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, 1997
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)
(dollar amounts in thousands)
March 31, 1997
Assets
Cash:
Unrestricted $ 1,443
Restricted--tenant security deposits 346
Accounts receivable 25
Escrow for taxes 352
Restricted escrows 572
Other assets 677
Investment properties:
Land $ 4,610
Buildings and related personal property 36,948
41,558
Less accumulated depreciation (21,165) 20,393
$ 23,808
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable $ 229
Tenant security deposits 346
Accrued taxes 148
Other liabilities 354
Mortgage notes payable 30,690
Partners' Deficit
General partners $ (3,507)
Limited partners (49,196 units
issued and outstanding) (4,452) (7,959)
$ 23,808
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,
1997 1996
Revenues:
Rental income $ 2,619 $ 2,594
Interest income 40 46
Other income 131 124
Total revenues 2,790 2,764
Expenses:
Operating 935 811
General and administrative 80 75
Partnership management fees 82 123
Maintenance 359 316
Depreciation 481 455
Interest 558 498
Property taxes 154 175
Total expenses 2,649 2,453
Income before extraordinary item 141 311
Extraordinary loss on early
extinguishment of debt -- (119)
Net income $ 141 $ 192
Net income allocated to general partners (1%) $ 1 $ 2
Net income allocated to limited partners (99%) 140 190
$ 141 $ 192
Per limited partnership unit:
Income before extraordinary item $ 2.84 $ 6.26
Extraordinary item -- (2.40)
Net income per limited partnership unit $ 2.84 $ 3.86
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)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 49,196 $ 1 $ 49,196 $ 49,197
Partners' capital (deficit)
at December 31, 1996 49,196 $ (3,339) $ 2,131 $ (1,208)
Distributions to partners (169) (6,723) (6,892)
Net income for the three months
months ended March 31, 1997 1 140 141
Partners' capital (deficit)
at March 31, 1997 49,196 $ (3,507) $ (4,452) $ (7,959)
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL GROWTH FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net income $ 141 $ 192
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 481 455
Amortization of loan costs 19 12
Extraordinary loss on early extinguishment of debt -- 119
Change in accounts:
Restricted cash -- 1
Accounts receivable 20 11
Escrows for taxes (129) (62)
Other assets 21 --
Accounts payable 2 (104)
Tenant security deposit liabilities -- (5)
Accrued taxes 148 162
Other liabilities (12) 8
Net cash provided by operating activities 691 789
Cash flows from investing activities:
Property improvements and replacements (452) (245)
Receipts from restricted escrows 435 --
Deposits to restricted escrows (92) (3)
Net cash used in investing activities (109) (248)
Cash flows from financing activities:
Loan costs (10) --
Payments on mortgage notes payable -- (32)
Repayment of mortgage notes payable -- (1,282)
Distributions to partners (6,892) (1,514)
Net cash used in financing activities (6,902) (2,828)
Net decrease in cash and cash equivalents (6,320) (2,287)
Cash and cash equivalents at beginning of period 7,763 4,717
Cash and cash equivalents at end of period $ 1,443 $ 2,430
Supplemental disclosure of cash flow information:
Cash paid for interest $ 539 $ 420
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 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 month period
ended March 31, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1997. 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,
1996.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 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 three month
periods ended March 31, 1997 and 1996, 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 affiliates received reimbursements and fees as reflected in the
following table:
For the Three Months Ended
March 31,
1997 1996
(in thousands)
Property management fees $ 137 $ 136
Reimbursement for services of affiliates (1) 49 44
Partnership management fees (2) 82 123
(1) Included in "reimbursement for services of affiliates" for 1997 is
approximately $4,000 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.
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 - 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 consists of four apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 1997 and 1996:
Average
Occupancy
Property 1997 1996
Breckinridge Square
Louisville, Kentucky 89% 94%
Churchill Park
Louisville, Kentucky 88% 91%
The Lakes
Raleigh, North Carolina 91% 95%
Tahoe Springs
Miami, Florida 96% 95%
The General Partner attributes the decreases in occupancy at Breckinridge
Square, Churchill Park and The Lakes to softening real estate markets and
increased competition from new complexes in the Louisville and Raleigh areas.
Results of Operations
The Partnership's net income for the three months ended March 31, 1997, was
approximately $141,000 versus net income of approximately $192,000 for the three
months ended March 31, 1996. This decrease is primarily the result of increases
in operating, maintenance, depreciation and interest expenses. The increase in
operating expenses is the result of increased concessions. The concessions have
been incurred in an attempt to offset the decreases in occupancy. The increase
in maintenance expenses is the result of purchases of office equipment and an
exterior painting project at Churchill Park. Included in maintenance expense
for the three months ended March 31, 1997, is approximately $91,000 of major
repairs and maintenance comprised primarily of office equipment, exterior
painting and exterior building repairs. Depreciation expense increased as a
result of the property improvements and replacements incurred since March 31,
1996. Interest expense increased due to the refinancing of Tahoe Springs in
November 1996.
These increases were offset by decreases in partnership management fees,
property taxes and extraordinary loss on early extinguishment of debt.
Partnership management fees decreased due to the decrease in distributions made
to limited partners from "cash available for distribution" (as defined in the
Partnership Agreement). The decrease in property taxes is as a result of a
decrease in tax estimates for 1997. The tax expense for the three months ended
March 31, 1996, was calculated based on the taxes paid in 1995. Subsequent to
March 31, 1996, the Partnership received a tax refund on the 1995 taxes
following a successful appeal of the 1995 taxes at Tahoe Springs. The tax
expense for the three months ended March 31, 1997, was calculated based on the
reduced taxes paid in 1996. In 1996, the Partnership recognized an
extraordinary loss of approximately $119,000 due to the early extinguishment of
debt at Tahoe Springs.
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, 1997, the Partnership had unrestricted cash of approximately
$1,443,000 versus approximately $2,430,000 at March 31, 1996. Net cash provided
by operating activities decreased as a result of the increase in escrows for
taxes and the decrease in net income as described above. Net cash used in
investing activities decreased primarily due to an increase in receipts from
restricted escrows. This increase was offset by increases in the purchases of
property improvements and replacements and deposits to restricted escrows. Net
cash used in financing activities increased primarily due to an increase in
distributions made to the partners in 1997.
Major capital programs budgeted for 1997 include a chiller replacement at
Churchill Park at an estimated cost of approximately $233,000 and an HVAC
replacement at The Lakes at an estimated cost of approximately $182,000. The
Partnership has no other material capital programs scheduled to be performed in
1997, 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.
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.
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 approximately $30,690,000 requires monthly interest
only payments. These notes require balloon payments on November 1, 2003, and
December 1, 2005, at which time the properties will either be refinanced or
sold. During the three months ended March 31, 1997, the Partnership distributed
approximately $6,723,000 to the limited partners and approximately $169,000 to
the General Partner. During the three months ended March 31, 1996, a
distribution of approximately $1,363,000 was made to the limited partners and a
distribution of approximately $14,000 was made to the General Partner. 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 were treated as a distribution to
the partners and was allocated $136,000 to the limited partners and $1,000 to
the General Partner. 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, 1997.
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/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By:/s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: April 30, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Growth Fund 1997 first quarter 10-QSB and is qualified in its entirety
by reference to such 10-QSB filing.
</LEGEND>
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<NAME> CONSOLIDATED CAPITAL GROWTH FUND
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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<RECEIVABLES> 25
<ALLOWANCES> 0
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<PP&E> 41,558
<DEPRECIATION> (21,165)
<TOTAL-ASSETS> 23,808
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 30,690
0
0
<COMMON> 0
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