FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 312905, eff. 04/26/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from.........to.........
Commission file number 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact name of registrant as specified in its charter)
California 94-2744492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (864) 239-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
June 30, December 31,
1996 1995
(Unaudited) (Note)
Assets
Cash and cash equivalents:
Unrestricted $ 12,300 $ 26,122
Restricted--tenant security deposits 310 335
Securities available for sale 2,697 5,264
Other assets 1,281 1,444
Net investment in Master Loan 95,438 95,246
Less: Allowance for impairment loss (41,478) (41,478)
53,960 53,768
Investment properties:
Land 3,620 3,620
Building and related personal property 19,576 17,756
23,196 21,376
Less accumulated depreciation (2,481) (1,958)
20,715 19,418
$ 91,263 $106,351
Liabilities and Partners' Capital (Deficit)
Accounts payable and accrued expenses $ 302 $ 368
Tenant security deposits 294 323
Distributions payable 324 324
Mortgage note and interest payable 4,548 4,560
5,468 5,575
Partners' Capital (Deficit)
General partner (368) (358)
Limited partners (199,052 units
outstanding at June 30, 1996, and
December 31, 1995, respectively) 86,163 101,134
85,795 100,776
$ 91,263 $106,351
Note: The balance sheet at December 31, 1995, has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 1,955 $ 434 $ 3,891 $ 757
Interest income on investment
in Master Loan to affiliate -- -- -- 1,536
Other income 239 99 616 227
Total revenues 2,194 533 4,507 2,520
Expenses:
Operating 1,425 154 2,924 330
Depreciation and amortization 281 105 526 210
General and administrative 260 243 376 439
Interest 82 -- 163 --
Total expenses 2,048 502 3,989 979
Net income $ 146 $ 31 $ 518 $ 1,541
Net income allocated
to general partner (1%) $ 1 $ -- $ 5 $ 15
Net income allocated
to limited partners (99%) 145 31 513 1,526
$ 146 $ 31 $ 518 $ 1,541
Net income per limited
partnership unit $ .73 $ .16 $ 2.58 $ 7.67
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 200,342 $ 1 $200,342 $200,343
Partners' capital (deficit) at
December 31, 1994 199,045 $ (294) $107,498 $107,204
Distributions to partners (15) (1,521) (1,536)
Net income for the six months
ended June 30, 1995 15 1,526 1,541
Partners' capital (deficit) at
June 30, 1995 199,052 $ (294) $107,503 $107,209
Partners' capital (deficit) at
December 31, 1995 199,052 $ (358) $101,134 $100,776
Distributions to partners (15) (15,484) (15,499)
Net income for the six months
ended June 30, 1996 5 513 518
Partners' capital (deficit) at
June 30, 1996 199,052 $ (368) $ 86,163 $ 85,795
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 518 $ 1,541
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 523 210
Amortization of loan costs and lease
commissions 9 --
Change in accounts:
Restricted cash 26 --
Other assets 153 81
Interest receivable on master loan -- (1,536)
Due from affiliates -- 935
Accounts payable and accrued expenses (54) 82
Tenant security deposit liabilities (29) (14)
Net cash provided by
operating activities 1,146 1,299
Cash flows from investing activities:
Property improvements and replacements (1,820) (15)
Purchase of securities available for sale -- (2,115)
Proceeds from sale of securities available
for sale 2,566 4,676
Advances on Master Loan (367) --
Principal receipts on Master Loan 175 --
Net cash provided by
investing activities 554 2,546
Cash flows from financing activities:
Distributions to partners (15,499) (1,536)
Mortgage principal payments (23) --
Net cash used in financing activities (15,522) (1,536)
Net (decrease) increase in cash and cash equivalents (13,822) 2,309
Cash and cash equivalents at beginning of period 26,122 1,554
Cash and cash equivalents at end of period $ 12,300 $ 3,863
Supplemental disclosure of cash flow information:
Cash paid for interest $ 145 $ --
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Institutional Properties ("Partnership") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of ConCap Equities, Inc. ("General Partner"), all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and six
month periods ended June 30, 1996, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the annual report on Form 10-K for the year ended December
31, 1995, for the Partnership.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Note B - Related Party Transactions
The Partnership paid property management fees based upon collected gross rental
revenues for property management services as noted below for the six month
periods ended June 30, 1996 and 1995. Fees paid to affiliates of Insignia during
the six month periods ended June 30, 1996 and 1995, are included in operating
expenses on the consolidated statement of operations and are reflected in the
following table. The Partnership Agreement ("Agreement") also provides for
reimbursement to the General Partner and its affiliates for costs incurred in
connection with the administration of Partnership activities. The General
Partner, and its current affiliates, received reimbursements as reflected in the
following table:
For the Six Months Ended
June 30,
1996 1995
(in thousands)
Property management fees $ 194 $ 34
Reimbursement for services of affiliates (1) 254 212
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $113,000 in reimbursements for construction oversight
costs.
Property management fees and reimbursements for services of affiliates both
increased during the six months ended June 30, 1996, as compared to the six
months ended June 30, 1995, due to the addition of The Carlton House on November
30, 1995.
Note B - Related Party Transactions - continued
On July 1, 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The agent assumed the
financial obligations to the affiliate of the General Partner who receives
payments on these obligations from the agent. The amount of the partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
Note C - Net Investment in Master Loan
Interest due to the Partnership pursuant to the terms of the Master Loan
Agreement, but not recognized in the income statements, totaled approximately
$14.8 million and $13.6 million for the six months ended June 30, 1996 and 1995,
respectively. At June 30, 1996, and December 31, 1995, such cumulative
unrecognized interest totaling approximately $153 million and $138.2 million was
not included in the balance of the investment in Master Loan.
During the six months ended June 30, 1996, the Partnership advanced
approximately $367,000 to Consolidated Capital Equity Partners, L.P. ("CCEP") as
an advance on the Master Loan. CCEP used the funds to pay for deferred
maintenance and capital improvements on certain properties which collateralize
the Master Loan. A portion of the advance was used to pay additional expenses
related to the December 1995 financing of six of CCEP's investment properties.
Also, a portion of the advance was used to pay taxes on behalf of 1801 Tower
Inc., a wholly owned subsidiary of CCEP.
During the six months ended June 30, 1996, the Partnership received
approximately $175,000 as principal payments on the Master Loan. Approximately
$101,000 was due to the return of a real estate tax escrow set up at the time of
the December 1995 financing of a certain CCEP investment property. This escrow
was held until CCEP was able to provide proof of payment to the mortgage lender.
Cash received on certain investments by CCEP, which are required to be
transferred to the Partnership per the Master Loan Agreement, accounted for
approximately $74,000.
Note D - Commitment
The Partnership is required by the Agreement to maintain working capital
reserves for contingencies of not less than 5% of Net Invested Capital, as
defined in the Agreement. In the event expenditures are made from this reserve,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Reserves, including cash and cash equivalents and
securities available for sale (at market), totaling approximately $15.3 million,
were greater than the reserve requirement of approximately $7.3 million at June
30, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership's investment properties consists of two properties, The Loft and
The Carlton House Apartment and Office Building ("The Carlton House"). The
Carlton House is a multiple-use facility which consists of an apartment complex
and commercial space. This property was transferred from Consolidated Capital
Equity Partners, L.P. ("CCEP") to a wholly owned subsidiary of the Partnership
on November 30, 1995. The operations of The Carlton House had a significant
impact on the results of operations of the Partnership for the six months ended
June 30, 1996, with revenues of approximately $3,170,000 and expenses of
approximately $2,796,000. The following table sets forth the average
occupancies of the properties for the six months ended June 30, 1996 and 1995:
Average
Occupancy
Property 1996 1995
The Loft Apartments 94% 91%
Raleigh, North Carolina
The Carlton House (residential) 86% 82%
The Carlton House (commercial) 65% 63%
Philadelphia, Pennsylvania
The General Partner attributes the increase in occupancy at The Loft to
increased marketing strategies and higher traffic. Also, the General Partner
attributes the increase in occupancy at The Carlton House (residential) to
increased marketing strategies and concessions offered to the residential
tenants.
Results of Operations
The Partnership's net income for the six months ended June 30, 1996, was
approximately $518,000 as compared to net income of approximately $1,541,000 for
the six months ended June 30, 1995. The Partnership recorded net income of
approximately $146,000 for the three months ended June 30, 1996, as compared to
net income of approximately $31,000 for the three months ended June 30, 1995.
Net income decreased for the six months ended June 30, 1996, but increased for
the three months ended June 30, 1996. The decrease in net income for the six
months ended June 30, 1996, is due to the fact that no interest income is
recorded on the investment in Master Loan to affiliate. This decrease is the
result of decreased operations at the underlying collateral properties.
Offsetting this decrease in income was the transfer of The Carlton House from
CCEP to the Partnership which resulted in an increase in net income for the
Partnership of approximately $248,000 and $374,000 for the three and six month
periods ended June 30, 1996, respectively. The transfer resulted in significant
increases in rental income, operating expenses and depreciation for the three
and six month periods ended June 30, 1996. Also contributing to the increase in
operating expenses during the three and six month periods ended June 30, 1996,
was major landscaping work and a wood replacement project done at The Loft.
General and administrative expenses decreased during the six months ended June
30, 1996, as compared to the six months ended June 30, 1995, as a result of the
additional costs associated with the combined efforts of the Dallas and
Greenville offices during the transition period that ended June 30, 1995. The
increased costs related to the transition efforts were incurred to minimize any
disruption in the 1994 year-end reporting function including K-1 preparation
and distribution. Interest expense increased for the three and six month
periods ended June 30, 1996, as a result of the financing of The Loft in
December 1995. This property did not have a mortgage balance prior to December
1995 and as a result had no interest expense during the three and six month
periods ended June 30, 1995. Other income increased during the three and six
month periods ended June 30, 1996, due to the increase in cash balances due to
the proceeds received from the December 1995 financing of The Loft and the
principal payments received on the Master Loan in December 1995.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment properties to assess
the feasibility of increasing rents, maintaining or increasing occupancy levels
and protecting the Partnership from increases in expense. As part of this plan,
the General Partner attempts to protect the Partnership from the burden of
inflation-related increases in expenses by increasing rents and maintaining a
high overall occupancy level. However, due to changing market conditions, which
can result in the use of rental concessions and rental reductions to offset
softening market conditions, there is no guarantee that the General Partner
will be able to sustain such a plan.
Liquidity and Capital Resources
At June 30, 1996, the Partnership had unrestricted cash of approximately
$12,300,000 versus approximately $3,863,000 at June 30, 1995. Net cash provided
by operating activities decreased primarily due to the decrease in net income
as explained above. Also, due from affiliates decreased during the six months
ended June 30, 1995, however, no such activity occurred during the six months
ended June 30, 1996. Offsetting these decreases is a decrease in interest
receivable on the Master Loan. Cash provided by investing activities decreased
primarily due to an increase in property improvements and replacements during
the six months ended June 30, 1996, and additional advances under the Master
Loan to CCEP. Partially offsetting these decreases was the receipt of principal
payments on the Master Loan. Net cash used in financing activities increased
due to an increase in distributions paid to the partners as well as principal
payments on the mortgage note for The Loft.
The Partnership has budgeted for approximately $14 million of deferred
maintenance and capital improvements to be made to The Carlton House during 1996
and 1997. These programs will be paid by existing cash and investments and from
cash generated by property operations and debt service on the Master Loan. The
major capital improvements are for exterior renovation, elevator rehabilitation,
residential and commercial common area renovations. As of June 30, 1996,
approximately $1.5 million had been spent on these programs.
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 property to adequately maintain the physical assets
and other operating needs of the Partnership. Such assets are currently thought
to be sufficient for any near-term needs of the Partnership. The mortgage
indebtedness of approximately $4,522,000 requires monthly principal and
interest payments and requires a balloon payment on December 1, 2005, at which
time the property will either be refinanced or sold. Distributions of
approximately $15,484,000 or $77.79 per Unit were made to the limited partners
during the six months ended June 30, 1996. A matching distribution of
approximately $15,000 was made to the General Partner. A distribution of
approximately $1,485,000 or $7.46 per Unit was made to the limited partners
during the six months ended June 30, 1995. A matching distribution of
approximately $15,000 was made to the General Partner. In June 1995, a
distribution of approximately $36,000 was accrued to pay the limited partners'
income taxes due to the State of North Carolina for income generated by the
Partnership's investment property located in North Carolina. Future cash
distributions will depend on the levels of cash generated from operations,
Master Loan interest income, capital expenditure requirements, property sales,
and the availability of cash reserves.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined by the Partnership Agreement. Reserves, including cash and cash
equivalents and securities available for sale totaling approximately $15.3
million, were greater than the reserve requirement of $7.3 million as of June
30, 1996.
CCEP Property Operations
The Partnership invested approximately $367,000 in CCEP during the six months
ended June 30, 1996, as additional advances under the Master Loan. CCEP used
the funds to pay for maintenance and capital improvements on certain properties
which collateralize the Master Loan. A portion of the advance was used to pay
additional expenses related to the December 1995 financing of six of CCEP's
investment properties. Also, a portion of the advance was used to pay taxes on
behalf of 1801 Tower Inc., a wholly owned subsidiary of CCEP.
For the six months ended June 30, 1996, CCEP's net loss totaled approximately
$14.8 million on total revenues of approximately $10.0 million. CCEP recognizes
interest expense on the New Master Loan Agreement obligation according to the
note terms, although payments to the Partnership are required only to the extent
of Excess Cash Flow, as defined therein. During the six months ended June 30,
1996, CCEP's statement of operations includes total interest expense
attributable to the Master Loan of approximately $14.8 million, all of which
represents interest accrued in excess of required payments. Subsequent to June
30, 1996, CCEP made an "Excess Cash Flow" principal payment of approximately
$1,363,000 to the Partnership. CCEP is expected to continue to generate
operating losses as a result of such interest accruals and noncash charges for
depreciation.
During the six months ended June 30, 1996, the Partnership received
approximately $175,000 as principal payments on the Master Loan. Approximately
$101,000 was due to the return of a real estate tax escrow set up at the time of
the December 1995 financing of a certain CCEP investment property. This escrow
was held until CCEP was able to provide proof of payment to the mortgage lender.
Cash received on certain investments by CCEP, which are required to be
transferred to the Partnership per the Master Loan Agreement, accounted for
approximately $74,000.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
S-K Reference
Number Description
27 Financial Data Schedule is filed as an
exhibit to this report.
99.1 Consolidated Capital Equity Partners, L.P.,
unaudited financial statements for the three
and six months ended June 30, 1996 and 1995.
(b) Reports on Form 8-K:
None filed during the quarter ended June 30, 1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES
By: CONCAP EQUITIES, INC.
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Vice President/CAO
Date: August 8, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties 1996 Second Quarter 10-Q and is qualified in
its entirety by reference to such 10-Q filing.
</LEGEND>
<CIK> 0000352983
<NAME> CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 12,300
<SECURITIES> 2,697
<RECEIVABLES> 95,438
<ALLOWANCES> 41,478
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 23,196
<DEPRECIATION> 2,481
<TOTAL-ASSETS> 91,263
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,548
0
0
<COMMON> 0
<OTHER-SE> 85,795
<TOTAL-LIABILITY-AND-EQUITY> 91,263
<SALES> 0
<TOTAL-REVENUES> 4,507
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,989
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 163
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 518
<EPS-PRIMARY> 2.58<F2>
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1996 AND 1995
EXHIBIT 99.1 (Continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited) (Note)
<S> <C> <C>
Assets
Cash and cash equivalents $ 3,160 $ 2,225
Investments in limited partnerships 387 460
Other assets 4,566 5,725
Investment properties:
Land 10,452 10,452
Building and related personal property 96,883 94,906
107,335 105,358
Less accumulated depreciation (70,612) (68,167)
36,723 37,191
$ 44,836 $ 45,601
Liabilities and Partners' Deficit
Accounts payable and accrued liabilities $ 2,123 $ 3,035
Mortgage notes and interest payable 24,964 25,050
Master loan and interest payable 248,488 233,490
275,575 261,575
Partners' Deficit
General partner (2,307) (2,159)
Limited partners (228,432) (213,815)
(230,739) (215,974)
$ 44,836 $ 45,601
<FN>
Note: The balance sheet at December 31, 1995, has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by generally accepted accounting principles for
complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
EXHIBIT 99.1 (Continued)
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 5,117 $ 6,075 $ 9,959 $ 12,129
Other income 41 43 56 58
Total revenues 5,158 6,118 10,015 12,187
Expenses:
Operating 2,904 3,768 6,001 7,619
General and administrative 210 458 367 674
Depreciation and
amortization 1,343 1,630 2,662 3,207
Interest 7,868 6,523 15,723 15,330
Total expenses 12,325 12,379 24,753 26,830
Loss on disposition
of property (15) (2) (27) (9)
Casualty gain -- -- -- 45
Net loss $(7,182) $(6,263) $(14,765) $(14,607)
Net loss allocated
to general partner (1%) $ (72) $ (63) $ (148) $ (146)
Net loss allocated
to limited partners (99%) (7,110) (6,200) (14,617) (14,461)
$(7,182) $(6,263) $(14,765) $(14,607)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
EXHIBIT 99.1 (Continued)
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
General Limited
Partner Partners Total
<S> <C> <C> <C>
Partners' deficit at
December 31, 1994 $ (1,780) $(176,260) $(178,040)
Net loss for the six months
ended June 30, 1995 (146) (14,461) (14,607)
Partners' deficit at
June 30, 1995 $ (1,926) $(190,721) $(192,647)
Partners' deficit at
December 31, 1995 $ (2,159) $(213,815) $(215,974)
Net loss for the six months
ended June 30, 1996 (148) (14,617) (14,765)
Partners' deficit at
June 30, 1996 $ (2,307) $(228,432) $(230,739)
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
EXHIBIT 99.1 (Continued)
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $(14,765) $(14,607)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,701 3,210
Loss on disposition of property 27 9
Casualty gain -- (45)
Change in accounts:
Other assets 1,137 (1,047)
Accounts payable and accrued liabilities (911) 1,049
Interest on Master Loan 14,805 15,113
Due to affiliates -- (918)
Interest payable 63 11
Net cash provided by operating activities 3,057 2,775
Cash flows from investing activities:
Property improvements and replacements (2,164) (1,429)
Proceeds from sale of securities available
for sale -- 195
Net cash used in investing activities (2,164) (1,234)
Cash flows from financing activities:
Advances on Master Loan 367 --
Principal payments on Master Loan (175) --
Principal payments on notes payable (149) (296)
Loan costs paid (1) --
Net cash provided by (used in)
financing activities 42 (296)
Net increase in cash and cash equivalents 935 1,245
Cash and cash equivalents at beginning of period 2,225 3,393
Cash and cash equivalents at end of period $ 3,160 $ 4,638
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 815 $ 1,121
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Equity Partners, L.P. ("CCEP") have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Holdings, Inc. ("General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 1996, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1996.
Certain reclassifications have been made to the 1995 information to conform to
the 1996 presentation.
Consolidation
CCEP owns a 75% interest in a limited partnership ("Western Can, Ltd.") which
owns 444 De Haro, an office building in San Francisco, California. CCEP's
investment in Western Can, Ltd. is consolidated in CCEP's financial statements.
No minority interest liability has been reflected for the 25% minority interest
because Western Can, Ltd. has a net capital deficit and no minority liability
exists with respect to CCEP.
The operations for the six months ended June 30, 1995, for The Carlton House
Apartment and Office Building ("The Carlton House") are consolidated in CCEP's
financial statements pursuant to accounting guidelines regarding notes
receivable in-substance foreclosed. The Carlton House was transferred to a
wholly owned subsidiary of Consolidated Capital Institutional Properties
("CCIP") in a series of transactions on November 30, 1995.
Note B - Related Party Transactions
CCEP paid property management fees based upon collected gross rental revenues
for property management services in each of the six month periods ended June 30,
1996 and 1995. Fees paid to affiliates of Insignia during the six month periods
ended June 30, 1996 and 1995, are included in operating expenses on the
consolidated statement of operations and are reflected in the following table.
The Partnership Agreement ("Agreement") also provides for reimbursement to the
General Partner and its affiliates for costs incurred in connection with the
administration of CCEP activities. The General Partner, and its current
affiliates, received reimbursements for the six months ended June 30, 1996 and
1995, as reflected in the following table.
Note B - Related Party Transactions (continued)
Also, CCEP is subject to an Investment Advisory Agreement between the
Partnership and an affiliate of ConCap Holdings, Inc. ("CHI"). This agreement
provides for an annual fee, payable in monthly installments, to an affiliate of
CHI for advising and consulting services for CCEP's properties. Advisory fees
paid pursuant to this agreement are included in general and administrative
expenses on the consolidated statement of operations and are reflected in the
following table:
For the Six Months Ended
June 30,
1996 1995
(in thousands)
Property management fees $500 $615
Investment advisory fees 91 129
Lease commissions 26 --
Reimbursement for services of affiliates (1) 239 300
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $39,000 in reimbursements for construction oversight
costs.
The decrease in property management fees for the six months ended June 30, 1996,
as compared to the six months ended June 30, 1995, is the result of the transfer
of The Carlton House to CCIP on November 30, 1995.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from CCIP pursuant to the
Master Loan Agreement, which is described more fully in the 1995 Annual Report.
Interest payments made during the six month periods ended June 30, 1996 and
1995, were $0 and approximately $918,000, respectively. (See further discussion
in "Note C"). Advances of approximately $367,000 were made under the Master
Loan Agreement during the six months ended June 30, 1996. Principal payments of
approximately $175,000 were made on the Master Loan during the six months ended
June 30, 1996.
On July 1, 1995, CCEP began insuring its properties under a master policy
through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner who
receives payments on these obligations from the agent. The amount of CCEP's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
Note C - Master Loan and Accrued Interest Payable
The Master Loan principal and accrued interest payable balances at June 30,
1996, and December 31, 1995, are approximately $248.5 million and approximately
$233.5 million, respectively.
Terms of Master Loan Agreement
Under the terms of the Master Loan Agreement, interest accrues at a fluctuating
rate per annum adjusted annually on July 15 by the percentage change in the U.S.
Department of Commerce Implicit Price Deflator for the Gross National Product
subject to an interest rate ceiling of 12.5%. The interest rates for each of
the three and six month periods ended June 30, 1996 and 1995, was 12.5%.
Payments are currently payable quarterly in an amount equal to "Excess Cash
Flow", generally defined in the Master Loan Agreement as net cash flow from
operations after third-party debt service and capital expenditures. Any unpaid
interest is added to principal, compounded annually, and is payable at the
loan's maturity. Any net proceeds from sale or refinancing of any of CCEP's
properties are paid to CCIP under the terms of the Master Loan Agreement. The
Master Loan Agreement matures in November 2000.
CCIP invested approximately $367,000 in CCEP during the six months ended June
30, 1996, as additional advances under the Master Loan. CCEP used the funds to
pay for deferred maintenance and capital improvements on certain properties
which collateralize the Master Loan. A portion of the advance was used to pay
additional expenses related to the December 1995 financing of six of CCEP's
investment properties. Also, a portion of the advance was used to pay taxes on
behalf of 1801 Tower Inc., a wholly owned subsidiary.
During the six months ended June 30, 1996, CCEP paid approximately $175,000 to
CCIP as principal payments on the Master Loan. Approximately $101,000 was due
to the return of a real estate tax escrow set up at the time of the December
1995 financing of a certain CCEP investment property. This escrow was held
until CCEP was able to provide proof of payment to the mortgage lender. Cash
received on certain investments by CCEP, which are required to be transferred to
CCIP per the Master Loan Agreement, accounted for approximately $74,000.
Note D - Note Receivable Deemed In-Substance Foreclosed
Prior to the transfer of The Carlton House from CCEP to CCIP on November 30,
1995, CCEP held the "Carlton House Note" which was secured by a deed of trust on
The Carlton House with a scheduled maturity in 1995. According to the note
terms, interest accrued at 10% and compounded monthly on principal plus accrued
but unpaid interest. The note receivable had been in default since 1991. As
described more fully in the 1995 audited financial statements, the required debt
service payments were reduced to only the amount of net cash flow from The
Carlton House. In 1995 no interest income was recognized as no cash related to
the note receivable was received by CCEP.
Summarized below are the results of operations of The Carlton House that are
included in CCEP's financial statements for the six months ended June 30, 1995,
prepared on the same basis as CCEP's financial statements. Any intercompany
balances between the Partnership and The Carlton House have been eliminated in
CCEP's consolidated financial statements and the summarized financial statements
set forth below:
For the Six Months Ended
June 30, 1996
(in thousands)
Revenues:
Rental income $ 2,908
Other income 14
Total revenues 2,922
Expenses:
Operating 2,217
Depreciation and amortization 517
Interest 1
Administrative 93
Total expenses 2,828
Net income $ 94
