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 March 31, 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)
March 31, 1996
Assets
Cash:
Unrestricted $ 2,430
Restricted--tenant security deposits 310
Accounts receivable 24
Escrow for taxes 189
Restricted escrows 921
Other assets 575
Investment properties:
Land $ 4,610
Buildings and related personal property 35,438
40,048
Less accumulated depreciation (19,244) 20,804
$ 25,253
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 204
Tenant security deposits 305
Accrued taxes 162
Other liabilities 424
Mortgage notes payable 24,690
Partners' Capital (Deficit)
General partners $ (3,280)
Limited partners (49,196 units
issued and outstanding) 2,748 (532)
$ 25,253
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 2,594 $ 2,694
Other income 170 294
Total revenues 2,764 2,988
Expenses:
Operating 664 1,009
General and administrative 95 81
Property management fees 136 141
Partnership management fees 123 490
Maintenance 307 284
Depreciation 455 498
Interest 498 211
Property taxes 175 187
Total expenses 2,453 2.901
Gain on sale of investment property -- 3,693
Loss on disposal of property -- (63)
Income before extraordinary item 311 3,717
Extraordinary (loss) gain on early
extinguishment of debt (119) 121
Net income $ 192 $ 3,838
Net income allocated to general partners (1%) $ 2 $ 38
Net income allocated to limited partners (99%) 190 3,800
$ 192 $ 3,838
Per limited partnership unit:
Income before extraordinary item $ 6.26 $ 74.80
Extraordinary item (2.40) 2.44
Net income per limited partnership unit $ 3.86 $ 77.24
See Accompanying Notes to Consolidated Financial Statements
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 Partners 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 -- (15) (1,499) (1,514)
Net income for the three
months ended March 31, 1996 -- 2 190 192
Partners' capital (deficit)
at March 31, 1996 49,196 $ (3,280) $ 2,748 $ (532)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 192 $ 3,838
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 455 498
Amortization of loan costs and mortgage discounts 12 8
Gain on sale of investment property -- (3,693)
Loss (gain) on early extinguishment of debt 96 (121)
Loss on disposal of property -- 63
Change in accounts:
Restricted cash 1 81
Accounts receivable 11 44
Escrows for taxes (62) (209)
Other assets 23 51
Accounts payable (104) 133
Tenant security deposit liabilities (5) (45)
Accrued taxes 162 (172)
Other liabilities 8 5
Net cash provided by operating activities 789 481
Cash flows from investing activities:
Property improvements and replacements (245) (413)
Cash received from sale of securities
available for sale -- 4,441
Proceeds from sale of investment property -- 7,966
Receipts from restricted escrows -- 74
Deposits to restricted escrows (3) --
Net cash (used in) provided by
investing activities (248) 12,068
Cash flows from financing activities:
Payments on mortgage notes payable (32) (98)
Repayment of mortgage notes payable (1,282) (4,850)
Distributions to partners (1,514) (5,509)
Net cash used in financing activities (2,828) (10,457)
Net (decrease) increase in cash and cash equivalents (2,287) 2,092
Cash and cash equivalents at beginning of period 4,717 2,358
Cash and cash equivalents at end of period $ 2,430 $ 4,450
Supplemental disclosure of cash flow information:
Cash paid for interest $ 420 $ 179
<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 the General Partner, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 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 Limited Partnership Agreement ("Agreement") provides for
payments to affiliates for services and as reimbursement of certain expenses
incurred by affiliates on behalf of the Partnership. The following transactions
with Insignia Financial Group, Inc. and certain of its affiliates were charged
to expense in 1996 and 1995:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $ 136 $ 141
Reimbursement for services of affiliates 48 66
Partnership management fees (1) 123 490
(1) 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.
The Partnership insures 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 at March 31, 1995:
Three Months Ended
March 31, 1995
Revenues:
Rental income $ 235
Other income 69
Total revenues 304
Expenses:
Operating 269
Property management fees 13
Maintenance 57
Depreciation 45
Interest 39
Property taxes 70
Total expenses 493
Gain on sale of real estate 3,693
Income before extraordinary item 3,504
Extraordinary gain on early
extinguishment of debt 121
Net income $3,625
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 gain 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 $24,000 was recorded due to prepayment penalties
incurred.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Partnership's investment properties consists of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
Breckinridge Square
Louisville, Kentucky 94% 93%
Churchill Park
Louisville, Kentucky 91% 93%
The Lakes
Raleigh, North Carolina 95% 92%
Tahoe Springs
Miami, Florida 95% 93%
Results of Operations
The Partnership's net income as shown in the financial statements for the
three months ended March 31, 1996, was $192,000 versus net income of $3,838,000
for the corresponding period of 1995. The decrease in net income for the three
months ended March 31, 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 three months
ended March 31, 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.
Contributing to the decrease in net income was a decrease in rental income as
a direct result of the sale of Forest Hills. The remaining properties have
experienced stable occupancy and increased rental income. Also contributing to
the decrease in net income for the three months ended March 31, 1996, was a
decrease in other income which resulted from lower interest income due to a
decrease in securities available for sale. During the three months ended March
31, 1995, the securities available for sale were liquidated to facilitate the
$5,509,000 distribution paid to the partners in March 1995.
Offsetting the decrease in net income for the three months ended March 31,
1996, was a decrease in total expenses. Operating expenses decreased due to the
sale of Forest Hills Apartments in February 1995. Utilities also decreased at
Churchill Park and Tahoe Springs due to the installation of water saving devices
in all of the units. General and administrative expenses increased due to the
payment of approximately $12,000 in taxes on behalf of CCGF Associates, Ltd., a
wholly owned subsidiary. Also, partnership management fees decreased due to the
decrease in distributions made to the limited partners from "cash available for
distribution" (as defined in the Agreement). Offsetting the decrease in
expenses, but contributing to the decrease in net income was 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.
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 March 31, 1996, the Partnership had unrestricted cash of $2,430,000 versus
$4,450,000 at March 31, 1995. Net cash provided by operating activities
increased during the three months ended March 31, 1996, as compared to the
corresponding period of 1995, primarily as a result of an increase in accrued
taxes. 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 repayment of the mortgage note payable of Forest Hills in 1995
and a decrease in cash distributions paid in the first quarter of 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 March 1996, 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. Also during
the first quarter of 1996, the Partnership paid $137,000 to the Georgia
Department of Revenue for withholding taxes related to income generated by
Forest Hills, located in Georgia. These taxes have been treated as a
distribution to the partners and have been allocated $136,000 to the limited
partners and $1,000 to the General Partner. A distribution of $5,449,000 or
$110.77 per unit was made to the limited partners with a matching distribution
of $60,000 to the General Partner in March 1995. 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 March 31, 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: April 29, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Growth Fund 1996 1st Quarter 10-QSB and is qualified in it's entirety by
reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000201529
<NAME> CONSOLIDATED CAPITAL GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,430
<SECURITIES> 0
<RECEIVABLES> 24
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 40,048
<DEPRECIATION> 19,244
<TOTAL-ASSETS> 25,253
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 24,690
0
0
<COMMON> 0
<OTHER-SE> (532)
<TOTAL-LIABILITY-AND-EQUITY> 25,253
<SALES> 0
<TOTAL-REVENUES> 2,764
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,453
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 498
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 311
<DISCONTINUED> 0
<EXTRAORDINARY> (119)
<CHANGES> 0
<NET-INCOME> 192
<EPS-PRIMARY> 3.86
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
</FN>
</TABLE>
