FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
(As last amended by 34-32231, eff. 6/3/93.)
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1994
For the transition period.........to.........
Commission file number 0-8639
CONSOLIDATED CAPITAL GROWTH FUND
(Exact name of small business issuer as specified in its charter)
California 94-2382571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (803) 239-1000
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
September 30, 1995
<S> <C> <C>
Assets
Cash and cash equivalents $ 5,087
Securities available for sale 9
Prepaid and other assets 955
Investment properties:
Land $ 4,610
Buildings and related personal property 34,777
39,387
Less accumulated depreciation (18,329) 21,058
$27,109
Liabilities and Partners' Capital (Deficit)
Liabilities
Mortgage notes and interest payable $ 6,308
Tenant security deposits 316
Accrued taxes 327
Other liabilities 914
Partners' Capital (Deficit)
General partners $ (677)
Limited partners (49,196 units
issued and outstanding) 19,921 19,244
$27,109
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 2,686 $ 3,456 $ 8,356 $ 10,124
Interest and dividend income
on investments 53 89 199 249
Total revenues 2,739 3,545 8,555 10,373
Expenses:
Operating 1,527 2,118 4,417 5,879
General and administrative 138 112 315 303
Partnership management fees 123 -- 613 --
Depreciation 462 750 1,392 2,279
Interest 160 410 534 1,277
Total expenses 2,410 3,390 7,271 9,738
Other income -- -- -- 77
Reorganization items -- (18) -- (26)
Gain on sale of investment
property -- -- 3,693 --
Loss on disposal of property -- -- (67) --
Income before extraordinary
item 329 137 4,910 686
Extraordinary gain on
troubled debt restructuring -- -- -- 555
Extraordinary gain on early
extinguishment of debt -- -- 121 --
Net income $ 329 $ 137 $ 5,031 $ 1,241
Net income allocated
to general partners (1%) $ 3 $ 1 $ 50 $ 12
Net income allocated
to limited partners (99%) 326 136 4,981 1,229
$ 329 $ 137 $ 5,031 $ 1,241
Per limited partnership unit:
Income before extraordinary
items $ 6.62 $ 2.76 $ 98.80 $ 13.81
Extraordinary gain on
troubled debt restructuring -- -- -- 11.17
Extraordinary gain on early
extinguishment of debt -- -- 2.44 --
Net income per limited
partnership unit $ 6.62 $ 2.76 $101.24 $ 24.98
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 49,196 $ 1 $ 49,196 $ 49,197
Partners' capital (deficit) at
December 31, 1994 49,196 $ (653) $ 21,973 $ 21,320
Distributions -- (74) (7,033) (7,107)
Net income for the nine months
ended September 30, 1995 -- 50 4,981 5,031
Partners' capital (deficit) at
September 30, 1995 49,196 $ (677) $ 19,921 $ 19,244
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,031 $ 1,241
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,392 2,279
Amortization of discounts and loan costs 23 34
Gain on troubled debt restructuring -- (555)
Gain on early extinguishment of debt (121) --
Gain on sale of investment property (3,693) --
Loss on disposal of property 67 --
Change in accounts:
Prepaid and other assets (37) (101)
Interest payable 24 141
Tenant security deposits (85) (27)
Accrued taxes 38 271
Other liabilities 382 (51)
Net cash provided by
operating activities 3,021 3,232
Cash flows from investing activities:
Property improvements and replacements (806) (496)
Cash received from sale of securities
available for sale 4,441 --
Cash used for purchase of securities -- (2,142)
Proceeds from sale of investment property 7,966 --
Principal receipts on note receivable -- 760
Net cash provided by (used in)
investing activities 11,601 (1,878)
Cash flows from financing activities:
Payments on mortgage notes payable (332) (1,294)
Repayment of mortgage notes payable (4,850) --
Distributions paid (7,107) --
Net cash used in financing
activities (12,289) (1,294)
Net increase in cash and cash equivalents 2,333 60
Cash and cash equivalents at beginning
of period 2,754 2,188
Cash and cash equivalents at end of period $ 5,087 $ 2,248
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 487 $ 1,102
</TABLE>
[FN]
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine
month periods ended September 30, 1995, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 1995.
For further information, refer to the financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1994.
Note B - Related Party Transactions
Consolidated Capital Growth Fund ("Partnership") paid property management
fees based upon collected gross rental revenues for property management
services for the nine month periods ended September 30, 1995, and September
30, 1994. For the nine months ended September 30, 1994, a portion of such
property management fees were paid to Coventry Properties, Inc. ("Coventry"),
an affiliate of the General Partner, for day-to-day property management services
and a portion was paid to Partnership Services, Inc. ("PSI") for advisory
services related to day-to-day property operations. Affiliates of Insignia
Financial Group, Inc. ("Insignia"), an affiliate of the General Partner, assumed
day-to-day management responsibilities for the Partnership's properties in late
December 1994. Fees paid to affiliates of Insignia during the nine months ended
September 30, 1995, and fees paid to Coventry and PSI during the nine months
ended September 30, 1994, are reflected in the following table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Property management fees $405 $388
Partnership management fees 613(1) --
(1)The Limited Partnership Agreement ("Agreement") provides for a fee equal to
9% of the total distributions made to the limited partners from "cash available
for distribution" to the limited partners (as defined in the Agreement) to be
paid to the General Partner for executive and administrative management
services.
Note B - Related Party Transactions - continued
The Agreement also provides for reimbursement to the General Partner and its
affiliates for costs incurred in connection with administration of Partnership
activities. The General Partner and its current and former affiliates
(including Coventry), received reimbursements as reflected in the following
table:
For the Nine Months Ended
September 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $184 $142
Reimbursements for services of affiliates increased during the nine months
ended September 30, 1995, compared to the nine months ended September 30, 1994,
due to increased expense reimbursements related to the combined efforts of the
Dallas and Greenville offices during the transition period for the nine months
ended September 30, 1995. These increased costs related to the transition
efforts were incurred to minimize any disruption in the year-end reporting
function including the financial reporting and K-1 preparation and
distribution. The administrative expenses have decreased in the third quarter
of 1995 as the transition efforts are now complete. As of September 30, 1995,
the Partnership has accrued $13,654 in reimbursements to an affiliate of the
General Partner relating to the potential refinancings of three of its
investment properties.
On July 1, 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payments on these obligations from the agent. The amount of the
partnership's insurance premiums accruing to the benefit of the affiliate of the
General Partner by virtue of the agent's obligations is not significant.
Note C - Chapter 11 Proceeding
The note payable of approximately $6.5 million (including accrued interest)
secured by the Forest Hills Apartments matured in November 1990. The General
Partner was unable to obtain an extension and modification of the note's term
from the lender. In the General Partner's opinion, the lender's mortgage note
was fully secured by the estimated fair value of the property, and the Chapter
11 proceeding was the best alternative to maintain control of the property while
pursuing debt modification negotiations with the lender and/or a sale of the
property.
Note C Chapter 11 Proceeding - continued
During the first quarter of 1994, CCGF Associates filed a first amendment to
the Plan of Reorganization with the Bankruptcy Court and in May 1994, the Plan
of Reorganization was approved. The Partnership recognized a gain of
approximately $555,000 on the early extinguishment and modification of
indebtedness pursuant to the Plan of Reorganization.
Note D - Disposition of Real Estate
On February 10, 1995, the General Partner, on behalf of the Partnership,
executed a contract for the sale of Forest Hills Apartments for a gross sales
price of $8.25 million. The Partnership realized a net gain of approximately
$3.7 million on the sale after repayment of the related mortgage debt and other
closing costs. The Partnership also realized an extraordinary gain of
approximately $121,000 on early extinguishment of debt related to the sale of
Forest Hills Apartments. Also, in October 1994, the U.S. Department of Housing
and Urban Development ("HUD") foreclosed on the Ridgemar Square Apartments. The
following table sets forth the statement of operations for each of these
investment properties at September 30, 1994:
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, 1994 September 30, 1994
Forest Ridgemar Forest Ridgemar
Hills Square Hills Square
Apartments Apartments Apartments Apartments
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 539 $ 385 $1,581 $1,141
Interest income 2 1 9 1
Total revenues 541 386 1,590 1,142
Expenses:
Operating 455 355 1,219 910
General and
administrative 4 2 4 11
Depreciation 138 114 413 342
Interest 91 137 347 410
Total expenses 688 608 1,983 1,673
Reorganization items (1) -- (9) --
Loss before extraordinary
item (148) -- (402) (531)
Extraordinary gain on
troubled debt restructuring -- -- 555 --
Net (loss) income $(148) $(222) $ 153 $ (531)
</TABLE>
Note E - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark Corporation's activities while it exercised
control (directly, or indirectly through its affiliates) over the Partnership.
The Bankruptcy Court set the Partnership's and other affiliated partnerships'
allowed claim at $11 million, in the aggregate. In March 1994, the Partnership
received approximately $68,000 in cash, 1,233 shares of Southmark Corporation
Redeemable Series A Preferred Stock, and 9,020 shares of Southmark Corporation
New Common Stock with an aggregate market value on the date of receipt of
$9,075, representing the Partnership's share of the recovery, based on its pro
rata share of the claims filed.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consist of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
Breckinridge Square
Louisville, Kentucky 92% 95%
Churchill Park
Louisville, Kentucky 94% 92%
The Lakes
Raleigh, North Carolina 93% 94%
Tahoe Springs
Miami, Florida 92% 93%
The Partnership's net income for the nine months ended September 30, 1995,
was $5,031,000 compared to $1,241,000 for the same period in 1994. The
Partnership's net income for the three months ended September 30, 1995, was
$329,000 compared to $137,000 for the same period in 1994. The increase in net
income for the nine month period is primarily due to the recognition of a
$3,693,000 gain on the sale of the Forest Hills Apartment complex. The increase
in net income for the three month period ended September 30, 1995, as compared
to the three month period ended September 30, 1994, is primarily due to the
foreclosure of Ridgmar Square Apartments during the fourth quarter of 1994 and
the sale of Forest Hills Apartments during the first quarter of 1995. Ridgmar
Square and Forest Hills reported operating losses during the third quarter of
1994. Rental income has decreased for the three and nine month periods ended
September 30, 1995, as a result of the sale of Forest Hills in February 1995,
and the foreclosure on the Ridgemar Square Apartment complex. Interest and
dividend income on investments decreased due to a decrease in securities
available for sale in the three and nine months ended September 30,
1995, versus the three and nine months ended September 30, 1994. All securities
available for sale except the Southmark stock was liquidated prior to March 31,
1995, to facilitate the $5,449,000 distribution paid to the limited partners in
March 1995. (See further discussion below).
In addition, operating, depreciation and interest expense decreased during
the three and nine month periods ended September 30, 1995, as compared to the
three and nine month periods ended September 30, 1994. The decreases in these
items are the result of the disposition of Ridgemar Square Apartments and the
Forest Hills Apartments. General and administrative expenses increased during
the nine months ended September 30, 1995, as compared to the nine months ended
September 30, 1994, due to the payment of accrued penalties and interest on the
1993 taxes due for income generated by The Lakes. Partnership management fees
of $613,000 were incurred in connection with the distributions to the limited
partners. The Limited Partnership Agreement ("Agreement") provides for a fee
equal to 9% of the total distributions made to the limited partners from "cash
available for distribution" to the limited partners (as defined in the
Agreement) to be paid to the General Partner for executive and administrative
management services. No such fee was incurred in the first nine months of 1994
as no distributions were made to the limited partners. Other income has
decreased as a result of the receipt of approximately $77,000 in cash and stock
in March 1994 as partial recovery of claims against Southmark Corporation's
Chapter 11 bankruptcy proceeding which was included in other income for
the nine months ended September 30, 1994. No additional judgements were
granted on the Partnership's claims in 1995. The loss on disposal of property
was the result of roof write-offs at three of the investment properties due to
ongoing roof repairs. The extraordinary gain on early extinguishment of debt is
the result of a partial forgiveness of debt by the mortgage holder at the time
the Forest Hills Apartment complex was sold.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expense. As part of
this plan the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that
the General Partner will be able to sustain such a plan.
At September 30, 1995, the Partnership had cash of $5,087,000 versus
$2,248,000 for the corresponding period of 1994. Net cash provided by operating
activities decreased primarily due to a decrease in depreciation expense which
resulted from the sale of two investment properties. Additionally, cash
provided by operating activities decreased as a result of the decrease in tenant
security deposits. Net cash provided by investing activities increased due to
cash received from securities available for sale and the proceeds from the sale
of Forest Hills Apartments. Net cash used in financing activities increased due
to the repayment of the mortgage note payable with the proceeds from the sale of
Forest Hills and the payment of cash distributions.
The sufficiency of existing liquid assets to meet future liquidity and
capital expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of $6,308,000 is amortized over varying periods and requires a
balloon payment in September 1996. The General Partner is attempting to
refinance all of its properties other than Tahoe Springs. The General Partner
believes that the partnership will generate approximately $15,700,000 in net
refinancing proceeds. If such refinancing does occur, the General Partner
anticipates it would use a portion of such refinancing proceeds to make a
special distribution to the partners of up to approximately $14,000,000. The
remainder of the refinancing proceeds would be used to pay off the debt due on
Tahoe Springs. A distribution of $5,449,000 or $110.77 per Unit was made to the
limited partners in March 1995. A matching distribution of $60,000 was made to
the General Partner. During the third quarter of 1995, the
Partnership paid $114,000 to the North Carolina Department of Revenue for
withholding taxes related to income generated by the Partnership's investment
property located in North Carolina. Also, as of September 30, 1995, the
Partnership owes $106,000 to the North Carolina Department of Revenue for
withholding taxes related to income generated by the Partnership's investment
property located in North Carolina during 1993 which was not paid by the
previous General Partner. These taxes have been treated as a distribution to
the limited partners. The General Partner received a distribution of $1,000
related to this payment. Also during the third quarter of 1995, the Partnership
distributed $1,363,000, or $27.71 per Unit, to the limited partners. The
General Partner received a matching distribution of $14,000. Future
cash distributions will depend on the levels of cash generated from operations,
capital expenditure requirements, property sales, refinancings and the
availability of cash reserves.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 25, 1995, the General Partner proxied the Limited Partners to
modify the Partnership Agreement with regards to long term debt restrictions.
The Proposal would permit the General Partner to explore an expanded array of
property refinancing options by modifying the leverage limitations to provide
that, with respect to any refinanced properties, the maximum aggregate
indebtedness may equal 80% of the aggregate fair market value of all refinanced
properties, as determined by the lender as of the date of refinancing and
eliminating the restrictions requiring that the Partnership's aggregate
financing of its properties be comprised of no more than 10% in second
mortgages, no more than 40% in first mortgages with 30-year amortization
and balloon payments due in no less than 20 years, and at least 50% in fully
amortizing mortgages.
The unit holders voted 63% in favor of the matter, 4% opposed or abstained
and 33% did not respond. With a majority of the outstanding units approving the
proposal, the proposal was adopted.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to
this report.
b) Reports on Form 8-K: None filed during the quarter ended September 30,
1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL GROWTH FUND
By: CONCAP EQUITIES, INC.
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: November 9, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Growth Fund 1995 Third Quarter 10-QSB and is qualified in its entirety
to reference to such 10-QSB.
</LEGEND>
<CIK> 0000201529
<NAME> CONSOLIDATED CAPITAL GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,087
<SECURITIES> 9
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 39,387
<DEPRECIATION> (18,329)
<TOTAL-ASSETS> 27,109
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 6,308
<COMMON> 0
0
0
<OTHER-SE> 19,244
<TOTAL-LIABILITY-AND-EQUITY> 27,109
<SALES> 0
<TOTAL-REVENUES> 8,555
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,271
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 534
<INCOME-PRETAX> 4,910
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,910
<DISCONTINUED> 0
<EXTRAORDINARY> 121
<CHANGES> 0
<NET-INCOME> 5,031
<EPS-PRIMARY> 101.24
<EPS-DILUTED> 0
<FN>
<F1>
The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
