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, 1997
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)
March 31, December 31,
1997 1996
(Unaudited) (Note)
Assets
Cash and cash equivalents:
Unrestricted $ 8,421 $ 12,373
Restricted--tenant security deposits 326 318
Accounts receivable 23 95
Escrow for taxes 247 551
Restricted escrows 64 62
Other assets 601 209
Interest receivable on Master Loan 862 --
Net investment in Master Loan 91,940 93,370
Less: Allowance for impairment loss (40,686) (40,686)
51,254 52,684
Investment properties:
Land 3,620 3,620
Building and related personal property 27,125 24,962
30,745 28,582
Less accumulated depreciation (3,612) (3,217)
27,133 25,365
$ 88,931 $ 91,657
Liabilities and Partners' Capital (Deficit)
Accounts payable $ 179 $ 1,789
Tenant security deposits 325 317
Accrued taxes 16 --
Other liabilities 450 465
Mortgage note payable 4,486 4,498
Partners' Capital (Deficit)
General partner (391) (380)
Limited partners (199,052 units
outstanding at March 31, 1997, and
December 31, 1996, respectively) 83,866 84,968
83,475 84,588
$ 88,931 $ 91,657
Note: The balance sheet at December 31, 1996, 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)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 1,863 $ 1,805
Interest income on investment in Master
Loan to affiliate 862 --
Interest income 127 377
Other income 152 131
Total revenues 3,004 2,313
Expenses:
Operating 1,092 1,097
Depreciation and amortization 398 246
General and administrative 88 116
Maintenance 319 208
Property taxes 140 193
Interest 81 81
Total expenses 2,118 1,941
Net income $ 886 $ 372
Net income allocated to general partner (1%) $ 9 $ 4
Net income allocated to limited partners (99%) 877 368
$ 886 $ 372
Net income per limited partnership unit $ 4.41 $ 1.85
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 200,342 $ 1 $200,342 $200,343
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
Partners' capital (deficit) at
December 31, 1996 199,052 $ (380) $ 84,968 $ 84,588
Distributions to partners (20) (1,979) (1,999)
Net income for the three months
ended March 31, 1997 9 877 886
Partners' capital (deficit) at
March 31, 1997 199,052 $ (391) $ 83,866 $ 83,475
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 886 $ 372
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 395 245
Amortization of loan costs and lease
commissions 5 4
Change in accounts:
Restricted cash (8) 4
Accounts receivable 72 153
Escrows for taxes 304 342
Other assets (398) (417)
Interest receivable on master loan (862) --
Accounts payable (1,610) 120
Tenant security deposit liabilities 8 (8)
Accrued taxes 16 16
Other liabilities (15) (59)
Net cash (used in) provided by
operating activities (1,207) 772
Cash flows from investing activities:
Property improvements and replacements (2,163) (480)
Advances on Master Loan -- (367)
Principal receipts on Master Loan 1,430 175
Net cash used in investing
activities (733) (672)
Cash flows from financing activities:
Distributions to partners (1,999) (15,499)
Mortgage principal payments (12) (12)
Net cash used in financing activities (2,011) (15,511)
Net decrease in cash and cash equivalents (3,951) (15,411)
Cash and cash equivalents at beginning of period 12,372 26,264
Cash and cash equivalents at end of period $ 8,421 $ 10,853
Supplemental disclosure of cash flow information:
Cash paid for interest $ 78 $ 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 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 month
period ended March 31, 1997, are not necessarily indicative of the results that
may be expected for the fiscal year ending December 31, 1997. 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, 1996, for the Partnership.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The 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, 1997 and 1996. Such fees are included in operating
expenses on the consolidated statements 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 Three Months
March 31,
1997 1996
(in thousands)
Property management fees $102 $ 97
Reimbursement for services of affiliates (1) 109 58
(1) Included in "reimbursements for services of affiliates" for 1997 is
approximately $41,000 in reimbursements for construction oversight costs.
The Partnership insures 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
At March 31, 1997, the recorded investment in the Master Loan was considered to
be impaired under "FASB 114." The Partnership measures the impairment of the
loan based upon the fair value of the collateral due to the fact that repayment
of the loan is expected to be provided solely by the collateral. For the three
months ended March 31, 1997, the Partnership recorded approximately $862,000 in
income based upon an increase in the fair value of the collateral.
Interest due to the Partnership pursuant to the terms of the Master Loan
Agreement, but not recognized in the income statements, totaled approximately
$8.3 million and $7.4 million for the three months ended March 31, 1997 and
1996, respectively. At March 31, 1997, and December 31, 1996, such cumulative
unrecognized interest totaling approximately $176 million and $167.7 million was
not included in the balance of the investment in Master Loan. In addition, six
of the properties are collateralized by first mortgages totaling approximately
$23,330,000 which are superior to the Master Loan.
During the three months ended March 31, 1997, the Partnership made no advances
to Consolidated Capital Equity Partners, L.P. ("CCEP") as an advance on the
Master Loan.
During the three months ended March 31, 1997, the Partnership received
approximately $1,430,000 as principal payments on the Master Loan. Cash
received on certain investments by CCEP, which are required to be transferred to
the Partnership per the Master Loan Agreement, accounted for approximately
$367,000. Approximately $63,000 received was due to an excess cash flow payment
received from CCEP as stipulated by the master loan agreement. Approximately
$1,000,000 was received from CCEP as additional principal payments. Subsequent
to March 31, 1997, CCEP paid $1,000,000 to CCIP of which approximately $411,000
was an excess cash flow payment which is required under the terms of the Master
Loan Agreement.
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 $8.7 million,
were greater than the reserve requirement of approximately $7.3 million at March
31, 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Partnership's investment properties consist of two properties, The Loft and
The Sterling Apartment Homes and Commerce Center ("The Sterling"). The
Sterling is a multiple-use facility which consists of an apartment complex and
commercial space. The following table sets forth the average occupancies of the
properties for the three months ended March 31, 1997 and 1996:
Average
Occupancy
1997 1996
Property
The Loft Apartments 94% 92%
Raleigh, North Carolina
The Sterling Apartment Homes 84% 87%
The Sterling Commerce Center 68% 64%
Philadelphia, Pennsylvania
The General Partner attributes the decrease in occupancy at The Sterling
Apartment Homes to major capital improvements occurring at the complex, along
with rental increases established in order to upgrade the tenant base.
Management expects to see an upward trend in occupancy throughout 1997 as a
result of the renovations and change in demographics. The increase in occupancy
at The Sterling Commerce Center is attributable to the major ongoing capital
improvements including exterior renovations, elevator rehabilitation, and common
area renovations. The improvements at The Sterling Commerce Center are
substantially complete as of March 31, 1997.
Results of Operations
The Partnership's net income for the three months ended March 31, 1997, was
approximately $886,000 compared to net income of approximately $372,000 for the
corresponding period ended March 31, 1996. The increase in net income is
primarily due to an increase in interest income recorded on the investment in
Master Loan to affiliate. This increase is the result of an increase in the
fair value of the underlying collateral properties due to an increase in
operations of such properties. Also contributing to the increase in net income
was a decrease in tax expense and general and administrative expense and an
increase in other income. The decrease in tax expense is the result of an
assessment reduction at The Sterling in 1996. General and administrative
expense has decreased due to the fact that the copying and mailing costs related
to the 1996 10-K's have not been incurred at March 31, 1997. These costs were
incurred in late March 1996. Other income increased for the three months ended
March 31, 1997, due to increased utility collections resulting from higher
commercial occupancy.
Offsetting the increase in net income was an increase in depreciation and
maintenance expenses and a decrease in interest income. Both depreciation and
maintenance expenses increased during the three months ended March 31, 1997, as
a direct result of the ongoing capital improvements and renovations at the
Sterling. Interest income decreased as a result of a decrease in investment
balances during the first quarter of 1997. Included in maintenance expense for
the three months ended March 31, 1997, is approximately $141,000 of major
repairs and maintenance comprised primarily of window coverings and interior and
exterior building improvements.
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, 1997, the Partnership had unrestricted cash of approximately
$8,421,000 versus approximately $10,853,000 at March 31, 1996. Net cash used in
operating activities increased primarily due to a decrease in accounts payable
resulting from the payment of invoices relating to the renovations at The
Sterling. The increase in net cash used in operating activities is also the
result of an increase in interest receivable on the Master Loan. Offsetting the
increase in net cash used in operating activities was an increase in net income
as explained above. Net cash used in investing activities increased as a result
of an increase in property improvements and replacements related to the
renovations at The Sterling. Offsetting this increase in net cash used in
investing activities was the receipt of principal payments on the Master Loan
from CCEP. Net cash used in financing activities decreased due to a decrease in
distributions to partners.
The Partnership has budgeted approximately $7.9 million for deferred maintenance
and capital improvements to be made to The Sterling during 1997. These programs
will be paid by existing cash and from cash generated by property operations and
debt service on the Master Loan. The major capital improvements are for
exterior renovations, elevator rehabilitation, residential and commercial common
area renovations. As of March 31, 1997, approximately $8.6 million had been
spent on these programs during 1996 and 1997.
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 $4,486,000 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
$1,979,000 were made to the limited partners during the three months ended March
31, 1997. A corresponding distribution of approximately $20,000 was made to the
General Partner. Distributions of approximately $15,484,000 were made to the
limited partners during the three months ended March 31, 1996. A corresponding
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 the 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 $8.7
million, were greater than the reserve requirement of approximately $7.3 million
at March 31, 1997.
CCEP Property Operations
For the three months ended March 31, 1997, CCEP's net loss totaled approximately
$7.9 million on total revenues of approximately $5.1 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, 1997, CCEP's statement of operations includes total interest expense
attributable to the Master Loan of approximately $8.3 million, all of which
represents interest accrued in excess of required payments. During the three
months ended March 31, 1997, CCEP made an excess cash flow principal payment of
approximately $63,000 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 three months ended March 31, 1997, the Partnership received
approximately $1,430,000 as principal payments on the Master Loan. Cash
received on certain investments by CCEP, which are required to be transferred to
the Partnership per the Master Loan Agreement, accounted for approximately
$367,000. Approximately $63,000 received was due to an excess cash flow payment
from CCEP as described above. The Partnership also received an additional
$1,000,000 from CCEP as principal payment on the Master Loan. Subsequent to
March 31, 1997, CCEP paid $1,000,000 to the Partnership of which approximately
$411,000 was an excess cash flow payment which is required under the terms of
the Master Loan Agreement.
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, 1997 and 1996.
(b) Reports on Form 8-K:
None filed during the quarter ended March 31, 1997.
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/ William H. Jarrard, Jr.
William H. Jarrard, Jr.
President
By: /s/ Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: May 5, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties 1997 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-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 8,421
<SECURITIES> 0
<RECEIVABLES> 92,825
<ALLOWANCES> (40,686)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 30,745
<DEPRECIATION> (3,612)
<TOTAL-ASSETS> 88,931
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 4,486
0
0
<COMMON> 0
<OTHER-SE> 83,475
<TOTAL-LIABILITY-AND-EQUITY> 88,931
<SALES> 0
<TOTAL-REVENUES> 3,004
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,118
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 81
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 886
<EPS-PRIMARY> 4.41<F2>
<EPS-DILUTED> 0
<FN>
<F1>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 MONTHS ENDED
MARCH 31, 1997 AND 1996
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
1997 1996
(Unaudited) (Note)
Assets
Cash and cash equivalents:
Unrestricted $ 2,265 1,960
Restricted - tenant security deposits 547 554
Investments in limited partnerships -- 336
Accounts receivable 235 252
Escrow for taxes 755 678
Restricted escrows 639 1,420
Other assets 1,667 1,630
Investment properties:
Land 10,217 10,217
Building and related personal property 95,653 95,236
105,870 105,453
Less accumulated depreciation (71,871) (70,606)
33,999 34,847
$ 40,107 $ 41,677
Liabilities and Partners' Deficit
Accounts payable $ 250 $ 798
Tenant security deposits 605 611
Accrued taxes 374 313
Other liabilities 423 363
Mortgage notes 23,330 23,393
Master loan and interest payable 267,972 261,136
Partners' Deficit
General partner (2,528) (2,449)
Limited partners (250,319) (242,488)
(252,847) (244,937)
$ 40,107 $ 41,677
Note: The balance sheet at December 31, 1996, 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 EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1997 1996
Revenues:
Rental income $ 4,777 $ 4,686
Interest income 35 15
Other income 321 270
Total revenues 5,133 4,971
Expenses:
Operating 1,845 2,059
General and administrative 252 157
Depreciation and amortization 1,298 1,319
Maintenance 631 828
Property taxes 325 336
Interest 8,692 7,855
Total expenses 13,043 12,554
Net loss $ (7,910) $ (7,583)
Net loss allocated to general partner (1%) $ (79) $ (76)
Net loss allocated to limited partners (99%) (7,831) (7,507)
$ (7,910) $ (7,583)
See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Three Months Ended March 31, 1997 and 1996
(in thousands)
General Limited
Partners Partners Total
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)
Partners' deficit at
December 31, 1996 $ (2,449) $(242,488) $(244,937)
Net loss for the three months
ended March 31, 1997 (79) (7,831) (7,910)
Partners' deficit at
March 31, 1997 $ (2,528) $(250,319) $(252,847)
See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1997 1996
Cash flows from operating activities:
Net loss $ (7,910) $ (7,583)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,318 1,338
Change in accounts:
Restricted cash 7 (9)
Accounts receivable 17 124
Escrows for taxes (78) 115
Other assets (89) 152
Accounts payable (548) (1,035)
Tenant security deposit liabilities (6) 11
Accrued taxes 60 40
Other liabilities 61 (78)
Interest on Master Loan 8,266 7,401
Net cash provided by operating activities 1,098 476
Cash flows from investing activities:
Property improvements and replacements (417) (1,162)
Deposits to restricted escrows (22) (5)
Withdrawals from restricted escrows 803 255
Distributions from investments in limited partnerships 336 --
Net cash provided by (used in)
investing activities 700 (912)
Cash flows from financing activities:
Advances on Master Loan -- 367
Principal payments on Master Loan (1,430) (175)
Principal payments on notes payable (63) (74)
Loan costs paid -- (2)
Net cash (used in) provided by
financing activities (1,493) 116
Net increase (decrease) in cash and cash equivalents 305 (320)
Cash and cash equivalents at beginning of period 1,960 1,686
Cash and cash equivalents at end of period $ 2,265 $ 1,366
Supplemental disclosure of cash flow information:
Cash paid for interest $ 406 $ 371
See Accompanying Notes to Consolidated Financial Statements
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 month period
ended March 31, 1997, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1997.
Certain reclassifications have been made to the 1996 information to conform to
the 1997 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.
NOTE B - RELATED PARTY TRANSACTIONS
CCEP has no employees and is dependent on the General Partner and its affiliates
for the management and administration of all partnership activities. 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, 1997 and
1996. Fees paid to affiliates of Insignia during the three month periods ended
March 31, 1997 and 1996, are included in operating expenses on the consolidated
statements 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 three months ended March 31, 1997 and
1996, as reflected in the following table.
Also, CCEP is subject to an Investment Advisory Agreement between CCEP 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 reflected in the following table:
For the Three Months Ended
March 31,
1997 1996
(in thousands)
Property management fees $253 $248
Investment advisory fees 45 45
Lease commissions 35 7
Reimbursement for services of affiliates (1) 117 113
(1) Included in "reimbursements for services of affiliates" for 1997 is
approximately $20,000 in reimbursements for construction oversight costs.
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 1996 Annual Report.
No interest payments were made during the three month periods ended March 31,
1997 and 1996. No advances were received under the Master Loan Agreement during
the three months ended March 31, 1997. Principal payments of approximately
$1,430,000 were made on the Master Loan during the three months ended March 31,
1997.
CCEP insures 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,
1997, and December 31, 1996, are approximately $268.0 million and approximately
$261.1 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, 1997 and 1996, 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.
During the three months ended March 31, 1997, CCEP paid approximately $1,430,000
to CCIP as principal payments on the Master Loan. Cash received on certain
investments by CCEP, which are required to be transferred to CCIP per the Master
Loan Agreement, accounted for approximately $367,000. Approximately $63,000 was
due to an excess cash flow payment paid to CCIP as stipulated by the Master Loan
Agreement. CCEP also paid an additional $1,000,000 to CCIP as principal payment
on the Master Loan. Subsequent to March 31, 1997, CCEP paid $1,000,000 to CCIP
of which approximately $411,000 was an excess cash flow payment which is
required under the terms of the Master Loan Agreement.
