March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Consolidated Capital Properties III
Form 10-KSB
File No. 0-10273
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
<PAGE>
FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
Form 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
[No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
[No Fee Required]
For the transition period from _________to _________
Commission file number 0-10273
CONSOLIDATED CAPTIAL PROPERTIES III
(Name of small business issuer in its charter)
California 94-2653686
(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)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(Title of class)
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___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of the registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year. $3,109,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Consolidated Capital Properties III (the "Partnership" or "Registrant") was
organized on May 22, 1980 as a limited partnership under the California Uniform
Limited Partnership Act. Commencing November 25, 1980, the Partnership offered,
pursuant to a Registration Statement filed with the Securities and Exchange
Commission (the "SEC"), $120,000 of units of limited partnership interest (the
"Units"), with the general partner's right to increase the offering to 240,000
units. The Units represent equity interests in the Partnership and entitle the
holders thereof to participate in certain allocations and distributions of the
Partnership. The sale of Limited Partnership Units closed on December 17, 1981,
with 158,945 Units sold at $500 each, or gross proceeds of $79,473,000 to the
Partnership. The original general partners contributed capital in the amount of
$1,000 for a 4% interest in the Partnership. At the request of certain Limited
Partners and in accordance with its Partnership Agreement (herein so called),
the Partnership has retired a total of 363 Units. The Partnership gave no
consideration for these units. The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2010 unless terminated prior to such
date.
By the end of fiscal year 1985, approximately 71% of the proceeds raised had
been invested in twenty-eight properties. Of the remaining 29%, 11% was required
for organizational and offering expenses, sales commissions and acquisition
fees, and 18% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement. Since its initial
offering, the Registrant has not received, nor are limited partners required to
make, additional capital contributions.
Upon the Partnership's formation in 1980, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner.
In 1988, through a series of transactions, Southmark Corporation ("Southmark")
acquired controlling interest in CCEC. In December 1988, CCEC filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990,
as part of CCEC's reorganization plan, Concap Equities, Inc. ("CEI") acquired
CCEC's general partner interests in the Partnership and in 15 other affiliated
public limited partnerships (the "Affiliated Partnerships") and CEI replaced
CCEC as managing general partner in all 16 partnerships. The selection of CEI as
the sole managing general partner was approved by a majority of the Limited
Partners in the Partnership and in each of the Affiliated Partnerships pursuant
to a solicitation of the Limited Partners dated August 10, 1990. As part of this
solicitation, the Limited Partners also approved an amendment to the Partnership
Agreement to limit changes of control of the Partnership. CEI is a subsidiary of
Apartment Investment and Management Company ("AIMCO").
The Registrant is engaged in the business of operating and holding real estate
properties for investment. At December 31, 1999, the Partnership owned three
apartment complexes. Prior to 1999, the Partnership disposed of twenty-six
properties, two of which were reacquired through foreclosure. During 1999, the
Partnership sold its remaining commercial property. See "Item 2. Description of
Properties" below for a description of the Partnership's remaining properties.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area, could have a material effect on the rental market for the
apartments at the Partnership's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of the total apartment units in the United
States and competition for the apartments is local. In addition, various limited
partnerships have been formed by the General Partner and/or affiliates to engage
in business which may be competitive with the Partnership.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand of similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner has been providing such property management
services.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
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 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.
<PAGE>
Item 2. Description of Properties
The following table sets forth the Partnership's investments in properties:
Date of
Property Purchase Type of Ownership Use
Ventura Landing Apartments 10/07/81 Fee ownership subject to Apartment
Orlando, Florida a first mortgage 184 units
Village Green Apartments 12/20/91 Fee ownership subject to Apartment
Altamonte Springs, Florida a first mortgage (1) 164 units
West Chase Apartments 09/17/90 Fee ownership subject to Apartment
Lexington, Kentucky a first mortgage 120 units
(1) Property is held by a limited partnership in which the Registrant owns a
99% interest.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Useful Federal
Property Value Depreciation Life Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Ventura Landing $ 5,505 $ 4,506 5-19 yrs S/L $ 1,076
Village Green 3,137 1,502 3-15 yrs S/L 3,845
West Chase 2,485 1,390 5-15 yrs S/L 1,973
Total $11,127 $ 7,398 $ 6,894
</TABLE>
See "Note A" of the consolidated financial statements included in "Item 7.
Financial Statements" for a description of the Partnership's depreciation policy
and "Note K - Change in Accounting Principle".
<PAGE>
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Ventura Landing $ 2,200 7.33% (1) 11/03 $ 2,200
Village Green 2,000 7.33% (1) 11/03 2,000
West Chase 1,150 7.87% 20 yrs 12/19 --
Totals $ 5,350 $ 4,200
</TABLE>
(1) Interest only payments.
(2) See "Item 7. Financial Statements - Note F" for information with respect
to the Registrant's ability to prepay these loans and other specific
details about the loans.
Rental Rates and Occupancy
Average annual rental rates and occupancy for 1999 and 1998 for each property
are as follows:
Average Annual Average Annual
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
Ventura Landing 6,908 6,547 93% 95%
Village Green 6,710 6,445 96% 98%
West Chase 6,139 6,264 93% 85%
The General Partner attributes the increase in occupancy at West Chase
Apartments to increased concessions offered late in 1998 and increased marketing
efforts in 1999.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
the Partnership's properties are adequately insured. Each residential property
is an apartment complex which leases units for terms of one year or less. No
residential tenant leases 10% or more of the available rental space. All of the
properties are in good physical condition, subject to normal depreciation and
deterioration as is typical for assets of this type and age.
<PAGE>
Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for each property are as follows:
1999 1999
Billing Rate
(in thousands)
Ventura Landing $90 2.35%
Village Green 75 1.96%
West Chase 19 0.98%
Capital Improvements
Ventura Landing
In 1999, the Partnership completed approximately $354,000 of capital
improvements at Ventura Landing, consisting primarily of carpet and vinyl
replacement, lighting and plumbing upgrades, structural improvements, and
appliances. These improvements were funded from cash provided by operations. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $55,200. Additional improvements may be considered and will
depend on the physical condition of the property as well as replacement reserves
and anticipated cash flow generated by the property.
Village Green
In 1999, the Partnership completed approximately $312,000 of capital
improvements, consisting primarily of carpet and vinyl replacement, fencing,
swimming pool improvements, appliances, air conditioning units, and structural
and other building improvements. These improvements were funded from cash
provided by operations and Partnership reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $49,200.
Additional improvements may be considered and will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
West Chase
In 1999, the Partnership completed approximately $228,000 of capital
improvements, consisting primarily of structural and other building improvements
plumbing, heating and parking lot upgrades, and carpet and vinyl replacement.
These improvements were funded from cash provided by operations. The Partnership
is currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $36,000. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Professional Plaza
In 1999, the Partnership completed approximately $42,000 of capital
improvements, consisting primarily of tenant improvements. This property was
sold July 8, 1999 (see "Item 6. Management's Discussion and Analysis or Plan of
Operation" for further details).
<PAGE>
The capital improvements planned for the year 2000 at the Partnership's
properties will be made only to the extent of cash 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.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
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 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 1999.
<PAGE>
PART II
Item 5. Market for Partnership Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, sold 158,945 Limited
Partnership Units aggregating $79,473,000. In addition, the General Partner
contributed a total of $1,000 to the Partnership. The Partnership currently has
5,259 holders of record owning an aggregate of 158,582 Units. Affiliates of the
General Partner owned 72,484.5 Units or 45.708% at December 31, 1999.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999, as well as for the subsequent period
from January 1, 2000 to March 3, 2000:
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/98 - 12/31/98 $ -- $ --
01/01/99 - 12/31/99 6,252 (1) 39.19
01/01/00 - 03/03/00 650 (2) 4.10
(1) Consists of $928,000 of cash from operations and $1,826,000 of cash from a
return of capital and $3,498,000 of cash from sale proceeds from the sale
of Professional Plaza (see "Item 6" for further details).
(2) Distribution was made from cash from the financing proceeds on West Chase
Apartments (see "Item 6" for further details).
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, property sales and/or refinancings. The Partnership's distribution
policy is reviewed on a semi-annual basis. 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 in the year 2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 72,484.5
units of limited partnership units in the Partnership representing 45.708% of
the outstanding units. 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. 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.
<PAGE>
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB 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 operations. 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.
This item should be read in conjunction with "Item 7. Financial Statements" and
other items contained elsewhere in this report.
Results of Operations
The Registrant's net income for the year ended December 31, 1999 was
approximately $2,563,000 as compared to approximately $760,000 for the year
ended December 31, 1998. (See "Note G" of the consolidated financial statements
for a reconciliation of these amounts to the Registrant's Federal taxable
income). The increase in net income is primarily attributable to the gain on
sale of discontinued operations of approximately $2,132,000 realized on the sale
of Professional Plaza.
Excluding the impact of the sale and operations of Professional Plaza, the
Registrant had net income of approximately $264,000 and $328,000 for the years
ending December 31, 1999 and 1998, respectively. The decrease in net income was
due to increased total expenses partially offset by an increase in total
revenues. Total expenses increased primarily due to increased general and
administrative expenses, operating expenses and depreciation expense. General
and administrative expenses increased due to increased legal expenses due to the
settlement of a lawsuit as disclosed in the Partnership's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1998, increased printing and
mailing costs and to a special management fee paid to the General Partner during
the year ended December 31, 1999 in association with the distribution from
operations made to the limited partners during the current year. There were no
such distributions made to the limited partners during the year ended 1998, so
no special management fees were paid during 1998. These increases were partially
offset by reduced management reimbursements. Included in general and
administrative expenses at both December 31, 1999 and 1998, are management
reimbursements to the General Partner allowed under the Partnership Agreement.
Costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are also included. Operating expenses increased primarily due to increases in
utility expenses, bonuses and supplies at all the Partnership's properties, as
well as increased expenses for common area cleaning primarily at Ventura
Landing. Depreciation expense increased due to capital improvements completed
during the past twelve months that are now being depreciated.
The increase in total revenues was primarily due to an increase in rental
income. Rental income increased primarily due to increased average rental rates
at Ventura Landing and Village Green and improved occupancy at West Chase. In
addition, concession expense and bad debt expense decreased at West Chase.
Partially offsetting these increases were decreased occupancy at Village Green
and Ventura Landing and reduced average rental rates at West Chase.
<PAGE>
Income from discontinued operations decreased approximately $265,000 due to the
sale of Professional Plaza on July 8, 1999, as discussed below. Since
Professional Plaza was the last commercial property held by the Partnership, its
results of operations were shown as "Income from discontinued operation" on the
accompanying consolidated statements of operations. The decrease in income was
due to the fact that there was only six months of activity for 1999 prior to the
sale of the property and that additional expenses were incurred in getting the
property ready for sale.
On July 8, 1999, Professional Plaza, located in Salt Lake City, Utah, was sold
to an unaffiliated third party for $3,600,000. After payment of closing
expenses, the net proceeds received by the Partnership were approximately
$3,397,000. The sale of the property resulted in a gain on sale of discontinued
operations of approximately $2,132,000. The proceeds were distributed to the
partners during 1999.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $29,000 ($0.18 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
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
As of December 31, 1999, the Partnership held cash and cash equivalents of
approximately $1,460,000 compared to approximately $2,883,000 at December 31,
1998. The decrease in cash and cash equivalents of approximately $1,423,000 from
the Partnership's year ended December 31, 1998, is due to approximately
$5,131,000 of cash used in financing activities partially offset by
approximately $2,406,000 of cash provided by investing activities and
approximately $1,302,000 of cash provided by operating activities. Cash used in
financing activities consisted of distributions to the partners partially offset
by proceeds from and loan costs paid for the financing of West Chase. Cash
provided by investing activities consisted of proceeds from the sale of
Professional Plaza partially offset by property improvements and replacements
and deposits to escrow accounts. The Registrant invests its working capital
reserves in a money market 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 Registrant and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$140,400. Additional improvements may be considered and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. The capital expenditures will
be incurred only if cash is available from operations or from 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 Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness at Ventura Landing and Village Green Apartments of $4,200,000
requires interest only payments with the principal balance due in November 2003.
On December 1, 1999, the Partnership obtained financing on West Chase Apartments
in the amount of $1,150,000. The loan carries a stated interest rate of 7.87%.
Payments are due on the first day of each month beginning on January 1, 2000
until the loan matures on December 1, 2019. Total capitalized loan costs were
approximately $29,000 at December 31, 1999. The General Partner will attempt to
refinance such indebtedness and/or sell the properties prior to such maturity
date. If the properties cannot be refinanced or sold for a sufficient amount,
the Registrant will risk losing such properties through foreclosure.
During the year ended December 31, 1999, the Partnership distributed
approximately $6,252,000 (approximately $6,215,000 to the limited partners or
$39.19 per limited partnership unit), of which approximately $928,000
(approximately $891,000 to the limited partners or $5.62 per limited partnership
unit) was attributable to cash flow from operations. Approximately $1,826,000
($11.51 per limited partnership unit) represented a return of capital and
approximately $3,498,000 ($22.06 per limited partnership unit) represented sale
proceeds from the sale of Professional Plaza both of which were distributed
entirely to the Limited Partners. No distributions were paid during the year
ended December 31, 1998. Subsequent to the Partnership's fiscal year end a
distribution of approximately $650,000 ($4.10 per limited partnership unit) was
made representing financing proceeds on West Chase Apartments all of which was
paid to the Limited Partners. 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, property sales and/or refinancings. The
Partnership's distribution policy is reviewed on a semi-annual basis. 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 in the year 2000 or subsequent periods.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 72,484.5
units of limited partnership units in the Partnership representing 45.708% of
the outstanding units. 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. 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.
<PAGE>
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
CONSOLIDATED CAPTIAL PROPERTIES III
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheet - December 31, 1999
Consolidated Statements of Operations - Years ended December 31, 1999 and 1998
Consolidated Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998
Consolidated Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Consolidated Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties III
We have audited the accompanying consolidated balance sheet of Consolidated
Capital Properties III as of December 31, 1999, and the related consolidated
statements of operations, changes in partners' (deficit) capital and cash flows
for each of the two years in the period ended December 31, 1999. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties III at December 31, 1999, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States.
As discussed in Note K to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 7, 2000
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and cash equivalents $ 1,460
Receivables and deposits 182
Restricted escrows 133
Other assets 216
Investment properties (Notes F and H):
Land $ 507
Buildings and related personal property 10,620
11,127
Less accumulated depreciation (7,398) 3,729
$ 5,720
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 304
Tenant security deposit liabilities 97
Other liabilities 259
Mortgage notes payable (Note F) 5,350
Partners' (Deficit) Capital
General partner $(1,828)
Limited partners (158,582 units issued and
outstanding) 1,538 (290)
$ 5,720
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPTIAL PROPERTIES III
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Revenues:
<S> <C> <C>
Rental income $ 2,865 $ 2,733
Other income 244 250
Total revenues 3,109 2,983
Expenses:
Operating expenses 1,497 1,460
General and administrative 360 263
Depreciation 468 417
Interest 339 338
Property taxes 181 177
Total expenses 2,845 2,655
Income before discontinued operations 264 328
Income from discontinued operations (Note C) 167 432
Gain on sale of discontinued operations (Note C) 2,132 --
Net income $ 2,563 $ 760
Net income allocated to general partner (4%) $ 103 $ 30
Net income allocated to limited partners (96%) 2,460 730
$ 2,563 $ 760
Per limited partnership unit:
Income before discontinued operations $ 1.59 $ 1.99
Income from discontinued operations 1.01 2.61
Gain on sale of discontinued operations 12.91 --
Net income per limited partnership unit $ 15.51 $ 4.60
Distributions per limited partnership unit $ 39.19 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPTIAL PROPERTIES III
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 158,945 $ 1 $79,473 $79,474
Partners' (deficit) capital
at December 31, 1997 158,582 $(1,924) $ 4,563 $ 2,639
Net income for the year ended
December 31, 1998 -- 30 730 760
Partners' (deficit) capital at
December 31, 1998 158,582 $(1,894) $ 5,293 $ 3,399
Distributions to partners -- (37) (6,215) (6,252)
Net income for the year
ended December 31, 1999 -- 103 2,460 2,563
Partners' (deficit) capital
at December 31, 1999 158,582 $(1,828) $ 1,538 $ (290)
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES III
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 2,563 $ 760
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 492 465
Amortization of lease commissions and loan costs 40 61
Gain on sale of discontinued operations (2,132) --
Change in accounts:
Receivables and deposits 34 (17)
Other assets 11 (34)
Accounts payable 243 (78)
Tenant security deposit liabilities (43) 19
Other liabilities 94 21
Net cash provided by operating activities 1,302 1,197
Cash flows from investing activities:
Net proceeds from sale of discontinued operations 3,397 --
Property improvements and replacements (936) (380)
Net (deposits to) receipts from restricted escrows (55) 28
Net cash provided by (used in) investing
activities 2,406 (352)
Cash flows from financing activities:
Payment of loan costs (29) --
Net proceeds from refinancing of West Chase 1,150 --
Distributions to partners (6,252) --
Net cash used in financing activities (5,131) --
Net (decrease) increase in cash and cash equivalents (1,423) 845
Cash and cash equivalents at beginning of the year 2,883 2,038
Cash and cash equivalents at end of year $ 1,460 $ 2,883
Supplemental disclosure of cash flow information:
Cash paid for interest $ 308 $ 308
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 167 $ --
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
<PAGE>
CONSOLIDATED CAPITAL PROPERTIES III
NOTES CONSOLIDATED TO FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties III, a California limited
partnership (the "Partnership" or "Registrant") was formed on May 22, 1980, to
acquire and operate commercial and residential properties. The general partner
responsible for management of the Partnership's business is ConCap Equities,
Inc. (the "General Partner" or "CEI"). The General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO") (see "Note B - Transfer of
Control"). The directors and officers of the General Partner also serve as
executive officers of AIMCO. The Partnership Agreement provides that the
Partnership is to terminate on December 31, 2010 unless terminated prior to such
date. As of December 31, 1999, the Partnership owned two residential properties
in Florida, and one residential property in Kentucky.
At the time of the Partnership's formation, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired controlling interest
in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the
United States Bankruptcy Code. As part of CCEC's reorganization plan, CEI
acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. As part of the
solicitation for approval of CEI as general partner, the limited partners also
approved the conversion of CCMC from the general partner to a limited partner,
thereby leaving CEI as the sole general partner of the Partnership.
Principles of Consolidation: The Partnership's financial statements include the
accounts of ConCap Village Green Associates, Ltd. The Partnership owns a 99%
interest in this partnership, and it has the ability to control the major
operating and financial policies of this partnership. All intercompany
transactions have been eliminated.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Allocation of Profits, Gains, and Losses: The Partnership Agreement provides for
net income and net losses for both financial and tax reporting purposes to be
allocated 96% to the Limited Partners and 4% to the general partners.
Upon the sale or other disposition, or refinancing, of any asset of the
Partnership, the distributable net proceeds shall be distributed as follows:
First, to the partners in proportion to their interests until the limited
partners have received proceeds equal to their original capital investment
applicable to the property; Second, to the limited partners until the limited
partners have received distributions from all sources equal to their 12%
cumulative return; Third, concurrent with limited partner distributions, 4% to
the general partner subordinated and deferred until the limited partners have
received 100% of their capital contributions; Thereafter, 86% to the limited
partners in proportion to their interests and 14% to the general partner.
Investment Properties: Investment properties consist of three apartment
complexes and are stated at cost. Acquisition fees are capitalized as a cost of
real estate. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", the Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
Costs of investment properties that have been permanently impaired have been
written down to appraised value. No adjustments for impairment of value were
recorded in the year ended December 31, 1999 or 1998.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 15 years for additions prior to March 16, 1984, 18 years
for additions after March 15, 1984 and before May 9, 1985, and 19 years for
additions after May 8, 1985, and before January 1, 1987, and (2) for personal
property over 5 years for additions prior to January 1, 1987. As a result of the
Tax Reform Act of 1986, for additions after December 31, 1986, the modified
accelerated cost recovery method is used for depreciation of (1) real property
over 27 1/2 years and (2) personal property additions over 5 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note K).
Cash and Cash Equivalents: Includes cash on hand and in banks and money market
accounts. At certain times, the amount of cash deposited at a bank may exceed
the limit on insured deposits.
Cash balances include approximately $66,000 at December 31, 1999 that are
maintained by the affiliated management company on behalf of affiliated entities
in a cash concentration account.
Restricted Escrows:
Capital Improvement Reserve: As a result of the refinancing of Ventura
Landing Apartments and Village Green Apartments in 1996, the properties
deposited approximately $216,000 with the mortgage company to establish a
capital reserve designated for certain capital improvements. At December
31, 1999, this reserve totaled approximately $14,000.
Replacement Reserve: As a result of the 1996 refinancing of Ventura Landing
Apartments and Village Green Apartments and the December 1999 financing of
West Chase Apartments, each property makes monthly deposits to establish
and maintain a replacement reserve designated for repairs and replacements
at the properties. At December 31, 1999, this reserve totaled approximately
$119,000.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Loan Costs: Loan costs of approximately $243,000, less accumulated amortization
of approximately $97,000, are included in other assets and are being amortized
on a straight-line basis over the life of the loans.
Tenant Security Deposits: The Partnership requires security deposits from
lessees for the duration of the lease and such deposits are included in
receivables and deposits. Deposits are refunded when the tenant vacates,
provided the tenant has not damaged its space and is current on its rental
payments.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.
Segment Reporting: Statement of Financial Standards ("SFAS") No. 131, Disclosure
about Segments of an Enterprise and Related Information ("Statement 131")
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. See "Note I"
for required disclosure.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $57,000 and $53,000 for the years ended
December 31, 1999 and 1998, respectively were charged to operating expense as
incurred.
Reclassification: Certain reclassifications have been made to the 1998
information to conform to the 1999 presentation.
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 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 - Discontinued Segment
On July 8, 1999, Professional Plaza, located in Salt Lake City, Utah, was sold
to an unaffiliated third party for $3,600,000. After payment of closing
expenses, the net proceeds received by the Partnership were approximately
$3,397,000. The sale of the property resulted in a gain on sale of discontinued
operations of approximately $2,132,000.
Professional Plaza was the only commercial property owned by the Partnership and
represented one segment of the Partnership's operations. Due to the sale of this
property, the results of the commercial segment have been shown as income from
discontinued operations and gain on sale of discontinued operations. Revenues of
this property were approximately $412,000 and $940,000 for 1999 and 1998,
respectively. Income from discontinued operations were approximately $167,000
and $432,000 for 1999 and 1998, respectively.
<PAGE>
Note D - 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 ("Partnership Agreement") provides for
payments to affiliates of the General Partner for property management services
based on a percentage of revenue; for a partnership management fee equal to 9%
of the total distributions made to limited partners from cash flow from
operations; and for reimbursements of certain expenses incurred by affiliates of
the General Partner on behalf of the Partnership.
The following amounts were paid or accrued to the General Partner or affiliates
during each of the years ended December 31, 1999 and 1998, respectively:
1999 1998
(in thousands)
Property management fees (included in operating expenses
and income from discounted operations) $ 153 $ 180
Reimbursement for services of affiliates (included in
investment properties and general and administrative
expenses) 129 147
Partnership management fees (included in general and
administrative expenses) 88 --
Real estate brokerage commission (included in gain on sale
of discontinued operations) 108 --
Loan costs (included in other assets) 12 --
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of Registrant's
residential properties as compensation for providing property management
services. The Registrant paid to such affiliates approximately $153,000 and
$146,000 for the years ended December 31, 1999 and 1998, respectively. During
the nine months ended September 30, 1998, affiliates of the General Partner were
entitled to varying percentages of gross receipts from the Registrant's
commercial property as compensation for providing property management services.
These services were performed by affiliates of the General Partner during the
nine months ended September 30, 1998 and were approximately $34,000. Effective
October 1, 1998 (the effective date of the Insignia Merger (See "Note B")),
these services for the commercial property were provided by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $129,000 and $147,000 for the
years ended December 31, 1999 and 1998, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow from operations to be paid to the General
Partner for executive and administrative management services. Under this
provision of the Partnership Agreement, a fee of approximately $88,000 was paid
to the General Partner during the year ended December 31, 1999. No similar
management fee was paid to the General Partner during the corresponding period
in 1998.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a commission equal to 3% of the aggregate disposition price of sold
properties. The Partnership paid a commission of $108,000 to the General Partner
related to the sale of Professional Plaza in 1999. This amount is subordinate to
the limited partners receiving their original capital contributions plus a
cumulative preferred return of 6% per annum of their adjusted capital
investment, as defined in the Partnership Agreement. If the limited partners
have not received these returns when the Partnership terminates, the General
Partner will return this amount to the Partnership.
In connection with the financing of West Chase Apartments in December 1999, the
Partnership paid a brokerage fee of approximately $12,000 to an affiliate. The
brokerage fee is included in "Other Assets" and is being amortized on a
straight-line basis over the life of the loan.
Additionally, the Partnership paid approximately $18,000 during the nine months
ended September 30, 1998, to an affiliate of the General Partner for lease
commissions at the Partnership's commercial property. These lease commissions
were included in other assets and were amortized over the terms of the
respective leases. Effective October 1, 1998, lease commissions were paid to an
unrelated party.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 72,484.5
units of limited partnership units in the Partnership representing 45.708% of
the outstanding units. 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. 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 E - Distributions
During the year ended December 31, 1999, the Partnership distributed
approximately $6,252,000 (approximately $6,215,000 to the limited partners or
$39.19 per limited partnership unit), of which approximately $928,000
(approximately $891,000 to the limited partners or $5.62 per limited partnership
unit) was attributable to cash flow from operations. Approximately $1,826,000
($11.51 per limited partnership unit) represented a return of capital and
approximately $3,498,000 ($22.06 per limited partnership unit) represented sale
proceeds from the sale of Professional Plaza both of which were distributed
entirely to the Limited Partners. No distributions were paid during the year
ended December 31, 1998. Subsequent to the Partnership's fiscal year end, a
distribution of approximately $650,000 ($4.10 per limited partnership unit) was
paid to the limited partners from financing proceeds on West Chase Apartments.
<PAGE>
Note F - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31 Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Ventura Landing Apartments $2,200 $ 13 7.33% 11/03 $2,200
Village Green Apartments 2,000 12 7.33% 11/03 2,000
West Chase Apartments 1,150 10 7.87% 12/19 --
Total $5,350 $ 35 $4,200
</TABLE>
On December 1, 1999, the Partnership obtained financing on West Chase Apartments
in the amount of $1,150,000. The loan carries a stated interest rate of 7.87%
and matures on December 1, 2019. The Partnership received net proceeds from the
financing in the amount of approximately $1,124,000. The Partnership spent
approximately $29,000 on loan costs during the year ended December 31, 1999.
These loan costs are included in other assets on the consolidated balance sheet.
The mortgage notes payable are nonrecourse and are secured by pledge of the
Partnership's properties and by pledge of revenues from the respective rental
properties. Also, the loans require prepayment penalties if repaid prior to
maturity and prohibit resale of the properties subject to existing indebtedness.
Scheduled principal payments of the mortgage notes payable subsequent to
December 31, 1999 are as follows (in thousands):
2000 $ 23
2001 27
2002 29
2003 4,231
2004 34
Thereafter 1,006
$5,350
Note G - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (in thousands, except per unit data):
1999 1998
Net income as reported $2,563 $ 760
Add (deduct):
Deferred revenue and other
liabilities 17 1
Depreciation differences 21 52
Accrued expenses 20 22
Gain on sale of discontinued
operations (355) --
Other (17) (1)
Federal taxable income $2,249 $ 834
Federal taxable income per
limited partnership unit $13.61 $ 5.05
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net (liabilities) assets at December 31, 1999 (in
thousands):
Net liabilities as reported $ (290)
Differences in basis of assets and liabilities
Investment properties at cost 3,414
Accumulated depreciation (210)
Other assets and liabilities 341
Syndication costs 8,691
Net assets - tax basis $11,946
<PAGE>
Note H - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Ventura Landing $ 2,200 $ 282 $ 3,754 $ 1,470
Village Green 2,000 125 2,375 637
West Chase 1,150 100 1,702 682
Totals $ 5,350 $ 507 $ 7,831 $ 2,789
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Ventura Landing $ 282 $ 5,223 $ 5,505 $ 4,506 10/07/81 5-19
Village Green 125 3,012 3,137 1,502 12/20/91 3-15
West Chase 100 2,385 2,485 1,390 09/17/90 5-15
Totals $ 507 $10,620 $11,127 $ 7,398
</TABLE>
<PAGE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $14,589 $14,209
Property improvements 936 380
Sale of discontinued operations (4,398) --
Balance at end of year $11,127 $14,589
Accumulated Depreciation
Balance at beginning of year $10,089 $ 9,624
Additions charged to expense 468 465
Sale of discontinued operations (3,159) --
Balance at end of year $ 7,398 $10,089
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999 and 1998, is approximately $14,502,000 and $18,481,000,
respectively. The accumulated depreciation taken for Federal income tax purposes
at December 31, 1999 and 1998, is approximately $7,608,000 and $10,166,000,
respectively.
Note I - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership had two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of three apartment complexes, one each in Orlando, Florida; Altamonte Springs,
Florida; and Lexington, Kentucky. The Partnership rents apartment units to
tenants for terms that are typically twelve months or less. On July 8, 1999, the
commercial property was sold to an unrelated party. Therefore, the commercial
segment is reflected as discontinued operations (see "Note C" for further
discussion regarding the sale).
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 summary of significant accounting policies.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segments are investment properties that offer
different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.
Segment information for the years 1999 and 1998 is shown in the tables below (in
thousands). The "Other" Column includes Partnership administration related items
and income and expense not allocated to the reportable segment.
<TABLE>
<CAPTION>
1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $2,865 $ -- $ -- $2,865
Other income 184 -- 60 244
Interest expense 339 -- -- 339
Depreciation 468 -- -- 468
General and administrative
expenses -- -- 360 360
Income from discontinued
operations -- 167 -- 167
Gain on sale of discontinued
operations -- 2,132 -- 2,132
Segment profit (loss) 564 2,299 (300) 2,563
Total assets 4,475 21 1,224 5,720
Capital expenditures for
investment properties 894 42 -- 936
</TABLE>
<TABLE>
<CAPTION>
1998 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $2,733 $ -- $ -- $2,733
Other income 158 -- 92 250
Interest expense 338 -- -- 338
Depreciation 417 -- -- 417
General and administrative
expense -- -- 263 263
Income from discontinued
operations -- 432 -- 432
Segment profit (loss) 499 432 (171) 760
Total assets 3,978 1,484 2,503 7,965
Capital expenditures for
investment properties 323 57 -- 380
</TABLE>
Note J - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek monetary damages and equitable relief, including judicial dissolution of
the Partnership. On June 25, 1998, the General Partner filed a motion seeking
dismissal of the action. In lieu of responding to the motion, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement, settling claims, subject to
final court approval, on behalf of the Partnership and all limited partners who
own units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note K - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $29,000 ($0.18 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
<PAGE>
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The Registrant has no officers or director. The General Partner of the
Registrant is ConCap Equities, Inc. The names and ages of, as well as the
positions and offices held by, the executive officers and directors of the
General Partner are set forth below. There are no family relationships between
or among any officers or directors.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989
to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D.
from Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 4 with respect to its
acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
Except as noted below, no person or entity was known by the Registrant to be the
beneficial owner of more than 5% of the Limited Partnership Units of the
Registrant as of December 31, 1999.
Entity Number of Units Percentage
Cooper River Properties, LLC
(an affiliate of AIMCO) 17,056.00 10.76%
Insignia Properties LP
(an affiliate of AIMCO) 39,831.50 25.12%
AIMCO Properties LP
(an affiliate of AIMCO) 15,597.00 9.83%
Cooper River Properties LLC and Insignia Properties LP are indirectly ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, South
Carolina 29602. AIMCO Properties is indirectly ultimately controlled by AIMCO
and its business address is 2000 South Colorado Boulevard, Denver, Colorado
80222.
No director or officer of the General Partner owns any Units.
Item 12. Certain Relationships and Related Transactions
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 ("Partnership Agreement") provides for
payments to affiliates of the General Partner for property management services
based on a percentage of revenue; for a partnership management fee equal to 9%
of the total distributions made to limited partners from cash flow from
operations; and for reimbursements of certain expenses incurred by affiliates of
the General Partner on behalf of the Partnership.
The following amounts were paid or accrued to the General Partner or affiliates
during each of the years ended December 31, 1999 and 1998, respectively:
1999 1998
(in thousands)
Property management fees $ 153 $ 180
Reimbursement for services of affiliates 129 147
Partnership management fees 88 --
Real estate brokerage commission 108 --
Loan costs 12 --
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from all of Registrant's
residential properties as compensation for providing property management
services. The Registrant paid to such affiliates approximately $153,000 and
$146,000 for the years ended December 31, 1999 and 1998, respectively. During
the nine months ended September 30, 1998, affiliates of the General Partner were
entitled to varying percentages of gross receipts from the Registrant's
commercial property as compensation for providing property management services.
These services were performed by affiliates of the General Partner during the
nine months ended September 30, 1998 and were approximately $34,000. Effective
October 1, 1998 (the effective date of the Insignia Merger, see "Note B"), these
services for the commercial property were provided by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $129,000 and $147,000 for the
year ended December 31, 1999 and 1998, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow from operations to be paid to the General
Partner for executive and administrative management services. Under this
provision of the Partnership Agreement, a fee of approximately $88,000 was paid
to the General Partner during the year ended December 31, 1999. No similar
management fee was paid to the General Partner during the corresponding period
in 1998.
Pursuant to the Partnership Agreement, the General Partner is entitled to
receive a commission equal to 3% of the aggregate disposition price of sold
properties. The Partnership paid a commission of $108,000 to the General Partner
related to the sale of Professional Plaza in 1999. This amount is subordinate to
the limited partners receiving their original capital contributions plus a
cumulative preferred return of 6% per annum of their adjusted capital
investment, as defined in the Partnership Agreement. If the limited partners
have not received these returns when the Partnership terminates, the General
Partner will return this amount to the Partnership.
In connection with the financing of West Chase Apartments in December 1999, the
Partnership paid a brokerage fee of approximately $12,000 to an affiliate. The
brokerage fee is included in "Other Assets" and is being amortized on a
straight-line basis over the life of the loan.
Additionally, the Partnership paid approximately $18,000 during the nine months
ended September 30, 1998, to an affiliate of the General Partner for lease
commissions at the Partnership's commercial property. These lease commissions
were included in other assets and were amortized over the terms of the
respective leases. Effective October 1, 1998, lease commissions were paid to an
unrelated party.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the fiscal years ended December 31, 1999 and 1998. As a
result of these tender offers, AIMCO and its affiliates currently own 72,484.5
units of limited partnership units in the Partnership representing 45.708% of
the outstanding units. 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. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. 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.
<PAGE>
Item 13. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the fourth quarter of 1999.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL PROPERTIES III
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:
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the
date indicated.
/s/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
EXHIBIT INDEX
Exhibit Number
2.1 Agreement and Plan of Merger, dated as of October 1, 1998 by
and between AIMCO and IPT; incorporated by reference to
Exhibit 2.1 filed with Registrant's Current Report on Form 8-K
dated October 1, 1998.
3 Certificate of Limited Partnership, as amended to date.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.1 Property Management Agreement No. 104 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.2 Property Management Agreement No. 204 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.3 Property Management Agreement No. 305 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.4 Property Management Agreement No., 402 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.5 Bill of Sale and Assignment dated October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.6 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCEC and ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).
10.7 Assignment and Agreement as to Certain Property Management
Services dated October 23, 1990, by and between CCMLP and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.8 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and The Hayman Group (100 Series of Property
Management Contracts), (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.9 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts) (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.10 Assignment and Assumption Agreement dated October 23, 1990,
by and between CCMLP and Metro ConCap, Inc. (300 Series of
Property Management Contracts). (Incorporated by reference
to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.11 Assignment and Assumption Agreement dated October 23, 1990, by
and between R&B Realty Group (400 Series of Property
Management Contracts). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.12 Assignment and Assumption Agreement dated August 1, 1991,
by and between R & B Arizona Management Company, Inc. and R
& B Apartment Management Company, Inc. (Incorporated by
reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.13 Assignment and Assumption Agreement dated September 1,
1991, by and between the Partnership and CCP III
Associates, Ltd. (Property Agreement No. 305).
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.14 Assignment and Assumption Agreement dated September 1,
1991, by and between the Partnership and CCP III
Associates, Ltd. (Property Agreement No. 104).
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.15 Assignment and Assumption Agreement dated September 1,
1991, by and between the Partnership and CCP III
Associates, Ltd. (Property Agreement No. 204).
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.16 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and
Horn-Barlow Companies (the "Horn-Barlow Construction
Management Agreement").
10.17 Assignment and Assumption Agreement dated September 1,
1991, by and between CCP III Associates, Ltd. (Horn-Barlow
Construction Management Agreement). (Incorporated by
reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.18 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and Metro
ConCap, Inc. (the "Metro Construction Management
Agreement"). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.19 Assignment and Assumption Agreement dated September 1,
1991, by and between the Partnership and CCP III
Associates, Ltd. (Metro Construction Management Agreement).
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.20 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The Hayman
Company (the "Hayman Construction Management Agreement").
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.21 Assignment and Assumption Agreement dated September 1,
1991, by and between the Partnership and CCP III
Associates, Ltd. (Hayman Construction Management
Agreement). (Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31, 1991).
10.22 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and R & B
Apartment Management Company (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.23 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.24 Assignment and Assumption Agreement (Investor Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Services Company. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1990).
10.25 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("RSI") to the Partnership regarding the change
in ownership and dissolution of ConCap Services Company
whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.26 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.27 Assignment and Assumption Agreement (Financial Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.28 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI assumed the Financial
Services Agreement. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991).
10.29 Property Management Agreement No. 416 dated May 13, 1993,
by and between the Partnership and Coventry Properties,
Inc. (Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993).
10.30 Assignment and Assumption Agreement (Property Management
Agreement No. 416) dated May 13, 1993, by and between
Coventry Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.31 Assignment and Agreement as to Certain Property Management
Services dated May 13, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.32 Property Management Agreement No, 418 dated May 13, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.33 Assignment and Assumption Agreement (Property Management
Agreement No. 418) dated May 13, 1993, by and between
Coventry Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.34 Assignment and Agreement as to Certain Property Management
Services dated May 13, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.35 Property Management Agreement No, 426 dated June 30, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.36 Assignment and Assumption Agreement (Property Management
Agreement No. 426) dated June 30, 1993, by and between
Coventry Properties, Inc., R&B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.37 Assignment and Agreement as to Certain Property Management
Services dated June 30, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.38 Property Management Agreement No. 510 dated June 1, 1993,
by and between the Partnership and Coventry Properties,
Inc.
10.39 Property Management Agreement No. 510A dated August 18,
1993, by and between the Partnership and Coventry
Properties, Inc.
10.40 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
10.41 Property Management Agreement No. 511 dated June 1, 1993,
by and between the Partnership and Coventry Properties, Inc.
10.42 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
10.43 Property Management Agreement No. 512 dated June 1, 1993,
by and between the Partnership and Coventry Properties, Inc.
10.44 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
10.45 Stock and Asset Purchase Agreement, dated December 8, 1994
(the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"),
Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII
Realty"), and certain other parties. (Incorporated by
reference to Form 8-K dated December 8, 1994).
10.46 Exercise of the Option (as defined in the Gordon Agreement),
dated December 8, 1994, between MAE-ICC and Gordon.
(Incorporated by reference to Form 8-K dated December 8,
1994).
10.47 Multifamily Noted dated November 14, 1996 between CCP III,
a California limited partnership, and Lehman Brothers
Holding, Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.48 Multifamily Noted dated November 14, 1996 between CCP III,
a California limited partnership, and Lehman Brothers
Holding, Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.49 Purchase and Sale Contract between Registrant and Goodman
Financial Services, Inc., a Washington Corporation, dated
May 5, 1999 (sale of Professional Plaza - incorporated by
reference to Form 8-K dated July 8, 1999).
10.50 Multifamily Note dated December 1, 1999 between CCP III, a
California limited partnership, and GMAC Commercial Mortgage
Corporation (West Chase Apartments note is filed with 10-KSB
dated December 31, 1999).
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note 1 of
Item 8 - Financial Statements of this Form 10-K).
16.1 Letter, dated August 12, 1992, from Ernst & Young to the
Securities and Exchange Commission regarding change in
certifying accountant. (Incorporated by reference to Form 8-K
dated August 6, 1992).
16.2 Letter dated May 9, 1995 from the Registrant's former
independent accountant regarding its concurrence with the
statements made by the Registrant regarding a change in the
certifying accountant. (Incorporated by reference to Form 8-K
dated May 3, 1995).
19.1 Modified First Amended Plan of Reorganization for CCP/III
Associates, Ltd., dated and filed March 24, 1992, in the
United States Bankruptcy Court for the Northern District of
Texas, Dallas Division. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1992).
19.2 Modified First Amended Disclosure Statement for the
Modified First Amended Plan of Reorganization for CCP/III
Associates, Ltd., dated and filed March 24, 1992, in the
United States Bankruptcy Court for the Northern District of
Texas, Dallas Division. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1992).
<PAGE>
19.3 First Modification to Modified First Amended Plan of
Reorganization for CCP/III Associates, Inc., dated and filed
April 22, 1992, in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1992).
19.4 Second Modification to Modified First Amended Plan of
Reorganization for CCP/III Associates, Inc., dated and filed
April 29, 1992, in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1992).
19.5 Third Modification to Modified First Amended Plan of
Reorganization for CCP/III Associates, Inc., dated and filed
April 29, 1992, in the United States Bankruptcy Court for the
Northern District of Texas, Dallas Division. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1992).
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule.
<PAGE>
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
ConCap Equities, Inc.
General Partner of Consolidated Capital Properties III
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note K of Notes to the Consolidated Financial Statements of Consolidated Capital
Properties III included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method, which based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
<PAGE>
Exhibit 10.50
FHLMC Loan No. 002724642
MULTIFAMILY NOTE
(MULTISTATE)
US $1,150,000.00 As of December 31, 1999
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of One Million One
Hundred Fifty Thousand and 00/100 Dollars (US $1,150,000.00), with interest on
the unpaid principal balance at the annual rate of Seven and Eight Hundred
Seventy Thousandths percent (7.870%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Nine Thousand Five Hundred Twenty-Six and 23/100 Dollars (US
$9,526.23), shall be payable on the first day of each month beginning on January
1, 2000, until the entire unpaid principal balance evidenced by this Note is
fully paid. Any accrued interest remaining past due for 30 days or more shall be
added to and become part of the unpaid principal balance and shall bear interest
at the rate or rates specified in this Note, and any reference below to "accrued
interest" shall refer to accrued interest which has not become part of the
unpaid principal balance. Any remaining principal and interest shall be due and
payable on December 1, 2019 or on any earlier date on which the unpaid principal
balance of this Note becomes due and payable, by acceleration or otherwise (the
"Maturity Date"). The unpaid principal balance shall continue to bear interest
after the Maturity Date at the Default Rate set forth in this Note until and
including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
X Schedule A Prepayment Premium (required)
X Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
CONSOLIDATED CAPITAL PROPERTIES III, a
California limited partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By:
Name: Patti K. Fielding
Title: Vice President
94-2653686
Borrower's Social Security/Employer ID Number
<PAGE>
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS ____ DAY OF NOVEMBER, 1999.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:
Donald W. Marshall
Vice President
<PAGE>
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.250% U.S. Treasury Security
due February 1, 2016, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
<PAGE>
Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
<PAGE>
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents in accordance with the terms of the Security Instrument.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Properties III 1999 Fourth Quarter 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000317331
<NAME> CONSOLIDATED CAPITAL PROPERTIES III
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,460
<SECURITIES> 0
<RECEIVABLES> 182
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 11,127
<DEPRECIATION> (7,398)
<TOTAL-ASSETS> 5,720
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 5,350
0
0
<COMMON> 0
<OTHER-SE> (290)
<TOTAL-LIABILITY-AND-EQUITY> 5,720
<SALES> 0
<TOTAL-REVENUES> 3,109
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,845
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 339
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,563
<EPS-BASIC> 15.51 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
