FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] 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.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
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 Partnership 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
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2000
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 968
Receivables and deposits 979
Restricted escrows 184
Other assets 499
Investment properties:
Land $ 4,610
Buildings and related personal property 41,719
46,329
Less accumulated depreciation (28,622) 17,707
$20,337
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 100
Tenant security deposit liabilities 230
Accrued property taxes 612
Other liabilities 383
Due to affiliates 98
Mortgage notes payable 30,690
Partners' Deficit
General partner $ (4,796)
Limited partners (49,196 units issued and
outstanding) (6,980) (11,776)
$ 20,337
See Accompanying Notes to Financial Statements
</TABLE>
b)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 2,803 $ 2,777 $ 8,408 $ 8,291
Other income 184 152 524 455
Total revenues 2,987 2,929 8,932 8,746
Expenses:
Operating 1,222 1,076 3,496 3,310
General and administrative 203 139 515 388
Depreciation 596 561 1,817 1,612
Interest 558 558 1,675 1,675
Property taxes 246 152 598 457
Total expenses 2,825 2,486 8,101 7,442
Net income $ 162 $ 443 $ 831 $ 1,304
Net income allocated to general
partner (1%) $ 1 $ 4 $ 8 $ 13
Net income allocated to limited
partners (99%) 161 439 823 1,291
$ 162 $ 443 $ 831 $ 1,304
Net income per limited partnership unit $ 3.27 $ 8.92 $ 16.73 $ 26.24
Distribution per limited partnership unit $ 3.88 $ 13.86 $ 50.84 $ 29.47
See Accompanying Notes to Financial Statements
</TABLE>
c)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN PARTNERS' 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' deficit at
December 31, 1999 49,196 $ (4,779) $(5,302) $(10,081)
Distribution to partners -- (25) (2,501) (2,526)
Net income for the nine months
ended September 30, 2000 -- 8 823 831
Partners' deficit at
September 30, 2000 49,196 $ (4,796) $ (6,980) $(11,776)
See Accompanying Notes to Financial Statements
</TABLE>
d)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 831 $1,304
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,817 1,612
Amortization of loan costs 58 58
Bad debt 132 86
Change in accounts:
Receivables and deposits (672) (184)
Other assets (47) (76)
Accounts payable (167) (55)
Tenant security deposit liabilities (11) (45)
Accrued property taxes 589 297
Other liabilities (51) (16)
Due to affiliates 98 --
Net cash provided by operating activities 2,577 2,981
Cash flows from investing activities:
Property improvements and replacements (1,246) (1,106)
Net withdrawals from restricted escrows 175 136
Net cash used in investing activities (1,071) (970)
Cash flows used in financing activities:
Distributions to partners (2,526) (1,465)
Net (decrease) increase in cash and cash equivalents (1,020) 546
Cash and cash equivalents at beginning of period 1,988 968
Cash and cash equivalents at end of period $ 968 $ 1,514
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,617 $ 1,617
See Accompanying Notes to Financial Statements
</TABLE>
e)
CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Consolidated Capital Growth
Fund (the "Partnership" or "Registrant") 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. (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, 2000, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2000. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's Annual Report on Form 10-KSB for the year ended December 31,
1999.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note C - Distributions
Cash distributions of approximately $2,526,000 (approximately $2,501,000 of
which was paid to the limited partners, $50.84 per limited partnership unit)
were paid from operations during the nine months ended September 30, 2000. Cash
distribution of approximately $1,465,000 (approximately $1,450,000 of which was
paid to the limited partners, $29.47 per limited partnership unit) were paid
from operations during the nine months ended September 30, 1999. Subsequent to
September 30, 2000, the Partnership declared and paid a distribution from
operations of approximately $346,000 ($343,000 paid to limited partners or $6.97
per limited partnership unit).
Note D - Casualty Event
In January 2000, The Lakes Apartments experienced a fire, which resulted in the
destruction of twelve apartment units. It is estimated that the property
incurred damages of approximately $247,000. As of September 30, 2000, insurance
proceeds of approximately $169,000 have been received to cover the estimated
damages and are being held in escrow by the mortgage lender until repairs are
complete.
Note E - 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 Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The General Partner and its affiliates received
reimbursements and fees during the nine months ended September 30, 2000 and 1999
as reflected in the following table:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 429 $ 446
Reimbursement for services of affiliates (included in
general and administrative expense and investment
properties) 276 173
Partnership management fees (included in general
and administrative expense) 225 131
Due to affiliates (included in other liabilities) 98 --
During the nine months ended September 30, 2000 and 1999, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Registrant's properties for providing property management services. The
Registrant paid to such affiliates approximately $429,000 and $446,000 for the
nine months ended September 30, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $276,000 and $173,000 for the
nine months ended September 30, 2000 and 1999, respectively. Approximately
$98,000 of which was accrued at September 30, 2000
The Partnership Agreement provides for a fee equal to 9% of the total
distributions made to the limited partners from "cash available for
distribution" (as defined in the Agreement) to be paid to the General Partner
for executive and administrative management services. Affiliates of the General
Partner received approximately $225,000 and $131,000 for the nine months ended
September 30, 2000 and 1999, respectively, for providing these services.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 26,127.75 limited
partnership units in the Partnership representing 53.11% of the outstanding
units. A number of these units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters, which would include without limitation, voting on certain amendments to
the Partnership Agreement and voting to remove the General Partner. As a result
of its ownership of 53.11% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of their affiliation
with the General Partner.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of four apartment complexes
located in Florida (1), Kentucky (2), and North Carolina (1). The Partnership
rents apartment units to tenants for terms that are typically twelve months or
less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the Partnership's Annual Report on Form 10-KSB for the year
ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the three and nine month periods ended September 30,
2000 and 1999 is shown in the tables below. The "Other" column includes
partnership administration related items and income and expense not allocated to
the reportable segment.
<TABLE>
<CAPTION>
Three Months Ended September 30, 2000 Residential Other Totals
(in thousands)
<S> <C> <C> <C>
Rental income $ 2,803 $ -- $ 2,803
Other income 181 3 184
Interest expense 558 -- 558
Depreciation 596 -- 596
General and administrative expense -- 203 203
Segment profit (loss) 362 (200) 162
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 2000 Residential Other Totals
(in thousands)
<S> <C> <C> <C>
Rental income $ 8,408 $ -- $ 8,408
Other income 516 8 524
Interest expense 1,675 -- 1,675
Depreciation 1,817 -- 1,817
General and administrative expense -- 515 515
Segment profit (loss) 1,338 (507) 831
Total assets 20,282 55 20,337
Capital expenditures for investment properties 1,246 -- 1,246
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999 Residential Other Totals
(in thousands)
<S> <C> <C> <C>
Rental income $ 2,777 $ -- $ 2,777
Other income 151 1 152
Interest expense 558 -- 558
Depreciation 561 -- 561
General and administrative expense -- 139 139
Segment profit (loss) 581 (138) 443
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999 Residential Other Totals
(in thousands)
<S> <C> <C> <C>
Rental income $ 8,291 $ -- $ 8,291
Other income 439 16 455
Interest expense 1,675 -- 1,675
Depreciation 1,612 -- 1,612
General and administrative expense -- 388 388
Segment profit (loss) 1,676 (372) 1,304
Total assets 21,079 330 21,409
Capital expenditures for investment properties 1,106 -- 1,106
</TABLE>
Note G - Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature arising in the ordinary course of business.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
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, 2000 and 1999:
Average Occupancy
Property 2000 1999
Breckinridge Square 94% 95%
Louisville, Kentucky
Churchill Park 95% 97%
Louisville, Kentucky
The Lakes 86% 92%
Raleigh, North Carolina
Doral Springs (formerly Tahoe Springs) 97% 95%
Miami, Florida
The General Partner attributes the decrease in occupancy at The Lakes Apartments
due to the fire at the property which occurred in January 2000 as discussed
below.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
2000 was approximately $162,000 and $831,000 as compared to approximately
$443,000 and $1,304,000 for the three and nine months ended September 30, 1999.
The decrease in net income for the three and nine months ended September 30,
2000 is due to an increase in total expenses partially offset by an increase in
total revenues. Total revenues increased due to an increase in rental and other
income. The increase in rental income is primarily attributed to an increase in
average rental rates at all four of the Partnership's properties and an increase
in occupancy at Doral Springs, which more than offset the decrease in occupancy
at The Lakes, Churchill Park and Breckinridge Square. Other income increased due
to telephone rebates at all four properties and a cable rebate at Doral Springs
plus an increase in interest income due to higher cash balances being held in
interest bearing accounts.
Total expenses increased for the three and nine months ended September 30, 2000
primarily due to an increase in depreciation, operating, general and
administrative and property tax expenses. The increase in depreciation expense
resulted from an increase in capital improvements performed at all of the
investment properties during the past twelve months to improve the overall
appearance and quality of the properties. The increase in operating expenses is
primarily due to an increase in property, salaries, and related employee
benefits. The increase in property tax expense is primarily due to increased tax
billings due to an increase in the assessed value of the properties by the
taxing authorities for all four properties.
General and administrative expenses increased for the nine months ended
September 30, 2000 due to an increase in partnership management fees paid as a
result of the distributions from operations made during the nine months ended
September 30, 2000, as required by the Partnership Agreement in addition to an
increase in the cost of services included in the management reimbursements to
the General Partner as allowed under the Partnership Agreement. In addition,
costs associated with the quarterly and annual communications with the investors
and regulatory agencies and the annual audit required by the Partnership
Agreement are also included.
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, 2000, the Partnership had cash and cash equivalents of
approximately $968,000 compared to approximately $1,514,000 at September 30,
1999. The decrease in cash and cash equivalents of approximately $1,020,000 for
the nine months ended September 30, 2000, from the Partnership's calendar year
end of December 31, 1999, is due to approximately $2,526,000 of cash used in
financing activities and approximately $1,071,000 of cash used in investing
activities, which was partially offset by approximately $2,577,000 of cash
provided by operating activities. Cash used in investing activities consisted of
property improvements and replacements which were slightly offset by net
withdrawals from escrow accounts maintained by the mortgage lender. Cash used in
financing activities consisted of partner distributions. The Partnership invests
its working capital reserves in money market accounts.
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 investment properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state and local legal and regulatory requirements. Capital improvements
planned for each of the Registrant's properties are detailed below.
Breckinridge Square Apartments: For 2000 the Partnership has budgeted
approximately $282,000 for capital improvements, consisting primarily of
plumbing upgrades, floor covering and appliance replacements, water heaters,
recreation facilities, and air conditioning upgrades. The Partnership completed
approximately $225,000 in budgeted capital expenditures at Breckinridge Square
Apartments as of September 30, 2000, consisting primarily of air conditioning
upgrades, water heater replacements, plumbing upgrades and appliance and floor
covering replacements. These improvements were funded primarily from operations.
Churchill Park Apartments: For 2000 the Partnership has budgeted approximately
$325,000 for capital improvements, consisting primarily of plumbing upgrades,
appliances, and floor covering replacements. The Partnership completed
approximately $222,000 in budgeted capital expenditures at Churchill Park
Apartments as of September 30, 2000, consisting primarily of plumbing upgrades
and appliance and floor covering replacements. These improvements were funded
from operations and replacement reserves.
The Lakes Apartments: For 2000 the Partnership has budgeted approximately
$348,000 for capital improvements, consisting primarily of floor covering,
appliance, and HVAC replacements. The Partnership completed approximately
$534,000 in capital expenditures at The Lakes Apartments as of September 30,
2000, consisting primarily of floor covering, structural improvements, and
appliance replacements. These improvements were funded primarily from
operations. Of the $534,000 spent as of September 30, 2000, $245,000 is
construction in progress due to the fire in January 2000, which damaged 12
units. It is estimated that the property incurred damages of approximately
$247,000. As of September 30, 2000, insurance proceeds of approximately $169,000
have been received to cover the estimated damages and are being held in escrow
by the mortgage lender until repairs are complete.
Doral Springs Apartments: For 2000 the Partnership has budgeted approximately
$398,000 for capital improvements, consisting primarily of fencing and equipment
enhancements, swimming pool upgrades, floor covering and appliance replacements
and elevator improvements. The Partnership completed approximately $265,000 in
budgeted capital expenditures at Doral Springs Apartments as of September 30,
2000, consisting primarily of carpet and tile replacements, interior decorating
enhancements, and other building improvements. These improvements were funded
primarily from operations.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. 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. The General Partner may attempt to refinance such indebtedness and/or
sell the properties prior to such maturity dates. If the properties cannot be
refinanced or sold for a sufficient amount, the Registrant will risk losing such
properties through foreclosure.
Cash distributions of approximately $2,526,000 (approximately $2,501,000 of
which was paid to the limited partners, $50.84 per limited partnership unit)
were paid from operations during the nine months ended September 30, 2000. A
cash distribution of approximately $1,465,000 ($1,450,000 of which was paid to
the limited partners, $29.47 per limited partnership unit) was paid from
operations during the nine months ended September 30, 1999. Subsequent to
September 30, 2000, the Partnership declared and paid a distribution from
operations of approximately $346,000 ($343,000 paid to limited partners or $6.97
per limited partnership unit). The Partnership's distribution policy is reviewed
on a quarterly basis. Future cash distributions will depend on the levels of net
cash generated from operations, the availability of cash reserves, and the
timing of debt maturities, refinancings, and/or property sales. There can be no
assurance, however, that the Partnership will generate sufficient funds from
operations, after required capital expenditures, to permit any additional
distributions to its partners during the remainder of 2000 or subsequent
periods.
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, 2000.
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.
its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date: November 8, 2000
