
PROPERTY AND EQUIPMENT:
Land 3,046,000 3,046,000
Buildings and improvements 17,646,870 17,088,531
Furniture and equipment 1,592,170 1,587,926
---------- ----------
Total 22,285,040 21,722,457
Less accumulated depreciation 8,325,543 7,594,027
---------- ----------
Property and equipment - net 13,959,497 14,128,430
---------- ----------
Deferred expenses (net of accumulated
amortization - 1996, $212,916;
1995, $170,189) 219,172 261,898
---------- ----------
TOTAL ASSETS $14,871,592 $ 15,201,548
=========== ==========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Accounts payable:
Affiliate $ 4,129 $ 23,438
Other 64,217 88,828
Security deposits 125,235 117,687
Accrued expenses:
Real estate taxes 156,023 97,737
Interest 78,245 79,716
Mortgage notes payable 13,025,497 13,171,774
---------- ----------
TOTAL LIABILITIES 13,453,346 13,579,180
---------- ----------
PARTNERS' EQUITY (DEFICIT):
General Partner (210,793) (208,891)
Limited Partners 1,629,039 1,831,259
---------- ----------
Total Partners' Equity (Deficit) 1,418,246 1,622,368
---------- ----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIT) $14,871,592 $ 15,201,548
=========== ============
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
---- ---- ----
REVENUES:
Rent (less vacancies:
1996, $303,971; 1995, $183,893;
1994, $174,401) $ 4,095,552 $4,042,288 $ 3,841,246
Interest 21,615 32,823 46,417
Recognition of deferred revenue - 246,635 -
Other 80,921 90,263 118,622
---------- --------- ---------
Total Revenues 4,198,088 4,412,009 4,006,285
---------- --------- ---------
EXPENSES:
Interest 1,136,293 1,307,610 1,052,718
Depreciation and amortization 774,243 747,572 717,988
Property valuation benefit - - (238,000)
Real estate taxes 292,829 265,812 286,833
Repairs and maintenance 659,340 670,600 650,585
Utilities 409,344 374,635 342,870
Salaries and employee benefits 604,706 606,840 574,465
Management fees:
Related parties 221,068 222,740 212,246
Administrative 153,064 181,500 148,142
Insurance 107,848 94,854 115,771
Bad debts 27,900 64,025 18,569
Other 1,702 3,440 12,371
---------- --------- ---------
Total expenses 4,388,337 4,539,628 3,894,558
---------- --------- ---------
NET INCOME (LOSS) $ (190,249) $ (127,619) $ 111,727
========== ========== =========
NET INCOME (LOSS) ALLOCATED
TO GENERAL PARTNERS $ (1,902) $ (1,276) $ 1,117
========== ========== =========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ (188,347) $ (126,343) $ 110,610
========== ========== =========
PER UNIT:
NET INCOME (LOSS) $ (4.92) $ (3.30) $ 2.89
========== ========== =========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (190,249) $ (127,619) $ 111,727
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Recognition of
deferred revenue - (246,635) -
Depreciation and
amortization 774,243 747,572 717,988
Note receivable amortization - (1,473) (11,698)
Reduction in property valuation
provision - - (238,000)
Write-off of notes receivable - 30,000 -
Decrease (increase) in:
Escrow deposits 66,333 70,728 163,689
Receivables and other assets 1,564 (1,063) (13,431)
Increase (decrease) in:
Accounts payable (43,921) (19,091) (84,593)
Security deposits 7,548 5,175 9,574
Accrued expenses 56,815 19,944 (18,712)
---------- ---------- ----------
Net cash provided by
operating activities 672,333 477,538 636,544
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property (562,583) (396,852) (525,602)
Proceeds from Note Receivable - 310,466 -
---------- ---------- ----------
Net cash used by
investing activities (562,583) ( 86,386) (525,602)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of finance fees - (124,014) -
Principal payments on mortgage
notes payable (146,277) (72,722) (61,976)
Redemption of Partnership Units (13,873) - (9,304)
---------- ---------- ---------
Net cash used by
financing activities (160,150) (196,736) (71,280)
---------- ---------- ---------
INCREASE (DECREASE) IN CASH (50,400) 194,416 39,662
CASH AND CASH EQUIVALENTS
- BEGINNING OF YEAR 501,306 306,890 267,228
---------- --------- ----------
CASH AND CASH EQUIVALENTS
- END OF YEAR $ 450,906 $ 501,306 $ 306,890
========== ========= ==========
CASH PAID FOR INTEREST $ 1,137,764 $1,283,734 $ 1,036,489
========== ========= ==========
SUMMARY OF NON-CASH TRANSACTIONS:
Proceeds from refinancing of
mortgage note $ - $ 3,245,000 $ -
Payoff of mortgage note - (3,056,000) -
Loan proceeds paid to
fund escrows - (189,000) -
---------- --------- -----------
$ - $ - $ -
========== ========== ===========
Discount on note receivable $ - $ - $ 48,365
Adjustment of deferred revenue - - (48,365)
---------- ---------- ----------
$ - $ - $ 0
========== ========== ==========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
GENERAL LIMITED
PARTNERS' PARTNERS'
EQUITY EQUITY
(DEFICIT) (DEFICIT) TOTAL
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1993 $ (208,732) $ 1,856,296 $ 1,647,564
NET INCOME 1,117 110,610 111,727
REDEMPTION OF TWENTY
PARTNERSHIP UNITS -- (9,304) (9,304)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1994 (207,615) 1,957,602 1,749,987
NET LOSS (1,276) (126,343) (127,619)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1995 (208,891) 1,831,259 1,622,368
NET LOSS (1,902) (188,347) (190,249)
REDEMPTION OF THIRTY
PARTNERSHIP UNITS -- (13,873) (13,873)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1996 $ (210,793) $ 1,629,039 $ 1,418,246
=========== =========== ===========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-V,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Partnership - Griffin Real Estate Fund-V, A Limited
Partnership (the Partnership), was organized under the laws of the State
of Minnesota. The limited partnership offering terminated on March 4,
1986, at which time 38,346 units had been sold at a cost of $500 per
unit. At December 31, 1996 there are 38,346 limited partnership units
authorized and 38,246 limited partnership units outstanding.
Sale of Property - Griffin Ravenwood Joint Venture is currently under a
$3,450,000 purchase agreement dated February 11, 1997 for the sale of
Ravenwood Apartments. The Partnership's share of this purchase price
will be $2,415,000. The anticipated closing date of this purchase
agreement is April 15, 1997. Estimated closing costs of $140,500 are
associated with this purchase agreement of which the Partnership's
obligation would be $98,350.
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 $450,906 and $501,306 at December 31, 1996
and 1995 respectively, consist of bank deposits and government money
market portfolios with banks 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 disclosure 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, 10-15 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.
Escrow Deposits - The escrow deposits consist of funds held for future
payment of real estate taxes, insurance premiums and replacement
reserves for major expenditures.
Leases - Apartment leases are generally renewable on a six month to one
year basis.
Deferred Expenses - These are primarily financing costs and are amortized
over the term of the related debt on a straight-line 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 Equity
Partners, a Minnesota Partnership, and Guardian Investment Corporation,
a Minnesota Corporation, to acquire existing, income-producing real
properties for rental purposes. The General Partner 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;
.. Third, any remaining balance, 85% to the limited partners and
15% to the General Partner.
. The Partnership will terminate on December 31, 2025 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>
1996 1995
---- ----
<S> <C> <C>
Mortgage note (Country Club Apartments)
monthly installments of principal and
interest (7.936% at December 31, 1996)
due November 1, 2005 $ 3,198,357 $ 3,241,552
Mortgage note (Savannah Oaks Apartments)
monthly installments of principal and
interest (9.25% at December 31, 1996)
due February 15, 2000 4,295,712 4,344,294
Mortgage note (Desert Pines Apartments),
varying monthly installments of principal
and interest (8.37% at December 31, 1996)
due October 1998 3,407,907 3,445,827
Mortgage Note (Ravenwood Apartments)
monthly installments of principal and interest
(9.475% at December 31, 1996), due January 2004.
The Partnership's share of the debt
is 70% (See note 9) 2,123,521 2,140,101
----------- -----------
Total mortgage notes payable $13,025,497 $13,171,774
=========== ===========
</TABLE>
All property is pledged as collateral to the mortgage notes payable.
Future principal maturities are as follows:
1997 $ 165,135
1998 3,490,524
1999 141,050
2000 4,203,620
2001 90,871
Later 4,934,297
----------
Total $13,025,497
On October 24, 1995, the Partnership refinanced Country Club Apartments.
The refinanced loan of $3,245,000 requires monthly installments of
principal and interest ($24,908 beginning December 1, 1995) with
payments based on a fixed interest rate of 7.936% until it matures on
November 1, 2005. This loan is subject to a yield maintenance prepayment
penalty with a minimum 1% prepayment penalty until the final 90 days of
the loan, at which time there is no penalty.
On June 16, 1995 the Savannah Oaks Mortgage note was modified for the
third time to allow interest only payments of $40,951 at 11.2625%
through July 15, 1995 at which time the interest rate was changed to
9.25%. On August 15, 1995, a new monthly payment of principal and
interest of $37,367 began and continues to the new maturity date of
February 15, 2000. All cash flow after payment of normal operating
expenses and debt service were placed in an escrow account for future
capital improvements as a result of Savannah Oaks second mortgage note
modification during January 1993.
On December 9, 1993, the Partnership refinanced Ravenwood Apartments. The
refinanced loan of $3,105,500 requires monthly installments of principal
and interest of $20,870 beginning February 1, 1994 with possible
interest rate adjustments every six months limited to 1% per adjustment
date, due 2004. (The Partnership share of the debt is 70% -see note 9).
All of the above debt is non-recourse to the individual partners.
4. FORECLOSURE
In September 1991, a foreclosure action in relation to Lantern Square
Apartments was commenced against the Partnership by the second mortgage
holder. An agreement was reached whereby the Partnership transferred
title to the property and was relieved of all liabilities related to the
property. In addition, the Partnership received a note receivable from
the second mortgage holder for $354,000 secured by a mortgage on the
property. The note called for interest to accrue at 2% from October 1,
1991 through October 1, 1993, with such interest to be added to the
principal balance. Thereafter, the Partnership was to receive monthly
interest only payments at varying rates until the note matured on June
20, 1995. This note was discounted at December 31, 1994 and 1993 to
$246,635 and $295,000, respectively, to reflect prevailing market
interest rates. Amortization of $1,473 and $11,698 was included in
interest income at December 31, 1995 and 1994 respectively. The
foreclosure resulted in $295,000 of deferred revenue and an
extraordinary loss of $72,488.
During January, 1995, the Partnership received payment on this note
receivable. Due to the note repayment prior to the maturity date, a
discount of $48,365 was given. The note receivable balance and the
related deferred revenue at December 31, 1994 reflects this discount.
Deferred revenue in the amount of $246,635 has been recognized in 1995.
5. VALUATION ALLOWANCE
As of December 31, 1996 and 1995, no valuation allowance has been recorded
on any of the Partnership's real property investments. A property
valuation benefit of $238,000 were recorded at December 31, 1994 related
to management's reduction of the allowance. The valuation allowance is
the difference between the net book value of the property and an
estimated sales value (net of sales costs). Upon analysis, no allowance
was considered necessary at December 31, 1996 and 1995.
6. RELATED PARTY TRANSACTIONS
The partners of Griffin Equity Partners and the shareholder of Guardian
Investment Corporation, the general partners 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:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Property management fees $ 221,068 $ 222,740 $ 212,246
Major improvement
supervisory fees 83,307 78,018 76,680
7. PARTNERS' EQUITY (DEFICIT) RECONCILIATION
1996 1995 1994
---- ---- ----
Equity per financial statements $ 1,418,246 $ 1,622,368 $ 1,749,987
Cumulative excess of tax
depreciation over financial
statement depreciation (2,355,413) (2,338,483) (2,313,897)
Additional interest income on
note receivable for financial
statement purposes - - (33,323)
Interest income not recorded
for tax purposes - - (14,811)
Accrued real estate taxes not
deducted for tax purposes 80,693 25,531 23,086
Prepaid rent recognized as
income for tax purposes 12,233 12,038 10,910
--------- --------- ---------
Deficit per tax return $ (844,241) $ (678,546) $ (578,048)
========= ========== =========
</TABLE>
8. TAXABLE LOSS
The net income (loss) shown on the financial statements is reconciled to
the taxable loss as follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Net income (loss) per
financial statements $ (190,249) $ (127,619) $ 111,727
Property valuation
benefit recorded - - (238,000)
Tax depreciation in excess of
financial statement
depreciation (16,930) (24,586) (69,949)
Accrued real estate taxes not
deducted for tax purposes 80,693 25,531 23,086
Tax deduction for real estate
taxes in excess of financial
statement expense (25,531) (23,086) (91,758)
Additional interest income on
note receivable for tax purposes - 48,198 -
Additional interest income on
note receivable for financial
statement purposes - - (11,698)
Other 195 1,064 (5,766)
-------- --------- ---------
Taxable loss $ (151,822) $ (100,498) $ (282,358)
======== ========= =========
</TABLE>
9. JOINT VENTURE
On April 26, 1985, Griffin Real Estate Fund-V entered into a joint venture
with Griffin Real Estate Fund-IV 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 future
contributions are to be in the ratio of 30% to 70%.
Summarized financial information for the Ravenwood Joint Venture for the
years ended December 31,:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Balance Sheet-
Property and equipment - net $ 2,432,944 $ 2,587,018 $ 2,721,963
Other Assets 253,408 259,306 293,503
--------- --------- ---------
Total Assets $ 2,686,352 $ 2,846,324 $ 3,015,466
========= ========= =========
Mortgage notes payable $ 3,033,601 $ 3,057,287 $ 3,079,538
Other liabilities 146,975 142,275 120,178
Partners' deficit (494,224) (353,238) (184,250)
--------- --------- ---------
Total Liabilities and
Partners' Deficit $ 2,686,352 $ 2,846,324 $ 3,015,466
========= ========= =========
Statements of Operations
Operating revenues $ 885,376 $ 908,746 $ 933,863
Operating expenses 1,056,362 1,077,734 998,383
--------- --------- ---------
Net Loss $ (170,986) $ (168,988) $ (64,520)
========= ========= =========
</TABLE>
The Partnership accounts for its 70% interest in the joint venture by
including its 70% share of the joint venture assets, liabilities and
operations in the Partnership financial statements. Such pro rata
accounting is appropriate since the controlling majority of each of the
general partners of the joint venture owners consists of the same
individuals.
SCHEDULE III
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
<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>
CINCINNATI, OH
Ravenwood Apts $2,123,521 $ 322,000 $ 2,484,825 $ 322,554 $ 322,000 $2,807,379 $3,129,379 $1,426,319 1973 04/30/85
MARIETTA, GA
Savannah Oaks
Apartments 4,295,712 1,239,000 5,009,028 793,127 1,239,000 5,802,155 7,041,155 2,469,878 1973 09/30/86
TUCSON, AZ
Desert Pines
Apartments 3,407,907 1,225,000 4,290,612 1,497,356 1,225,000 5,787,968 7,012,968 2,303,292 1973 02/02/87
ANDERSON, SC
Country Club
Apartments 3,198,357 260,000 4,195,025 646,513 260,000 4,841,538 5,101,538 2,126,054 1973 05/14/86
--------- --------- ---------- --------- --------- ---------- ---------- ---------
Total $13,025,497 $3,046,000 $15,979,490 $3,259,550 $3,046,000 $19,239,040 $22,285,040 $8,325,543
========== ========= ========== ========= ========= ========== ========== =========
</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, 1996 is the
same for financial statement purposes as it is for tax purposes, with
the aggregate total being $22,285,040.
(c) Reconciliation of property:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ---------- -----------
<S> <C> <C> <C>
Balance at beginning of period $20,562,003 $21,325,605 $21,722,457
Additions during period
Improvements 525,602 396,852 562,583
Valuation allowance 238,000 - -
---------- ---------- ----------
Balance at end of period $21,325,605 $21,722,457 $22,285,040
========== ========== ==========
(d) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 6,187,738 $ 6,880,418 $ 7,594,027
Depreciation expense for period 692,680 713,609 731,516
---------- ---------- ----------
Balance at end of period $ 6,880,418 $ 7,594,027 $ 8,325,543
========== ========== ==========
</TABLE>
Depreciation calculated on 5-27.5 year lives using the straight-line method on
real property and accelerated for personal property.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 450,906
<SECURITIES> 0
<RECEIVABLES> 41,527
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 692,923
<PP&E> 22,285,040
<DEPRECIATION> 8,325,543
<TOTAL-ASSETS> 14,871,592
<CURRENT-LIABILITIES> 427,849
<BONDS> 13,025,497
0
0
<COMMON> 0
<OTHER-SE> 1,418,246<F1>
<TOTAL-LIABILITY-AND-EQUITY> 14,871,592
<SALES> 0
<TOTAL-REVENUES> 4,176,473
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,252,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,114,678
<INCOME-PRETAX> (190,249)
<INCOME-TAX> 0
<INCOME-CONTINUING> (190,249)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (190,249)
<EPS-PRIMARY> (4.92)<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 loss per limited partnership unit.
</FN>
</TABLE>
