FORM 10-Q---QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
[ ] 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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
(Unaudited) (Note)
Assets
<S> <C> <C>
Cash and cash equivalents $ 6,499 $ 11,175
Receivables and deposits 731 1,078
Restricted escrows 538 600
Other assets 1,923 1,641
Investment in Master Loan 67,698 67,865
Less: allowance for impairment loss (17,417) (17,417)
50,281 50,448
Investment properties:
Land 3,564 3,564
Building and related personal property 38,357 37,115
41,921 40,679
Less: accumulated depreciation (11,458) (9,953)
30,463 30,726
$ 90,435 $ 95,668
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 191 $ 108
Tenant security deposit liabilities 621 574
Accrued property taxes 33 --
Other liabilities 595 627
Mortgage note payable 26,928 27,074
28,368 28,383
Partners' (Deficit) Capital
General partner (44) (58)
Limited partners (199,045.2 units issued and
outstanding) 62,111 67,343
62,067 67,285
$ 90,435 $ 95,668
Note: The balance sheet at December 31, 1999, 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>
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,
2000 1999 2000 1999
Revenues:
<S> <C> <C> <C> <C>
Rental income $ 2,640 $ 2,463 $ 5,227 $ 4,919
Interest income on investment
in Master Loan to affiliate 1,000 252 1,000 1,053
Interest income 101 69 215 141
Other income 222 177 367 309
Total revenues 3,963 2,961 6,809 6,422
Expenses:
Operating 1,147 1,050 2,308 2,208
Depreciation 767 689 1,505 1,263
General and administrative 199 181 299 297
Property taxes 143 81 286 224
Interest 480 491 959 962
Total expenses 2,736 2,492 5,357 4,954
Net income $ 1,227 $ 469 $ 1,452 $ 1,468
Net income allocated
to general partner (1%) $ 12 $ 5 $ 14 $ 15
Net income allocated
to limited partners (99%) 1,215 464 1,438 1,453
$ 1,227 $ 469 $ 1,452 $ 1,468
Net income per Limited
Partnership Unit $ 6.10 $ 2.33 $ 7.22 $ 7.30
Distributions per Limited
Partnership Unit $ 5.97 $ -- $ 33.51 $ 9.29
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
c)
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Limited
Partnership General Limited
Units Partner Partners Total
<S> <C> <C> <C> <C>
Original capital contributions 200,342.0 $ 1 $200,342 $200,343
Partners' (deficit) capital
at December 31, 1998 199,045.2 $ (96) $ 86,230 $ 86,134
Distributions to partners -- -- (1,850) (1,850)
Net income for the six months
ended June 30, 1999 -- 15 1,453 1,468
Partners' (deficit) capital
at June 30, 1999 199,045.2 $ (81) $ 85,833 $ 85,752
Partners' (deficit) capital at
December 31, 1999 199,045.2 $ (58) $ 67,343 $ 67,285
Distributions to partners -- -- (6,670) (6,670)
Net income for the six months
ended June 30, 2000 -- 14 1,438 1,452
Partners' (deficit) capital at
June 30, 2000 199,045.2 $ (44) $ 62,111 $ 62,067
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,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net income $ 1,452 $ 1,468
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,564 1,327
Change in accounts:
Receivables and deposits 347 (24)
Other assets (341) (505)
Accounts payable 83 (186)
Tenant security deposit liabilities 47 20
Accrued property taxes 33 (29)
Other liabilities (32) (125)
Net cash provided by operating activities 3,153 1,946
Cash flows from investing activities:
Net receipts from (deposits to) restricted escrows 62 (134)
Property improvements and replacements (1,242) (1,027)
Lease commissions paid -- (74)
Principal receipts on Master Loan 167 124
Net cash used in investing activities (1,013) (1,111)
Cash flows from financing activities:
Distributions to partners (6,670) (1,850)
Payments on notes payable (146) (145)
Loan costs paid -- (8)
Net cash used in financing activities (6,816) (2,003)
Net decrease in cash and cash equivalents (4,676) (1,168)
Cash and cash equivalents at beginning of period 11,175 8,683
Cash and cash equivalents at end of period $ 6,499 $ 7,515
Supplemental disclosure of cash flow information:
Cash paid for interest $ 931 $ 933
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 (the "Partnership" or "Registrant") 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. (the "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, 2000, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2000. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 1999.
Principles of Consolidation
The Partnership's financial statements include the accounts of Kennedy Boulevard
Associates, I, L.P., a Pennsylvania Limited Partnership ("KBA-I, L.P."), Kennedy
Boulevard Associates II, L.P. a Pennsylvania Limited Partnership ("KBA-II,
L.P."), Kennedy Boulevard Associates III, L.P. a Pennsylvania Limited
Partnership ("KBA-III, L.P."), Kennedy Boulevard Associates IV, L.P. a
Pennsylvania Limited Partnership ("KBA-IV, L.P.") and Kennedy Boulevard GP I, a
Pennsylvania Partnership. The general partners of each of the affiliated Limited
and General Partnerships are Limited Liability Corporations of which the
Partnership is the sole member. The Limited Partners of each of the affiliated
limited and general partnerships are either the Partnership or a Limited
Liability Corporation of which the Partnership is the sole member. Therefore,
the Partnership controls the affiliated Limited and General Partnerships and
consolidation is appropriate. KBA-I, L.P. holds title to The Sterling Apartment
Home and Commerce Center ("Sterling").
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note C - 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 Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made to the General
Partner and its affiliates during the six months ended June 30, 2000 and 1999:
2000 1999
(in thousands)
Property management fees (included in operating expenses) $ 279 $ 266
Reimbursement for services of affiliates (included in
operating, and general and administrative expenses
and investment properties) 167 126
During the six months ended June 30, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Registrant's
properties for providing property management services. The Registrant paid to
such affiliates approximately $279,000 and $266,000 for the six months ended
June 30, 2000 and 1999, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $167,000 and $126,000 for the
six months ended June 30, 2000 and 1999, respectively.
AIMCO and its affiliates currently own 117,301.80 limited partnership units in
the Partnership representing 58.93% of the outstanding units. A number of these
units were acquired pursuant to tender offers made by AIMCO or its affiliates.
It is possible that AIMCO or its affiliates will make one or more additional
offers to acquire additional limited partnership interests in the Partnership
for cash or in exchange for units in the operating partnership of AIMCO. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters. As a result of its
ownership of 58.93% of the outstanding units, AIMCO is in a position to
influence all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of their affiliation
with the General Partner.
Note D - Net Investment in Master Loan
The Partnership was formed for the benefit of its limited partners to lend funds
to Consolidated Capital Equity Partners ("CCEP"), a California general
partnership. The Partnership loaned funds to CCEP subject to a nonrecourse note
with a participation interest (the "Master Loan"). At June 30, 2000, the
recorded investment in the Master Loan was considered to be impaired under
Statement of Financial Accounting Standard No. 114 ("SFAS 114"), Accounting by
Creditors for Impairment of a Loan. 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 six months ended June 30, 2000 and 1999, the Partnership recorded
approximately $1,000,000 and $1,053,000, respectively, of interest income based
upon "Excess Cash Flow" generated (as defined in the terms of the New Master
Loan Agreement).
The fair value of the collateral properties was determined using the net
operating income of the collateral properties capitalized at a rate deemed
reasonable for the type of property adjusted for market conditions, the physical
condition of the property and other factors, or by obtaining an appraisal by an
independent third party. This methodology has not changed from that used in
prior calculations performed by the General Partner in determining the fair
value of the collateral properties. There was no change in the provision for
impairment loss for the six months ended June 30, 2000 and 1999. The General
Partner evaluates the net realizable value on a semi-annual basis.
Interest, calculated on the accrual basis, due to the Partnership pursuant to
the terms of the Master Loan Agreement, but not recognized in the consolidated
statements of operations due to the impairment of the loan, totaled
approximately $20,210,000 and $19,108,000 for the six months ended June 30, 2000
and 1999, respectively. Interest income is recognized on the cash basis as
allowed under SFAS 114. At June 30, 2000, and December 31, 1999, such cumulative
unrecognized interest totaling approximately $287,185,000 and $266,975,000 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
$22,398,000 which are superior to the Master Loan. Accordingly, this fact has
been taken into consideration in determining the fair value of the Master Loan.
During the six months ended June 30, 2000 and 1999, the Partnership received
approximately $167,000 and $124,000, respectively, in principal payments on the
Master Loan. This amount represents cash received on certain investments held by
CCEP, which are required to be transferred to the Partnership per the Master
Loan Agreement.
Note E - Commitment
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 in the Partnership 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 tenant security deposits totaling approximately $7,121,000,
were greater than the reserve requirement of approximately $4,626,000 at June
30, 2000.
Note F - Distributions
Distributions from surplus cash of approximately $6,670,000 were paid to the
limited partners ($33.51 per limited partnership unit) during the six months
ended June 30, 2000. During the six months ended June 30, 1999, the Partnership
paid approximately $1,850,000 in distributions from surplus cash to the limited
partners ($9.29 per limited partnership unit). Included in the amounts at June
30, 2000 are payments to both the Pennsylvania and North Carolina Departments of
Revenue for withholding taxes related to income generated by the Registrant's
investment properties located in those states. Included in the amounts at June
30, 1999 are payments to the North Carolina Department of Revenue for
withholding taxes related to income generated by the Registrant's investment
property located in that state.
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has two reportable segments: residential properties and
commercial properties. The Partnership's residential property segment consists
of one apartment complex located in North Carolina and one multiple-use facility
consisting of apartment units and commercial space located in Pennsylvania. The
Partnership rents apartment units to tenants for terms that are typically twelve
months or less. The commercial property leases space to various medical offices,
various career services facilities, and a credit union at terms ranging from two
months to fifteen years.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segments are the same as
those described in the Partnership's Annual Report on Form 10-K for the year
ended December 31, 1999.
Factors management used to identify the enterprise's reportable segment:
The Partnership's reportable segments are investment properties that offer
different products and services. The reportable segments are each managed
separately because they provide distinct services with different types of
products and customers.
Segment information for the three and six month periods ended June 30, 2000 and
1999 is shown in the tables below (in thousands). The "Other" column includes
Partnership administration related items and income and expense not allocated to
the reportable segment.
<TABLE>
<CAPTION>
Three Months Ended June 30, 2000 Residential Commercial Other Totals
<S> <C> <C> <C> <C>
Rental income $ 2,253 $ 387 $ -- $ 2,640
Interest income 33 13 55 101
Other income 166 56 -- 222
Interest income on investment in
Master Loan -- -- 1,000 1,000
Interest expense 421 59 -- 480
Depreciation 745 22 -- 767
General and administrative
expense -- -- 199 199
Segment profit 262 109 856 1,227
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 2000 Residential Commercial Other Totals
<S> <C> <C> <C> <C>
Rental income $ 4,463 $ 764 $ -- $ 5,227
Interest income 42 14 159 215
Other income 256 111 -- 367
Interest income on investment in
Master Loan -- -- 1,000 1,000
Interest expense 841 118 -- 959
Depreciation 1,463 42 -- 1,505
General and administrative
expense -- -- 299 299
Segment profit 372 220 860 1,452
Total assets 32,490 1,713 56,232 90,435
Capital expenditures for
investment properties 1,223 19 -- 1,242
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1999 Residential Commercial Other Totals
<S> <C> <C> <C> <C>
Rental income $ 2,110 $ 353 $ -- $ 2,463
Interest income 5 1 63 69
Other income 132 45 -- 177
Interest income on investment
in Master Loan -- -- 252 252
Interest expense 432 59 -- 491
Depreciation 667 22 -- 689
General and administrative
expense -- -- 181 181
Segment profit 211 124 134 469
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended June 30, 1999 Residential Commercial Other Totals
<S> <C> <C> <C> <C>
Rental income $ 4,240 $ 679 $ -- $ 4,919
Interest income 15 2 124 141
Other income 240 69 -- 309
Interest income on investment
in Master Loan -- -- 1,053 1,053
Interest expense 844 118 -- 962
Depreciation 1,228 35 -- 1,263
General and administrative
expense -- -- 297 297
Segment profit 413 175 880 1,468
Total assets 34,663 1,638 78,034 114,335
Capital expenditures for
investment properties 1,012 15 -- 1,027
</TABLE>
Note H - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note I - Subsequent Event
On July 21, 2000, CCEP sold Shirewood Townhomes, located in Shreveport,
Louisiana, to an unaffiliated third party for net sales proceeds of
approximately $4,526,000, after payment of closing costs. CCEP used all of the
proceeds from the sale to paydown the Master Loan principal, as required by the
Master Loan Agreement. The sale resulted in a gain on sale of investment
property of approximately $3,030,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The matters discussed in this Form 10-Q contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the
disclosures contained in this Form 10-Q and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
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 occupancy of the properties
for the six months ended June 30, 2000 and 1999:
Average Occupancy
Property 2000 1999
The Loft Apartments 93% 96%
Raleigh, North Carolina
The Sterling Apartment Homes 92% 93%
The Sterling Commerce Center 89% 88%
Philadelphia, Pennsylvania
The decrease in occupancy at The Loft Apartments is attributed to a large number
of new apartment complexes in the area.
Results of Operations
The Partnership's net income for the six months ended June 30, 2000 was
approximately $1,452,000 compared to net income of approximately $1,468,000 for
the corresponding period in 1999. The Partnership recorded net income of
approximately $1,227,000 for the three months ended June 30, 2000 compared to
net income of approximately $469,000 for the corresponding period in 1999. The
decrease in net income for the six month period ended June 30, 2000 compared
with the six month period ended June 30, 1999 was primarily due to an increase
in total expenses, partially offset by an increase in total revenues. The
increase in net income for the three month period ended June 30, 2000 compared
with the three month period ended June 30, 1999 was primarily due to the
increase in interest income related to the Master Loan and an increase in rental
revenues offset slightly by an increase in total expenses. The increase in
interest income related to the Master Loan is a factor of the method used to
recognize income. Income is only recognized to the extent that actual cash is
received. The receipt of cash is dependent on the corresponding cash flow of the
properties, which secure the Master Loan. Cash flow for these properties was
lower for the six months ended June 30, 1999 as a result of capital expenditures
at the properties. The increase in rental income was due to increases in average
rental rates at the Registrant's investment properties offset slightly by a
decrease in occupancy at The Loft Apartments and The Sterling Apartment Homes.
The increase in interest income is the result of increased levels of cash
maintained in interest bearing accounts.
The increase in total expenses for the three and six months ended June 30, 2000
is primarily due to an increase in depreciation, property tax and operating
expenses. The increase in operating expense is the result of an increase in
property expenses, slightly offset by a decrease in maintenance expense.
Property expenses increased due to an increase in the cost of utility expense at
The Sterling. Maintenance expenses decreased due to decreases in repairs and
supplies at The Sterling. Depreciation expense increased due to major capital
improvements and replacements at The Sterling during 1999. The increase in
property tax expense is due to the receipt in 1999 of a property tax refund for
The Sterling.
Included in general and administrative expenses for the three and six month
periods ended June 30, 2000 and 1999 are management reimbursements to the
General Partner allowed under the Partnership Agreement. In addition, costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are also included.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. 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, 2000, the Partnership had cash and cash equivalents of approximately
$6,499,000 as compared to approximately $7,515,000 at June 30, 1999. Cash and
cash equivalents decreased approximately $4,676,000 for the six months ended
June 30, 2000 from the Partnership's year ended December 31, 1999. This decrease
was primarily due to approximately $6,816,000 of net cash used in financing
activities and, to a lesser extent, to approximately $1,013,000 of net cash used
in investing activities which was partially offset by approximately $3,153,000
of net cash provided by operating activities. Cash used in investing activities
consisted primarily of property improvements and replacements partially offset
by principal repayments received on the Master Loan and, net receipts from
escrow accounts maintained by the mortgage lender. Cash used in financing
activities consisted primarily of distributions to partners and, to a lesser
extent, payments of principal made on the mortgages encumbering the Registrant's
properties. The Registrant invests its working capital reserves in money market
accounts.
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 tenant security deposits totaling approximately $7,121,000, were
greater than the reserve requirement of approximately $4,626,000 at June 30,
2000.
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 various properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
Federal, state, and local, legal and regulatory requirements. Capital
improvements planned for each of the Registrant's properties are detailed below.
The Loft
The Partnership has budgeted, but is not limited to, approximately $93,000 for
capital improvements during the current year consisting of floor covering and
mini-blinds replacements, appliances, HVAC condensing units, and water heaters.
During the six months ended June 30, 2000, the Partnership completed
approximately $46,000 of budgeted capital improvements, consisting primarily of
appliances, floor covering replacement and mini-blind replacements. These
improvements were funded from cash flow.
The Sterling
The Partnership has budgeted, but is not limited to, approximately $1,379,000
for capital improvements during the current year consisting of appliances,
cabinet replacements, interior building improvements, electrical and plumbing
upgrades, and floor covering replacements. During the six months ended June 30,
2000, the Partnership completed approximately $1,196,000 of budgeted capital
improvements consisting primarily of plumbing and electrical upgrades, air
conditioning units, appliance and cabinet replacements and interior building
improvements. These improvements were funded primarily from cash flow and
replacement reserves.
The additional capital improvements planned for 2000 at the Partnership's
properties will be made only to the extent of cash available from operations and
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Registrant's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $26,928,000 requires monthly payments of principal
and interest and balloon payments of approximately $3,903,000 and $19,975,000 on
December 1, 2005 and October 1, 2008, respectively. The General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity dates. If the properties cannot be refinanced or sold for a sufficient
amount, the Registrant may risk losing such properties through foreclosure.
Distributions from surplus cash of approximately $6,670,000 were paid to the
limited partners ($33.51 per limited partnership unit) during the six months
ended June 30, 2000. During the six months ended June 30, 1999, the Partnership
paid approximately $1,850,000 in distributions from surplus cash to the limited
partners ($9.29 per limited partnership unit). Included in the amounts at June
30, 2000 are payments to both the Pennsylvania and North Carolina Departments of
Revenue for withholding taxes related to income generated by the Registrant's
investment properties located in those states. Included in the amounts at June
30, 1999, are payments to the North Carolina Department of Revenue for
withholding taxes related to income generated by the Registrant's investment
property located in that state. The Registrant's distribution policy is reviewed
on a semi-annual basis. Future cash distributions will depend on the levels of
net cash generated from operations, the availability of cash reserves, and the
timing of debt maturities, refinancings, and/or property sales. Furthermore,
cash reserves are subject to the requirement of the Partnership Agreement which
requires that the Partnership maintain reserves equal to 5% of Net Investment
Capital. There can be no assurance, however, that the Partnership will generate
sufficient funds from operations, after planned capital improvement
expenditures, to permit further distributions to its partners during the
remainder of 2000 or subsequent periods.
CCEP Property Operations
For the six months ended June 30, 2000, CCEP's net loss totaled approximately
$19,794,000 on total revenues of approximately $10,008,000. CCEP recognizes
interest expense on the 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, 2000
and 1999, CCEP's statement of operations includes total interest expense
attributable to the Master Loan of approximately $21,210,000 and $20,161,000,
respectively, all but approximately $1,000,000 and $1,053,000, respectively,
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 six months ended June 30, 2000, the Partnership received
approximately $167,000 in principal payments on the Master Loan. These amounts
were received on certain investments by CCEP, which are required to be
transferred to the Partnership per the Master Loan Agreement.
Subsequently on July 21, 2000, CCEP sold Shirewood Townhomes, located in
Shreveport, Louisiana, to an unaffiliated third party for net sales proceeds of
approximately $4,526,000, after payment of closing costs. CCEP used all of the
proceeds from the sale to paydown the Master Loan principal, as required by the
Master Loan Agreement. The sale resulted in a gain on sale of investment
property of approximately $3,030,000.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks associated with its Master Loan to
Affiliate ("Loan). Receipts (interest income) on the Loan are based upon the
operations and cash flow of the underlying investment properties that
collateralize the Loan. Both the income and expenses of operating the investment
properties are subject to factors outside the Partnership's control, such as an
oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws, or changes in the patterns or needs of users.
The investment properties are also susceptible to the impact of economic and
other conditions outside of the control of the Partnership as well as being
affected by current trends in the market area in which they operate. In this
regard, the General Partner of the Partnership closely monitors the performance
of the properties collateralizing the loans. Based upon the fact that the loan
is considered impaired under Statement of Financial Accounting Standard No. 114,
Accounting by Creditors for Impairment of a Loan, interest rate fluctuations do
not offset the recognition of income, as income is only recognized to the extent
of cash flow. Therefore, market risk factors do not offset the Partnership's
results of operations as it relates to the Loan.
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for its
borrowing activities used to maintain liquidity and fund business operations. To
mitigate the impact of fluctuations in U.S. interest rates, the Partnership
maintains its debt as fixed rate in nature by borrowing on a long-term basis.
Based on interest rates at June 30, 2000, a 1% increase or decrease in market
interest rates would not have a material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 1999. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximate the recorded value as of June 30,
2000.
Principal Amount by Expected Maturity
Fixed Rate Debt
Long-term Average Interest
Debt Rate 6.86%
(in thousands)
2000 $ 151
2001 323
2002 346
2003 371
2004 393
Thereafter 25,344
Total $ 26,928
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, its General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition of interests in certain general partner
entities by Insignia Financial Group, Inc. and entities which were, at one time,
affiliates of Insignia; past tender offers by the Insignia affiliates to acquire
limited partnership units; the management of partnerships by the Insignia
affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to final court approval, on behalf of the Partnership
and all limited partners who owned units as of November 3, 1999. Preliminary
approval of the settlement was obtained on November 3, 1999 from the Court, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case. The Court will entertain applications for lead counsel which must
be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000
to address the issue of appointing lead counsel. The General Partner does not
anticipate that costs associated with this case will be material to the
Partnership's overall operations.
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 six months ended June
30, 2000 and 1999.
b) Reports on Form 8-K during the quarter ended June 30, 2000:
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
By: CONCAP EQUITIES, INC.
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: August 10, 2000
<PAGE>
EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
June 30, 2000 and 1999
EXHIBIT 99.1 (Continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
<TABLE>
<CAPTION>
June 30, December 31,
2000 1999
---- ----
(Unaudited) (Note)
Assets
<S> <C> <C>
Cash and cash equivalents $ 3,823 $ 2,865
Receivables and deposits 1,392 1,359
Restricted escrows 353 718
Other assets 715 761
Investment properties:
Land 8,290 8,290
Building and related personal property 87,984 85,969
96,274 94,259
Less accumulated depreciation (74,249) (71,592)
22,025 22,667
$ 28,308 $ 28,370
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 213 $ 493
Tenant security deposit liabilities 506 466
Accrued property taxes 634 435
Other liabilities 443 555
Mortgage notes 22,398 22,556
Master loan and interest payable 354,883 334,840
379,077 359,345
Partners' Deficit
General partner (3,508) (3,310)
Limited partners (347,261) (327,665)
(350,769) (330,975)
$ 28,308 $ 28,370
Note: The balance sheet at December 31, 1999, 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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues: (restated) (restated)
<S> <C> <C> <C> <C>
Rental income $ 4,603 $ 4,450 $ 9,158 $ 8,905
Other income 469 293 850 674
Total revenues 5,072 4,743 10,008 9,579
Expenses:
Operating 2,145 2,043 4,144 4,088
General and administrative 157 150 318 288
Depreciation 1,343 1,200 2,657 2,341
Interest 11,012 10,483 22,030 20,994
Property taxes 327 333 653 622
Total expenses 14,984 14,209 29,802 28,333
Loss from continuing operations (9,912) (9,466) (19,794) (18,754)
Income from discontinued operations -- 117 -- 185
Net loss $ (9,912) $ (9,349) $(19,794) $(18,569)
Net loss allocated to general
partner (1%) $ (99) $ (94) $ (198) $ (186)
Net loss allocated to limited
partners (99%) (9,813) (9,255) (19,596) (18,383)
$ (9,912) $ (9,349) $(19,794) $(18,569)
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
EXHIBIT 99.1 (Continued)
c)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands)
General Limited
Partners Partners Total
Partners' deficit at
December 31, 1998 $ (3,108) $(307,679) $(310,787)
Return of capital -- (1,350) (1,350)
Net loss for the six months
ended June 30, 1999 (186) (18,383) (18,569)
Partners' deficit
at June 30, 1999 $ (3,294) $(327,412) $(330,706)
Partners' deficit
at December 31, 1999 $ (3,310) $(327,665) $(330,975)
Net loss for the six months
ended June 30, 2000 (198) (19,596) (19,794)
Partners' deficit at
June 30, 2000 $ (3,508) $(347,261) $(350,769)
See Accompanying Notes to Consolidated Financial Statements
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,
2000 1999
Cash flows from operating activities:
<S> <C> <C>
Net loss $(19,794) $(18,569)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 2,696 2,736
Change in accounts:
Receivables and deposits (33) (208)
Other assets 7 (116)
Accounts payable (280) 215
Tenant security deposit liabilities 40 39
Accrued property taxes 199 312
Other liabilities (112) (15)
Accrued interest on Master Loan 20,210 19,108
Net cash provided by operating activities 2,933 3,502
Cash flows from investing activities:
Property improvements and replacements (2,015) (1,170)
Lease commissions paid -- (138)
Net receipts from (deposits to) restricted escrows 365 (60)
Net cash used in investing activities (1,650) (1,368)
Cash flows from financing activities:
Principal payments on Master Loan (167) (124)
Principal payments on notes payable (158) (146)
Return of capital -- (1,350)
Proceeds from note payable to affiliate -- 650
Net cash used in financing activities (325) (970)
Net increase in cash and cash equivalents 958 1,164
Cash and cash equivalents at beginning of period 2,865 1,992
Cash and cash equivalents at end of period $ 3,823 $ 3,156
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,781 $ 1,845
See Accompanying Notes to Consolidated Financial Statements
</TABLE>
e)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Going Concern
The Partnership's financial statements have been prepared assuming that the
Partnership will continue as a going concern. The Partnership continues to incur
operating losses, suffers from inadequate liquidity, has an accumulated deficit
and is unable to repay the Master Loan balance, which matures in November 2000.
The Partnership realized a net loss of approximately $19,794,000 for the six
months ended June 30, 2000. The General Partner expects the Partnership to
continue to incur such losses from operations. The Partnership generated cash
from operations of approximately $2,933,000 during the six months ended June 30,
2000; however, this was primarily the result of accruing interest of
approximately $20,210,000 on its Master Loan indebtedness.
The Partnership's indebtedness to CCIP under the Master Loan of approximately
$354,883,000, including accrued interest, matures in November 2000. The
Partnership has not received notice as to the maturity of the Master Loan. The
holder of the note has two options, which include foreclosing on the properties
that collateralize the Master Loan or extending the term of the note. Currently,
the Partnership does not have the means with which to satisfy this obligation.
No other sources of additional financing have been identified by the
Partnership, nor does the General Partner have any other plans to remedy the
liquidity problems the Partnership is currently experiencing. At June 30, 2000,
partners' deficit was approximately $350,769,000.
The General Partner expects revenues from the eleven investment properties will
be sufficient over the next twelve months to meet all property operating
expenses, mortgage debt service requirements and capital expenditure
requirements. However, these cash flows will be insufficient to repay to CCIP
the Master Loan balance, including accrued interest, in the event it is not
renegotiated.
As a result of the above, there is substantial doubt about the Partnership's
ability to continue as a going concern. The consolidated financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or amounts and classifications of
liabilities that may result from these uncertainties.
Note B - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Equity Partners, L.P. ("CCEP" or the "Partnership") 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. (the "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, 2000, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2000.
Certain reclassifications have been made to the 1999 information to conform to
the 2000 presentation.
Consolidation
As of December 31, 1998, CCEP owned a 75% interest in a limited partnership
("Western Can, Ltd.") which owned 444 De Haro, an office building in San
Francisco, California. No minority interest liability was reflected, as of
December 31, 1998, for the 25% minority interest because Western Can, Ltd. had a
net capital deficit and no minority liability existed with respect to CCEP. In
May 1999, a limited partner in Western Can, Ltd. withdrew in connection with a
settlement with CCEP pursuant to which the partner was paid $1,350,000 by CCEP.
This settlement effectively terminated Western Can Ltd. as CCEP became the sole
limited partner. CCEP's investment in Western Can, Ltd. is consolidated in
CCEP's financial statements. In September 1999, 444 DeHaro was sold (see "Note D
- Discontinued Segment").
Note C - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust
merged into Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust, with AIMCO being the surviving corporation
(the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in
the General Partner. The General Partner does not believe that this transaction
has had or will have a material effect on the affairs and operations of the
Partnership.
Note D - Discontinued Segment
In September 1999, 444 De Haro located in San Francisco, California was sold to
an unaffiliated third party. 444 DeHaro was the only remaining property in the
commercial segment of the Partnership. Due to the sale of this property, the
results of operations of the property have been classified as "Income from
Discontinued Operations" for the three and six months ended June 30, 1999.
Revenues from 444 DeHaro were approximately $507,000 and $1,018,000 for the
three and six months ended June 30, 1999. No revenues from 444 DeHaro were
recorded during the three or six months ended June 30, 2000.
Note E - 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 Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made to the General
Partner and affiliates during the six months ended June 30, 2000 and 1999:
<TABLE>
<CAPTION>
2000 1999
---- ----
(in thousands)
<S> <C> <C>
Property management fees (included in operating expenses) $ 502 $ 484
Investment advisory fees (included in general
and administrative expense) 90 90
Reimbursement for services of affiliates (included in
operating, general and administrative expenses
and investment properties) 179 173
Note payable to affiliate -- 650
</TABLE>
During the six months ended June 30, 2000 and 1999, affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Partnership's
residential properties for providing property management services. The
Partnership paid to such affiliates approximately $502,000 and $484,000 for the
six months ended June 30, 2000 and 1999, respectively.
The Partnership is also subject to an Investment Advisory Agreement between the
Partnership and an affiliate of the General Partner. This agreement provides for
an annual fee, payable in monthly installments, to an affiliate of the General
Partner for advising and consulting services for CCEP's properties. The
Partnership paid to such affiliates approximately $90,000 for both the six
months ended June 30, 2000 and 1999.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $179,000 and $173,000 for the
six months ended June 30, 2000 and 1999, respectively.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from Consolidated Capital
Institutional Properties ("CCIP") pursuant to the Master Loan Agreement (the
"Master Loan"), which is described more fully in the 1999 annual report. Such
interest payments totaled approximately $1,053,000 for the six months ended June
30, 1999 and approximately $1,000,000 for the six months ended June 30, 2000.
There were no advances on the Master Loan during the six months ended June 30,
2000 or 1999. During the six months ended June 30, 2000 and 1999, CCEP paid
approximately $167,000 and $124,000 respectively, to CCIP as principal payments
on the Master Loan. These amounts were from cash received on certain investments
by CCEP, which are required to be transferred to CCIP as per the Master Loan
Agreement.
Note F - Master Loan and Accrued Interest Payable
The Master Loan principal and accrued interest payable balances at June 30, 2000
and December 31, 1999, are approximately $354,883,000 and $334,840,000,
respectively.
Terms of Master Loan Agreement
Under the terms of the Master Loan, 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%. Payments are currently payable
quarterly in an amount equal to "Excess Cash Flow", generally defined in the
Master Loan 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 the 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.
The Partnership has not received notice as to the maturity of the Master Loan.
The holder of the note has two options which include foreclosing on the
properties that collateralize the Master Loan or extending the terms of the
note.
During the six months ended June 30, 2000, CCEP paid approximately $167,000 to
CCIP as principal payments on the Master Loan. This amount was from cash
received on certain investments by CCEP, which are required to be transferred to
CCIP per the Master Loan Agreement. There were no advances on the Master Loan
for the six months ended June 30, 2000 or 1999.
Note G - Subsequent Event
On July 21, 2000 the Partnership sold Shirewood Townhomes, located in
Shreveport, Louisiana, to an unaffiliated third party for net sales proceeds of
approximately $4,526,000, after payment of closing costs. The Partnership used
all of the proceeds from the sale of the property to pay down the Master Loan
principal as required by the Master Loan Agreement. The sale resulted in a gain
on sale of investment property of approximately $3,030,000.
