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, 1995. Commission file number 0-16765
GRIFFIN REAL ESTATE FUND-VI, A LIMITED PARTNERSHIP
Minnesota 41-1545501
3800 West 80th Street - Suite 750
Minneapolis, Minnesota 55431
Registrant's telephone number (612) 896-3800
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: $9,526,500
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. [ ]
Forms 8-K dated October 1, 1991 with an amendment dated October 16, 1991 and
December 23, 1991 are incorporated by reference in this report.
GRIFFIN REAL ESTATE FUND-VI, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
PART I
Item 1 Business............................................... 1
Item 2 Properties............................................. 1
Item 3 Legal Proceedings...................................... 1
Item 4 Submission of Matters to a Vote
of Limited Partners.................................... 2
PART II
Item 5 Market for the Partnership's Limited Partnership
Interests and Related Limited Partner Matters.......... 2
Item 6 Selected Financial Data................................ 2-3
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations.......... 3-5
Item 8 Financial Statements and Supplementary Data............ 5
Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.................... 5
PART III
Item 10 The General Partner of the Partnership................. 6-7
Item 11 Management Remuneration and Transactions............... 7-8
Item 12 Limited Partnership Ownership of Certain
Beneficial Owners and Management....................... 8
Item 13 Certain Relationships and Related
Transactions........................................... 8
PART IV
Item 14 Exhibits, Financial Statement Schedules
and Reports on Form 8-K................................ 8
SIGNATURES............................................................... 9
GRIFFIN REAL ESTATE FUND-VI, A LIMITED PARTNERSHIP
PART I
Item 1. Business
The registrant, Griffin Real Estate Fund-VI, A Limited Partnership (the
"Partnership"), was organized on November 22, 1985 under the laws of the State
of Minnesota and became effective on May 27, 1986. 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 19, 1986 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 19, 1988 upon the acceptance of 19,053 units ($9,526,500).
The Partnership is engaged solely in the business of real estate
investment. 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.
As of December 31, 1995 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>
1. Carriage House Apts 164 units 12/29/87 Mortgage Note
Jacksonville, Florida
2. Bass Lake Building 47,585 05/18/88 Mortgage Note
New Hope, Minnesota sq. feet
3. Industry Park Building 55,155 05/18/88 Mortgage Note
New Hope, Minnesota sq. feet
</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;
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.
Item 2. Properties
The Partnership owns the real properties referred to in Item 1 to which
reference is hereby made.
Item 3. Legal Proceedings
There have been no significant legal proceedings.
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 988 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-VI, A Limited
Partnership For the Years Ended December 31,
1995, 1994, 1993, 1992, and 1991
<TABLE>
<CAPTION>
1995 1994 1993 1992 1991
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues (d) $ 1,393,478 $ 1,318,537 $ 1,320,580 $ 1,324,793 $ 2,196,746
Income (Loss) before
extraordinary item 28,825 (84,769) (210,435) (730,356) (769,250)
Income (Loss) before
extraordinary item per
limited partner
unit 1.50 (4.41) (10.94) (37.99) (39.99)
Extraordinary Item:
Loss on foreclosure
of property -- -- -- -- (1,547,596)
Extraordinary item:
Loss on foreclosure of
property per limited
partner unit -- -- -- -- (80.45)
Net income (loss) 28,825 (84,769) (210,435) (730,356) (2,316,846)
Net income (loss) per
limited partner
unit (c) 1.50 (4.41) (10.94) (37.97) (120.45)
Total assets 5,641,036 5,689,040 5,772,987 6,055,403 6,837,463
Mortgage notes
payable 4,172,438 4,227,965 4,251,134 4,303,085 4,350,174
</TABLE>
(a) The above selected financial data should be read in conjunction with
the financial statements and the related notes appearing in Exhibit I
in this annual report.
(b) Cash distributions of $61 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 represented a return of capital. 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. In the opinion of counsel, the Partnership's
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 income (loss) and cash distributions per limited partnership
unit are based upon the weighted average number of limited partnership
units outstanding during the period.
(d) 1991 figures reflect the foreclosure of Hidden Glen Apartments.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Summary of Operations - 1995 Compared to 1994
Rental rates increased by 2% at Carriage House Apartments and
approximately 8% for new leases during 1995 at Bass Lake Building and Industry
Park Building. Average physical occupancy increased at Carriage House Apartments
by 2% from an average of 89% to an average of 91%. Occupancy at Bass Lake
decreased from 95.8% to 91.5%. Occupancy at Industry Park declined from an
average of 95.5% to an average of 87.8%. However, as of March 1, 1996 both Bass
Lake Building and Industry Park Building are at 100% occupancy, while Carriage
House Apartments occupancy has declined to 87.7%.
The common area reimbursement increase of approximately $37,000 was a
result of higher charges to tenants to off-set increased operating expenses of
the two industrial properties.
Total revenue increased by approximately $75,000 while operating
expenses (excluding property valuation benefit) decreased by approximately
$15,600 resulting in an approximate $90,600 increase in Net Income. Included in
the decreased expenses were insurance expense which decreased approximately
$27,500 and bad debt expense which increased approximately $23,600.
The decrease in insurance expense was due to lower premiums as a result
of changing insurance carriers for the two industrial properties. The decrease
was also due to the elimination of the costly separate coverage for wind and
storm damages for Carriage House Apartments (located in Florida) which was
included as a part of the primary insurance package in 1995.
The bad debt expense increased by approximately $23,600 essentially due
to writing off approximately $21,500 of rent due from a tenant who pre-maturely
vacated its space and subsequently filed bankruptcy.
Due to the tax re-format of 1986, the over-built real estate situation,
the Savings and Loan Industry crisis, and the recessionary climate in the United
States, real estate values in general declined substantially in the later 1980's
and early 1990's. Experts believed that this decline reached bottom in 1992.
Generally accepted accounting principals require that property be carried on the
Partnership books at the lower of depreciated cost or market value. Because of
further declines in value of the Partnership property, the Partnership increased
the valuation allowance by $88,000 for Bass Lake and Industry Park commercial
properties in 1993. In 1995 and 1994, however, a recovery of market values
allowed the Partnership to restore the valuation allowance by $75,000 and
$52,000 respectively.
The Carriage House Apartments mortgage lender has agreed to a short
term extension of the maturity date of the loan from December 29, 1995 to June
28, 1996. The interest rate and monthly debt service payment during the
extension will remain the same.
Summary of Operations - 1994 Compared to 1993
Rental rates at Carriage House Apartments increased on average of 2.6%.
Rental rates at Bass Lake Building and Industry Park Building increased an
average of 7.6% for new leases in 1994.
Physical occupancy at Carriage House Apartments declined by an average
of 2.8% from 91.8% to 89%. Physical occupancy at Bass Lake Building increased by
an average of 13.8% from 82% to 95.8%. Physical occupancy at Industry Park
Building increased by an average of 10.7% from 84.8% to 95.5%. As a result of
improving occupancy at the industrial properties, net rental income increased by
approximately $14,800. However, common area reimbursement income declined due to
an adjustment for 1993 over charges of approximately $25,000 which is reflected
in the common area reimbursement charges for 1994.
Total operating expenses (excluding the property valuation provision
(benefit)) increased by approximately $12,300. Real estate tax expense appears
to have increased by approximately $30,500, however, the change in real estate
expense is a result of receiving $28,200 of refunds in 1993 for prior years real
estate taxes paid.
As a result, Net Loss (excluding the property valuation provision
(benefit)) increased by approximately $14,300.
During 1994, the Partnership was successful in refinancing the Industry
Park Building mortgage loan with a new loan of $800,000. The new loan has a term
of seven years maturing on January 1, 2002 with initial interest rate of 9.75%
which adjusts every three months.
LIQUIDITY
The Partnership has approximately $135,700 of cash reserves on hand at
December 31, 1995. This should provide the Partnership with ample liquidity with
which to operate the Partnership and provide funds for necessary capital
improvements to the properties in the near term.
The Partnership continued to market Carriage House Apartments
throughout 1995. A purchase agreement for the sale of Carriage House Apartments
was executed on January 2, 1996 at a price, net of purchaser's brokerage fees
totaling $185,000, of $2,900,000. Subsequently on March 5, 1996 the purchase
agreement was amended and restated reducing the selling price, net of
purchaser's brokerage fees totaling $180,300, to $2,825,000. The buyer has
waived all inspection contingencies and a closing date of April 15, 1996 has
been scheduled.
Although there can be no assurance that a sale will ultimately be
completed at a satisfactory price, the Partnership intends on selling Bass Lake
Building and Industry Park Building during 1996. It is possible that all three
properties will be sold during 1996 and the Partnership liquidated on or before
December 31, 1996.
The combination of the disposition by foreclosure of Hidden Glen in
1991, which represented approximately 50% of the invested equity, and the
decline in value of the remaining properties, will make a full return of the
invested equity unlikely. Final results of the sales and liquidating
distributions will be determined following the close of each sale.
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
Carriage House Hidden Glen
Bass Lake Road Industry Park Apartments Apartments
New Hope, MN New Hope, MN Jacksonville, FL Marietta, GA
------------ ------------ ---------------- ------------
3/31/95 100% 85% 90% *
6/30/95 100% 85% 88% *
9/30/95 83% 85% 96% *
12/31/95 83% 97% 91% *
3/31/94 94% 98% 87% *
6/30/94 100% 97% 90% *
9/30/94 100% 96% 93% *
12/31/94 89% 91% 86% *
3/31/93 82% 62% 93% *
6/30/93 82% 81% 92% *
9/30/93 82% 98% 91% *
12/31/93 82% 98% 91% *
3/31/92 72% 96% 90% *
6/30/92 91% 85% 88% *
9/30/92 84% 80% 95% *
12/31/92 86% 96% 94% *
3/31/91 80% 82% 89% 68%
6/30/91 80% 61% 90% 69%
9/30/91 80% 68% 96% 72%
12/31/91 80% 79% 91% *
* Indicates the Partnership did not own this 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 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 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.
The identity and business experience of each of the partners of the
General Partner is as follows:
Larry D. Fransen (age 55) 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 MultiHousing 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 (56) 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 MultiHousing 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 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 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 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 $13,284, $18,735, and $11,208 in 1995, 1994 and 1993
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
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 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, 1995
-------------- --------- -----------------
Limited Partnership Units 80 units purchased .42%
at $500 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.
Item 13. Certain Relationships and Related Transactions
The partners of Griffin Equity Partners and the shareholders of
Guardian Investment Corporation, the general partners of the Partnership, are
also owners and/or 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:
1995 1994 1993
------- ------- -------
Property management fees $70,508 $73,756 $66,505
Major improvement
supervisory fees 10,943 9,777 14,011
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 1995 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, 1996 Griffin Real Estate Fund-VI,
A Limited Partnership
By: /s/ Larry D. Fransen
Larry D. 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, 1996 By: /s/ Larry D. Fransen
Larry D. Fransen
Managing General Partner
of the General Partner
Griffin Equity Partners
EXHIBIT 13
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
INCLUDED IN ANNUAL REPORT (FORM 10-K)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
TABLE OF CONTENTS
Page
Independent Auditor's Report............................................. 1
Balance Sheets, December 31, 1995 and 1994............................... 2
Statements of Operations for the Years Ended
December 31, 1995, 1994 and 1993......................................... 3
Statements of Cash Flows for the Years
Ended December 31, 1995, 1994 and 1993................................... 4
Statements of Changes in Partners' Equity (Deficit)
for the Years Ended December 31, 1995, 1994 and 1993..................... 5
Notes to Financial Statements............................................6-10
Financial Statement Schedules............................................ 11
III Real Estate and Accumulated Depreciation,
December 31, 1995.......................................... 11
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-VI,
A Limited Partnership
Minneapolis, Minnesota
We have audited the accompanying balance sheets of Griffin Real Estate Fund-VI,
A Limited Partnership, as of December 31, 1995 and 1994, 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, 1995. Our
audits also included the financial statement schedules listed in the table of
contents at Exhibit I. 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 statements 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-VI, A
Limited Partnership, as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for each of the years in the three-year period
ended December 31, 1995 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.
As discussed in Note 1 to the financial statements, the Partnership has listed
its remaining three properties for sale. As such, it is possible that all three
properties will be sold during 1996 and the Partnership liquidated on or before
December 31, 1996.
LARSON, ALLEN, WEISHAIR & CO., LLP
Minneapolis, Minnesota
March 11, 1996
-1-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
1995 1994
----------- -----------
ASSETS
Cash and cash equivalents $ 135,745 $ 119,572
Real estate tax escrow deposits 68,649 53,251
Receivables and other assets 10,772 9,757
----------- -----------
Total 215,166 182,580
----------- -----------
PROPERTY AND EQUIPMENT:
Land 1,085,776 1,085,776
Buildings and improvements 6,443,789 6,367,650
Furniture and equipment 242,362 242,362
Less valuation allowance (470,000) (545,000)
----------- -----------
Total 7,301,927 7,150,788
Less accumulated depreciation 1,919,664 1,699,341
----------- -----------
Property and equipment - net 5,382,263 5,451,447
----------- -----------
Deferred expenses (less accumulated
amortization - 1995, $22,547;
1994, $11,141) 43,607 55,013
----------- -----------
TOTAL ASSETS $ 5,641,036 $ 5,689,040
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
LIABILITIES:
Accounts payable:
Affiliate $ 11,818 $ 15,374
Other 14,385 37,425
Security deposits 51,567 47,845
Accrued interest 32,971 31,399
Mortgage notes payable 4,172,438 4,227,965
----------- -----------
Total liabilities 4,283,179 4,360,008
----------- -----------
PARTNERS' EQUITY (DEFICIT):
General Partner (100,118) (100,406)
Limited Partners 1,457,975 1,429,438
----------- -----------
Total Partners' Equity (Deficit) 1,357,857 1,329,032
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIT) $ 5,641,036 $ 5,689,040
=========== ===========
See Notes to Financial Statements
-2-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
REVENUES:
Rent (less apartment vacancies:
1995, $92,041; 1994, $94,245;
1993, $68,615) $ 1,134,321 $ 1,101,275 $ 1,086,487
Common area maintenance
reimbursement 220,087 182,384 196,197
Interest 4,401 3,685 2,236
Other 34,669 31,193 35,660
----------- ----------- -----------
Total revenues 1,393,478 1,318,537 1,320,580
----------- ----------- -----------
EXPENSES:
Interest 402,217 417,967 431,170
Depreciation and amortization 231,729 236,439 237,610
Property valuation provision
(benefit) (75,000) (52,000) 88,000
Real estate taxes 198,286 203,088 172,547
Repairs and maintenance 179,392 189,574 200,169
Utilities 77,295 73,924 73,114
Salaries and employee benefits 126,596 125,039 117,281
Management fees to related parties 70,508 73,756 66,505
Administrative 89,924 73,751 93,507
Insurance 27,968 55,464 46,532
Bad debts 24,588 1,003 1,337
Other 11,150 5,301 3,243
----------- ----------- -----------
Total expenses 1,364,653 1,403,306 1,531,015
----------- ----------- -----------
NET INCOME (LOSS) $ 28,825 $ (84,769) $ (210,435)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO GENERAL PARTNER $ 288 $ (848) $ (2,104)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ 28,537 $ (83,921) $ (208,331)
=========== =========== ===========
PER UNIT:
NET INCOME (LOSS) $ 1.50 $ (4.41) $ (10.94)
=========== =========== ===========
See Notes to Financial Statements
-3-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 28,825 $ (84,769) $(210,435)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 231,729 236,439 237,610
Property valuation
provision (benefit) (75,000) (52,000) 88,000
Decrease (increase) in:
Real Estate tax escrow deposits (15,398) 1,563 (20,805)
Receivables and other assets (1,015) 11,623 (16,347)
Increase (decrease) in:
Accounts payable (26,596) 28,442 (1,978)
Security deposits 3,722 (917) 214
Accrued expenses 1,572 (3,534) (18,266)
--------- --------- ---------
Net cash provided by
operating activities 147,839 136,847 57,993
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (76,139) (97,854) (36,013)
--------- --------- ---------
Net cash used by
investing activities (76,139) (97,854) (36,013)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Refinancing proceeds -- 800,000 --
Deferred costs from refinancing -- (47,907) --
Payments on mortgage
notes payable (55,527) (823,169) (51,951)
--------- --------- ---------
Net cash used by financing
activities (55,527) (71,076) (51,951)
--------- --------- ---------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 16,173 (32,083) (29,971)
CASH AND CASH EQUIVALENTS
- BEGINNING OF YEAR 119,572 151,655 181,626
--------- --------- ---------
CASH AND CASH EQUIVALENTS
- END OF YEAR $ 135,745 $ 119,572 $ 151,655
========= ========= =========
CASH PAID FOR INTEREST $ 400,645 $ 421,501 $ 442,855
========= ========= =========
See Notes to Financial Statements
-4-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
GENERAL LIMITED
PARTNER'S PARTNERS'
EQUITY EQUITY
(DEFICIT) (DEFICIT) TOTAL
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1992 $ (97,454) $ 1,721,690 $ 1,624,236
NET LOSS (2,104) (208,331) (210,435)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1993 (99,558) 1,513,359 1,413,801
NET LOSS (848) (83,921) (84,769)
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1994 (100,406) 1,429,438 1,329,032
NET INCOME 288 28,537 28,825
----------- ----------- -----------
PARTNER'S EQUITY (DEFICIT) $ (100,118) $ 1,457,975 $ 1,357,857
=========== =========== ===========
See Notes to Financial Statements
-5-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of the Partnership - Griffin Real Estate Fund-VI, A Limited
Partnership (the Partnership), was organized under the laws of the
State of Minnesota. The limited partnership offering terminated March
18, 1988, at which time 19,053 units had been sold at a value of $500
per unit. During 1988, 10 units were repurchased on death of limited
partners for an aggregate cost of $4,700. At December 31, 1995, there
are 19,053 limited partnership units authorized and 19,043 limited
partnership units outstanding.
Sale of Properties - Because of the in ability to negotiate a loan
modification from the Carriage House lender, the inability to refinance
the Carriage House debt, and the weak Carriage House rental market,
there is insufficient cash generated from the operations of Carriage
House to provide the funds necessary to complete all of the capital
improvements needed at the property. If this situation were to
continue, operations would further decline, resulting in a decline in
value. Thus, the Partnership decided it would be in its best interest
to sell Carriage House. After attempting to sell Carriage House
directly, the Partnership listed the property for sale with a real
estate broker on September 23, 1994. Carriage House is currently under
a $3,005,300 purchase agreement dated March 5, 1996. The closing date
of the purchase agreement is April 15, 1996. The Partnership has agreed
to pay the purchaser's brokerage fees totalling $180,300, the seller's
brokerage fees totalling $84,750, and other closing costs in connection
with the sale.
The decision was also made to sell the remaining two properties, Bass
Lake and Industry Park, in the Partnership. These properties were
listed for sale on July 15, 1994 with the Griffin Companies, Real
Estate Brokerage Division. It is possible that all three properties
will be sold during 1996, and the Partnership liquidated on or before
December 31, 1996.
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 equivalents of $135,745 and $119,572 at December 31,
1995 and 1994 respectively, consist of 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 the Modified
Accelerated Cost Recovery System over the estimated useful lives of the
related assets (buildings, 27.5 and 31.5 years; furnishings and
equipment, 5 and 7 years). For income tax purposes, the Partnership
depreciates the buildings and improvements over 27.5, 31.5, and 39
years using the Modified Accelerated Cost Recovery System.
-6-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
Leases - Apartment leases are generally renewable on a six month to one
year basis.
Deferred Expenses - Costs incurred in connection with securing
financing on Partnership properties have been capitalized and are being
amortized on the straight line basis over the remaining life of the
related financing agreement.
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.
Recently Issued Accounting Standards - The Financial Accounting
Standards Board ("FASB") issued Statement No. 121, Accounting for the
Impairment of Long Lived Assets, which requires the recognition of
impairments on long lived assets in the statements of operations. This
statement is effective for years beginning after December 15, 1995.
This SFAS has been applied by the Partnership as disclosed in Note 4 to
the Financial Statements.
2. ORGANIZATION
The Partnership was formed by the general partners, Griffin Equity
Partners, a Minnesota general partnership consisting of the owners of
Griffin Companies, and Guardian Investment Corporation, a wholly owned
subsidiary of Griffin Companies, to acquire existing, income producing
real properties for rental purposes. The general partners are not
required to make any capital contribution 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:
-7-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
** 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, 2026 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:
1995 1994
---------- ----------
Mortgage note (Carriage House Apartments),
monthly installments of $22,627
including interest at 10.25% due
June 28, 1996 $2,372,756 $2,397,843
Mortgage note (Bass Lake Building)
monthly installments of $8,040
including interest at 8.03%
due April 1999 1,015,842 1,030,122
Mortgage note (Industry Park Building)
monthly installments of $7,506
including interest at 9.013%,
due January 2002 783,840 800,000
---------- ----------
Total mortgage notes payable $4,172,438 $4,227,965
========== ==========
All property is pledged as collateral to the mortgage notes payable.
Future principal maturities are as follows:
1996 $ 2,408,684
1997 39,116
1998 42,589
1999 992,163
2000 29,183
Later 660,703
-----------
Total $ 4,172,438
===========
4. VALUATION ALLOWANCE
As of December 31, 1995, management has reduced the valuation allowance
related to the Bass Lake Building and the Industry Park Building by
$75,000. The valuation allowance at December 31, 1995 is $470,000. This
allowance is the difference between the net book value of the property
and an estimated sales value (net of sales costs) as of December 31,
1995. The valuation allowance relating to these properties at December
31, 1994 was $545,000. The remaining property was also analyzed, with
the result being no allowance considered necessary at December 31,
1995.
-8-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
5. 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:
1995 1994 1993
------- ------- -------
Property management fees $70,508 $73,756 $66,505
Major improvement
supervisory fees 10,943 9,777 14,011
6. COMMERCIAL RENTAL PROPERTIES
The Partnership has certain noncancelable operating leases on the
commercial rental property for terms up to 5 1/2 years. The minimum
future rental income on these operating leases is as follows:
Year Ending Amount
1996 $ 386,310
1997 303,757
1998 216,190
1999 180,120
2000 119,998
----------
Total $1,206,375
7. TAXABLE INCOME
The net income (loss) shown on the financial statements is reconciled
to the taxable loss as follows:
1995 1994 1993
--------- --------- ---------
Net income (loss) per
financial statements $ 28,825 $ (84,769) $(210,435)
Valuation allowance per
financial statements (75,000) (52,000) 88,000
Other items (2,026) 324 371
--------- --------- ---------
Net loss per tax return $ (48,201) $(136,445) $(122,064)
========= ========= =========
-9-
<PAGE>
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993
8. PARTNERS' EQUITY RECONCILIATION
Reconciliation of financial statement equity to tax return equity is as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
---------- ---------- ----------
<S> <C> <C> <C>
Equity per
financial statements $1,357,857 $1,329,032 $1,413,801
Syndication costs properly
netted with equity for financial
statement purposes -- -- 1,397,399
Property valuation allowance
recognized for financial
statement purposes 470,000 545,000 597,000
Other items 2,004 4,030 3,706
---------- ---------- ----------
Equity per tax return $1,829,861 $1,878,062 $3,411,906
========== ========== ==========
</TABLE>
9. TENANT CONCENTRATIONS
As of December 31, 1995 and 1994, two tenants, Independent Metal Co.,
Inc. and United Hardware, accounted for 68.5% of Bass Lake Building's
occupancy. Three tenants at Industry Park, A.C. Carlson, Compucon
Corporation and Kluge Design, Inc. accounted for 54.1% of Industry Park
Building's total occupancy at December 31, 1995 and 1994.
-10-
<PAGE>
SCHEDULE III
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1995
<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>
JACKSONVILLE, FL
Carriage House
Apartments $2,372,756 $ 412,776 $3,235,011 $ 276,653 $ 412,776 $3,511,664 $3,924,440 $1,169,066 1964 12/29/87
NEW HOPE, MN
Bass Lake
Building 1,015,842 335,000 1,450,649 79,419 335,000 1,530,068 1,865,068 361,588 1980 05/18/88
NEW HOPE, MN
Industry Park
Building 783,840 338,000 1,596,195 48,224 338,000 1,644,419 1,982,419 389,010 1978 05/18/88
Valuation
Allowance - - - - - (470,000) (470,000) -
--------- --------- ---------- --------- ---------- ----------- --------- ----------
Total $4,172,438 $1,085,776 $6,281,855 $ 404,296 $1,085,776 $6,216,151 $7,301,927 $1,919,664
========= ========= ========== ========= ========== ========== ========== ==========
</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, 1995 for
federal income tax purposes is $ 7,771,927.
(c) Reconciliation of property:
1993 1994 1995
----------- ----------- -----------
Balance at beginning of period $ 7,052,921 $ 7,000,934 $ 7,150,788
Additions during period
Improvements 36,013 97,854 76,139
Dispositions 0 0 0
Valuation allowance (88,000) 52,000 75,000
----------- ----------- -----------
Balance at end of period $ 7,000,934 $ 7,150,788 $ 7,301,927
=========== =========== ===========
(d) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 1,230,946 $ 1,466,041 $ 1,699,341
Depreciation expense for period 235,095 233,300 220,323
Dispositions 0 0 0
----------- ----------- -----------
Balance at end of period $ 1,466,041 $ 1,699,341 $ 1,919,664
=========== =========== ===========
Depreciation calculated on 5-39 year lives.
-11-
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 135,745
<SECURITIES> 0
<RECEIVABLES> 10,772
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 215,166
<PP&E> 7,301,927
<DEPRECIATION> 1,919,664
<TOTAL-ASSETS> 5,641,036
<CURRENT-LIABILITIES> 110,741
<BONDS> 4,172,438
0
0
<COMMON> 0
<OTHER-SE> 1,357,857<F1>
<TOTAL-LIABILITY-AND-EQUITY> 5,641,036
<SALES> 0
<TOTAL-REVENUES> 1,389,077
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 962,436
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 397,816
<INCOME-PRETAX> 28,825
<INCOME-TAX> 0
<INCOME-CONTINUING> 28,825
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,825
<EPS-PRIMARY> 1.50<F2>
<EPS-DILUTED> 0
<FN>
<F1>This entity is a limited partnership. The Other Stockholders Equity line
represents total Partnership equity.
<F2>The EPS-Primary line represents net income per limited partnership unit.
</FN>
</TABLE>
