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 0-16765
GRIFFIN REAL ESTATE FUND-VI, A LIMITED PARTNERSHIP
Minnesota 41-1545501
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: $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 8, 1991 and November 26, 1996 are incorporated by
reference in this report.
GRIFFIN REAL ESTATE FUND-VI, A LIMITED PARTNERSHIP
TABLE OF CONTENTS
PAGE
PART I
Item 1 Business.......................................... 1-3
Item 2 Properties........................................ 1
Item 3 Legal Proceedings................................. 1
Item 4 Submission of Matters to a Vote
of Limited Partners............................... 1
PART II
Item 5 Market for the Partnership's Limited Partnership
Interests and Related Limited Partner Matters..... 1
Item 6 Selected Financial Data........................... 2
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operations..... 3-4
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............ 5-6
Item 11 Management Remuneration and Transactions.......... 6-7
Item 12 Limited Partnership Ownership of Certain
Beneficial Owners and Management................... 7
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
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 was 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.
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
As of December 31, 1996 the Partnership has sold all of its real property
investments and has been terminated effective that date.
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
<TABLE>
<CAPTION>
Griffin Real Estate Fund-VI, A Limited
Partnership For the Years Ended December 31, 1996, 1995, 1994, 1993, and 1992
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Total revenues (d) $ 841,368 $ 1,393,478 $ 1,318,537 $ 1,320,580 $ 1,324,793
Net income (loss) 294,640 28,825 (84,769) (210,435) (730,356)
Net income (loss) per
limited partner
unit (c) 8.75 1.50 (4.41) (10.94) (37.97)
Total assets 203,357 5,641,036 5,689,040 5,772,987 6,055,403
Mortgage notes
payable - 4,172,438 4,227,965 4,251,134 4,303,085
</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 $146 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.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
RESULTS OF OPERATIONS
Because all of the Partnership properties were sold at different dates during
1996, a discussion of the 1996 results from operations compared to prior years
would not be practical and therefore is not included.
As planned the Partnership completed the sale of all of its properties and
concluded its operations at December 31, 1996, with the exception of the final
liquidating distribution of $9.27 per limited partnership unit which was issued
on January 22, 1997.
Following the formation of the Partnership it acquired four properties,
Hidden Glen Apartments in Atlanta, GA, Carriage House Apartments in
Jacksonville, FL, Bass Lake Building and Industry Park Building both in New
Hope, MN. Hidden Glen was acquired on February 20, 1987, and was lost to
foreclosure by the lender on December 3, 1991. Carriage House Apartments was
acquired on December 29, 1987 and was sold for all cash on May 10, 1996 for
$3,005,300. With the sale the mortgage debt of $2,363,147 was extinguished after
approximately $307,600 of sale expenses and the approximate $334,600 of sales
proceeds was distributed at $18.00 per limited partnership unit on June 19,
1996. Bass Lake Building was acquired on May 18, 1988 and was sold for all cash
on September 30, 1996 for $1,425,000. With the sale, the mortgage debt of
$1,004,357 was extinguished after approximately $43,100 of sales expenses and
approximately $32,900 of prepayment penalties. The approximate $344,600 of sales
proceeds was distributed at $18.00 per limited partnership unit on October 25,
1996. Industry Park Building was acquired on May 18, 1988 and was sold for all
cash on November 15, 1996 at a price of $1,590,000. With the sale, the mortgage
debt of $765,237 was extinguished after approximately $56,700 of sales expenses.
The approximate $768,000 of sales proceeds was distributed at $40.00 per limited
partnership unit.
Due to a valuation provision $509,000 recognized in 1992, the combined sales
resulted in $355,395 of gain from sale and $294,640 of net income for the
Partnership for the year ended December 31, 1996. However, because the valuation
provision was not recognized for tax purposes the property sales did not result
in any taxable income in 1996.
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 reform act 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.
Liquidity
No discussion of liquidity is provided as the partnership was liquidated and
ceased operations effective December 31, 1996.
OCCUPANCY TABLE
Approximate occupancy levels of the Partnership's investment property by
quarter.
Carriage House
Bass Lake Road Industry Park Apartments
New Hope, MN New Hope, MN Jacksonville, FL
------------ ------------ ----------------
3/31/96 100% 98% 85%
6/30/96 100% 99% *
9/30/96 * 99% *
12/31/96 * * *
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%
* 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 Partnership was terminated effective December 31, 1996. Before
then, the General Partners of the Partnership were 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 managed and controlled the affairs of the Partnership and
had 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 provided executive, supervisory
and certain administrative services for the Partnership's operations and the
General Partner was 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
have intended to devote only as much of their time to the business of the
Partnership as they determined to be reasonably required. Limited Partners had
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 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 was entitled to engage in various transactions involving
affiliates of the General Partner of the Partnership.
Griffin Companies ("Griffin"), an affiliate of the General Partner, was
permitted to be reimbursed for direct expenses relating to the administration of
the Partnership and operation of the Partnership real property investments.
Griffin received approximately $20,394, $13,284, and $18,735 in 1996, 1995 and
1994 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 have owned
beneficially more than 5% of the outstanding units of the Partnership.
The individual general partners of the General Partner as a group had
the following interest in the Partnership:
<TABLE>
<CAPTION>
Amount and Nature Percent of Class
of Beneficial Outstanding at
Title of Class Ownership December 31 1996
-------------- ----------------- ----------------
<S> <C> <C> <C>
Limited Partnership Units 80 units purchased .42%
at $500 per unit
</TABLE>
No partner of the General Partner possessed a right to acquire
beneficial ownership of interest 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 consisted 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 $57,814 $ 70,508 $ 73,756
Major improvement
supervisory fees 8,503 10,943 9,777
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
An 8-K was filed on October 8, 1996 in regards to the sale of the Bass
Lake Building. Proforma Financial Information was included with this filing.
An 8-K was filed on November 26, 1996 in regards to the sale of the
Industry Park Building. Proforma Financial Information was included with this
filing.
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 27, 1997 Griffin Real Estate Fund-VI,
A Limited Partnership
By: Larry D. Fransen/s/
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 27, 1997 By: Larry D. Fransen/s/
-------------------
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, 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............................................ 6-10
Financial Statement Schedules............................................ 11
III Real Estate and Accumulated Depreciation,
December 31, 1996......................................... 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.
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, 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
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, 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.
As discussed in Note 1 to the financial statements, the Partnership sold its
remaining three properties during 1996 and was liquidated effective December 31,
1996.
LARSON, ALLEN, WEISHAIR & CO., LLP
Minneapolis, Minnesota
February 20, 1997
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
1996 1995
---- ----
ASSETS
- ------
Cash and cash equivalents $ 203,357 $ 135,745
Real estate tax escrow deposits - 68,649
Receivables and other assets - 10,772
----------- -----------
Total 203,357 215,166
----------- -----------
PROPERTY AND EQUIPMENT:
Land - 1,085,776
Buildings and improvements - 6,443,789
Furniture and equipment - 242,362
Less valuation allowance - (470,000)
----------- -----------
Total - 7,301,927
Less accumulated depreciation - 1,919,664
----------- -----------
Property and equipment - net - 5,382,263
----------- -----------
Deferred expenses (less accumulated
amortization - 1996, $0; 1995, $22,547) - 43,607
----------- -----------
TOTAL ASSETS $ 203,357 $ 5,641,036
=========== ===========
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- ------------------------------------------
LIABILITIES:
Accounts payable:
Affiliate $ 17,405 $ 11,818
Other - 14,385
Security deposits - 51,567
Accrued interest - 32,971
Liquidating distributions payable 185,952 -
Mortgage notes payable - 4,172,438
----------- -----------
Total liabilities 203,357 4,283,179
----------- -----------
PARTNERS' EQUITY (DEFICIT):
General Partner - (100,118)
Limited Partners - 1,457,975
----------- -----------
Total Partners' Equity (Deficit) - 1,357,857
----------- -----------
TOTAL LIABILITIES AND PARTNERS'
EQUITY (DEFICIT) $ 203,357 $ 5,641,036
=========== ===========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
---- ---- ----
REVENUES:
Rent (less apartment vacancies:
1996, $49,604; 1995, $92,041; $ 604,087 $ 1,134,321 $ 1,101,275
1994, $94,245)
Common area maintenance
reimbursement 197,186 220,087 182,384
Interest 14,743 4,401 3,685
Other 25,352 34,669 31,193
Gain on sale of properties 355,395 - -
----------- ----------- -----------
Total revenues 1,196,763 1,393,478 1,318,537
----------- ----------- -----------
EXPENSES:
Interest 246,351 402,217 417,967
Depreciation and amortization 168,459 231,729 236,439
Property valuation benefit - (75,000) (52,000)
Real estate taxes 141,171 198,286 203,088
Repairs and maintenance 104,251 179,392 189,574
Utilities 34,612 77,295 73,924
Salaries and employee benefits 61,016 126,596 125,039
Management fees to related parties 57,814 70,508 73,756
Administrative 60,145 89,924 73,751
Insurance 21,024 27,968 55,464
Bad debts 1,994 24,588 1,003
Other 5,286 11,150 5,301
----------- ----------- -----------
Total expenses 902,123 1,364,653 1,403,306
----------- ----------- -----------
NET INCOME (LOSS) $ 294,640 $ 28,825 $ (84,769)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO GENERAL PARTNER $ 127,933 $ 288 $ (848)
=========== =========== ===========
NET INCOME (LOSS) ALLOCATED
TO LIMITED PARTNERS $ 166,707 $ 28,537 $ (83,921)
=========== =========== ===========
NET INCOME (LOSS) $ 8.75 $ 1.50 $ (4.41)
=========== =========== ===========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net income (loss) $ 294,640 $ 28,825 $ (84,769)
Adjustments to reconcile net income
(loss) to net cash provided
by operating activities:
Depreciation and amortization 168,459 231,729 236,439
Gain on sale of property (355,395) - -
Property valuation benefit - (75,000) (52,000)
Decrease (increase) in:
Real Estate tax escrow deposits 68,649 (15,398) 1,563
Receivables and other assets 10,772 (1,015) 11,623
Increase (decrease) in:
Accounts payable (8,798) (26,596) 28,442
Security deposits (51,567) 3,722 (917)
Accrued expenses (32,971) 1,572 (3,534)
Liquidating distributions payable 185,952 - -
----------- ----------- -----------
Net cash provided by
operating activities 279,741 147,839 136,847
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property
and equipment 5,612,806 - -
Purchase of property and equipment - (76,139) (97,854)
----------- ----------- -----------
Net cash provided (used by)
investing activities 5,612,806 (76,139) (97,854)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Refinancing proceeds - - 800,000
Deferred costs from refinancing - - (47,907)
Distributions to partners (1,652,497) - -
Payments on mortgage
notes payable (4,172,438) (55,527) (823,169)
----------- ----------- -----------
Net cash used by financing
activities (5,824,935) (55,527) (71,076)
----------- ----------- -----------
INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 67,612 16,173 (32,083)
CASH AND CASH EQUIVALENTS
- BEGINNING OF YEAR 135,745 119,572 151,655
----------- ----------- -----------
CASH AND CASH EQUIVALENTS
- END OF YEAR $ 203,357 $ 135,745 $ 119,572
=========== =========== ===========
CASH PAID FOR INTEREST $ 279,322 $ 400,645 $ 421,501
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
STATEMENTS OF CHANGES IN PARTNERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
GENERAL LIMITED
PARTNER'S PARTNERS'
EQUITY EQUITY
(DEFICIT) (DEFICIT) TOTAL
--------- --------- -----
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
----------- ----------- -----------
PARTNERS' EQUITY (DEFICIT)
DECEMBER 31, 1995 (100,118) 1,457,975 1,357,857
NET INCOME 127,933 166,707 294,640
DISTRIBUTIONS (27,815) (1,624,682) (1,652,497)
----------- ----------- -----------
PARTNER'S EQUITY (DEFICIT) $-0- $-0- $-0-
DECEMBER 31, 1996 ========== ========== ==========
See Notes to Financial Statements
GRIFFIN REAL ESTATE FUND-VI,
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-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. Upon liquidation at December
31, 1996, there were 19,053 limited partnership units authorized and
19,043 limited partnership units outstanding.
Sale of Properties - During 1996 the three remaining properties in the
Partnership's portfolio were sold. On May 10, 1996 the Carriage House
Apartments were sold for $3,005,300. The Partnership agreed to pay the
purchaser's brokerage fees of $180,300, the seller's brokerage fees of
$84,750, and $42,592 of other closing costs in connection with the sale.
The Bass Lake building was sold on September 30, 1996 for $1,425,000
with the Partnership paying brokerage fees of $28,500 plus $14,632 of
other closing costs. Lastly, for the Industry Park Building sold on
November 15, 1996, the sale price was $1,590,000 with brokerage fees of
$47,700 paid by the Partnership in addition to $9,020 of other closing
costs. These sales resulted in a net gain to the Partnership of
$355,395.
Termination of Partnership
Effective December 31, 1996 the Partnership was terminated and a final
liquidating distribution was made during January of 1997 to the general
and limited partners. Amounts payable to affiliates at December 31, 1996
were paid on February 6, 1997.
Statements of Cash Flows - For the purpose of the statements of cash
flows, the Partnership considered all highly liquid debt instruments
with an original maturity of three months or less to be cash
equivalents. Cash equivalents of $203,357 and $135,745 at December 31,
1996 and 1995, respectively, consists 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
approximated fair value. The carrying amounts for cash, receivables,
accounts payable and accrued liabilities, and loans payable approximated
fair value because of the short maturity of these instruments. The fair
value of long-term debt approximated the current rates at which the
Partnership could borrow funds with similar remaining maturities.
Properties and Depreciation - Properties were stated at cost including
capitalized acquisition fees and were 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
depreciated the buildings and improvements over 27.5, 31.5, and 39 years
using the Modified Accelerated Cost Recovery System.
Leases - Apartment leases were generally renewable on a six month to one
year basis.
Deferred Expenses - Costs incurred in connection with securing financing
on Partnership properties had been capitalized and were 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, were 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 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, were 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, were 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.
* Any partner who unexpectedly receives an adjustment, allocation, or
distribution specified in Section 1.704-1(b)(2)(ii)(d)(4)-(6) of the
income tax regulations which causes or increases a deficit balance
in such partners capital account should be allocated taxable income
and profit on the sale of properties in an amount and manner
sufficient to eliminate such deficit balances as quickly as
possible.
3. MORTGAGE NOTES PAYABLE
Mortgage notes payable consisted of the following at December 31:
1996 1995
---- ----
Mortgage note (Carriage House Apartments),
monthly installments of $22,627
including interest at 10.25% due
June 28, 1996 $ - $ 2,372,756
Mortgage note (Bass Lake Building)
monthly installments of $8,040
including interest at 8.03%
due April 1999 - 1,015,842
Mortgage note (Industry Park Building)
monthly installments of $7,506
including interest at 9.013%,
due January 2002 - 783,840
--------- ----------
Total mortgage notes payable $ - $ 4,172,438
========= ==========
All property was pledged as collateral to the mortgage notes payable.
4. VALUATION ALLOWANCE
In light of the sale of the properties, as of December 31, 1996,
management has recognized the valuation allowance related to the Bass Lake
Building and the Industry Park Building as a reduction of the properties'
net book value in the calculation of gain on sale of properties. The
valuation allowance at December 31, 1995 was $470,000. This allowance was
the difference between the net book value of the property and an estimated
sales value (net of sales costs) as of December 31, 1995. Carriage House
Apartments was also analyzed at December 31, 1995, with the result being
no allowance considered necessary.
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 consisted 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 $ 57,814 $ 70,508 $ 73,756
Major improvement
supervisory fees 8,503 10,943 9,777
</TABLE>
6. TAXABLE INCOME
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 $ 294,640 $ 28,825 $ (84,769)
Valuation allowance per
financial statements (470,000) (75,000) (52,000)
Other items (2,004) (2,026) 324
-------- --------- ---------
Net loss per tax return $(177,364) $ (48,201) $ (136,445)
======== ======== =========
</TABLE>
7. PARTNERS' EQUITY RECONCILIATION
Reconciliation of financial statement equity to tax return equity is as
follows:
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
Equity per
financial statements $ -0- $ 1,357,857 $ 1,329,032
Property valuation allowance
recognized for financial
statement purposes - 470,000 545,000
Other items - 2,004 4,030
---------- --------- ---------
Equity per tax return $ -0- $ 1,829,861 $ 1,878,062
========== ========= =========
</TABLE>
8. INCOME ALLOCATION
An allocation was made to the general and limited partners' equity
accounts at December 31, 1996 to reflect the requirements of the
Partnership Agreement. These requirements provide for an allocation of
profit on the sale of properties in a manner sufficient to eliminate any
deficit balance. Therefore, an allocation of $124,987 on the sale of
properties was provided to the general partner's deficit equity balance
and included with their allocated net income on the statement of
operations to meet such requirements and resulted in the elimination of
all balances in partner equity accounts.
9. TENANT CONCENTRATIONS
Prior to the sale of the property on September 30, 1996 and as of December
31, 1995, two tenants, Independent Metal Co., Inc. and United Hardware,
accounted for 68.5% of Bass Lake Building's occupancy. Two tenants at
Industry Park, Compucon Corporation and Kluge Design, Inc. accounted for
52% of Industry Park Building's total occupancy prior to their sale on
November 15, 1996 and at December 31, 1995.
SCHEDULE III
GRIFFIN REAL ESTATE FUND-VI,
A LIMITED PARTNERSHIP
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>
JACKSONVILLE, FL
Carriage House
Apartments $- $ 412,776 $3,235,011 $276,653 $- $- $- $- 1964 12/29/87
NEW HOPE, MN
Bass Lake
Building - 335,000 1,450,649 79,419 - - - - 1980 05/18/88
NEW HOPE, MN
Industry Park
Building - 338,000 1,596,195 48,224 - - - - 1978 05/18/88
------- ------- --------- ------ ------- ------- ------- -------
Total $- $1,085,776 $6,281,855 $404,296 $- $- $- $-
======= ========== ========== ======== ======= ======= ======= =======
</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 for federal
income tax purposes is $ -0-.
(c) Reconciliation of property:
<TABLE>
<CAPTION>
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period $7,000,934 $7,150,788 $7,301,927
Additions during period
Improvements 97,854 76,139 0
Dispositions 0 0 (7,771,927)
Valuation allowance 52,000 75,000 470,000
--------- --------- ---------
Balance at end of period $7,150,788 $7,301,927 $ 0
========= ========= =========
(d) Reconciliation of accumulated depreciation:
Balance at beginning of period $ 1,466,041 $1,699,341 $1,919,664
Depreciation expense for period 233,300 220,323 124,852
Dispositions 0 0 (2,044,516)
---------- --------- ----------
Balance at end of period $ 1,699,341 $1,919,664 $ 0
========== ========= =========
Depreciation calculated on 5-39 year lives.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 203,357
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 203,357
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 203,357
<CURRENT-LIABILITIES> 203,357
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 0<F1>
<TOTAL-LIABILITY-AND-EQUITY> 203,357
<SALES> 0
<TOTAL-REVENUES> 1,182,020
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 655,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 231,608
<INCOME-PRETAX> 294,640
<INCOME-TAX> 0
<INCOME-CONTINUING> 294,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 294,640
<EPS-PRIMARY> 8.75<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>
