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 March 31, 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
(Unaudited)
(in thousands, except unit data)
March 31, December 31,
1996 1995
Assets
Cash and cash equivalents:
Unrestricted $ 10,740 $ 26,122
Restricted--tenant security deposits 332 335
Securities available for sale 5,264 5,264
Other assets 1,332 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 18,236 17,756
21,856 21,376
Less accumulated depreciation (2,202) (1,958)
19,654 19,418
$ 91,282 $106,351
Liabilities and Partners' Capital (Deficit)
Accounts payable and accrued expenses $ 434 $ 368
Tenant security deposits 315 323
Distributions payable 324 324
Mortgage note and interest payable 4,560 4,560
Partners' Capital (Deficit)
General partner (369) (358)
Limited partners (199,052 units
outstanding at March 31, 1996, and
December 31, 1995, respectively) 86,018 101,134
85,649 100,776
$ 91,282 $106,351
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
March 31,
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 1,936 $ 323
Interest income on investment in Master
Loan to affiliate -- 1,536
Other income 377 128
Total revenues 2,313 1,987
Expenses:
Operating 1,499 176
Depreciation 245 105
General and administrative 116 196
Interest 81 --
Total expenses 1,941 477
Net income $ 372 $ 1,510
Net income allocated to general partner (1%) $ 4 $ 15
Net income allocated to limited partners (99%) 368 1,495
$ 372 $ 1,510
Net income per limited partnership unit $ 1.85 $ 7.51
<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) (1,485) (1,500)
Net income for the three months
ended March 31, 1995 15 1,495 1,510
Partners' capital (deficit) at
March 31, 1995 199,045 $ (294) $107,508 $107,214
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 three months
ended March 31, 1996 4 368 372
Partners' capital (deficit) at
March 31, 1996 199,052 $ (369) $ 86,018 $ 85,649
<FN>
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<C> <C> <C>
Cash flows from operating activities:
Net income $ 372 $ 1,510
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 245 105
Amortization of loan costs and lease
commissions 4 --
Change in accounts:
Restricted cash 4 --
Other assets 106 (31)
Interest receivable on master loan -- (1,536)
Accounts payable and accrued expenses 78 88
Tenant security deposit liabilities (8) (13)
Net cash provided by
operating activities 801 123
Cash flows from investing activities:
Property improvements and replacements (480) (5)
Purchase of securities available for sale -- (1,097)
Proceeds from sale of securities available
for sale -- 3,663
Advances on Master Loan (367) --
Principal receipts on Master Loan 175 --
Net cash (used in) provided by
investing activities (672) 2,561
Cash flows from financing activities:
Distributions to partners (15,499) (1,500)
Mortgage principal payments (12) --
Net cash used in financing activities (15,511) (1,500)
Net (decrease) increase in cash and cash equivalents (15,382) 1,184
Cash and cash equivalents at beginning of period 26,122 1,554
Cash and cash equivalents at end of period $ 10,740 $ 2,738
Supplemental disclosure of cash flow information:
Cash paid for interest $ 67 $ --
<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 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 the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 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
Consolidated Capital Institutional Properties ("Partnership").
Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.
Note B - Related Party Transactions
Consolidated Capital Institutional Properties ("Partnership") paid property
management fees based upon collected gross rental revenues for property
management services as noted below for the three month periods ended March 31,
1996 and 1995. Fees paid to affiliates of Insignia during the three month
periods ended March 31, 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. These reimbursements are included in
general and administrative expense on the consolidated statement of operations.
The General Partner, and its current affiliates, received reimbursements as
reflected in the following table:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $ 97 $ 17
Reimbursement for services of affiliates 58 115
Property management fees increased during the three months ended March 31,
1996, as compared to the three months ended March 31, 1995, due to the addition
of the Carlton House Apartment and Office Building on November 30, 1995.
Reimbursements for services of affiliates decreased during the three months
ended March 31, 1996, as compared to the three months ended March 31, 1995. The
three months ended March 31, 1995, included the additional costs associated with
the combined efforts of the Dallas and Greenville offices during the transition
period that ended June 30, 1995.
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
$7.4 million and $6.0 million for the three months ended March 31, 1996 and
1995, respectively. At March 31, 1996, and December 31, 1995, such cumulative
unrecognized interest totaling approximately $145.6 million and $138.2 million
was not included in the balance of the investment in Master Loan.
During the first quarter of 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 the properties which collateralize the Master Loan. A
portion of the advance was used to pay for 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 first quarter of 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 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 $16.3 million,
were greater than the reserve requirement of approximately $7.3 million at March
31, 1996.
Note E - Subsequent Events
Subsequent to March 31, 1996, the Carlton House Apartment and Office Building
was renamed "The Sterling."
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Partnership's investment properties consists of two properties, The
Lofts and The Carlton House Apartment and Office Building ("Carlton House").
The Carlton House is a multiple-use facility which consists of an apartment
complex and commercial space. This property was transferred from CCEP to a
wholly owned subsidiary of the Partnership on November 30, 1995. The operations
of Carlton House had a significant impact on the results of operations of the
Partnership for the three months ended March 31, 1996, with revenues of
approximately $1,586,000 and expenses of approximately $1,460,000. Subsequent
to March 31, 1996, the Carlton House was renamed "The Sterling." The following
table sets forth the average occupancies of the properties for the three months
ended March 31, 1996 and 1995:
Average
Occupancy
Property 1996 1995
The Loft Apartments 92% 92%
Raleigh, North Carolina
The Carlton House (residential) 87% 83%
The Carlton House (commercial) 64% 63%
Philadelphia, Pennsylvania
Results of Operations
The Partnership's net income for the three months ended March 31, 1996, was
approximately $372,000 as compared to net income of approximately $1,510,000 for
the three months ended March 31, 1995. The decrease in net income is primarily
due to the fact there was no interest income recorded on investment in Master
Loan to affiliate during the three months ended March 31, 1996. This decrease
is the result of decreased operations at the affiliated properties. Offsetting
this decrease in income was the transfer of The Carlton House from CCEP to the
Partnership which resulted in net income for the Partnership of approximately
$126,000 for the three months ended March 31, 1996. The transfer caused
significant increases in rental income, operating expenses, and depreciation.
Also, the Lofts experienced increased operating expenses during the three months
ended March 31, 1996, due to major landscaping work done at the property.
General and administrative expenses decreased during the three months ended
March 31, 1996, as compared to the three months ended March 31, 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 as a result of the
financing of The Lofts 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 months ended March 31, 1995. Other income increased during the three
months ended March 31, 1996, due to the investment of the proceeds received
from the December 1995 financing of The Lofts 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 March 31, 1996, the Partnership had unrestricted cash of approximately
$10,740,000 versus approximately $2,738,000 at March 31, 1995. Net cash
provided by operating activities increased primarily due to the decrease in
interest receivable on the Master Loan. Offsetting this increase was a decrease
in net income as explained above. Cash used in investing activities increased
due to cash received in 1995 from the sale of securities available for sale and
an increase in property improvements and replacements during the three months
ended March 31, 1996. Net cash used in financing activities increased due to
increased distributions paid to the partners as well as principal payments on
the mortgage note for The Lofts.
The Partnership has budgeted for the completion of approximately $14 million
of deferred maintenance and capital improvements to The Carlton House during
1996 and 1997. These programs will be funded using a portion of the cash
received from CCEP in 1995 on debt service on the Master Loan and cash flow from
property operations, if available, as well as cash and cash equivalents on hand.
The major capital improvements are for exterior renovation, elevator
rehabilitation, residential and commercial common area renovations.
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 $4,560,000 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 in March 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 in March 1995. A matching distribution of approximately
$15,000 was made to the General Partner. 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 $16.3
million, were greater than the reserve requirement of $7.3 million as of March
31, 1996.
CCEP Property Operations
The Partnership invested approximately $367,000 in CCEP during the three
months ended March 31, 1996, as additional advances under the Master Loan. CCEP
used the funds to pay for deferred maintenance and capital improvements on the
properties which collateralize the Master Loan. A portion of the advance was
used to pay for 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.
For the three months ended March 31, 1996, CCEP's net loss totaled
approximately $7.6 million on total revenues of approximately $4.9 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 three
months ended March 31, 1996, CCEP's statement of operations includes total
interest expense attributable to the Master Loan of $7.4 million, all of which
represents interest accrued in excess of required payments. CCEP is expected to
continue to generate operating losses as a result of such interest accruals and
noncash charges for depreciation.
During the three months ended March 31, 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 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
months ended March 31, 1996 and 1995.
(b) Reports on Form 8-K:
None filed during the quarter ended March 31, 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: May 6, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties 1996 First 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 10,740
<SECURITIES> 5,264
<RECEIVABLES> 95,438
<ALLOWANCES> 41,478
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 21,856
<DEPRECIATION> 2,202
<TOTAL-ASSETS> 91,282
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,560
0
0
<COMMON> 0
<OTHER-SE> 85,649
<TOTAL-LIABILITY-AND-EQUITY> 91,282
<SALES> 0
<TOTAL-REVENUES> 2,313
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 372
<EPS-PRIMARY> 1.85
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 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
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
Assets
Cash and cash equivalents $ 1,914 $ 2,225
Investments in limited partnerships 387 460
Other assets 5,122 5,725
Investment properties:
Land 10,452 10,452
Building and related personal property 95,990 94,906
106,442 105,358
Less accumulated depreciation (69,391) (68,167)
37,051 37,191
$ 44,474 $ 45,601
Liabilities and Partners' Deficit
Accounts payable and accrued liabilities $ 1,909 $ 3,035
Mortgage notes and interest payable 25,039 25,050
Master loan and interest payable 241,083 233,490
Partners' Deficit
General partner (2,235) (2,159)
Limited partners (221,322) (213,815)
(223,557) (215,974)
$ 44,474 $ 45,601
<FN>
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
March 31,
1996 1995
<S> <C> <C>
Revenues:
Rental income $ 4,842 $ 6,054
Other income 15 15
Total revenues 4,857 6,069
Expenses:
Operating 3,097 3,851
General and administrative 157 216
Depreciation and amortization 1,319 1,577
Interest 7,855 8,807
Total expenses 12,428 14,451
Loss on disposition of property (12) (7)
Casualty gain -- 45
Net loss $ (7,583) $ (8,344)
Net loss allocated to general partner (1%) $ (76) $ (83)
Net loss allocated to limited partners (99%) (7,507) (8,261)
$ (7,583) $ (8,344)
<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 Three Months Ended March 31, 1996 and 1995
(in thousands)
<TABLE>
<CAPTION>
General Limited
Partners Partners Total
<S> <C> <C> <C>
Partners' deficit at
December 31, 1994 $ (1,780) $(176,260) $(178,040)
Net loss for the three months
ended March 31, 1995 (83) (8,261) (8,344)
Partners' deficit at
March 31, 1995 $ (1,863) $(184,521) $(186,384)
Partners' deficit at
December 31, 1995 $ (2,159) $(213,815) $(215,974)
Net loss for the three months
ended March 31, 1996 (76) (7,507) (7,583)
Partners' deficit at
March 31, 1996 $ (2,235) $(221,322) $(223,557)
<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>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (7,583) $ (8,344)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,338 1,577
Loss on disposition of property 12 7
Casualty gain -- (45)
Change in accounts:
Other assets 630 (935)
Accounts payable and accrued liabilities (1,127) 886
Interest on Master Loan 7,401 7,556
Interest payable 64 1,158
Net cash provided by operating activities 735 1,860
Cash flows from investing activities:
Property improvements and replacements (1,162) (441)
Proceeds from sale of securities available
for sale -- 195
Net cash used in investing activities (1,162) (246)
Cash flows from financing activities:
Advances on Master Loan 367 --
Principal payments on Master Loan (175) --
Principal payments on notes payable (74) (136)
Loan costs paid (2) --
Net cash provided by (used in)
financing activities 116 (136)
Net (decrease) increase in cash and cash equivalents (311) 1,478
Cash and cash equivalents at beginning of period 2,225 3,393
Cash and cash equivalents at end of period $ 1,914 $ 4,871
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 371 $ 92
<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 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 the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 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
Consolidated Capital Equity Partners, L.P. ("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 three months ended March 31, 1995, of Carlton House
are consolidated in CCEP's financial statements pursuant to accounting
guidelines regarding notes receivable in-substance foreclosed. 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 three month periods ended March
31, 1996 and 1995. Fees paid to affiliates of Insignia during the three month
periods ended March 31, 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. These reimbursements are included in general
and administrative expense on the consolidated statement of operations. The
General Partner, and its current affiliates, received reimbursements for the
three months ended March 31, 1996 and 1995, as reflected in the following table.
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 Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $ 248 $314
Investment advisory fees 45 64
Lease commissions 7 --
Reimbursement for services of affiliates 113 126
The decrease in property management fees for the three months ended March 31,
1996, as compared to the three months ended March 31, 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.
No interest payments were made during the three month periods ended March 31,
1996 and 1995. (See further discussion in "Note C"). Advances of approximately
$367,000 were made under the Master Loan Agreement during the three months ended
March 31, 1996. Principal payments of approximately $175,000 were made on the
Master Loan during the three months ended March 31, 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 March 31,
1996, and December 31, 1995, are $241.1 million and $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 month periods ended March 31, 1996 and 1995, was
12.5%. Interest 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. If such Excess Cash Flow
payments are less than the current accrued interest during the quarterly period,
the unpaid interest is added to principal, compounded annually, and is payable
at the loan's maturity. If such Excess Cash Flow payments are greater than the
currently payable interest, the excess amount is applied to the principal
balance of the loan. Any net proceeds from sale or refinancing of any of the
Partnership'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 three months ended
March 31, 1996, as additional advances under the Master Loan. CCEP used the
funds to pay for deferred maintenance and capital improvements on the properties
which collateralize the Master Loan. A portion of the advance was used to pay
for 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 three months ended March 31, 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 agreement, accounted for approximately $74,000.
Note D - Note Receivable Deemed In-Substance Foreclosed
Prior to the transfer of 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
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 three months ended March 31,
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 Three Months Ended
March 31, 1995
(in thousands)
Revenues:
Rental income $ 1,369
Other income 9
Total revenues 1,378
Expenses:
Operating 1,248
Depreciation and amortization 250
Interest 1,141
Total expenses 2,639
Net loss $(1,261)
