UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: November 30, 1995
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact name of registrant as specified in its charter)
CALIFORNIA 0-10831 94-2744492
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification
Number)
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29602
(Address of Principal Executive Office)
Registrant's telephone number, including area code (864) 239-1000
Item 2. Acquisition or Disposition of Assets
On November 30, 1995, New Carlton House Partners, Ltd., a
Pennsylvania limited partnership ("NCHP"), owner of a multi-use
apartment/commercial building in Philadelphia, Pennsylvania known as "The
Carlton House", Consolidated Capital Institutional Properties, a California
limited public partnership ("CCIP"), Philly Associates, Inc., a Texas
Corporation ("Philly"), and Kennedy Boulevard Associates I, L.P., a Pennsylvania
limited partnership ("KBA-I, L.P.") (an affiliate of CCIP) entered into a
consensual Transfer Agreement whereby certain mortgage notes held by CCEP and
Philly that are secured by The Carlton House were assigned to KBA-I, L.P. As
NCHP is unable to repay the debt, the parties agreed that in order to avoid the
additional costs and expenses of litigation or a judicial foreclosure, that NCHP
transfer Carlton House to KBA-I, L.P. by a deed in lieu of foreclosure in full
satisfaction of its obligations on the mortgages assigned to KBA-I, L.P. As an
additional matter, the transfer of the Carlton House to KBA-I, L.P. shall be in
satisfaction of a portion of the amounts owed by CCEP to CCIP under the Master
Loan Agreement.
Item 7. Financial Statements and Exhibits
(b). Pro forma financial information
The Carlton House was transferred to Kennedy Boulevard Associates I,
Limited Partnership (KBA-I L.P.), an affiliate of Consolidated Capital
Institutional Properties ("CCIP"), by a deed in lieu of foreclosure on November
30, 1995. The following unaudited condensed balance sheet of CCIP assumes the
property had been transferred and deeded in lieu of foreclosure to KBA-I, L.P.
at January 1, 1994.
<TABLE>
<CAPTION>
Pro Forma Balance Sheet
(unaudited)
(in thousands)
September 30, September 30,
1995 Pro Forma 1995
As Reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 5,433 $ 1,865 (1) $ 7,298
Securities available for sale 5,264 -- 5,264
Prepaid assets and other assets 178 644 (1) 822
Net investment in master loan
to affiliate 92,319 (20,685) (1) 71,634
Land 1,053 3,660 (1) 4,713
Building & related personal
property, net 3,415 15,183 (1) 18,598
Total assets $ 107,662 $ 667 $ 108,329
Accounts payable and accrued
expenses 95 578 (1) 673
Distributions payable 324 -- 324
Total liabilities 419 578 997
Partners' capital 107,243 89 (1) 107,332
Total liabilities and partners'
capital $ 107,662 $ 667 $ 108,329
<FN>
(1) Represents pro forma adjustments to reflect the addition of assets and
liabilities related to the transfer and by deed in lieu of foreclosure of The
Carlton House.
</TABLE>
The following pro forma statement of operations assumes The Carlton House had
been transferred and deeded in lieu of foreclosure as of January 1, 1994.
<TABLE>
<CAPTION>
Pro-Forma Statement of Operations
(Unaudited)
(in thousands, except for unit data)
For the year ended
December 31, 1994
Pro Forma
As Reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
Rental income $ 1,312 $ 4,831 (2) $ 6,143
Investment income on investment
in Master Loan to affiliate 2,448 -- 2,448
Interest and dividend income
on investments 674 27 (2) 701
Total revenues 4,434 4,858 9,292
Property operations 599 4,108 (2) 4,707
Depreciation 417 885 (2) 1,302
Administrative 480 81 (2) 561
Total expenses 1,496 5,074 6,570
Other income 56 -- 56
Net income $ 2,994 $ (216) $ 2,778
Net income per limited
partnership unit $ 14.90 $ (1.08) $ 13.82
Weighted average number of
units 199,045 199,045
<FN>
(2) Represents pro forma adjustments to add revenues and expenses related to
The Carlton House as a result of the transfer by deed in lieu of foreclosure to
KBA-I, L.P.
</TABLE>
The following pro forma statement of operations assumes The Carlton House had
been transferred and deeded in lieu of foreclosure as of January 1, 1994.
<TABLE>
<CAPTION>
Pro-Forma Statement of Operations
(Unaudited)
(in thousands, except for unit data)
For the nine months ended
September 30, 1995
Pro Forma
As Reported Adjustments Pro Forma
<S> <C> <C> <C> <C>
Rental income $ 1,117 $ 4,502 (2) $ 5,619
Investment income on investment
in Master Loan to affiliate 2,503 -- 2,503
Interest and dividend income
on investments 364 22 (2) 386
Reduction of allowance for
possible losses 533 533
Total revenues 4,517 4,524 9,041
Property operations 528 3,358 (2) 3,886
Depreciation 316 763 (2) 1,079
Administrative 607 98 (2) 705
Total expenses 1,451 4,219 5,670
Casualty gain 9 -- 9
Net income $ 3,075 $ 305 $ 3,380
Net income per limited
partnership unit $ 15.29 $ 1.52 $ 16.81
Weighted average number of
units 199,052 199,052
<FN>
(2) Represents pro forma adjustments to add revenues and expenses related to
The Carlton House as a result of the transfer by deed in lieu of foreclosure to
KBA-I, L.P.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
By: ConCap Equities, Inc.
General Partner
By: /s/ Carroll D. Vinson
Carroll D. Vinson
President
Date: December 21, 1995
EXHIBITS
EXHIBIT
10.17 Consensual Transfer Agreement of The Carlton House
10.18 Deed in Lieu of Foreclosure of New Carlton House
Partners
EXHIBIT 10.17
CONSENSUAL TRANSFER AGREEMENT
This Consensual Transfer Agreement is entered into as of November 30,
1995, by and among New Carlton House Partners, Ltd., a Pennsylvania limited
partnership ("NCHP"), Consolidated Capital Equity Partners, L.P., a California
limited partnership ("CCEP"), Consolidated Capital Institutional Properties, a
California limited public partnership ("CCIP"), Philly Associates, Inc., a Texas
corporation ("Philly"), and Kennedy Boulevard Associates I, L.P., a Pennsylvania
limited partnership ("KBA").
RECITALS
A. NCHP is the owner of a multi-use apartment/commercial building
in Philadelphia, Pennsylvania, called The Carlton House, together with the
leasehold interests, air rights and easements and rights appurtenant thereto
(the "Property"). The Property, together with various other assets and contract
rights related to or connected with the Property, are the only substantial
assets of NCHP.
B. NCHP was indebted to CCEP pursuant to an Amended Promissory
Note Secured by Mortgage, dated June 30, 1989, in the principal amount of
$31,500,000 (the "First Mortgage Note"). The First Mortgage Note was secured
by, inter alia, the Amended and Restated Mortgage, Assignment of Rents and
Security Agreement, dated June 30, 1989, and various other agreements (the
"First Mortgage Documents"). The present balance on the First Mortgage Note,
including principal and accrued and unpaid interest, exceeds $47,000,000.
C. CCEP is indebted to CCIP pursuant to a promissory note having
an assigned principal amount of $164,938,112.00 and dated November 15, 1990 (the
"EP/IP Note"), and CCEP and CCIP have entered into a certain Master Loan
Agreement (the "Master Loan Agreement") and a number of mortgages, security
agreements, and other agreements to secure the obligations of CCEP to CCIP.
Pursuant to these agreements, CCEP has granted liens or security interests in
substantially all of its assets to CCIP. In that regard, CCEP has collaterally
assigned the First Mortgage Note and the First Mortgage Documents to CCIP as
security for various obligations owed by CCEP to CCIP.
D. NCHP was indebted to Skokie Federal Savings & Loan Association
("Skokie") pursuant to the Amended and Restated Note, dated June 30, 1989, in
the principal amount of $19,350,000 (the "Second Mortgage Note") and Class 3
Note in the principal amount of $1,000,000 (the "Third Mortgage Note"). The
Second Mortgage Note and the Third Mortgage Note were secured by, inter alia,
the Amended and Restated Second Mortgage, dated June 30, 1989, and various other
agreements (the "Second Mortgage Documents"). The present balance on the Second
Mortgage Note and the Third Mortgage Note, including principal and accrued and
unpaid interest, exceeds $20,000,000.
E. The Resolution Trust Company ("RTC") subsequently became the
successor-in-interest to Skokie and became the assignee and holder of the Second
Mortgage Note and the Third Mortgage Note as well as the Second Mortgage
Documents. On or about September 29, 1993, the RTC sold and assigned the Second
Mortgage Note and the Third Mortgage Note, and the Second Mortgage Documents, to
Philly.
F. As part of these transactions, CCEP will assign the First
Mortgage Note and the First Mortgage Documents to KBA, and Philly will assign
the Second Mortgage Note, the Third Mortgage Note, and the Second Mortgage
Documents to KBA. As a result of these assignments, KBA will be the holder of
the First Mortgage Note, the Second Mortgage Note and the Third Mortgage Note
(collectively, the "Notes"), and all the security given for such Notes under the
First Mortgage Documents and the Second Mortgage Documents.
G. On or about September 3, 1992, the predecessor of NCHP entered
into a Restructure Agreement with CCEP (the "Restructure Agreement"). The
Restructure Agreement contained various provisions relating to the obligations
of NCHP on the First Mortgage Note, including a conditional forbearance on
foreclosure by CCEP until April 1, 1995. The parties to the Restructure
Agreement recognized that unless NCHP paid its obligations by April 1, 1995,
CCEP would take some form of action to enforce payment. This Consensual
Transfer Agreement constitutes an action that was within the contemplation of
the Restructure Agreement.
H. The First Mortgage Note was due and payable in full on April
1, 1995, and paragraph 7(a) provides for a thirty day grace period, or until May
1, 1995. The First Mortgage Note was not paid in full on May 1, 1995, and NCHP
does not have the funds to pay such Note. Because of such nonpayment, CCEP
declared the existence of an event of default under the First Mortgage Note. In
addition, there are payment defaults on the Second Mortgage Note and the Third
Mortgage Note, and such defaults have been in existence for several years. NCHP
has insufficient funds to make any payments on the Second Mortgage Note and
Third Mortgage Note.
I. The parties have discussed various options for satisfying
NCHP's obligations on the Notes, the present balance of which now exceeds
$67,000,000. However, the cash flow from the Property is insufficient even to
pay current interest on the Notes and, as described below, there is a need for
funds to make capital expenditures for improvements. NCHP has no source of
funds to pay such interest or capital expenditures.
J. The parties have obtained an appraisal which values the
Property at approximately $20 million, or less than one-third of the total
indebtedness on the Notes. In addition, the parties believe that, to maintain
and enhance the competitive position of the Property and to maximize the future
cash flow, it is necessary to make a number of capital expenditures in the
amount of approximately $10,000,000. The parties do not believe that there is
any significant possibility that, even if such capital expenditures are made,
the Property will appreciate in the foreseeable future to a sufficient extent to
satisfy the debt owed on the Notes.
K. Under these circumstances, the parties have agreed that the
most reasonable solution to avoid the costs and expenses of litigation or a
judicial foreclosure proceeding is for NCHP to transfer the Property to KBA by a
deed in lieu of foreclosure in full satisfaction of its obligations on the
Notes. In addition, NCHP will sell, transfer and assign to KBA the rights to
various personal property assets, contract rights, leasehold interests, permits
and licenses connected with the Property. Such transfers will be in full
satisfaction of all obligations of NCHP under the Notes. In addition, KBA will
assume specified obligations to vendors and suppliers connected with the
Property and obligations under contracts assumed in connection with the
Property, and will indemnify NCHP from such liabilities. Finally, NCHP will
retain sufficient cash to wind up the partnership and satisfy its record keeping
and reporting obligations.
L. As an additional matter, the transfer of the Property to KBA
shall be in satisfaction of a portion of the amounts owed by CCEP to CCIP under
the EP/IP Note and the Master Loan Agreement. However, except as specifically
provided, these transfers and transactions are not intended to supersede or
modify the obligations of CCEP to CCIP under the Master Loan Agreement and the
EP/IP Note, security documents, and other agreements executed thereunder.
NOW, THEREFORE, based on the foregoing Recitals, which are
incorporated into this Agreement by reference, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
AGREEMENT
1. Closing Date. The transfers and transactions described herein
shall take place on or about November 30, 1995, or such other date as may be
agreed to by the parties (the "Closing Date").
2. Agreements. On the Closing Date, the parties shall enter into
the following agreements and deliver the following documents:
(a) Deed in Lieu.
NCHP shall execute a deed in lieu of foreclosure (the "Deed in Lieu"), in
the form of Exhibit A, pursuant to which NCHP shall convey title to the
Property in lieu of foreclosure to KBA.
(b) Assignment of Leases. NCHP shall execute an assignment
of leases, rents and security deposits (the "Assignment of Leases"), in the form
of Exhibit B, pursuant to which NCHP shall assign the leases in the property
(together with the tenant security deposits) to KBA. The Assignment of Leases
shall specifically provide for an assumption by KBA of all obligations of NCHP
under such leases.
(c) Bill of Sale. NCHP shall execute a bill of sale (the
"Bill of Sale"), in the form of Exhibit C, pursuant to which NCHP shall sell,
transfer and assign to KBA all personal property connected with or related to
the ownership or operation of the Property. Such personal property shall
include, but is not limited to, (i) all funds held by NCHP relating to the
Property, (ii) all records relating to the operation of the Property including
plans, specifications, as-built drawings, blueprints, proposed modifications or
changes, architect's drawings, construction proposals, construction contracts,
written estimates for construction or improvements, (iii) all documents and
records relating to tenants including the rent roll and leases, (iv) all
financial records and documents relating to the Property, including records
relating to income and expenses, obligations incurred in connection with the
Property and amounts owed to suppliers or vendors, (v) all documents relating to
property tax obligations including bills, assessments and proposed assessments,
and any proceedings to alter assessments, (vi) all inventory, computer
equipment, telephone systems owned by NCHP and associated with any portion of
the Property or the operation thereof and any other communications equipment
used on or in connection with the Property; (vii) all tangible and intangible
property including customer lists, marketing materials, computer programs, trade
secrets, goodwill, warranties, guaranties, maintenance records, security codes,
lock combinations, keys; (viii) general intangibles and other intellectual and
proprietary rights, (ix) all fixtures; (x) all utility deposits, current utility
bills and the agreements relating thereto, and all escrow funds or deposits
including those relating to taxes and insurance, (xi) all rights to payment
including proceeds of insurance policies, refunds on payments of fees and
property taxes, amounts due under contracts and leases, and amounts due on
account of operations on or connected with the Property, and (xii) all rights
and documents relating to permits, zoning issues and variances, licenses,
parking, environmental matters and any administrative or regulatory proceedings.
(d) Assignment of Contracts. NCHP shall execute an
assignment of contracts, licenses and permits ("Assignment of Contracts"), in
the form of Exhibit D, pursuant to which NCHP shall assign all rights in those
contracts, licenses and permits relating to the Property to KBA. The Assignment
of Contracts shall specifically provide for an assumption by KBA of obligations
of NCHP under such assigned contracts.
(e) Assets. The term "Assets" shall refer to all personal
property assets to be conveyed under the foregoing paragraphs.
(f) Intent of Transfers; Cooperation. The parties intend
by this Consensual Transfer Agreement and by execution of the documents
described in paragraphs (a) through (d) hereof that, except as specifically set
forth in this Consensual Transfer Agreement, NCHP shall transfer, assign, sell
and convey to KBA all of the NCHP's right, title and interest in and to the
Property and Assets, however categorized or described, with the parties' intent
being to include all tangible and intangible assets of every kind located on or
used in connection with the Property (or the business conducted thereon). NCHP
agrees to cooperate fully with KBA, both before and after the Closing Date, in
KBA's efforts to complete the transfer of the Property and Assets to KBA and to
assist in an orderly transfer of the operation of the Property.
(g) CCEP/CCIP Transactions. CCEP, Philly, and CCIP shall
execute an agreement, in the form of Exhibit E, pursuant to which (i) CCEP
releases any interest it may have in the Property and Assets, and (ii) CCEP and
CCIP agree and acknowledge that the transfers and transactions herein shall be
deemed a partial repayment of obligations owed by CCEP to CCIP under the EP/IP
Note, in the amount of $19,250,000.
(h) Releases/Covenants Not to Sue. NCHP hereto shall
execute a general release in favor of CCEP, CCIP, Philly, and KBA and CCEP,
CCIP, Philly, and KBA shall execute a covenant not to sue in favor of NCHP, in
the form of Exhibit F.
3. Assumption of Debt/Indemnity.
(a) KBA hereby assumes (i) those existing or accrued
obligations and debts arising in the ordinary course from the operation of the
Property as are set forth on Exhibit G, (ii) those future obligations arising
from or connected with the operation of the Property, and (iii) those
obligations arising under the contracts and leases assigned under
paragraphs 2(b) and 2(d) of this Agreement. Except as specifically provided in
the foregoing sentence, KBA does not assume (A) any obligations of NCHP, the
predecessor of NCHP or any affiliates of NCHP, the limited partners of the
predecessor of NCHP (the "Old Limited Partners") or the general partners of the
predecessor of NCHP (the "Old General Partners") which CCEP did not assume under
the Restructure Agreement or as to which the Old General Partners were required
to indemnify and hold harmless the New General Partners and other partners
(including those set forth in section 1.7 of the Restructure Agreement), and
(B) obligations to repair the Property which were to be performed by the Old
General Partners under paragraphs 1.4(b)(iii), (iv) and (v) of the Restructure
Agreement. The predecessor of NCHP, the Old General Partners and Old Limited
Partners are referred to as the "Old Parties."
(b) KBA hereby agrees to pay all transfer taxes in
connection with the transfer of the Property to KBA pursuant to this Consensual
Transfer Agreement.
(c) KBA does not assume any obligations or liabilities of
the Old Parties, or NCHP or its general or limited partners, relating to the
operation of the partnership, or matters internal to the partnership including,
but not limited to, obligations or liabilities (i) relating to partnership
accounting, (ii) between and among partners, (iii) arising from rights of the
limited partners (if any) against the general partner whether relating to the
operation of the Property or otherwise, (iv) preparation of tax returns and,
(v) arising from dissolution of the partnership. KBA also does not assume any
obligation or liability arising from the conduct of any limited partner of
NCHP. Without limiting the foregoing two sentences and notwithstanding anything
else contained herein, KBA assumes no liability or obligation for and shall not
pay (A) any income tax liability of NCHP or its general or limited partners, or
the Old Parties, whether related to the transfers and transactions undertaken
hereunder or otherwise, including any income tax liability that may be imposed
on the partners of NCHP in connection with the transfers and transactions to be
undertaken hereunder, and (B) any incremental taxes or changes in tax attributes
incurred or suffered by NCHP or its general or limited partners, or the Old
Parties, as a result of the tax consequences of the transfers and transactions
to be undertaken hereunder, including those tax obligations or changes in tax
attributes which may result from any recapture of previous deductions and/or
discharge of indebtedness. Such income tax liabilities and changes in
attributes shall be the sole responsibility and obligation of NCHP and its
general and limited partners, and the Old Parties. The obligations or
liabilities not assumed hereunder shall include those arising both before and
after the Closing Date.
(d) KBA hereby agrees (i) to indemnify and hold NCHP
harmless against those specific liabilities and obligations assumed pursuant to
Exhibit G and subparagraph 3(a)(ii), and (ii) to such other indemnities as
provided in Exhibits B and D. KBA shall have no indemnity obligations except as
set forth in the foregoing sentence.
4. Transfers in Full Satisfaction of Notes.
(a) Full Sales/Actions. The transfers and transactions
described in sections 2 and 3 shall be in full and complete satisfaction of all
liability of NCHP under the Notes, as well as obligations under the First
Mortgage Documents and the Second Mortgage Documents. KBA agrees to accept such
transfers in exchange for the covenant not to sue included in Exhibit F. After
completion of the transactions herein, CCEP, CCIP and KBA agree and acknowledge
that NCHP shall have no obligation to them arising from or in connection with
the Notes, except as provided in paragraph 7(c) or otherwise in this Consensual
Transfer Agreement.
(b) Absolute Transfer. The transfer of the Property and
Assets shall be unconditional, immediate and absolute, and after the Closing
Date, NCHP shall have no right, title or interest of any kind whatsoever in or
to any of the Property and Assets, including without limitation any right of
redemption or other legal, beneficial or equitable interest, all of which shall
be negated automatically on the Closing Date. NCHP represents and warrants that
neither the Deed in Lieu nor the Bill of Sale is an equitable or other mortgage
or anything other than, respectively, a grant deed absolute and a bill of sale
absolute.
(c) Waiver. NCHP hereby forever waives and releases (to
the maximum extent permitted by law) any and all rights of redemption and legal,
beneficial, equitable or other rights, titles and interests, if any, which NCHP
might have or otherwise have had after the Closing Date in connection with any
of the Property and Assets including, without limitation, a waiver (to the
maximum extent permitted by law) by NCHP of any rights which it might otherwise
have had under the Uniform Commercial Code as adopted by and in force in the
Commonwealth of Pennsylvania. NCHP represents and warrants that it understands
the meaning and effect of the waivers contained in this section.
(d) CCEP/CCIP Transactions. Except as specifically
provided herein or in Exhibit E, the transfers hereunder shall have no effect on
the obligations of CCEP to CCIP, and shall not affect the Master Loan Agreement,
and the EP/IP Note, security documents, and other agreements executed
thereunder.
5. Representations and Warranties. The parties hereto make the
following representations and warranties:
(a) Organization. Each of the parties hereto represents
and warrants that it (i) is a limited partnership or corporation, as identified
in the introduction to this Consensual Transfer Agreement, organized under the
laws of the state set forth in said introduction; (ii) is duly qualified to
transact business in each jurisdiction in which the character of its properties
or the nature of its activities makes such qualification necessary; and
(iii) has full power, authority and legal right to execute, deliver and perform
this Consensual Transfer Agreement and the Transfer Documents (as defined
below), and to carry out the transfers and transactions as provided herein.
(b) Authorization. Each of the parties hereto represents
and warrants that its execution and delivery of this Consensual Transfer
Agreement and the Transfer Documents, and the consummation of the transfers and
transactions contemplated herein, have each been duly authorized by all
necessary partnership or corporate action, as the case may be, and require no
registrations with or approvals of any person or entity not heretofore obtained.
(c) Finder's Fee. Each of the parties hereto represents
and warrants that it has not entered into any agreement which might require the
payment of a finder's fee, broker's commission, or other compensation in
connection with the transfers or transactions contemplated herein. NCHP
represents and warrants that it has not entered into any transaction for the
listing and/or sale of the Property with any real estate broker or any person or
entity.
(d) No Side Deals. Each of the parties hereto represents
and warrants that there are no side deals or arrangements, agreements, whether
providing for compensation or otherwise, connected with the transfer and
transactions contemplated herein, other than those agreements which are
specifically set forth in this Consensual Transfer Agreement and the Transfer
Documents (as hereafter defined).
(e) Environmental; Administrative. NCHP represents and
warrants that to the best of its knowledge, (i) there exists no violation of any
federal, state or local law, regulation or ordinance relating to the
environmental conditions on, under or about the Property including, without
limitation, soil and ground water conditions, (ii) there are no hazardous
wastes, toxic substances or related materials on or about the Property, (iii)
there are no pending administrative or governmental proceedings pending or
matters under investigation relating to the condition of the Property,
compliance of the Property with local regulatory ordinances or building codes,
or compliance with health or safety regulations, and (iv) there are no pending
proceedings or matters relating to special assessments or taxes on, or
demolition or condemnation of, the Property. NCHP also represents and warrants
that, to the best of its knowledge, the Old General Partners performed the
various fix up obligations it was required to perform under the Restructure
Agreement including, but not limited to, those under paragraphs 1.4(b)(iii),
(iv) and (v).
(f) Litigation. To the best of NCHP's knowledge, there is
no litigation pending or threatened with respect to the Property or Assets other
than litigation arising in the ordinary course such as accident claims and
disputes with vendors and suppliers.
(g) No Agreements. NCHP represents and warrants that it
has not entered into any agreements regarding the sale or possible sale of the
Property including, but not limited to, options, agreements to sell, rights of
first refusal, or assignments. NCHP also represents that, to the best of its
knowledge, there are no agreements or contracts affecting the Property except
for those contracts and leases which are to be assigned under the provisions of
paragraphs 2(b) and 2(d).
(h) Validity. NCHP represents and warrants that the Notes,
and the First Mortgage Documents and the Second Mortgage Documents, are existing
and valid agreements, and are enforceable in accordance with their terms. NCHP
has no claims or defenses related to the Notes and such Mortgage Documents, and
the Notes are not subject to any affirmative defenses, set offs, counterclaims,
recoupments or any other basis to resist or defend against the payment thereof.
6. Acknowledgments Regarding Value. NCHP acknowledges and agrees
that:
(a) The Recitals are specifically incorporated into this
Consensual Transfer Agreement, and are true and correct.
(b) After considering any inquiries and offers which NCHP
has received concerning any of the Property and Assets and other factors
relating to value (including prior opinions as to value), the parties have
agreed that the amount of the appraisal of Reaves C. Lukens Company dated June
22, 1995 (the "Transfer Value") represents the best evidence of the current fair
market value of the Property and Assets. The Transfer Value is fair and
reasonably equivalent to the fair market value of the Property and Assets, if
not greater than the amount for which such Property and Assets could be sold for
cash within a reasonable time. As a consequence of each of the transfers and
transactions described in this Consensual Transfer Agreement, KBA must file with
the Internal Revenue Service ("IRS") a Form 1099-Acquisition or Abandonment of
Secured Property, which (among other things) requires KBA to state the actual
fair market value of the Property and Assets, which will be significantly less
than the amount of indebtedness under the Notes which indebtedness is to be
satisfied by such transfers and transactions.
(c) The Transfer Value is a consensus of NCHP and KBA that
takes into account (among other things) that KBA is entitled to be paid under
the Notes in cash, and other market and financial factors including, without
limitation, the need for significant capital improvements, significant carrying
costs and risks associated with such assets. The Transfer Value also reflects
the estimate of the value of the Property and Assets as disclosed to the
partners of NCHP in connection with the restructuring transaction described in
Recital G.
(d) NCHP shall have no right to rescind the transfers and
transactions herein notwithstanding any transaction undertaken with respect to
the Property or Assets by KBA after the Closing Date including any sales
transaction (regardless of the price and terms thereof), and any refinancing
transaction including, but not limited to, a financing of capital improvements
on the Property. The parties acknowledge that the Transfer Value cannot be a
mutual mistake of the parties hereto, and neither NCHP nor any other person or
entity is entitled to any adjustment in the terms of this Consensual Transfer
Agreement as a result of any such post-Closing Date transaction regardless of
the timing of such transaction or the identity of the parties thereto. NCHP
acknowledges that it is receiving substantial benefits as a consequence of this
Consensual Transfer Agreement and the Transfer Documents, and each party hereto
knowingly and willingly accepts the risks associated with such a valuation of
such assets.
7. Primary Principal: Form is Intended as Substance. NCHP
acknowledges, represents, warrants and agrees that, in addition to all other
acknowledgments, representations, warranties and agreements by NCHP in this
Consensual Transfer Agreement and in any other agreements, instruments or
documents executed pursuant to, or required by, this Consensual Transfer
Agreement (collectively, the "Transfer Documents"), the following:
(a) Absolute Transfer. NCHP intends an absolute transfer
of ownership of the Property and Assets transferred to NCHP hereunder, rather
than only a mortgage or lesser interest. Such transfers to KBA are absolute and
eliminate all right, title and interest of NCHP in and to the Property and
Assets.
(b) Meaning and Effect. NCHP intends this Consensual
Transfer Agreement to have the meaning and effect as provided by its express
terms, rather than some other effect not stated herein. This Consensual
Transfer Agreement requires no parol evidence in order to reflect the intention
of the parties, and the parties intend the literal words of this Consensual
Transfer Agreement to govern the transfers and transactions described herein.
(c) Acceptance of Risk of Invalidation.
(i) NCHP knowingly accepts the risk that if, as a
direct or indirect result of NCHP's conduct, or at NCHP's behest, a court
interprets this Consensual Transfer Agreement, in a manner contrary to the
intentions of the parties hereto, as expressly stated herein, or otherwise in a
manner which denies KBA, in whole or in part, the benefit of its respective
bargains hereunder, as a result thereof the parties hereto may be returned to
their original status vis-a-vis each other immediately prior to the execution of
this Consensual Transfer Agreement and the other Transfer Documents.
(ii)NCHP agrees and acknowledges that if KBA is denied
the benefit of its bargain hereunder in any respect, KBA shall retain the same
position as a creditor of NCHP as it had immediately prior to the execution of
this Consensual Transfer Agreement including, but not limited to, the ability of
KBA to exercise all of its rights and remedies against NCHP as if this
Consensual Transfer Agreement had never been executed.
8. Retention and Operation. NCHP acknowledges and agrees that
after the Closing Date and the delivery to KBA of the Deed in Lieu and Bill of
Sale:
(a) Refinancing for Account of KBA. KBA may refinance and
retain the Property and Assets, and any such retention and refinancing shall be
solely for the account and the benefit of KBA. KBA shall not directly or
indirectly have any obligation or duty to account to NCHP (or any other person)
for any income or profit which KBA may earn on the Property and Assets.
(b) No Duty. Except as expressly provided herein, after
the Closing Date KBA shall not have any duty or legal or other relationship
whatsoever with NCHP or any other person or entity with respect to the Property
and Assets, whether as principal, agent, partner, joint venturer, trustee,
fiduciary or otherwise, each of which is disclaimed and inapplicable. After the
Closing Date, NCHP shall not have any direct, indirect or contingent right,
title or interest of any kind whatsoever, whether legal, equitable or otherwise,
in or to the Property and Assets.
(c) Altering Contracts. KBA may operate, refinance or sell
the Property and Assets in any manner it may choose, without notice to or
consent from NCHP (or any other person or entity), including without limitation
by terminating, amending or otherwise altering, at any time desired by KBA, any
lease, contract or other arrangement which may have previously existed with any
person or entity.
(d) Prior Sales/Financing Leads. KBA may (i) utilize any
information, contacts, offers or leads which have been heretofore developed or
obtained by NCHP, any persons previously employed by NCHP or anyone else, and
(ii) contact any person or entity, including one who has previously indicated an
interest in any of the Property and Assets, whether as a potential purchaser,
broker or financier.
(e) No Interference. Neither NCHP nor any of its agents
(including without limitation the general or limited partners of NCHP and the
management company employed by NCHP) shall directly or indirectly interfere with
the efforts of KBA (i) to market or refinance the Property and Assets for the
highest possible price or on any other terms that KBA may wish, (ii) to operate,
use or manage the Property and Assets in any way KBA sees fit, or (iii) to
exercise or defend the respective rights, titles and interests of KBA.
9. Closing Conditions. Each of the following shall be
conditions precedent to the obligations of the parties hereunder, and each shall
be satisfied on or before the Closing Date:
(a) Documents. Each of the parties shall have executed and
delivered each of the documents to which it is a party, including without
limitation those documents described in section 2.
(b) Delivery of Cash. NCHP shall have delivered to KBA all
cash required to be delivered under paragraph 2(c)(i), all cash representing
tenant security deposits, and all other cash required to be delivered under the
provisions of this Consensual Transfer Agreement.
(c) Title Insurance. KBA shall have received an
irrevocable commitment for the issuance of a title insurance policy, with such
exceptions as to which it shall have agreed, by a title insurance company
acceptable to KBA in its sole discretion, and NCHP shall have executed a
seller's affidavit in a form reasonably required by said title insurance
company.
(d) Records/Documents. NCHP shall have delivered to KBA
all records and documents which are to be transferred to KBA pursuant to
section 2 of this Agreement.
(e) Representations and Warranties. Each and every
representation, acknowledgment and warranty made by the parties hereto shall be
true and correct as of the Closing Date.
(f) Certifications of Transfer. KBA shall have received a
sworn certificate from NCHP dated as of the Closing Date, setting forth its
United States tax identification number and stating that NCHP is not a "foreign
person" and is a "United States Person" as that term is defined in Section
7701(a)(3) of the Internal Revenue Code of 1986, as amended.
(g) Approvals/Consents. All governmental approvals and
consents of third parties required to effect the transfer and transactions
contemplated hereby or by any Transfer Document, shall have been obtained and
shall be in full force and effect.
(h) Due Authorization. Each of the parties shall have
received such certificates, resolutions, and other documents from each other
party, as it shall reasonably request, to evidence that such other party is
legally authorized to enter into the transfers and transactions contemplated
hereby.
(i) General. All other documents and legal matters in
connection with the transfers and transactions contemplated hereby and by the
Transfer Documents shall have been delivered or executed in a form and substance
satisfactory to KBA.
10. Miscellaneous.
(a) Successors; Assignment. Except as otherwise provided
herein, this Consensual Transfer Agreement shall be binding on and inure to the
benefit of the parties hereto, and their respective successors and assigns;
provided, however, that NCHP may not assign any of its rights hereunder without
the prior written consent of KBA.
(b) Transaction Costs. Each party shall bear its own costs
and expenses in connection with the transfers and transactions contemplated
herein.
(c) Separability. In case any one or more of the
provisions contained in this Consensual Transfer Agreement should be deemed
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or in the Transfer
Documents shall not in any way be affected or impaired thereby.
(d) Entire Agreement. This Consensual Transfer Agreement
and the Transfer Documents constitute the entire agreement between the parties,
and supersede all prior discussions, negotiation, offers, understandings, and
agreements with respect to the matters herein and therein. There are no other
understandings or agreements, and KBA has made no representations, warranties or
promises, unless specifically set forth in this Consensual Transfer Agreement
and the other Transfer Documents. Each party acknowledges that it has expressly
bargained for a prohibition of any implied or oral amendments or modifications
of any kind, nature or character. Each party acknowledges and agrees that
(i) this Consensual Transfer Agreement, together with the Transfer Documents, is
fully integrated and requires no parol evidence to reflect the intentions of the
parties, (ii) the literal words of this Consensual Transfer Agreement and the
Transfer Documents shall and do govern the transactions described herein, and
(iii) prior negotiations, drafts and other extraneous communications shall have
no significance or evidentiary effect whatsoever.
(e) Amendment; Waiver. This Consensual Transfer Agreement
may not be changed, waived, discharged or terminated, except by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
(f) No Course of Conduct. At no time shall the prior or
subsequent course of conduct by any of the parties directly or indirectly limit,
impair or otherwise adversely affect any of the rights or remedies of any other
party in connection with this Consensual Transfer Agreement or any of the
Transfer Documents, or detract from or otherwise affect the literal
interpretation and effect of this Consensual Transfer Agreement or any of the
Transfer Documents, since the parties hereto agree that this Consensual Transfer
Agreement and the Transfer Documents shall only be amended by written
instruments executed by the parties, as provided herein.
(g) Governing Law. This Consensual Transfer Agreement and
all rights and duties of the parties hereunder shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(h) Time of Essence. Time is of the essence in every
provision of this Consensual Transfer Agreement and each of the Transfer
Documents.
(i) Survival of Warranties. All representations,
warranties, covenants and agreements of NCHP and KBA contained herein shall
survive the Closing Date and shall continue in full force and effect until the
performance and satisfaction of all of the obligations of NCHP and KBA under
this Consensual Transfer Agreement. Any breach by NCHP of any representation or
warranty shall create an obligation by NCHP to immediately cure the breach,
restore the other parties to the full rights and interests which each had
expected pursuant to such representation or warranty, and to otherwise fully
compensate such parties for the consequences of said breach. Any breach by KBA
of a covenant hereunder shall be remedied upon notification thereof and may be
enforced in accordance with applicable law.
(j) No Third Parties Benefited. This Consensual Transfer
Agreement is made and entered into for the protection and benefit of the parties
hereto and their successors and assigns, and no other person or entity shall be
a direct or indirect beneficiary of or have any direct or indirect cause of
action or claim in connection with this Consensual Transfer Agreement or any
Transfer Document.
(k) Counterparts. This Consensual Transfer Agreement may
be executed in counterparts, with each counterpart constituting an original
document, and all counterparts constituting one Consensual Transfer Agreement.
(l) Notices. All written notices, requests and demands
given to or made upon the respective parties shall be deemed to have been given
or made when sent by first class, registered or certified mail or personally
delivered as follows:
If to NCHP:
New Carlton House Partners, Ltd.
c/o 1801 Tower, Inc.
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29602
Attention: Kelley M. Buechler
If to CCEP, CCIP or Philly:
Consolidated Capital Equity Partners, L.P.
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29602
Attention: Carroll D. Vinson
If to KBA:
Kennedy Boulevard Associates I, L.P.
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29602
Attention: Marcus S. McCall
(m) Jury Trial. EACH PARTY HERETO SPECIFICALLY WAIVES ITS
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, CAUSE OF ACTION, DISPUTE, SUIT OR
PROCEEDING ARISING OUT OF THIS CONSENSUAL TRANSFER AGREEMENT OR THE TRANSFER
DOCUMENTS, OR OUT OF ANY FACTS AND CIRCUMSTANCES ARISING IN CONNECTION WITH OR
RELATING TO THIS CONSENSUAL TRANSFER AGREEMENT AND THE TRANSFER DOCUMENTS. EACH
SUCH PARTY RECOGNIZES THAT IT HAS SUCH A RIGHT AND, BY THIS DOCUMENT, HAS
BARGAINED AND AGREED TO WAIVE SUCH RIGHT, AND ACKNOWLEDGES THAT THE OTHER
PARTIES TO THIS DOCUMENT ARE RELYING ON SUCH WAIVER IN EXECUTING A WAIVER OF
THEIR RIGHTS. THE PARTIES HERETO SPECIFICALLY CONSENT THAT ANY SUCH MATTER
SHALL BE DECIDED BY A COURT, WITHOUT A JURY TRIAL.
(n) Consent to Jurisdiction. Each party hereto
specifically consents to the jurisdiction of the courts of the Commonwealth of
Pennsylvania, and the United States District Court for the Eastern District of
Pennsylvania, to hear any claim or suit arising in connection with or relating
to the Consensual Transfer Agreement or the Transfer Documents, and each party
further consents to the placing of venue in the judicial district where the
Property is located.
IN WITNESS WHEREOF, the parties hereto have caused this Consensual
Transfer Agreement to be duly executed and delivered as of the day and year
first written above.
NEW CARLTON HOUSE PARTNERS, LTD.
By 1801 Tower, Inc.,
its general partner
By C. D. Vinson
Title President
CONSOLIDATED CAPITAL EQUITY
PARTNERS, L.P.
By ConCap Holdings, Inc.,
its general partner
By C. D. Vinson
Title President
CONSOLIDATED CAPITAL
INSTITUTIONAL PROPERTIES
By Concap Equities, Inc.,
its general partner
By C. D. Vinson
Title President
PHILLY ASSOCIATES, INC.
By C. D. Vinson
Title President
Kennedy Boulevard Associates I, L.P.
By Kennedy Boulevard I, Inc., general
partner of KBA's general partner, Kennedy
Boulevard Associates, II, L.P.
By C. D. Vinson
Title President
EXHIBIT 10.18
DEED IN LIEU OF FORECLOSURE
THIS DEED IN LIEU OF FORECLOSURE is made this 30th day of November in
the year A.D. one thousand nine hundred ninety-five (1995) between NEW CARLTON
HOUSE PARTNERS, LTD., a Pennsylvania limited partnership, successor in interest
to Carlton House Associates (hereinafter called the Grantor), of the one part,
and KENNEDY BOULEVARD ASSOCIATES I, L.P., a Pennsylvania limited partnership
(hereinafter called the Grantee), of the other part.
WHEREAS, Grantee is the present holder of the following mortgages
against the premises hereinafter described: (i) Mortgage, Assignment of Rents
and Security Agreement dated October 30, 1984 executed by Grantor's predecessor-
in-interest, Carlton House Associates ("CHA"), in favor of Consolidated Capital
Equity Partners ("CCEP") and recorded in the Department of Records of the City
Philadelphia (the "Recorder's Office") on November 13, 1984 in Mortgage Book
F.H.S. 2, Page 227, as collaterally assigned by a certain assignment of (1)
Mortgage, Assignment of Rents and Security Agreement, (2) Promissory Note
Secured Thereby, and (3) Conditional Assignment of Rents and Leases dated
October 31, 1984 executed by CCEP in favor of Consolidated Capital Institutional
Properties ("CCIP") and recorded in the Recorder's Office on November 27, 1984
in Deed Book F.H.S. 15, Page 30, as amended by a certain Amended and Restated
Mortgage, Assignment of Rents and Security Agreement dated June 30, 1989
executed by Grantor in favor of CCEP and recorded in the Recorder's Office on
July 3, 1989 in Mortgage Book F.H.S. 2418, Page 490, as collaterally assigned by
a certain Assignment of (1) Amended and Restated Mortgage, Assignment of Rents
and Security Agreement, (2) Amended Promissory Note Secured by Mortgage, and (3)
Supplemental Conditional Assignment of Rents and Leases dated June 28, 1989
executed by CCEP in favor of CCIP and recorded in the Recorder's Office on July
3, 1989 in Assignment Book F.H.S. 300, Page 436, all as further assigned by a
certain Assignment of Mortgage, Assignment of Rents and Security Agreement and
of Conditional Assignment of Rents dated the date hereof executed by
Consolidated Capital Equity Partners, L.P., successor to CCEP, and CCIP in favor
of Grantee and to be recorded in the Recorder's Office prior to this Deed in
Lieu of Foreclosure; and (ii) Mortgage dated October 31, 1984 executed by CHA in
favor of Skokie Federal Savings and Loan Association ("Skokie") and recorded in
the Recorder's Office on November 13, 1984 in Mortgage Book F.H.S. 2, Page 245,
as amended by Amended and Restated Mortgage dated June 30, 1989 executed by
Grantor in favor of Skokie and recorded in the Recorder's Office of July 3, 1989
in Mortgage Book F.H.S. 1383, Page 572, as assigned by a certain Assignment of
Mortgage and Note dated September 29, 1993 executed by Resolution Trust
Corporation as receiver for Skokie in favor of Philly Associates, Inc.
("Philly") and recorded in the Recorder's Office on November 4, 1993 in
Assignment of Mortgage Book V.C.S. 118, Page 344, as further assigned by a
certain Assignment of Mortgage and of Assignment of Rents and Leases dated the
date hereof executed by Philly in favor of Grantee and to be recorded in the
Recorder's Office prior to this Deed in Lieu of Foreclosure (as amended and
assigned, collectively, the "Mortgages").
WHEREAS, pursuant to the Second Amended Plan of Reorganization of TM
Carlton House Partners, Ltd. dated May 9, 1989 as confirmed by an Order of the
Bankruptcy Court of the Eastern District of Pennsylvania, a copy of which is
attached hereto as Exhibit "A," that certain Wrap-Around Purchase Money Mortgage
and Security Agreement dated October 31, 1984 executed by CHA in favor of John
G. Berg and Maureen Beverly and recorded in the Recorder's Office in Mortgage
Book F.H.S. 2, Page 300 was discharged and terminated.
WHEREAS, Grantor and Grantee, inter alia, have entered into that
certain Consensual Transfer Agreement dated this date (the "Agreement") pursuant
to which Grantor agreed to execute and deliver this Deed in Lieu of Foreclosure
to Grantee.
NOW THIS DEED WITNESSETH, that the said Grantor, for and in
consideration of the covenants and agreements contained in the Agreement, has
granted, bargained and sold, aliened, enfeoffed, released and confirmed, and by
these presents does grant, bargain and sell, alien, enfeoff, release and confirm
unto the said Grantee, its successors and assigns,
ALL THAT CERTAIN tract or parcel of land with the buildings and
improvements thereon erected, situate in the City of Philadelphia and
Commonwealth of Pennsylvania, as described more fully on Exhibit "B" attached
hereto and made a part hereof.
BEING the same premises that CCEP conveyed, by deed dated June 7,
1984 and recorded in the Recorder's Office in Deed Book A.L.O. 121, Page 482,
unto CHA, in fee.
BEING tax parcels 08-3-0056-00 and 88-1-0350-00.
UNDER AND SUBJECT to the lien of the Mortgages. The Grantor and the
Grantee hereunder do not intend by this conveyance to merge the interest of the
Grantee as mortgagee under the Mortgages with the interest of the Grantee under
this Deed or in any way extinguish or terminate the Mortgages. The separate
estates of the Grantee as mortgagee under the Mortgages and of the Grantee as
the grantee hereunder shall remain separate and distinct estates at law. The
Grantor and the Grantee intend this Deed in Lieu of Foreclosure to be an
absolute conveyance and not to constitute further security for the indebtedness
secured by the Mortgages.
ALSO UNDER AND SUBJECT to all valid and enforceable covenants,
conditions, restrictions and easements of record.
TOGETHER with all and singular the buildings and improvements, ways,
streets, alleys, passages, waters, water-courses, rights, liberties, privileges,
hereditaments and appurtenances, whatsoever thereunto belonging, or in any wise
appertaining, and the reversions and remainders, rents, issues and profits
thereof; and all the estate, right, title, interest, property, claim and demand
whatsoever of it, the said Grantor in law as in equity, or otherwise howsoever,
of, in, and to the same and every part thereof.
TO HAVE AND TO HOLD the said lot or piece of ground, with the
buildings and improvements thereon erected, the hereditaments and premises
hereby granted, or mentioned and intended so to be, with the appurtenances, unto
the said Grantee, its successors and assigns, to and for the only proper use and
behoof of the said Grantee, its successors and assigns, forever.
UNDER AND SUBJECT as aforesaid.
AND the said Grantor, for itself, its successors and assigns, does
covenant, promise and agree, to and with the said Grantee, its successors and
assigns, by these presents, that it, the said Grantor and its successors and
assigns, all and singular the hereditaments and premises hereinabove described
and granted, or mentioned and intended so to be, with the appurtenances, unto
the said Grantee, its successors and assigns, against it, the said Grantor and
its successors and assigns, and against all and every person or persons
whomsoever lawfully claiming or to claim the same or any part thereof, by, from
or under them or any of them, shall and will subject as aforesaid WARRANT and
forever DEFEND.
IN WITNESS WHEREOF, the said Grantor has hereunto set its hand and
seal as of the date first written above.
Sealed and Delivered
in the Presence of Us.
NEW CARLTON HOUSE PARTNERS, LTD., a Pennsylvania
limited partnership, successor-in-interest to
Carlton House Associates
By: 1801 Tower Inc., a Delaware
corporation, its general partner
Attest:Kelley M. Buechler By: C. D. Vinson
Name: Kelley M. Buechler Name: C. D. Vinson
Title: Asst. Secretary Title: President
(Corporate Seal)
The address of the above-named Grantee is:
One Insignia Financial Plaza
P.O. Box 1089
Greenville, SC 29601
On behalf of the Grantee
