-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H+lyzuIgYoL/2AgACYC6nDpG36DNVbIFGzGkJ9DqaV9ICpmhQfAAFupH25OAGIOr bJUzySFt0Anf1U15L6paHA== 0000897101-98-000793.txt : 19980812 0000897101-98-000793.hdr.sgml : 19980812 ACCESSION NUMBER: 0000897101-98-000793 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980811 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRIFFIN REAL ESTATE FUND II CENTRAL INDEX KEY: 0000319716 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 41398390 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11200 FILM NUMBER: 98681900 BUSINESS ADDRESS: STREET 1: 510 MARQUETTE AVE STREET 2: SUITE 300 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 BUSINESS PHONE: 6128963800 MAIL ADDRESS: STREET 1: 510 MARQUETTE AVE STREET 2: SUITE 300 CITY: MINNEAPOLIS STATE: MN ZIP: 55402 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 1998 COMMISSION FILE NUMBER 0-11200 GRIFFIN REAL ESTATE FUND-II, A LIMITED PARTNERSHIP MINNESOTA 41-1398390 510 MARQUETTE AVENUE, SUITE 300 MINNEAPOLIS, MINNESOTA 55402 REGISTRANT'S TELEPHONE NUMBER (612) 338-2828 WATS NUMBER 800-328-3788 Indicate by check mark whether the registrant (1) has filed reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days. Yes [x] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-Q or any amendment to this Form 10-Q. [ ] GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNESHIIP INDEX PART I. Financial Information Condensed Balance Sheets June 30, 1998 and December 30, 1997..............................1 Condensed Statements of Operations for the Three Months and Six Months Ended June 30, 1998 and 1997...........................................2 Condensed Statements of Cash Flows for the Six Months Ended June 30, 1998 and 1997...........................................3 Condensed Statements of Changes in Partners' Equity for the Six Months ended June 30, 1998...................................4 Notes to Financial Statements........................................5 Management's Discussion and Analysis of Financial Conditions and Results of Operations..................................................6-7 Part II. Other Information....................................................8 SIGNATURES ....................................................................9 GRIFFIN REAL ESTATE FUND-II, A LIMITED PARTNERSHIP CONDENSED BALANCE SHEETS (unaudited)
JUNE 30, 1998 DECEMBER 31, 1997 ------------- ----------------- ASSETS - ------ Cash and Cash Equivalents $ 597,980 $ 628,333 Receivables and Other Assets 327,051 266,535 ------------ ------------ Total 925,031 $ 894,868 ------------ ------------ PROPERTY: Land 1,529,374 1,529,374 Buildings and Improvements 16,467,188 16,430,929 Furniture and Equipment 1,339,244 1,339,243 ------------ ------------ Total 19,335,806 19,299,546 Less Accumulated Depreciation 10,626,099 10,292,116 ------------ ------------ Property - Net 8,709,707 9,007,430 ------------ ------------ TOTAL ASSETS $ 9,634,738 $ 9,902,298 ============ ============ LIABILITIES AND PARTNERSHIP EQUITY - ---------------------------------- LIABILITIES: Accounts Payable and Accrued Liabilities $ 539,761 $ 546,908 Security Deposits 101,899 90,063 Mortgage Notes Payable 8,917,490 9,031,201 ------------ ------------ Total Liabilities 9,559,150 $ 9,668,172 ------------ ------------ PARTNERS' EQUITY: General Partner (470,841) (462,914) Limited Partner 546,429 697,040 ------------ ------------ Total Partnership Equity 75,588 234,126 ------------ ------------ TOTAL LIABILITIES AND PARTNERS' EQUITY $ 9,634,738 $ 9,902,298 ============ ============
See notes to condensed financial statements. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP CONDENSED STATEMENTS OF OPERATIONS (unaudited)
FOR THE THREE MONTHS FOR THE SIX MONTHS ENDED JUNE 30 ENDED JUNE 30 1998 1997 1998 1997 ------------------------- ------------------------- REVENUES Rental Income $ 963,705 $ 1,149,005 $ 1,912,665 $ 2,447,999 Interest Income 7,916 14,073 18,084 27,706 Other Income 49,996 58,874 93,960 122,363 Gain on Sale of Property -- 4,953,336 -- 4,953,336 ----------- ----------- ----------- ----------- Total Revenues 1,021,617 6,175,288 2,024,709 7,551,404 ----------- ----------- ----------- ----------- OPERATING EXPENSES Operating Expenses 544,675 666,874 1,025,446 1,389,540 Interest Expense 178,219 252,147 359,371 542,552 Depreciation and Amortization 169,215 212,445 338,430 451,813 ----------- ----------- ----------- ----------- Total Operating Expenses 892,109 1,131,466 1,723,247 2,383,905 ----------- ----------- ----------- ----------- NET INCOME BEFORE EXTRAORDINARY ITEM 129,508 5,043,822 301,462 5,167,499 EXTRAORDINARY ITEM - LOSS ON EXTINGUISHMENT OF DEBT -- (142,121) -- (142,121) ----------- ----------- ----------- ----------- NET INCOME 129,508 $ 4,901,701 $ 301,462 $ 5,025,378 =========== =========== =========== =========== NET INCOME ALLOCATED TO GENERAL PARTNER 6,475 $ 46,951 $ 15,073 $ 53,135 =========== =========== =========== =========== NET INCOME ALLOCATED TO LIMITED PARTNERS $ 123,033 $ 4,854,750 $ 286,389 $ 4,972,243 =========== =========== =========== =========== PER UNIT: NET INCOME BEFORE EXTRAORDINARY ITEM $ 56.31 $ 2,283.64 $ 131.07 $ 2,337.42 EXTRAORDINARY ITEM -- (61.79) -- (61.79) ----------- ----------- ----------- ----------- NET INCOME $ 56.31 $ 2,221.85 $ 131.07 $ 2,275.63 =========== =========== =========== ===========
See notes to condensed financial statements. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP CONDENSED STATEMENTS OF CASH FLOWS (unaudited) FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 301,462 $ 5,025,378 Adjustments to reconcile Net Income to Net Cash Provided by Operating Activities: Gain on Sale of Property -- (4,953,336) Extraordinary Item - Loss on Extinguishment of Debt -- 142,121 Depreciation and Amortization 338,430 451,813 Decrease (Increase) in Receivables and Other Assets (64,963) 8,004 Decrease in Accounts Payable and Accrued Liabilities (7,147) (341,776) Increase (Decrease) in Security Deposits 11,836 (48,438) ----------- ----------- Net Cash Provided by Operating Activities 579,618 283,766 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Property and Equipment (36,260) (140,856) Proceeds from Sale of Property and Equipment -- 8,365,572 ----------- ----------- Net Cash Provided (Used) by Investing Activities (36,260) 8,224,716 ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Distributions to Partners (460,000) (3,238,811) Prepayment Penalties on Mortgages -- (52,235) Payments of Principal Mortgage Notes Payable (113,711) (5,369,338) ----------- ----------- Net Cash Used by Financing Activities (573,711) (8,660,384) ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (30,353) (151,902) CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 628,333 1,001,510 ----------- ----------- CASH AND CASH EQUIVALENTS - END OF PERIOD $ 597,980 $ 849,608 =========== =========== CASH PAID DURING THE PERIOD FOR INTEREST $ 360,779 $ 581,478 =========== =========== See notes to condensed financial statement. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP CONDENSED STATEMENTS OF CHANGES IN PARTNERS' EQUITY FOR THE SIX MONTHS ENDED JUNE 30, 1998 (unaudited) General Limited Total Partner Partners Partnership ------- -------- ----------- Partner's Equity (Deficit) $(462,914) $ 697,040 $ 234,126 January 1, 1998 Net Income 15,073 286,389 301,462 Distributions (23,000) (437,000) (460,000) --------- --------- --------- Partners' Equity (Deficit) $(470,841) $ 546,429 $ 75,588 June 30, 1998 ========== ========= ========= See notes to condensed financial statements. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP NOTES TO CONDENSED FINANCIAL STATEMENTS JUNE 30, 1998 (unaudited) 1. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly Griffin Real Estate Fund-II, A Limited Partnership's financial position as of June 30, 1998 and December 31, 1997 and the results of its operations for the three months and six months ended June 30, 1998 and 1997 and its cash flows for the six months ended June 30, 1998 and 1997. The accounting policies followed by the Partnership are set forth in Note 1 to the Partnership financial statements in the 1997 Griffin Real Estate Fund-II, A Limited Partnership Form 10K. 2. RELATED PARTY TRANSACTIONS The partners of Investment Associates, the general partner of the Partnership, are also owners, directors and officers of the Griffin Companies, a Minnesota corporation. The following is a summary of fees incurred for the six months ended June 30, 1998 and 1997 relating to the Griffin Companies: 1998 1997 ---- ---- Management fees $ 122,810 $152,236 Supervisory fees $ 21,368 $ 28,400 3. TAXABLE INCOME (LOSS) The net income shown on the statement of operations is reconciled to the taxable income (loss) as follows: FOR THE SIX MONTHS ENDED JUNE 30, 1998 1997 ---- ---- Net income per statement of operations $ 301,462 $5,025,378 Excess of book depreciation over tax depreciation 400,944 188,405 --------- ---------- Taxable income $ 702,406 $5,213,783 ======== ========== GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES At June 30, 1998, the Partnership had cash and cash equivalents of $597,980 which will be used for working capital requirements of the Partnership and its properties. It is anticipated that the Partnership will be able to meet current obligations and commitments from cash on hand and from cash generated from operations during 1998. A quarterly distribution to partners of $100.00 per limited partnership unit was made following the first quarter and again following the end of the second quarter to unit holders of record on June 30, 1998. Future cash distributions will depend on future property operations. RESULTS OF OPERATIONS The General Partner, after reasonable inquiry, is not aware of any material factors relating to any of the Partnership's properties or the operations of the Partnership that would cause the financial information of the Partnership not to be indicative of future operating results or of future financial conditions, other than those discussed in the footnotes to the Partnership financial statements filed with Form 10K. On May 27, 1997 the Partnership sold the Candleridge Apartments and the Villas of Patricia Park Apartments, therefore comparison of results from one year to the next is not possible for the Partnership taken as a whole. The following discussion is therefore limited to the two remaining properties that were still held in the second quarter of 1998. Lunnonhaus Village Apartments: For the first six months, vacancies remained at less than 1% while rental rates rose 5% from 1997 to 1998. This, together with an increase in Other Income, resulted in an increase of 5.7% in total revenues, from 1997. Year-to-date payroll expense increased $7,671 from $82,425 to $90,096 from the first six months of 1997, while utilities rose $4,598 from $116,268 to $120,866 over the same period. Significant decreases in expenses occurred in General and Administrative, which declined $3,393 from $14,341 to $10,948, and in Repairs and Maintenance which declined $5,508 from $38,903 to $33,395 during the first six months of 1997 and 1998 respectively. On May 8, 1998, a formal sales contract was executed for the sale of Lunnonhaus Village Apartments. Although there can be no assurance a closing will ultimately occur, a closing of the sale is expected during the month of August. A Securities and Exchange Commission Form 8-K will be filed following the closing which will detail the transaction. Olde English Village Apartments: Vacancies were 11.3% for the first quarter, down slightly when compared to the 12.9% from the first six months of 1997. Rental rates also increased about 3%. Therefore despite a decline in Other Income total revenues increased about 3.5% for the first six months of 1998 over 1997. Operating expenses for the first half of 1998 increased from the first half of 1997 by about 10.7%. The largest increase was from Repairs and Maintenance which went from $21,526 in 1997 to $45,563 in 1998, one result of making vacant units rent ready. Real estate taxes also increased $8,400 from $123,600 in the first half of 1997 to $132,000 in 1998. Utilities on the other hand declined by $5,677 from $36,760 to $31,083. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS A formal sales contract is expected to be executed in late August 1998 for the sale of Olde English Village Apartments. Although there can be no assurance a closing will ultimately occur, a closing of the sale is expected during the month of October. A Securities and Exchange Commission From 8-K will be filed following the closing which will detail the transaction. Year 2000 The year 2000 compliance issue concerns the inability of computerized information systems to accurately calculate, store or use a date after 1999. This could result in a system failure or miscalculations causing disruptions of operations. The General Partner is currently evaluating the accounting software to find out if a Year 2000 problem exists. If the results of that evaluation show that there is a problem, there will be a conversion to another software that is widely used in the real estate industry, is readily available and is Year 2000 compliant. Such a conversion, if necessary, would occur in 1999. The General Partner's current estimate is that the costs associated with the Year 2000 issue, and the consequences of incomplete or untimely resolution of the Year 2000 issue, will not have a material adverse affect on the results of operations of financial position of the Partnership in any given year. OCCUPANCY TABLE Approximate occupancy levels of the Partnership's investment property by quarter.
1997 1998 at at ---------------------------- ---------------------------- 3/31 6/30 9/30 12/31 3/31 6/30 9/30 12/31 1. Villas of Patricia Park Apts. Urbandale, Iowa 84% * * * * 2. Candleridge Apartments Urbandale, Iowa 96% * * * * 3. Lunnonhaus Village Apartments Golden, Colorado 99% 100% 100% 100% 99% 4. Olde English Village Apartments W. Des Moines, Iowa 89% 91% 93% 88% 87% * Indicates Partnership did not own property at end of quarter.
GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP PART II OTHER INFORMATION Item 1. Legal Proceedings As of June 30, 1998, an individual was pursuing a legal action against the partnership for injuries sustained moving a refrigerator. The individual is attempting to recover monetary damages and to receive reimbursement for medical costs. Any judgment against the Partnership would be covered by insurance. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 Financial Data Schedule (b) No reports on Form 8-K have been filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GRIFFIN REAL ESTATE FUND-II A LIMITED PARTNERSHIP Dated: August 14, 1998 By: /s/ Larry D. Fransen --------------------------- Larry D. Fransen, for the General Partner, Investment Associates Dated: August 14, 1998 By: /s/ Larry D. Fransen --------------------------- Larry D. Fransen, Managing General Partner of the General Partner, Investment Associates EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS DEC-31-1998 JUN-30-1998 597,980 0 327,051 0 0 925,031 19,335,806 10,626,099 9,634,738 641,660 8,917,490 0 0 0 75,588 9,634,738 0 2,006,625 0 1,363,876 0 0 341,287 301,462 0 301,462 0 0 0 301,462 131.07 0.00 THIS ENTITY IS A LIMITED PARTNERSHIP. THE OTHER STOCKHOLDERS EQUITY LINE REPRESENTS TOTAL PARTNERSHIP EQUITY. THE EPS-PRIMARY LINE REPRESENTS NET INCOME PER LIMITED PARTNERSHIP UNIT.
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