<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
------------------------------------------------
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 0-11723
--------------------------------------------------------
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 94-2883067
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5520 LBJ Freeway, Suite 430, Dallas, Texas 75240
- - -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(214) 702-0027
- - -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
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 and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Index to Exhibits: 11
Total Pages: 19
-1-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- - ------ --------------------
BALANCE SHEETS
(unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1994 1993
- - ------ -------- ------------
<S> <C> <C>
Real estate, net of accumulated depreciation and
allowance for possible losses................... $ 8,279 $ 8,347
------- -------
Net Investment in Master Loan..................... 52,065 52,108
------- -------
Cash and cash equivalents......................... 4,293 1,912
United States Treasury Notes and other investments,
at cost (market - $6,281 in 1994 and $8,751 in
1993)............................................ 6,238 8,572
Due from affiliates............................... 777 284
Other assets...................................... 541 552
------- -------
$72,193 $71,775
======= =======
LIABILITIES AND PARTNERS' EQUITY (DEFICIT)
- - ------------------------------------------
Accounts payable and accrued expenses............. $ 207 $ 232
Distributions payable............................. 141 143
------- -------
348 375
------- -------
Commitment (Note 4)...............................
Partners' equity (deficit):
Limited Partners - 909,154 units outstanding..... 72,232 71,791
General Partner.................................. (387) (391)
------- -------
71,845 71,400
------- -------
$72,193 $71,775
======= =======
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-2-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
INCOME STATEMENTS
(unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------------ ------------------------------
1994 1993 1994 1993
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Rental.................................. $ 408 $ 347 $ 830 $ 740
Income on investment in Master Loan..... 739 810 824 1,279
Interest on investments................. 160 157 308 319
------------- ------------- ------------- -------------
Total revenues........................ 1,307 1,314 1,962 2,338
------------- ------------- ------------- -------------
Costs and expenses:
Property operations..................... 398 390 811 810
Depreciation............................ 239 202 471 404
Administrative.......................... 150 191 326 464
------------- ------------- ------------- -------------
Total costs and expenses (a).......... 787 783 1,608 1,678
------------- ------------- ------------- -------------
Income from operations.................... 520 531 354 660
Other income (Note 5)..................... - - 91 -
------------- ------------- ------------- -------------
Net income................................ $ 520 $ 531 $ 445 $ 660
============= ============= ============= =============
Net income per Limited Partnership Unit:
Income from operations.................. $ .56 $ .58 $ .38 $ .72
Other income............................ - - .10 -
------------- ------------- ------------- -------------
Net income................................ $ .56 $ .58 $ .48 $ .72
============= ============= ============= =============
</TABLE>
(a) Costs and expenses include $96,000 and $111,000 to related parties for the
three months ended June 30, 1994 and 1993, respectively, and $176,000 and
$238,000 for the six months ended June 30, 1994 and 1993, respectively. See
supplemental information with respect to related party transactions in
Notes 2 and 3 of the financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-3-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
STATEMENTS OF PARTNERS' EQUITY (DEFICIT)
(unaudited)
For the Six Months Ended June 30, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
TOTAL
GENERAL LIMITED PARTNERS'
PARTNER PARTNERS EQUITY (DEFICIT)
------- -------- ----------------
<S> <C> <C> <C>
Balance at December 31, 1992...... $ (360) $ 74,906 $ 74,546
Net income........................ 7 653 660
------- -------- --------
Balance at June 30, 1993.......... $ (353) $ 75,559 $ 75,206
======= ======== ========
Balance at December 31, 1993...... $ (391) $ 71,791 $ 71,400
Net income........................ 4 441 445
------- -------- --------
Balance at June 30, 1994.......... $ (387) $ 72,232 $ 71,845
======= ======== ========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-4-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
STATEMENTS OF CASH FLOWS
(unaudited)
Increase in Cash and Cash Equivalents
(in thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants......................... $ 837 $ 695
Cash paid to suppliers (a)......................... (1,134) (1,197)
Interest received (b).............................. 686 1,842
Property taxes paid................................ (73) (16)
Other income received.............................. 80 -
-------- --------
Net cash provided by operating activities............. 396 1,324
-------- --------
Cash flows from investing activities:
Additions to real estate........................... (403) (265)
Advances on Master Loan............................ - (662)
Principal receipts on Master Loan.................. 43 321
Proceeds from sale of United State Treasury Notes.. 3,817 -
Purchase of a United States Treasury Note.......... (1,472) -
-------- --------
Net cash provided by (used in) investing activities... 1,985 (606)
-------- --------
Net increase in cash and cash equivalents............. 2,381 718
Cash and cash equivalents, at beginning of period..... 1,912 1,595
-------- --------
Cash and cash equivalents, at end of period $ 4,293 $ 2,313
======== ========
</TABLE>
(a) Payments to related parties totaling $176,000 and $238,000 for the six
months ended June 30, 1994 and 1993, respectively, are included in cash paid
to suppliers.
(b) Payments from related parties totaling $339,000 and approximately $1.5
million for the six months ended June 30, 1994 and 1993, are included in
interest received.
See supplemental information with respect to related party
transactions in Notes 2 and 3 of the financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-5-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
Notes to Financial Statements
June 30, 1994
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The financial statements reflect all adjustments necessary for a fair
presentation of the financial position of Consolidated Capital Institutional
Properties/2 (the "Partnership") and the results of its operations. All
adjustments were of a normal recurring nature. However, the results of
operations for the six months ended June 30, 1994, are not necessarily
indicative of the results to be expected for the year ending December 31, 1994.
The financial statements should be read in conjunction with the financial
statements contained in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1993 (the "1993 Annual Report"), and the notes thereto,
as filed with the Securities and Exchange Commission, which is available upon
request by writing to the General Partner, ConCap Equities, Inc. ("CEI"),
Investor Relations, 5520 LBJ Freeway, Suite 430, Dallas, Texas 75240.
Net Income Per Limited Partnership Unit
- - ---------------------------------------
Net income per Limited Partnership Unit is computed by dividing net income
allocated to the Limited Partners by the number of Units outstanding. Per Unit
information has been computed based on the number of Units outstanding of
909,154 and 909,174 for the six months ended June 30, 1994 and 1993,
respectively.
Presentation of Accounts
- - ------------------------
Certain prior period amounts within the accompanying financial statements have
been reclassified to conform with current presentation.
NOTE 2 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
The Partnership has paid property management fees equal to 5% of collected gross
rental revenues ("Rental Revenues") for property management services in each of
the six month periods ended June 30, 1994 and 1993. A portion of such property
management fees equal to 4% of Rental Revenues has been paid to an unaffiliated
property management company performing day-to-day property management services
and the portion equal to 1% of Rental Revenues has been paid to Partnership
Services, Inc. ("PSI"), an affiliate of the General Partner, for advisory
services related to day-to-day property operations. Fees paid to PSI have been
reflected in the following table as compensation to related parties:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
COMPENSATION 1994 1993
- - ------------ -------- --------
(in thousands)
<S> <C> <C>
Charged to property operations expense:
Property management fee............................ $ 8 $ 7
======== ========
</TABLE>
The Partnership Agreement provides for reimbursement to the general partner and
its affiliates for costs incurred in connection with administration of
Partnership activities. The General Partner and its affiliates received
reimbursements as reflected in the following table:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
REIMBURSEMENTS 1994 1993
- - -------------- -------- --------
(in thousands)
<S> <C> <C>
Charged to administrative expense:
Reimbursement of administrative expenses (including
payroll reimbursements).......................... $ 168 $ 231
======== ========
</TABLE>
-6-
<PAGE>
In addition to the compensation and reimbursement described above, interest
payments are received from and loan advances are made to Consolidated Capital
Equity Partners/Two, Ltd. ("CCEP/2") pursuant to the Master Loan Agreement,
which is described more fully in the 1993 Annual Report. See Note 3.
NOTE 3 - INVESTMENT IN MASTER LOAN
- - ----------------------------------
General
- - -------
Interest due to the Partnership according to the terms of the Master Loan
Agreement but not recognized in the income statements totaled approximately $3.6
million and $7.8 million for the three and six months ended June 30, 1994, and
approximately $3.1 million and $6.6 million for the three and six months ended
June 30, 1993. At June 30, 1994, such cumulative unrecognized interest totaling
approximately $86.4 million was not included in the balance of the investment in
Master Loan.
Effective January 1, 1993, the Partnership and CCEP/2 amended the Master Loan
Agreement to stipulate that Excess Cash Flow would be computed net of capital
improvements. Such expenditures were formerly funded from advances on the Master
Loan from the Partnership to CCEP/2. During the six months ended June 30, 1993,
the Partnership paid $662,000 of capital improvement advances accrued at
December 31, 1992.
NOTE 4 - 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. Reserves, including cash and cash
equivalents and United States Treasury Notes and other investments, at market,
totaling approximately $10.6 million at June 30, 1994, exceeded the reserve
requirement of approximately $7.6 million.
NOTE 5 - OTHER INCOME
- - ---------------------
As described in the 1993 Annual Report, the Partnership (and simultaneously 15
affiliated partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding in 1991. These claims related to Southmark Corporation's
activities while it exercised control (directly, or indirectly through its
affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and
the affiliated partnerships' allowed claim at $11 million, in aggregate. In
March 1994, the Partnership received cash, 1,468 shares of Southmark Corporation
Redeemable Series A Preferred Stock and 10,738 shares of Southmark Corporation
New Common Stock, with a total market value on the date of receipt of $91,000,
representing the Partnership's share of the recovery, based on its pro rata
share of the claims filed.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- - ------ ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
RESULTS OF OPERATIONS
- - ---------------------
Property Operations:
Rental revenues for the three and six months ended June 30, 1994, increased
$61,000 or 18% and $90,000 or 12%, respectively, over 1993 primarily as a result
of higher average occupancy at the Partnership's sole property, the North Park
Plaza Office Complex. Depreciation expense for the three and six months ended
June 30, 1994, increased $37,000 or 18% and $67,000 or 17%, respectively, over
1993 due to capital improvements at the property.
Administrative Expenses:
Administrative expenses for the three and six months ended June 30, 1994,
decreased $41,000 or 21% and $138,000 or 30%, respectively, from 1993 primarily
due to decreased administrative overhead costs and other professional fees.
Interest on Investments:
Interest on investments for the six months ended June 30, 1994, was comparable
with 1993.
Income on Investment in Master Loan:
As described below under "Status of the Master Loan," income on the Investment
in Master Loan is based on operations of CCEP/2's properties which secure the
Master Loan. The following table summarizes the sources of income and payments
on the investment in Master Loan with respect to CCEP/2's operations during the
six months ended June 30, 1994 and 1993, respectively:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-------------------------
1994 1993
----------- -----------
<S> <C> <C>
Funds provided by property operations.............. $ 9,235 $ 8,820
Funds used for property operations (includes
administrative expenses)......................... (6,872) (5,706)
Debt service payments on underlying notes payable.. (1,511) (1,522)
----------- -----------
Net funds provided by property operations.......... 852 1,592
Net investing activity............................. 15 8
----------- -----------
Net funds provided................................. $ 867 $ 1,600
=========== ===========
Master Loan activity:
Principal receipts on Master Loan.................. $ 43 $ 321
Interest income.................................... 824 1,279
----------- -----------
$ 867 $ 1,600
=========== ===========
</TABLE>
During the six months ended June 30, 1994, net funds provided for payments on
the Master Loan decreased $733,000 or 46% from 1993 primarily as a result of a
$1.2 million increase in funds used for property operations resulting from
higher capital expenditures at CCEP/2's properties and increased leasing
expenses at Richmond Plaza, one of the CCEP/2 office buildings. During the first
quarter of 1994, Richmond Plaza was successful in obtaining the renewal of a
lease with the tenant who occupies 48% of the building. In May 1994, CCEP/2 paid
lease commissions totaling $455,000, related to the lease renewal, which were
due to the building's management company as provided for in the management
agreement.
-8-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
Six Months Ended June 30, 1994
- - ------------------------------
The Partnership's cash inflows, which totaled approximately $4.3 million during
the six months ended June 30, 1994, consisted of proceeds from the sale of
United States Treasury Notes of approximately $3.8 million, net cash provided by
operations of $396,000 and principal receipts on the Master Loan of $43,000. The
primary uses of cash, which totaled approximately $1.9 million during the same
period, consisted of the purchase of a United States Treasury Note of
approximately $1.5 million and additions to real estate of $403,000.
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. Reserves, including cash and cash
equivalents and Treasury Notes and other investments, at market, totaling
approximately $10.6 million at June 30, 1994, exceeded the reserve requirement
of approximately $7.6 million.
As described in the 1993 Annual Report, the Partnership (and simultaneously 15
affiliated partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding in 1991. These claims related to Southmark Corporation's
activities while it exercised control (directly, or indirectly through its
affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and
the affiliated partnerships' allowed claim at $11 million, in aggregate. In
March 1994, the Partnership received cash, 1,468 shares of Southmark Corporation
Redeemable Series A Preferred Stock and 10,738 shares of Southmark Corporation
New Common Stock, with a total market value on the date of receipt of $91,000,
representing the Partnership's share of the recovery, based on its pro rata
share of the claims filed.
Status of the Master Loan
- - -------------------------
Effective January 1, 1993, the Partnership and CCEP/2 amended the Master Loan
Agreement to stipulate that Excess Cash Flow would be computed net of capital
improvements. Such expenditures were formerly funded from advances on the Master
Loan from the Partnership to CCEP/2. During the six months ended June 30, 1994,
the Partnership made no advances on the Master Loan. However, during the first
six months of 1993, the Partnership paid $662,000 of Master Loan advances
accrued at December 31, 1992.
CCEP/2 Property Operations
- - --------------------------
For the three and six months ended June 30, 1994, CCEP/2's net losses totaled
approximately $4.5 million and $9.2 million, respectively, on total revenues of
approximately $4.6 million and $9.1 million, respectively, primarily due to the
recognition of approximately $4.4 million and $8.7 million, respectively, in
interest expense attributable to the Master Loan, of which approximately $3.6
million and $7.8 million, respectively, represents interest accrued in excess of
required Excess Cash Flow payments. CCEP/2 recognizes interest expense on the
Master Loan obligation according to the note terms, although payments to the
Partnership are required only to the extent of Excess Cash Flow, as defined in
the Master Loan Agreement. CCEP/2 will continue to generate operating losses as
a result of such interest accruals and noncash charges for depreciation.
Richmond Plaza Office Building
- - ------------------------------
The Richmond Plaza Office Building ("Richmond Plaza") leases 48% of its leasable
square feet to a single tenant under a lease which was scheduled to expire in
July 1994. The tenant had previously expressed its desire to relocate its
offices. As a result of the general partner's and the building management
company's extensive renewal efforts, CCEP/2 was successful in obtaining the
renewal of the tenant's lease during the first quarter of 1994. Since the former
lease was based on rental rates that were higher than current market rates,
future rental revenue from this tenant will not be consistent with prior years.
In May 1994, CCEP/2 paid lease commissions totaling $455,000, related to the
lease renewal, which were due to the building's management company as provided
for in the management agreement. Richmond Plaza secures approximately $14.6
million in mortgage debt (the "first lien note") which is superior to CCEP/2's
related obligation under the Master Loan of approximately $2.4 million. In May
1994, management negotiated a one-year extension with the lender which extends
the maturity of the first lien note, which matured in March 1994, to March 1995.
-9-
<PAGE>
Village Brooke Apartments
- - -------------------------
The Village Brooke Apartments, located in Cincinnati, Ohio, secures
approximately $6.9 million of first lien mortgage debt (the "first lien note")
which is superior to CCEP/2's related obligation under the Master Loan of
approximately $2 million. In May 1994, management negotiated a one-year
extension with the lender which extends the maturity of the first lien note,
which matured in June 1994, to June 1995.
Town Center Office Complex
- - --------------------------
The Town Center Office Complex located in Santa Ana, California, secures
approximately $3.1 million of third party mortgage debt in three notes payable
superior to approximately $16.6 million of the investment in Master Loan. The
Town Center Office Complex consists of four buildings ("Phases I, II, III and
IV"). The note payable of approximately $897,000, secured by Phase III matured
in October 1992. The note payable of approximately $1.1 million secured by Phase
IV matured in July 1993. In April 1994, management negotiated an extension and
modification of these notes which provide for a reduced interest rate, and
extension of the maturities to October 2000.
-10-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- - ------ -----------------
The Partnership is not a party to, nor is the Partnership's property the subject
of, any material pending legal proceedings as of June 30, 1994.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- - ------ --------------------------------
(a) Exhibits:
<TABLE>
<CAPTION>
S-K REFERENCE SEQUENTIAL
NUMBER DESCRIPTION Page NUMBER
------------- ----------- -----------
<C> <S> <C>
28.1 Consolidated Capital Equity Partners/Two, 13-19
L.P., unaudited Financial Statements for the
six months ended June 30, 1994, and 1993.
</TABLE>
(b) Reports on Form 8-K:
None.
-11-
<PAGE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
SIGNATURE PAGE
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/2
By: CONCAP EQUITIES, INC.
Its General Partner,
August 19, 1994 By: /s/David C. Meek
- - ------------------------ ------------------------------------------
Date David C. Meek
President
August 19, 1994 By: /s/David K. Ronck
- - ------------------------ ------------------------------------------
Date David K. Ronck
Vice President and Secretary
August 19, 1994 By: /s/Patricia L. Campbell
- - ------------------------ ------------------------------------------
Date Patricia L. Campbell
Vice President and Treasurer
(chief accounting officer)
-12-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
UNAUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
JUNE 30, 1994 AND 1993
-13-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
BALANCE SHEETS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
ASSETS 1994 1993
- - ------ ------------ ------------
<S> <C> <C>
Real estate, net of accumulated depreciation..... $ 65,522 $ 67,634
------------ ------------
Cash and cash equivalents........................ 1,927 1,506
Investments in limited partnerships.............. 2,508 2,508
Other assets..................................... 2,609 2,383
------------ ------------
$ 72,566 $ 74,031
============ ============
LIABILITIES AND PARTNERS' DEFICIT
- - ---------------------------------
Master Loan and interest payable................. $ 178,174 $ 170,364
Notes payable.................................... 26,085 26,354
Other liabilities................................ 1,562 1,881
Due to affiliates................................ 777 302
------------ ------------
206,598 198,901
------------ ------------
Contingency (Note 4).............................
Partners' deficit:
Limited Partners............................... (132,705) (123,635)
General Partner................................ (1,327) (1,235)
------------ ------------
(134,032) (124,870)
------------ ------------
$ 72,566 $ 74,031
============ ============
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-14-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
STATEMENTS OF OPERATIONS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
-------------------- -------------------
1994 1993 1994 1993
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Rental .............................. $ 4,602 $ 4,475 $ 9,077 $ 8,709
Interest............................. 9 5 15 8
-------- -------- -------- --------
Total revenues...................... 4,611 4,480 9,092 8,717
-------- -------- -------- --------
Costs and expenses:
Interest (a)........................ 4,992 4,588 9,928 9,180
Property operations................. 2,512 2,607 5,146 5,154
Depreciation........................ 1,444 1,502 2,897 2,994
Administrative...................... 145 132 283 267
-------- -------- -------- --------
Total costs and expenses (b)...... 9,093 8,829 18,254 17,595
-------- -------- -------- --------
Net loss............................... $ (4,482) $ (4,349) $ (9,162) $ (8,878)
======== ======== ======== ========
</TABLE>
(a) Interest expense includes approximately $4.4 and $4 million to related
parties for the three months ended June 30, 1994 and 1993, respectively, and
approximately $8.7 and $7.9 million for the six months ended June 30, 1994
and 1993, respectively.
(b) Costs and expenses include $364,000 and $247,000 to related parties for the
three months ended June 30, 1994 and 1993, respectively, and $718,000 and
$499,000 for the six months ended June 30, 1994 and 1993, respectively. See
supplemental information with respect to related parties in Note 2 of the
financial statements.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-15-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
STATEMENTS OF PARTNERS' DEFICIT
(unaudited)
For the Six Months Ended June 30,1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
TOTAL
GENERAL LIMITED PARTNERS'
PARTNER PARTNERS (DEFICIT)
--------- ---------- -----------
<S> <C> <C> <C>
Balance at December 31, 1992..... $ (1,064) $ (106,657) $ (107,721)
Net loss......................... (89) (8,789) (8,878)
-------- ---------- ----------
Balance at June 30, 1993......... $ (1,153) $ (115,446) $ (116,599)
======== ========== ==========
Balance at December 31, 1993..... $ (1,235) $ (123,635) $ (124,870)
Net loss......................... (92) (9,070) (9,162)
-------- ---------- ----------
Balance at June 30, 1994......... $ (1,327) $ (132,705) $ (134,032)
======== ========== ==========
</TABLE>
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-16-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
STATEMENTS OF CASH FLOWS
(unaudited)
Increase in Cash and Cash Equivalents
(in thousands)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
---------------------
1994 1993
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from tenants.......................... $ 9,235 $ 8,820
Cash paid to suppliers (a).......................... (5,273) (4,225)
Interest received................................... 15 8
Interest paid (b)................................... (1,581) (2,790)
Property taxes paid................................. (878) (1,048)
-------- --------
Net cash provided by operating activities............. 1,518 765
-------- --------
Cash flows from investing activities:
Additions to real estate............................ (785) (453)
-------- --------
Cash flows from financing activities:
Advances on Master Loan............................. - 662
Principal payments on Master Loan................... (43) (321)
Principal payments on notes payable................. (269) (253)
-------- --------
Net cash provided by (used in) financing activities... (312) 88
-------- --------
Net increase in cash and cash equivalents............. 421 400
Cash and cash equivalents, at beginning of period..... 1,506 1,149
-------- --------
Cash and cash equivalents, at end of period........... $ 1,927 $ 1,549
======== ========
</TABLE>
(a) Payments to related parties totaling approximately $1.2 million and
$499,000 for the six months ended June 30, 1994 and 1993, respectively, are
included in cash paid to suppliers. See supplemental information with
respect to related parties in Note 2 of the financial statements.
(b) Payments to related parties totaling $339,000 and approximately $1.5
million for the six months ended June 30, 1994 and 1993, are included in
interest paid.
The financial information included herein has been prepared by management
without audit by independent public accountants.
The accompanying notes are an integral part of the financial statements.
-17-
<PAGE>
CONSOLIDATED CAPITAL EQUITY PARTNERS/TWO, L.P.
Notes to Financial Statements
June 30, 1994
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
- - ------------------------------
The financial statements reflect all adjustments necessary for a fair
presentation of the financial position of Consolidated Capital Equity
Partners/Two, L.P. ("CCEP/2") and the results of its operations. CCEP/2's
general partner, ConCap Holdings, Inc. ("CHI") is a wholly-owned subsidiary of
ConCap Equities, Inc. ("CEI"). All adjustments were of a normal recurring
nature. However, the results of operations for the six months ended June 30,
1994, are not necessarily indicative of the results to be expected for the year
ending December 31, 1994.
The financial statements and notes included herein omit certain disclosures
required by generally accepted accounting principles, and should be read in
conjunction with CCEP/2's financial statements contained in Consolidated Capital
Institutional Properties/2's ("CCIP/2") Annual Report on Form 10-K for the year
ended December 31, 1993 (the "1993 Annual Report"), and the notes thereto, as
filed with the Securities and Exchange Commission, which is available upon
request by writing to ConCap Equities, Inc., Investor Relations, 5520 LBJ
Freeway, Suite 430, Dallas, Texas 75240.
Presentation of Accounts
- - ------------------------
Certain prior period amounts within the accompanying financial statements have
been reclassified to conform with current presentation.
NOTE 2 - RELATED PARTY TRANSACTIONS
- - -----------------------------------
CCEP/2 has paid property management fees equal to 5% of collected gross rental
revenues ("Rental Revenues") for property management services in each of the six
month periods ended June 30, 1994 and 1993. A portion of such property
management fees equal to 4% of Rental Revenues has been paid to the property
management companies performing day-to-day property management services and the
portion equal to 1% of Rental Revenues has been paid to Partnership Services,
Inc. ("PSI"), an affiliate of the General Partner, for advisory services related
to day-to-day property operations. During the six months ended June 30, 1993,
day-to-day property management services were provided to 11 of CCEP/2's
properties by unaffiliated management companies. Also, during 1993, Coventry
Properties, Inc. ("Coventry"), an affiliate of CHI, performed day-to-day
property management responsibilities for one of CCEP/2's properties under the
same management fee arrangement as the unaffiliated management companies.
Coventry assumed day-to-day property management responsibilities for three
additional CCEP/2 properties in January 1994. The management fee arrangement
with Coventry and the unaffiliated management companies also provided for the
payment of leasing commissions to the management companies as compensation for
their services in connection with obtaining new or renewed leases with tenants
of the commercial office buildings. Fees paid to PSI and Coventry have been
reflected in the table below as compensation to related parties.
Also, CCEP/2 is subject to an Investment Advisory Agreement between CCEP/2 and
an affiliate of CHI. This agreement provides for an annual fee, payable in
monthly installments, to an affiliate of CHI for advising and consulting
services for CCEP/2's properties. Advisory fees paid pursuant to this agreement
are reflected in the following table:
-18-
<PAGE>
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
COMPENSATION 1994 1993
- - ------------ --------- ---------
(in thousands)
<S> <C> <C>
Charged to other assets:
Lease commissions......................... $ 455 $ -
Charged to property operations expense:
Property management fee................... 254 177
Charged to administrative expense:
Investment advisory fees.................. 96 96
--------- ---------
$ 805 $ 273
========= =========
</TABLE>
The Partnership Agreement provides for reimbursement to the general partner and
its affiliates for costs incurred in connection with administration of CCEP/2's
activities and for reimbursement to Coventry for expenses related to property
operations (primarily salaries and related costs for on-site property
personnel). CHI and its affiliates, including Coventry, received reimbursements
included in the following table:
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED JUNE 30,
-----------------------
REIMBURSEMENT 1994 1993
- - ------------- --------- ---------
(in thousands)
<S> <C> <C>
Charged to property operations expenses:
Reimbursement of direct property expense........... $ 254 $ 116
Charged to administrative expenses:
Reimbursement of administrative expenses (including
payroll reimbursements).......................... 114 110
--------- ---------
$ 368 $ 226
========= =========
</TABLE>
In addition to the compensation and reimbursements described above, interest
payments are paid to and loan advances are received from CCIP/2 pursuant to the
Master Loan Agreement, which is described more fully in the 1993 Annual Report.
See Note 3.
NOTE 3 - MASTER LOAN AND ACCRUED INTEREST PAYABLE
- - -------------------------------------------------
Effective January 1, 1993, CCEP/2 and CCIP/2 amended the Master Loan Agreement
to stipulate that Excess Cash Flow would be computed net of capital
improvements. Such expenditures were formerly funded from advances on the Master
Loan to CCEP/2. During the six months ended June 30, 1993, CCEP/2 received
$662,000 of capital improvement advances accrued at December 31, 1992. No such
loan advances from CCIP/2 occurred during the six months ended June 30, 1994.
NOTE 4 - CONTINGENCY
- - --------------------
In 1993, the parking garage adjacent to the Chagrin Richmond Office Building
suffered a structural failure, and since that time the garage has been partially
closed. The Chagrin Richmond Office Building secures approximately $1.5 million
of third party mortgage debt, which is superior to approximately $4.4 million of
Master Loan debt. CCEP/2 has been involved in evaluating the damage and in
obtaining estimates for repair, and in July 1994, the third party lender
notified CCEP/2 that as a result of the failure, it is not in compliance with
certain provisions of the loan document. CCEP/2 may attempt to obtain debt
concessions from the lender, or may pursue other options to protect the
Partnership's interest. The outcome of this uncertainty cannot be predicted.
-19-
