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, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.......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 (864) 239-1000
Check whether the issuer (1) 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 .
PART I - FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED BALANCE SHEET
(Unaudited)
(in thousands)
September 30, 1996
Assets
Cash:
Unrestricted $ 1,778
Restricted--tenant security deposits 337
Accounts receivable 37
Escrow for taxes 575
Restricted escrows 823
Other assets 553
Investment properties:
Land $ 4,610
Buildings and related personal property 36,044
40,654
Less accumulated depreciation (20,190) 20,464
$24,567
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 93
Tenant security deposits 336
Accrued taxes 451
Other liabilities 450
Mortgage notes payable 24,690
Partners' Capital (Deficit)
General partner $ (3,342)
Limited partners (49,196 units
issued and outstanding) 1,889 (1,453)
$24,567
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 End
September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $2,680 $2,546 $7,905 $ 7,712
Other income 242 317 593 1,033
Total revenues 2,922 2,863 8,498 8,745
Expenses:
Operating 914 861 2,598 2,874
General and administrative 131 138 349 323
Partnership management fees 90 123 213 613
Maintenance 483 644 1,226 1,257
Depreciation 479 462 1,401 1,392
Interest 442 160 1,381 534
Property taxes 114 146 464 535
Total expenses 2,653 2,534 7,632 7,528
Gain on sale of
investment property -- -- -- 3,693
Income before extraordinary item 269 329 866 4,910
Extraordinary (loss) gain on early
extinguishment of debt -- -- (119) 121
Net income $ 269 $ 329 $ 747 $ 5,031
Net income allocated
to general partner (1%) $ 2 $ 3 $ 7 $ 50
Net income allocated
to limited partners (99%) 267 326 740 4,981
$ 269 $ 329 $ 747 $ 5,031
Per limited partnership unit:
Income before extraordinary item $ 5.41 $ 6.62 $17.42 $ 98.80
Extraordinary (loss) gain on
early extinguishment of debt -- -- (2.40) 2.44
Net income per limited
partnership unit $ 5.41 $ 6.62 $15.02 $101.24
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except for 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, 1995 49,196 $(3,267) $ 4,057 $ 790
Distributions to partners (82) (2,908) (2,990)
Net income for the nine months
ended September 30, 1996 7 740 747
Partners' capital (deficit)
at September 30, 1996 49,196 $(3,342) $ 1,889 $(1,453)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 747 $ 5,031
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,401 1,392
Amortization of discounts and loan costs 38 23
Gain on sale of investment property -- (3,693)
Loss (gain) on early extinguishment of debt 96 (121)
Loss on disposal of property -- 67
Change in accounts:
Restricted cash (26) 87
Accounts receivable (1) 23
Escrows for taxes (448) (445)
Other assets 47 (59)
Accounts payable (215) 493
Tenant security deposit liabilities 26 (41)
Accrued taxes 451 37
Other liabilities 34 (131)
Net cash provided by operating activities 2,150 2,663
Cash flows from investing activities:
Property improvements and replacements (851) (806)
Cash received from sale of securities
available for sale -- 4,441
Proceeds from sale of investment property -- 7,966
Receipts from restricted escrows 118 444
Deposits to restricted escrows (24) --
Net cash (used in) provided by
investing activities (757) 12,045
Cash flows from financing activities:
Payments on mortgage notes payable (32) (332)
Repayment of mortgage notes payable (1,282) (4,850)
Loan costs paid (28) --
Distributions to partners (2,990) (7,107)
Net cash used in financing activities (4,332) (12,289)
Net (decrease) increase in cash and cash equivalents (2,939) 2,419
Cash and cash equivalents at beginning of period 4,717 2,358
Cash and cash equivalents at end of period $ 1,778 $ 4,777
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,239 $ 487
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Consolidated
Capital Growth Fund (the "Partnership") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Article 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 ConCap Equities, Inc. ("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, 1996, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's annual report on Form 10-KSB for the year
ended December 31, 1995.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership paid property management fees based upon collected gross rental
revenues for property management services as noted below for the nine month
periods ended September 30, 1996 and 1995, respectively. Such fees are included
in operating expense on the consolidated statements of operations and are
reflected in the following table. The Limited Partnership Agreement
("Agreement") provides for reimbursement to the General Partner and its
affiliates for costs incurred in connection with the administration of
Partnership activities. The General Partner and its current and former
affiliates received reimbursements and fees as reflected in the following table:
For the Nine Months Ended
September 30,
1996 1995
(in thousands)
Property management fees $ 414 $ 405
Reimbursement for services of affiliates (1) 158 184
Partnership management fees (2) 213 613
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $13,000 in reimbursements for construction oversight costs.
(2) The 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.
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 - 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 following table sets forth the statement of operations for Forest Hills
Apartments for the nine months ended September 30, 1995:
Nine Months Ended
September 30, 1995
Revenues:
Rental income $ 234
Other income 77
Total revenues 311
Expenses:
Operating 272
Maintenance 57
Depreciation 45
Interest 39
Property taxes 70
Total expenses 483
Gain on sale of real estate 3,693
Income before extraordinary item 3,521
Extraordinary gain on early
extinguishment of debt 121
Net income $3,642
NOTE D - EARLY EXTINGUISHMENT OF DEBT
In March 1996, the Partnership paid off the first and second mortgages of Tahoe
Springs totaling approximately $1,282,000, with a portion of the refinancing
proceeds received in December 1995 from the refinancing of Breckinridge Square,
Churchill Park and The Lakes. An extraordinary loss on early extinguishment of
debt in the amount of approximately $119,000 was recorded upon payoff of the
mortgage notes. Of this amount, approximately $96,000 was recorded due to the
write off of the remaining mortgage note discount and approximately $23,000 was
recorded due to prepayment penalties incurred.
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, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Breckinridge Square
Louisville, Kentucky 94% 92%
Churchill Park
Louisville, Kentucky 93% 94%
The Lakes
Raleigh, North Carolina 95% 93%
Tahoe Springs
Miami, Florida 95% 92%
Results of Operations
The Partnership's net income for the nine months ended September 30, 1996, was
approximately $747,000 versus net income of approximately $5,031,000 for the
nine months ended September 30, 1995. The Partnership's net income for the
three months ended September 30, 1996, was approximately $269,000 compared to
approximately $329,000 for the same period in 1995. The decrease in net income
for the nine months ended September 30, 1996, is primarily due to the
recognition of a $3,693,000 gain on the sale of Forest Hills Apartment complex
in February 1995. Also, in 1995 the Partnership recognized a $121,000
extraordinary gain on early extinguishment of debt as a result of a partial
forgiveness of debt by the mortgage holder upon the sale of Forest Hills
Apartments. In the nine months ended September 30, 1996, a $119,000
extraordinary loss on the early extinguishment of debt at Tahoe Springs was
recognized as a result of the write off of the related mortgage note discounts
and prepayment penalties paid in connection with the early payoff of the
mortgage notes. The decrease in net income for the three month period ended
September 30, 1996, is primarily due to the increase in total expenses as
explained below. Contributing to the decrease in net income during the three
and nine month periods ended September 30, 1996, was a decrease in other income,
which resulted from a decrease in interest income due to a decrease in
securities available for sale and cash reserves. Prior to March 31, 1995, all
securities available for sale were liquidated in order to facilitate the
$7,107,000 distributions paid to the partners during the nine months ended
September 30, 1995. Additionally, interest bearing cash accounts were further
depleted to fund the $2,990,000 distributed to the partners during the nine
months ended September 30, 1996. The decrease in other income for the three
months ended September 30, 1996, was offset by increases in deposit forfeitures,
late charges and receipt of a tax refund. These charges increased as a result
of higher occupancy at Breckinridge Square, The Lakes and Tahoe Springs. In
addition, Tahoe Springs received a $76,000 tax refund on their 1995 property
taxes in July 1996.
Net income decreased during the three and nine month periods ended September 30,
1996, due to an increase in total expenses. The increase in total expenses was
primarily attributable to an increase in interest expense, which resulted from
the mortgage refinancing at Breckinridge Square and new mortgage financing at
The Lakes and Churchill Park, all of which closed in December 1995.
Partially offsetting the increase in total expenses was a decrease in
partnership management fees, maintenance expense and property taxes.
Maintenance expenses decreased for the three months ended September 30, 1996,
due to increased expenses in the third quarter of 1995. During the same three
month period in 1995, The Lakes incurred major repairs and replacements of
stairwells, atrium area repairs and floor coverings. In addition, the property
incurred major landscaping renovation costs. Breckinridge Square Apartments
incurred maintenance expenses for roof and balcony repairs as well as hallway
texturing.
Property tax expense decreased for the three and nine month periods ended
September 30, 1996, as a result of lower tax expense estimates for 1996. These
lower estimates are based upon the taxes paid in 1995, less the tax refund
received upon the successful appeal of the taxes assessed at Tahoe Springs in
1995. Partnership management fees for the three and nine months ended September
30, 1996, decreased due to the decrease in distributions made to limited
partners from "cash available for distribution" (as defined in the Agreement).
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.
Liquidity and Capital Resources
At September 30, 1996, the Partnership had unrestricted cash of approximately
$1,778,000 versus approximately $4,777,000 at September 30, 1995. Net cash
provided by operating activities decreased primarily due to a decrease in
accounts payable due to the timing of payments. Offsetting the decrease in
accounts payable was an increase in accrued taxes due to the timing of payments
to the taxing authorities. Net cash used in investing activities increased due
to cash received in 1995 from securities available for sale and the proceeds
received in 1995 from the sale of Forest Hills Apartments. Net cash used in
financing activities decreased due to the repayment of the mortgage note payable
on Forest Hills in 1995, and a decrease in cash distributions paid during the
nine months ended September 30, 1996.
The Partnership has no material capital programs scheduled to be performed in
1996, although certain routine capital expenditures and maintenance expenses
have been budgeted. These capital expenditures and maintenance expenses will be
incurred only if cash is available from operations or is received from the
capital reserve account.
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 properties 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 $24,690,000 requires monthly interest only payments.
These notes require balloon payments on December 1, 2005, at which time the
properties will either be refinanced or sold. During the nine months ended
September 30, 1996, the Partnership distributed approximately $2,908,000 to the
limited partners and approximately $82,000 to the General Partner. Included in
these amounts are payments made by the Partnership to the Georgia Department of
Revenue and the North Carolina Department of Revenue for withholding taxes
related to income generated by the Partnership's investment properties located
in those states. These payments were treated as distributions to the partners.
During the nine months ended September 30, 1995, the Partnership distributed
approximately $7,033,000 to the limited partners and approximately $74,000 to
the General Partner. Included in these amounts are amounts paid and accrued for
withholding taxes to the North Carolina Department of Revenue. These taxes
relate to income generated by the Partnership's investment property located in
that state. These payments and accruals were treated as distributions to the
partners. 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 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, 1996.
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.
the General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: October 30, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Growth Fund 1996 Third Quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000201529
<NAME> CONSOLIDATED CAPITAL GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,778
<SECURITIES> 0
<RECEIVABLES> 37
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 40,654
<DEPRECIATION> (20,190)
<TOTAL-ASSETS> 24,567
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 24,690
0
0
<COMMON> 0
<OTHER-SE> (1,453)
<TOTAL-LIABILITY-AND-EQUITY> 24,567
<SALES> 0
<TOTAL-REVENUES> 8,498
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7,632
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,381
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (119)
<CHANGES> 0
<NET-INCOME> 747
<EPS-PRIMARY> 15.02<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
