FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 34-31905, eff 10/26/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-14187
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
(Exact name of registrant as specified in its charter)
California 94-2940208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Act:
None
Securities registered under Section 12(g) of the Act:
Limited Partnership Units
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
348,473 of the partnership's 383,033 Limited Partnership Units ("Units") are
held by non-affiliates. The aggregate market value of Units held by non-
affiliates is not determinable since there is no public trading market for Units
and transfers of Units are subject to certain restrictions.
PART I
Item 1. Description of Business
Consolidated Capital Institutional Properties/3 (the "Registrant" or
"Partnership") was organized on May 23, 1984, as a limited partnership under the
California Uniform Limited Partnership Act. On July 23, 1985, the Partnership
registered with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933 (File No. 2-97664) and commenced a public offering for
sale of $200 million of Units. The Units represent equity interests in the
Partnership and entitle the holders thereof to participate in certain
allocations and distributions of the Partnership. The sale of Units terminated
on May 15, 1987, with 383,033 units sold for $250 each, or gross proceeds of
approximately $95.7 million to the Partnership. The Partnership subsequently
filed a Form 8-A Registration Statement with the SEC and registered its Units
under the Securities Exchange Act of 1934 (File No. 0-14187).
The General Partner of the Partnership is ConCap Equities, Inc. ("CEI" or the
"General Partner"), a Delaware corporation. The principal place of business for
the Partnership and for the General Partner is One Insignia Financial Plaza,
Greenville, South Carolina 29602.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership was formed, for the benefit of its Limited
Partners (herein so called and together with the General Partner shall be called
the "Partners"), to lend funds to ConCap Equity Partners/3, ConCap Equity
Partners/4, and ConCap Equity Partners/5 ("EP/3", "EP/4" and "EP/5",
respectively). EP/3, EP/4 and EP/5 represent California limited partnerships
in which certain of the partners were former shareholders and former management
of Consolidated Capital Equities Corporation ("CCEC"), the former corporate
general partner of the Partnership.
Through December 31, 1994, the Partnership had made twelve (12) specific loans
against a Master Loan agreement (as defined in "Status of Master Loan") and
advanced a total of $67.3 million. EP/3 used $17.3 million of the loaned funds
to purchase two (2) apartment complexes and one (1) office building. EP/4 used
$34.7 million of the loaned funds to purchase four (4) apartment complexes and
one (1) office building, which was subsequently sold in 1989. EP/5 used $15.3
million of the loaned funds to purchase two (2) apartment complexes and two (2)
office buildings. Through a series of transactions, the partnership has
acquired all of EP/3, EP/4 and EP/5's properties in full settlement of their
liability under the Master Loan. For a brief description of the properties
owned by the partnership refer to Item 2 - Description of Properties.
As of December 31, 1995, the Partnership's working capital reserves are greater
than 5% of Net Invested Capital as required by the Partnership Agreement. See
"Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations," for discussion of Partnership liquidity and capital
resources. Also, see "Item 8 - Financial Statements and Supplementary Data,"
for the amounts of revenue and operating profit or loss generated by the
Partnership's operations for its last three years and for information on the
operating results of EP/3's and EP/4's properties.
Prior to 1989, the Partnership had loaned $17.3 million to EP/3, $34.7 million
to EP/4 and $15.3 million to EP/5, subject to nonrecourse notes with
participation interests (collectively referred to as the "Master Loan"),
pursuant to a Master Loan Agreement dated February 26, 1986, between the
Partnership and EP/3, EP/4 and EP/5. The Partnership secured the Master Loan
with deeds of trust or mortgages on real properties and by the assignment and
pledge of promissory notes from the partners of EP/3, EP/4 ad EP/5. In November
1994, the Partnership entered into an agreement with EP/3 whereby one property
was deeded in lieu of foreclosure to the Partnership and foreclosure proceedings
were instituted by the Partnership on the other asset which collateralized the
Master Loan. The Partnership assumed a note payable of approximately $1.2
million in exchange for full settlement of EP/3's liability under the Master
Loan. During 1992, the Partnership foreclosed on the last remaining EP/4
apartment complex in full settlement of EP/4's liability under the Master Loan.
Previously, the Partnership foreclosed on three of EP/4's apartment complexes
and EP/4's interest in one note receivable secured by the office building sold
in 1989, and acquired EP/5's two apartment complexes and two office buildings
through a transfer of ownership in full settlement of EP/5's liability under the
Master Loan.
During 1993, the major tenant who occupied 95% of the Sutter D Office Building,
one of the three EP/3 properties collateralizing the Master Loan, did not renew
its lease and vacated the building. EP/3 was unable to replace the tenant under
terms that were economically viable for the property and defaulted on the
approximately $2.1 million third party mortgage debt secured by the Sutter D
Office Building. During 1994, the Sutter D Office Building serving as
collateral for the Master Loan was posted for foreclosure by the first
lienholder. This foreclosure had no gain or loss effect to the Partnership.
In November 1994, the Partnership entered into a settlement with EP/3 whereby
the Williamsburg Manor Apartments were deeded in lieu of foreclosure to the
Partnership and foreclosure proceedings were initiated by the Partnership on the
Sandpiper I and II Apartments, the remaining properties collateralizing the
Master Loan. The Partnership assumed a note payable of approximately $1.2
million in exchange for full settlement of EP/3's liability for the Master Loan
and recognized a net loss of approximately $413,000 on the settlement of the
Master Loan at December 31, 1994.
As a result of the facts that: (1) EP/3 has no equity in the Sandpiper I & II
Apartments, considering the current estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments can be expected to come only from the operations or
sale of the property; and (3) EP/3 effectively abandoned control of the
Sandpiper I & II Apartments when EP/3 and the Partnership executed the
settlement agreement in November 1994, whereby EP/3 agreed to transfer to the
Partnership the full and unrestricted right to possession, management, and
control of the property and not to contest, hinder or delay a judicial
foreclosure action initiated by the Partnership, CCIP/3 deemed the Sandpiper I &
II Apartments in-substance foreclosed at November 30, 1994. Accordingly, the
net Master Loan receivable collateralized by the Sandpiper I & II Apartments is
presented as "Net real estate assets of property in-substance foreclosed" in the
accompanying financial statements for 1994. Foreclosure proceedings were
initiated in 1994 and completed in 1995. As a result of the transactions
described above, the Master Loan was settled in full during 1994.
At December 31, 1995, the Partnership owned eight apartment complexes located in
Florida, North Carolina, Washington, Michigan, Utah and Colorado, and one office
building located in Florida, which range in age from 10 to 27 years old, and
which are hereinafter referred to as the "Partnership Properties". The
Partnership also holds a note receivable secured by an office complex in
California.
The Partnership had two notes payable that matured in January 1995, and were
extended until June 1995. The Lamplighter Park Apartments, located in Bellevue,
Washington, secured approximately $4.6 million of first mortgage debt that
matured in June of 1995. On June 30, 1995, an extension agreement was reached
which extends the maturity of this mortgage debt until June 30, 1997. The
Tamarac Village Apartments, located in Denver, Colorado, secured approximately
$2.8 million of first mortgage debt that matured in June of 1995. This
indebtedness was paid in full in December of 1995.
Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
corporate general partner. In 1988, through a series of transactions, Southmark
Corporation ("Southmark") acquired controlling interest in CCEC. In December
1988, CCEC filed for reorganization under Chapter 11 of the United States
Bankruptcy Code ("Chapter 11"). In 1990, as part of CCEC's reorganization plan,
CEI acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partners dated August 10, 1990. As
part of this solicitation, the Limited Partners also approved an amendment to
the Partnership Agreement to limit changes of control of the Partnership.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which, among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P. ("MAE"), an affiliate of
Insignia Financial Group, Inc. ("Insignia") acquired an option (exercisable in
whole or in part from time to time) to purchase all of the stock of GII Realty,
Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that
stock. As part of the Insignia Transaction, MAE-ICC, Inc. also acquired all of
the outstanding stock of Partnership Services, Inc., an asset manager.
Additionally, a subsidiary of Insignia acquired all of the outstanding stock of
Coventry Properties, Inc., a property manager. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, MAE-ICC, Inc. exercised the remaining portion of
its option to purchase all of the remaining outstanding capital stock of GII
Realty, Inc.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 7." of this Form
10-K.
The Registrant has no employees. Management and administrative services are
performed by ConCap Equities, Inc., the General Partner, and by affiliates of
Insignia.
The real estate business in which the Partnership is engaged is highly
competitive and the Partnership is not a significant factor in this industry.
The Registrant's property is subject to competition from similar properties in
the vicinity in which the property is located. In addition, various limited
partnerships have been formed by the General Partners and/or their affiliates to
engage in business which may be competitive with the Registrant.
Item 2. Description of Properties
The following table sets forth the Registrant's investment in properties:
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Cedar Rim 4/12/91 Fee ownership. Apartment
Renton, Washington 104 units
City Heights 4/13/90 Fee ownership. Apartment
Seattle, Washington 105 units
Corporate Center 4/13/90 Fee ownership. Commercial
Tampa, Florida 107,670 s.f.
Hidden Cove by the Lake 3/23/90 Fee ownership. Apartment
Belleville, Michigan 120 units
Lamplighter Park 4/12/91 Fee ownership subject Apartment
Bellevue, Washington to first mortgage. 174 units
Park Capitol 4/13/90 Fee ownership subject Apartment
Salt Lake City, Utah to first mortgage. 135 units
Tamarac Village 6/10/92 Fee ownership subject Apartment
I,II,III,IV to first and second 564 units
Denver, Colorado mortgages.
Williamsburg Manor 11/30/94 Fee ownership subject Apartment
Cary, North Carolina to first mortgage. 180 units
Sandpiper I & II 11/30/94 Fee ownership subject Apartment
St. Petersburg, Florida to first mortgage. 276 units
</TABLE>
Schedule of Property: (in thousands)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
<S> <C> <C> <C> <C> <C>
Cedar Rim $ 4,605 $1,203 3-20 yrs S/L $ 4,879
City Heights 4,707 1,277 3-20 yrs S/L 4,943
Corporate Center 3,390 1,085 5-20 yrs S/L 3,904
Hidden Cove 5,096 1,644 3-20 yrs S/L 4,260
Lamplighter Park 7,616 1,398 3-20 yrs S/L 7,020
Park Capitol 2,794 861 5-20 yrs S/L 2,391
Tamarac Village 13,545 1,963 5-20 yrs S/L 12,113
Williamsburg Manor 6,595 247 5-22 yrs S/L 6,401
Sandpiper I & II 7,487 280 5-22 yrs S/L 7,269
$55,835 $9,958
</TABLE>
See Note A of the financial statements included in "Item 8." for a description
of the Partnership's depreciation policy.
Schedule of Mortgages: (in thousands)
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1995 Rate Amortized Date Maturity
<S> <C> <C> <C> <C> <C>
Lamplighter Park* $ 4,609 3.75% + 5.5 yrs 06/30/97 $4,571
LIBOR Rate
Park Capitol 2,725 6.95% 10 yrs 12/01/05 2,725
Tamarac Village
1st mortgage 1,269 9.5% 13 yrs 10/01/06 --
2nd mortgage 1,293 9.5% 14 yrs 05/01/07 --
Williamsburg Manor 4,150 6.95% 10 yrs 12/01/05 4,150
Sandpiper I & II 3,950 6.95% 10 yrs 12/01/05 3,950
$17,996
Accrued interest 33
$18,029
</TABLE>
*Lamplighter Park's mortgage indebtedness matured in June of 1995. On June 30,
1995, an agreement was reached which extends the maturity of this mortgage debt
to June 30, 1997.
Schedule of Rental Rates and Occupancy:
Average Annual Average Annual
Rental Rates Occupancy
Property 1995 1994 1995 1994
Cedar Rim $8,512/unit $8,274/unit 89% 92%
City Heights 9,430/unit 8,987/unit 85% 93%
Corporate Center 5.42/sq.ft. 5.11/sq.ft. 99% 100%
Hidden Cove 7,716/unit 7,361/unit 95% 95%
Lamplighter Park 7,639/unit 7,492/unit 95% 96%
Park Capitol 7,007/unit 6,532/unit 96% 97%
Tamarac Village 6,332/unit 5,989/unit 86% 92%
Williamsburg Manor 7,241/unit 6,831/unit 96% 99%
Sandpiper I & II 6,301/unit 6,301/unit 87% 95%
The decrease in occupancy at City Heights is attributable to water damage to six
units resulting in move-outs. The damage was caused by a poor drainage system
between the buildings. At December 31, 1995, occupancy had increased to 95%.
The decrease in occupancy at Sandpiper I & II is due to the General Partner's
efforts to evict tenants who were habitually delinquent in making their rent
payments. The decrease in occupancy at Tamarac Village is due primarily to
increased home purchases.
As noted under "Item 1. Description of Business," the real estate industry is
highly competitive. The Partnership's properties are subject to competition
from other residential apartment complexes and commercial buildings in the area.
The General Partner believes that all of the properties are adequately insured.
The multifamily residential properties' lease terms are for one year or less.
No residential tenant leases 10% or more of the available rental space.
The following is a schedule of lease expirations for the years 1996 - 2005:
<TABLE>
<CAPTION>
Corporate Number of % of Gross
Center Expirations Square Feet Annual Rent Annual Rent
<S> <C> <C> <C> <C>
1996 9 24,700 $131,632 23.2%
1997 2 4,740 26,161 4.6%
1998 8 35,940 193,594 34.2%
1999 3 19,140 94,991 16.8%
2000 3 11,150 66,041 11.7%
2001 - 2005 0 0 0 0
The following schedule reflects information on tenants occupying 10% or more of
the leasable square feet for Corporate Center:
Nature of Square Footage Annual Rent Lease
Business Leased Per Sq. Ft. Expiration
Retailer 12,000 $5.16 10/31/98
Soil Testing 11,940 4.82 02/28/99
Real Estate taxes and rates in 1995 were:
1995 1995
Taxes Rate
Cedar Rim $66,873 1.39%
City Heights 66,256 1.16%
Corporate Center 57,841 2.55%
Hidden Cove 66,317 4.74%
Lamplighter Park 79,660 1.23%
Park Capitol 41,738 1.64%
Tamarac Village 149,628 8.12%
Williamsburg Manor 74,848 1.21%
Sandpiper I & II 183,200 2.53%
Item 3. Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The Managing General Partner of the Partnership believes
that all such pending or outstanding litigation will be resolved without a
material adverse effect upon the business, financial condition, or operations of
the Partnership.
Item 4. Submission of Matters to a Vote of Security Holders
During the fourth quarter of the fiscal year ended December 31, 1995, no matter
was submitted to a vote of the unit holders through the solicitation of proxies
or otherwise.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholders
Matters
As of December 31, 1995, the number of holders of record of Limited Partnership
Units was 18,948. No public trading market has developed for the Units, and it
is not anticipated that such a market will develop in the future. The
Partnership made distributions of cash generated from operations of
approximately $3,644,000 and $3,530,000 for the twelve months ended December 31,
1995 and 1994, respectively. Calculations are based upon the weighted average
number of Units outstanding. Future distributions will depend on the levels of
cash generated from operations, refinancings, property sales and the
availability of cash reserves.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in "Item 8 - Financial
Statements and Supplementary Data."
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
STATEMENTS OF OPERATIONS 1995 1994 1993 1992 1991
(in thousands, except per unit data)
<S> <C> <C> <C> <C> <C>
Revenues $ 12,569 $ 10,704 $ 10,441 $ 8,306 $ 7,547
Costs and expenses (14,175) (10,819) (11,381) (6,801) (7,622)
Income (loss) from operations (1,606) (115) (940) 1,505 (75)
Net gain (loss) on sales of securities -- (1) -- 48 (1)
Net gain (loss) on acquisition of
real estate -- (413) -- 1,943 --
Net loss on disposition of real
estate -- -- -- (2,177) --
Settlement costs -- -- (201) -- --
Income (loss) before
extraordinary item (1,606) (529) (1,141) 1,319 (76)
Extraordinary item (18) -- -- 2,177 --
Net income (loss) $ (1,624) $ (529)$ (1,141)$ 3,496 $ (76)
Net income (loss) per Limited
Partnership Unit:
Income (loss) from operations $ (4.15) $ (.30)$ (2.43)$ 3.89 $ (.20)
Net gain on sale of securities -- -- -- .12 --
Net gain (loss) on acquisition of
real estate -- (1.07) -- 5.03 --
Net loss on disposition of
real estate -- -- -- (5.63) --
Settlement costs -- -- (.52) -- --
Income (loss) before
extraordinary item (4.15) (1.37) (2.95) 3.41 (.20)
Extraordinary item (.05) -- -- 5.63 --
Net income (loss) $ (4.20) $ (1.37)$ (2.95)$ 9.04 $ (.20)
Distributions per Limited
Partnership Unit $ 9.42 $ 9.12 $ 7.20 $ 10.81 $ 5.22
Limited Partnership
Units outstanding 383,033 383,033 383,033 383,033 383,033
AS OF DECEMBER 31,
BALANCE SHEETS 1995 1994 1993 1992 1991
(in thousands)
Total assets $ 62,863 $ 61,910 $ 65,628 $ 69,709 $ 65,603
Notes payable $ 18,029 $ 12,318 $ 11,541 $ 11,994 $ 7,687
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
1995 Compared with 1994
The Partnership realized a net loss of $1,624,000 for the year ended December
31, 1995, compared to a net loss of $529,000 for the year ended December 31,
1994. The increased net loss for 1995 is attributable to the $3,255,000 write-
down of the South City Business Center note receivable during 1995. During
1995, it was determined that this note receivable's collateral was impaired and
it was written down to the estimated value of the property. The General Partner
is currently pursuing foreclosure of the property. An affiliate of the General
Partner was appointed receiver and the foreclosure proceedings were finalized
during the first quarter of 1996. The decrease in interest and other income was
due to the default on the note receivable.
Also contributing to the increase in the net loss was an increase in operating
expenses, depreciation expense, and interest expense for the year ended December
31, 1995, compared to the year ended December 31, 1994, primarily due to the
addition of Williamsburg Manor Apartments and Sandpiper I and II. Williamsburg
Manor Apartments was acquired through a deed-in-lieu of foreclosure transaction
and Sandpiper I and II was acquired through in-substance foreclosure in November
1994. The final foreclosure of Sandpiper was completed on June 16, 1995. As a
result of the transactions described above, the Master Loan was settled in full
in 1994. Accordingly, no related income was earned in 1995. General and
administrative expenses increased for 1995, compared to 1994, due to the
combined efforts of the Dallas and Greenville offices during the transition
period that ended June 30, 1995. These increased costs were incurred to
minimize any disruption in the year-end reporting function including the
financial reporting and K-1 preparation and distribution.
Mitigating the increased expenses noted above was an increase in overall
revenues for 1995. The increase is due to the acquisition of Williamsburg Manor
and Sandpiper. The provision for possible losses of $2,557,000 during December
31, 1994, resulted from the write-down of three investment properties, Cedar
Rim, City Heights, and Lamplighter Park due to declines in their estimated net
realizable values due to regional economic factors.
In November 1994, the Partnership entered into a settlement agreement with
Equity Partners/3 ("EP/3") whereby the Williamsburg Manor Apartments were deeded
in lieu of foreclosure to the Partnership and foreclosure proceedings were
initiated by the Partnership on the Sandpiper I and II Apartments, the remaining
properties which collateralized the Master Loan. The final foreclosure on
Sandpiper I and II was completed on June 16, 1995. The Partnership assumed a
note payable of approximately $1.2 million in exchange for full settlement of
EP/3's liability for the Master Loan. The Partnership realized a net loss of
approximately $413,000 on the settlement of the Master Loan at December 31,
1994.
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark's Chapter 11 bankruptcy proceedings. These claims
related to Southmark's activities while it exercised control (directly, or
indirectly through its affiliates) over the Partnership. The U.S. Bankruptcy
Court set the Partnership's and the affiliated partnerships' allowed claim at
$11 million, in the aggregate. In March 1994, the Partnership received $67,791
in cash, 1,237 shares of Southmark Corporation Redeemable Series A Preferred
Stock and 9,406 shares of Southmark Corporation New Common Stock with an
aggregate market value on the date of receipt of $9,104 representing the
Partnership's share of the recovery, based on its pro rata share of the claims
filed.
In December 1995, three of the Partnership's properties, Williamsburg Manor,
Sandpiper I and II, and Park Capitol, were successfully refinanced. The
extraordinary loss on refinancing of approximately $18,000 in 1995, resulted
from a prepayment penalty charged for the Park Capitol refinancing for the early
payoff of the original debt secured by this property.
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 needed to offset softening market conditions, there is no guarantee
that the General Partner will be able to sustain such a plan.
1994 Compared with 1993
The Partnership realized a net loss of $529,000 for the year ended December 31,
1994, compared to a net loss of $1,141,000 for the year ended December 31, 1993.
Rental revenues for the year ended December 31, 1994, increased $341,000 or 4%
compared to 1993, primarily due to increased rental rates at the Partnership's
properties. Property operations expense for the year ended December 31, 1994,
increased $388,000 or 9% compared to 1993, primarily due to increased personnel
cost, utility expense, and replacement costs. Interest income on the
Partnership's note receivable collateralized by the South City Business Center
for the year ended December 31, 1994, decreased $251,000 or 31% compared to
1993. The decrease is a result of the loan restructure in April 1993, at which
time the rate was reduced from 10% to 7.18%. Since that time, interest income
has been recognized as earned according to the terms of the note. All required
note payments were received in 1994. Administrative expenses for the year ended
December 31, 1994, decreased $299,000 or 34% compared to 1993, primarily because
of a decrease in administrative overhead expenses allocated to the Partnership
and legal fees pertaining to the 1993 restructuring of the South City note
receivable.
The following table summarizes the sources of Master Loan payments received from
EP/3 and EP/4 during the years ended December 31, 1994 and 1993:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1994 1993
(in thousands)
<S> <C> <C>
Funds provided by property operations $ 3,019 $ 3,599
Funds used for property operations (includes
administrative expenses) (1,632) (1,750)
Debt service payments on underlying
notes payable (241) (499)
Total funds from operations 1,146 1,350
Cash transferred in property transfer (26) --
Net funds provided 1,120 1,350
Cash remitted in excess of (less than)
funds from operations of EP/3 properties 177 (116)
$ 1,297 $ 1,234
Master Loan Activity:
Principal payments $ -- $ --
Interest income 1,297 1,234
$ 1,297 $ 1,234
</TABLE>
Liquidity and Capital Resources
At December 31, 1995, the Partnership held unrestricted cash of approximately
$9,871,000 compared to cash of approximately $3,642,000 at December 31, 1994.
Net cash provided by operating activities was comparable for 1995 and 1994. Net
cash provided by investing activities decreased due to increased property
improvements and replacements at the Partnership's investment properties, along
with the deposits to the restricted escrows required by the refinancings of
Williamsburg Manor, Sandpiper I and II, and Park Capitol (See discussion below).
This increase was partially offset by the maturity of securities available for
sale. At December 31, 1995, there was net cash provided by financing activities
of approximately $1,674,000 compared to net cash used in financing activities of
approximately $3,919,000 at December 31, 1994. This increase in 1995 is
attributable to the proceeds received from the refinancings of the three
investment properties discussed below.
In December 1995, three of the Partnership's investment properties, Williamsburg
Manor, Park Capitol, and Sandpiper I and II, obtained refinancing. Total
proceeds from the refinancings totalled $10,825,000. This debt accrues interest
at a rate of 6.95% per year, and matures on December 1, 2005. The refinancing
agreements required the properties to deposit a certain amount of funds into
restricted escrows held by the mortgage company. Each property established a
replacement reserve which will be used, as needed, to make necessary repairs and
replacements at the properties. A capital reserve was also established for each
property for certain capital improvements needed at the properties. Loan costs
of $359,726, incurred by the properties to complete the refinancings, are
included in other assets on the accompanying balance sheet.
The Partnership had two notes payable, which originally matured in January 1995,
which were extended to June 1995. Lamplighter Park Apartments secured
approximately $4.6 million, and Tamarac Village secured approximately $2.8
million. On June 30, 1995, an extension agreement was reached on the
indebtedness secured by Lamplighter Park Apartments which extends the maturity
of this mortgage debt to June 30, 1997. In December 1995, the indebtedness
secured by Tamarac Village was paid in full.
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. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The notes payable of $18,029,000 have maturity dates ranging from 1997 to 2007
at which time the individual properties will be refinanced or sold.
Distributions of approximately $3,644,000 and $3,530,000 were made to the
partners during 1995 and 1994, respectively. Future cash distributions will
depend on the levels of net cash generated from operations, property sales, and
the availability of cash reserves.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital
as defined in the Partnership Agreement. In the event expenditures are made
from this reserve, operating revenue shall be allocated to such reserve to the
extent necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totalling approximately $10.3 million at December
31, 1995, were greater than the reserve requirement of approximately $4.1
million.
Subsequent to December 31, 1995, the Partnership declared distributions to the
partners of approximately $1.8 million attributable to cash flow from operations
and approximately $2.5 million attributable from surplus funds.
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
LIST OF FINANCIAL STATEMENTS
Reports of Independent Auditors
Balance Sheets - December 31, 1995 and 1994
Statements of Operations - Years Ended December 31, 1995, 1994 and 1993
Statements of Changes in Partners' Capital (Deficit) - Years Ended December
31, 1995, 1994 and 1993
Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Institutional Properties/3
We have audited the accompanying balance sheet of Consolidated Capital
Institutional Properties/3 as of December 31, 1995, and the related statements
of operations, changes in partners capital (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Partnership s management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the
Partnership s management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Consolidated Capital
Institutional Properties/3 as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 6, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Consolidated Capital Institutional Properties/3:
We have audited the accompanying balance sheet of Consolidated Capital
Institutional Properties/3 (a California limited partnership) as of December 31,
1994, and the related statements of operations, partners' capital (deficit) and
cash flows for the years ended December 31, 1994 and 1993. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Consolidated Capital
Institutional Properties/3 as of December 31, 1994, and the results of its
operations and its cash flows for the years ended December 31, 1994 and 1993,
in conformity with generally accepted accounting principles.
/s/ Arthur Andersen, LLP
Dallas, Texas
March 23, 1995
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
BALANCE SHEETS
(in thousands, except unit data)
Years Ended December 31,
1995 1994
Assets
Cash:
Unrestricted $ 9,871 $ 3,642
Restricted - tenant security deposits 349 --
Note and interest receivable 4,400 7,701
Securities available for sale 109 3,176
Restricted escrows 1,188 --
Other assets 1,069 339
Due from affiliates -- 59
Investment properties:
Land 10,365 8,902
Buildings and related personal property 45,470 38,236
55,835 47,138
Less accumulated depreciation (9,958) (7,459)
45,877 39,679
Net real estate assets of property
in-substance foreclosed -- 7,314
$ 62,863 $ 61,910
Liabilities and Partners' Capital (Deficit)
Mortgage notes payable and accrued interest $ 18,029 $ 12,318
Accounts payable and accrued expenses 857 300
Tenant security deposits 339 328
Accrued taxes 177 235
19,402 13,181
Partners' Capital (Deficit)
General partner (407) (355)
Limited partners (383,033 units outstanding) 43,868 49,084
43,461 48,729
$ 62,863 $ 61,910
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C>
Revenues:
Rental income $ 11,863 $ 8,431 $ 8,090
Income on investment in master loan
to affiliate -- 1,297 1,234
Interest and other income 706 976 1,117
Total revenues 12,569 10,704 10,441
Costs and Expenses:
Operating 6,544 4,520 4,132
General and administrative 650 573 872
Provision for possible losses -- 2,557 3,300
Depreciation and amortization 2,514 2,090 2,048
Interest 1,212 1,079 1,029
Write-down of note receivable 3,255 -- --
Total costs and expenses 14,175 10,819 11,381
Loss from operations (1,606) (115) (940)
Loss on sales of securities -- (1) --
Loss on settlement of Master Loan -- (413) --
Settlement costs -- -- (201)
Loss before extraordinary item (1,606) (529) (1,141)
Extraordinary item-loss from refinancing (18) -- --
Net loss $ (1,624) $ (529) $(1,141)
Net loss allocated to general partners (1%) $ (16) $ (6) $ (11)
Net loss allocated to limited partners (99%) (1,608) (523) (1,130)
$ (1,624) $ (529) $(1,141)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF OPERATIONS (CONTINUED)
(in thousands, except per unit data)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C> <C>
Net loss per Limited Partnership Unit:
Loss from operations $ (4.15) $ (.30) $ (2.43)
Loss on settlement of Master Loan -- (1.07) --
Settlement costs -- -- (.52)
Loss before extraordinary item (4.15) (1.37) (2.95)
Extraordinary item (.05) -- --
Net loss $ (4.20) $ (1.37) $ (2.95)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the Years Ended December 31, 1995, 1994 and 1993
(in thousands)
<TABLE>
<CAPTION>
LIMITED
PARTNERSHIP GENERAL LIMITED
UNITS PARTNER PARTNERS TOTAL
<S> <C> <C> <C> <C>
Original capital contributions 383,033 $ 1 $ 95,758 $ 95,759
Balance at December 31, 1992 383,033 (275) 56,990 56,715
Net loss -- (11) (1,130) (1,141)
Distributions -- (28) (2,758) (2,786)
Balance at December 31, 1993 383,033 (314) 53,102 52,788
Net loss -- (6) (523) (529)
Distributions -- (35) (3,495) (3,530)
Balance at December 31, 1994 383,033 (355) 49,084 48,729
Net loss -- (16) (1,608) (1,624)
Distributions -- (36) (3,608) (3,644)
Balance at December 31, 1995 383,033 $ (407) $ 43,868 $ 43,461
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<caption
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C> <C>
Net loss $(1,624) $ (529) $(1,141)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,514 2,090 2,048
Amortization of discounts and loan costs 25 -- 6
Loss on sales of investments -- 1 --
Receipt of Southmark stock -- (9) --
Loss on settlement of Master Loan -- 413 --
Loss on disposal of property 11 -- --
Write-down of note receivable 3,255 -- --
Interest reduction on note receivable 46 -- --
Provision for possible losses -- 2,557 3,300
Changes in accounts:
Restricted cash (349) -- --
Other assets (404) 58 110
Interest, taxes, accounts payable and
tenant security deposit liability 544 (438) 300
Due from (to) affiliates 59 (16) (43)
Net cash provided by
operating activities 4,077 4,127 4,580
Cash flows from investing activities:
Property improvements and replacements (1,401) (198) (406)
Deposits to restricted escrows (1,188) -- --
Advances on note receivable -- -- (200)
Purchase of securities (11,251) (1,704) (2,002)
Proceeds from securities 14,318 3,896 650
Net cash provided by (used in)
investing activities $ 478 $ 1,994 $(1,958)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
<TABLE>
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
<S> <C> <C> <C>
Cash flows from financing activities:
Payments on mortgage notes payable $ (448) $ (389) $ (453)
Proceeds from refinancing 10,825 -- --
Repayment of mortgage debt (4,699) -- --
Loan cost paid (360) -- --
Partners' distributions (3,644) (3,530) (2,786)
Net cash provided by (used in)
financing activities 1,674 (3,919) (3,239)
Net increase (decrease) in cash 6,229 2,202 (617)
Cash at beginning of year 3,642 1,440 2,057
Cash at end of year $ 9,871 $ 3,642 $ 1,440
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 1,139 $ 1,030 $ 956
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
Note A - Organization of Significant Accounting Policies
Organization: Consolidated Capital Institutional Properties/3 (the "Registrant"
or "Partnership"), a California limited partnership, was formed on May 23, 1984,
to lend funds through non-recourse notes with participation interests (the
"Master Loan"). The loans were made to, and the real properties that secure the
Master Loan were purchased and owned by, ConCap Equity Partners/3, ConCap Equity
Partners/4, and ConCap Equity Partners/5, ("EP/3", "EP/4", and "EP/5",
respectively), California limited partnerships in which certain of the partners
were former shareholders and former management of Consolidated Capital Equities
Corporation ("CCEC"). The Partnership entered into a Master Loan Agreement with
EP/3, EP/4, and EP/5, pursuant to which the aggregate principal would not exceed
the net amount raised by the Partnership's offering of approximately $96
million.
Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
corporate general partner. In December 1988, CCEC filed for reorganization under
Chapter 11 of the United States Bankruptcy Code ("Chapter 11"). In 1990, as
part of CCEC's reorganization plan, ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI") acquired CCEC's general partner
interests in the Partnership and in 15 other affiliated public limited partner-
ships and replaced CCEC as managing general partner in all 16 partnerships.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P., an affiliate of Insignia
Financial Group, Inc. ("Insignia") acquired an option (exercisable in whole or
in part from time to time) to purchase all of the stock of GII Realty, Inc. and,
pursuant to a partial exercise of such option, acquired 50.5% of that stock. As
part of the Insignia Transaction, MAE-ICC, Inc. also acquired all of the
outstanding stock of Partnership Services, Inc., an asset manager.
Additionally, a subsidiary of Insignia acquired all of the outstanding stock of
Coventry Properties, Inc., a property manager. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, MAE-ICC, Inc. exercised the remaining portion of
its option to purchase all of the remaining outstanding capital stock of GII
Realty, Inc.
The Partnership operates eight apartment properties and one commercial property
located throughout the United States.
The principal place of business for the Partnership and for the General Partner
is One Insignia Financial Plaza, Greenville, South Carolina, 29602.
Cash
Unrestricted: Unrestricted cash includes cash on hand and in banks and money
market funds and certificates of deposit with original maturities of three
months or less.
Note A - Organization of Significant Accounting Policies - continued
Restricted Cash - Tenant Security Deposits: The Partnership requires
security deposits from lessees for the duration of the lease with such deposits
being considered restricted cash. Deposits are refunded when the tenant
vacates, provided the tenant has not damaged its space and is current on its
rental payments.
Restricted Escrows: As a result of the refinancing of Williamsburg Manor,
Sandpiper I & II and Park Capitol, the following reserves were established:
Capital Improvement Reserve - As part of the refinancing, the properties
deposited $843,185 in total with the mortgage company to establish a Capital
Reserve designated for certain capital improvements needed. At December 31,
1995, this reserve is fully funded.
Replacement Reserve - As part of the refinancing, each property deposits per
unit between $225 and $325 per year with the mortgage company to establish a
Replacement Reserve designated for necessary repairs and replacements at the
properties. At December 31, 1995, this reserve for all of the properties
totalled $156,141.
Net Investment in Master Loan: According to generally accepted accounting
principles, lending arrangements that qualify as real estate acquisition,
development, and construction ("ADC") loans are subject to certain rules for
financial statement presentation and income recognition. Pursuant to these
rules, the Master Loan Agreement (herein so called) was classified as an
investment in an ADC loan as of December 31, 1993, primarily because the
Partnership was entitled to receive, according to the provisions of the Master
Loan Agreement, in excess of 50% of the residual profits from the sale or
refinancing of the properties securing the Master Loan Agreement. Under the
accounting rules, the Investment in Master Loan was accounted for by the cost
method, whereby income from the investment was recognized as interest to the
extent of payments received, and losses in the net realizable value of the
investment were recognized in the period they were identified. Interest
contractually accruing according to the terms of the Master Loan Agreement in
excess of payments received was deferred. As of December 31, 1993, such
cumulative deferred interest, which was not included in the balance of the
Investment in Master Loan, totaled $8.3 million. During 1994, the Sutter D
Office Building which secured the third party mortgage debt and served as
collateral for the Master Loan was foreclosed upon the first lienholder. In
November 1994, the Partnership entered into a settlement agreement with EP/3
whereby the Williamsburg Manor Apartments were transferred to the Partnership
under a deed-in-lieu of foreclosure to the Partnership and foreclosure
proceedings were initiated by the Partnership on the Sandpiper I & II
Apartments, the remaining property which collateralized the Master Loan.
Additionally, the Partnership assumed a first lien note payable of approximately
$1.2 million collateralized by the Sandpiper I & II Apartments in exchange for
full settlement of EP/3's liability, including deferred interest, under the
Master Loan. The final foreclosure on Sandpiper I & II was completed on June
16, 1995. As a result of the above transactions, the Master Loan was considered
settled in full during 1994.
Provision for Possible Losses: Provision to reduce the carrying cost of the
note receivable and real estate investments are provided when it is probable
that their reasonably estimable net realizable values are less than the recorded
carrying cost of
Note A - Organization of Significant Accounting Policies - continued
such investments. Losses that result from the ongoing periodic evaluation of
the net realizable value of the note receivable and real estate investments are
charged to expense in the period in which they are identified.
Note Receivable In-Substance Foreclosed: The portion of the Master Loan secured
by the Sandpiper I & II Apartments was deemed in-substance foreclosed as of
November 30, 1994. The portion of the Master Loan secured by Sandpiper I & II
was deemed in-substance foreclosed because control of the property effectively
rested with CCIP/3 and the debtor was unable to pay debt service according to
the note terms. The note receivable in-substance foreclosed was recorded at the
estimated fair value of the collateral property.
Note Receivable Impairment: In 1995, the Company adopted FASB Statement No.
114, "Accounting By Creditors for Impairment of a Loan." Under the new
standard, the provision for credit losses, related to loans that are identified
for evaluation in accordance with FASB Statement No. 114 is based on discounted
cash flows using the loan's initial effective interest rate or the fair value of
the collateral for certain collateral dependent loans. During 1995, it was
determined that the note secured by the South City Business Center was impaired.
Accordingly, during 1995, the Partnership recorded a write-down of $3,255,000
($1,500,000 in the fourth quarter) on the note receivable to adjust the note
balance to the estimated net realizable value of the collateral.
Investment Properties: Investment properties which consist of eight apartment
properties and one commercial property are stated at cost. Costs of properties
that have been permanently impaired have been reduced to the estimated fair
market value.
During 1995, the Partnership adopted FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
which requires impairment losses to be recognized for long-lived assets used in
operations when indicators of impairment are present and the undiscounted cash
flows are not sufficient to recover the assets' carrying amount. The impairment
loss is measured by comparing the fair value of the asset to its carrying
amount. The adoption of FASB No. 121 did not have a material effect on the
Partnership's financial statements.
Depreciation: Buildings and improvements are depreciated using the straight-
line method over the estimated useful lives of the assets, ranging from 3 to 22
years.
Leases: The Partnership leases its residential properties under short-term
operating leases. Lease terms are generally one year or less in duration. The
Partnership expects that in the normal course of business these leases will be
renewed or replaced by other leases.
The Partnership leases certain commercial space to tenants under various lease
terms. For leases containing fixed rental increases during their term, rents
are recognized on a straight-line basis over the terms of the lease. For all
other leases, rents are recognized over the terms of the leases as collected.
Note A - Organization of Significant Accounting Policies - continued
Interest Recognition on Notes Receivable: The Partnership's policy is to cease
accruing interest on notes receivable that have been delinquent for 60 days or
more. In addition, interest income is only accrued to the extent collateralized
by the net realizable value of the subject property.
Loan Costs: Loan costs of $359,726 were capitalized in December of 1995 (in
conjunction with the property refinancings) and are included in other assets and
are being amortized on a straight-line basis over the life of the loans.
Income Taxes: No provision has been made in the financial statements for
Federal income taxes because, under current law, no Federal income taxes are
paid directly by the Partnership. The partners are responsible for their
respective shares of Partnership net income or loss.
The tax basis of the Partnership's assets and liabilities is approximately $27.2
million greater than the assets and liabilities as reported in the financial
statements.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for
net income and net losses for both financial and tax reporting purposes to be
allocated 99% to the Limited Partners and 1% to the general partner.
Fair Value: In 1995, the Partnership implemented Statement of Financial
Accounting Standards No. 107, "Disclosure about Fair Value of Financial
Instruments," which requires disclosure of fair value information about
financial instruments for which it is practicable to estimate that value. The
carrying amount of the note receivable approximates fair value since the
receivable has been written down to the fair value of the underlying collateral.
The Partnership estimates the fair value of its fixed rate mortgages by
discounted cash flow analysis, based on estimated borrowing rates currently
available to the Partnership. The carrying amounts of variable-rate mortgages
approximate fair value due to frequent re-pricing.
Use of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising expense, included in operating expenses, was $273,369 (1995),
$186,170 (1994), and $214,555 (1993).
Reclassifications: Certain reclassifications have been made to the 1994 and
1993 information to conform to the 1995 presentation.
Note B - 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 three years in the period ended December 31, 1995. 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") or its predecessor for advisory services related to day-
to-day property operations. During 1993, day-to-day property management
services were provided by an unaffiliated management company.
In late December 1994, an affiliate of Insignia began to perform property
management services under the same management fee arrangement as the
unaffiliated management company. Fees paid to PSI and Insignia have been
reflected in the following table as compensation to related parties in the
applicable periods:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
COMPENSATION 1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Property management fees $ 572 $ 260 $ 98
</TABLE>
The Partnership Agreement provides for reimbursement to the property management
companies for their expenses related to property operations (primarily salaries
and related costs for on-site property personnel). The Partnership Agreement
also 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 current and former affiliates received reimbursements as
noted below:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
REIMBURSEMENTS 1995 1994 1993
(in thousands)
<S> <C> <C> <C>
Charged to administrative expenses:
Reimbursement for services of affiliates $ 410 $ 282 $ 422
</TABLE>
On July 1, 1995, the Partnership began insuring its properties under a master
policy through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The agent assumed the
financial obligations to the affiliate of the General Partner, who receives
payments on these obligations from the agent. The amount of the partnership's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
Note C - Securities Available For Sale
In 1994, the Partnership adopted Statements of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities." As
the fair value of securities available for sale ("securities") approximate their
cost, any unrealized gains or losses are immaterial and therefore, have not been
recorded in the accompanying financial statements. Any such adjustment would be
recorded directly to Partners' Capital (Deficit) and would not be reflected in
the Statement of Operations. The cost of Securities sold is determined using
the specific identification method.
Investments stated at cost, consisted of the following at December 31, 1995:
DESCRIPTION COST MATURITY
Commercial Paper $100,000 May 1998
Equity Securities 9,104 N/A
$109,104
Investments available for sale as of December 31, 1994 consist of $1,704,027 in
U.S. Treasury Bills, $1,125,000 in Commercial Paper and $9,104 in Equity
Securities.
Note D - Net Investment in Master Loan
EP/3 Settlement: During 1994, Sutter D Office Building which collateralized a
third party first lien mortgage debt and served as collateral for the Master
Loan was foreclosed upon by the first lienholder. The foreclosure had no gain
or loss effect to the Partnership. In November 1994, the Partnership entered
into a settlement agreement with EP/3 whereby the Williamsburg Manor Apartments
was deeded in lieu of foreclosure to the Partnership and foreclosure proceedings
were initiated by the Partnership on the Sandpiper I & II Apartments, the
remaining property which collateralized the Master Loan. Additionally, the
Partnership assumed a first lien note payable of approximately $1.2 million
collateralized by the Sandpiper I & II Apartments. The Partnership recognized
the deed in lieu of foreclosure of the Williamsburg Manor Apartments, the in-
substance foreclosure of the Sandpiper I & II Apartments and the assumption of
the related underlying first lien mortgage in exchange for full settlement of
EP/3's liability, including deferred basic interest, under the Master Loan. The
Partnership recognized a net loss of approximately $413,000 on the settlement of
the Master Loan.
As a result of the facts that: (1) EP/3 has no equity in the Sandpiper I & II
Apartments, considering the current estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments can be expected to come only from the operations or
sale of the property; and (3) EP/3 effectively abandoned control of the
Sandpiper I & II Apartments when EP/3 and the Partnership executed the
settlement agreement in November 1994, whereby EP/3 agreed to transfer to the
Partnership the full and unrestricted right to possession, management, and
control of the property and not to contest, hinder or delay a judicial
foreclosure action initiated by the Partnership, CCIP/3 has deemed the Sandpiper
I & II Apartments in-substance foreclosed as of November 30, 1994. Accordingly,
the net Note D - Net Investment in Master Loan - continued
Master Loan receivable collateralized by the Sandpiper I & II Apartments is
presented as "Net real estate assets of property in-substance foreclosed" in the
accompanying financial statements for 1994. Foreclosure proceedings were
completed on June 16, 1995.
EP/4 Settlement: In accordance with EP/4's bankruptcy, the Partnership pursued
foreclosure on EP/4's properties and note receivable collaterally securing
EP/4's portion of the Master Loan since the agreement was finalized in 1990.
Through May 1992, the Partnership foreclosed upon three of EP/4's properties and
a note receivable.
The Partnership completed foreclosure upon the last EP/4 property in June 1992,
and recognized a $1.9 million gain on the transaction as summarized in Note 6
under the caption "Property acquisition through foreclosure" for the year ended
December 31, 1992. Gains or losses upon foreclosure of the EP/4 properties were
deferred in previous years until the EP/4 Master Loan was retired in connection
with the 1992 foreclosure of the last EP/4 property. Accrued settlement costs
of $275,000 related to EP/4's bankruptcy proceeding were netted against the gain
on foreclosure in 1992. Additional settlement costs of $201,000 were accrued in
1993. All settlement costs were paid in February 1994.
Summary of Operations of EP/3 and EP/4
Sources of income from the Partnership's Investment in Master Loan and cash
payments related to EP/3 and EP/4 totaled approximately $1.3 million and $1.2
million, respectively, during the years ended December 31, 1994 and 1993.
Following is a summary of operations of EP/3 and EP/4 for the years then ended:
AS OF DECEMBER 31,
1994 1993
(in thousands)
Funds provided by property operations $ 3,019 $ 3,599
Funds used for property operations (1,632) (1,750)
Debt service payments on underlying notes payable (241) (499)
Total funds from operations 1,146 1,350
Cash transferred in property foreclosure (26) --
Net funds provided 1,120 1,350
Cash remitted in excess of (less than) funds
from operations of EP/3 properties 177 (116)
$ 1,297 $ 1,234
Master Loan Activity:
Interest income $ 1,297 $ 1,234
Note E - Notes and Interest Receivable
Notes and interest receivable at December 31, 1995 and 1994, consist of the
following:
AS OF DECEMBER 31,
1995 1994
(in thousands)
Current note $ 4,400 $ 7,655
Add:
Interest receivable -- 46
$ 4,400 $ 7,701
This note receivable relates to South City Business Center.
The borrower on the note receivable secured by the South City Business Center
placed the property under Chapter 11 protection in September 1992. In April
1993, the Bankruptcy Court approved the borrower's reorganization plan pursuant
to which the General Partner and the borrower agreed to a restructure agreement.
According to the restructure agreement, deferred interest totaling approximately
$1 million was added to the principal balance of the note, the Partnership
funded a principal advance of $200,000 to a property improvement escrow account,
and the borrower funded $120,000 into the property improvement escrow account
and paid past due interest totaling approximately $357,000 to bring the note
current.
The Partnership has final approval over disbursements from the property
improvement escrow account. The General Partner has approved disbursements of
substantially all of the funds held in escrow to be utilized for roof
replacement and exterior repairs. Additionally, the note terms were modified as
follows: (i) the interest rate was reduced from 10% to 7.18%, (ii) the maturity
date of the note, originally January 1994, was extended to May 1998; and (iii)
principal payments equal to Net Property Cash Flow, as defined in the
restructured note, are due annually. No gain or loss was recognized on the
restructure of the South City Note.
As of December 31, 1994, the note receivable on sold real estate represented a
note for which payments were made in accordance with the terms and the
corresponding interest income was accrued according to the restructured note
terms as described above.
During 1995, the debtor stopped making note payments on the South City note in
June and officially defaulted on the note in August. The Partnership obtained
an appraisal of the collateral and it was determined that this note receivable
was impaired. Accordingly, during 1995, the Partnership recorded a write-down
of $3,255,000 ($1,500,000 in fourth quarter) related to South City Business
Center to adjust the note balance to the estimated net realizable value of the
collateral. An affiliate of the General Partner was appointed receiver in
September 1995, and the foreclosure proceedings were finalized during the first
quarter of 1996.
Note F - Mortgage Notes Payable
Notes payable at December 31, 1995, consist of the following (in thousands,
except monthly payments):
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
<S> <C> <C> <C> <C> <C>
Lamplighter Park(1) $ 4,609 $ 40,000(1) 3.75% + 06/30/97 $ 4,571
LIBOR Rate
Park Capitol 2,725 15,782 6.95% 12/01/05 2,725
Tamarac Village
1st mortgage 1,269 15,976 9.5% 10/01/06 --
2nd mortgage 1,293 15,728 9.5% 05/01/07 --
Williamsburg Manor 4,150 24,035 6.95% 12/01/05 4,150
Sandpiper I & II 3,950 22,877 6.95% 12/01/05 3,950
17,996 $134,398
Accrued interest 33
Total $18,029
<FN>
(1) Lamplighter Park's mortgage payment is calculated at the greater of a 10.25%
rate or a rate equal to 3.75% plus the LIBOR Rate, based on the number of
days outstanding. In periods during which the LIBOR-based rate is below the
10.25% rate, the excess payment is applied to principal.
</TABLE>
In December 1995, three of the Partnership's investment properties, Williamsburg
Manor, Park Capitol, and Sandpiper I and II, obtained refinancing. Total
proceeds from the refinancings totalled $10,825,000. This debt accrues interest
at a rate of 6.95% per year, and matures on December 1, 2005. This debt
requires balloon payments at maturity for the full principal amount. Throughout
the mortgage term, interest only payments are made. Loan costs of $359,726 were
incurred by the properties as a result of the refinancings, and are included in
other assets on the balance sheet. Park Capitol was charged a prepayment
penalty due to the early payoff of the old debt which resulted in the
extraordinary loss on refinancing of approximately $18,000 for December 31,
1995.
The Partnership had two notes payable, originally maturing in January 1995,
which were extended to June 1995. Lamplighter Park Apartments secured
approximately $4.6 million, and Tamarac Village secured approximately $2.8
million. On June 30, 1995, an extension agreement was reached on the
indebtedness secured by Lamplighter Park Apartments, which extended the maturity
of this mortgage debt to June 30, 1997. In December 1995, this indebtedness
secured by Tamarac Village was paid in full.
Note F - Mortgage Notes Payable - continued
The estimated fair values of the Partnership's aggregate debt is $18,190,000.
This estimate represents a general approximation of possible value and is not
necessarily indicative of the amounts the Partnership might pay in actual market
transactions.
The mortgage notes payable are nonrecourse and are secured by pledge of the
respective properties. Also, all notes require prepayment penalties if repaid
prior to maturity and prohibit resale of the properties subject to existing
indebtedness. Beginning March 1, 1996, the lender has the right, upon six
months written notice, to call the second mortgage on Tamarac Village.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1995 are as follows:
(in thousands)
1996 $ 156
1997 4,741
1998 172
1999 189
2000 208
Thereafter 12,530
Total $ 17,996
Note G - Summary of Noncash Investing and Financing Activity
The following table sets forth (in thousands) the Partnership's noncash
investing and financing activities during the year ended December 31, 1994, with
respect to the EP/3 property deeded-in-lieu of foreclosure and EP/3 property
recorded as in-substance foreclosure in 1994. There was no significant noncash
investing or financing activity during the years ended December 31, 1995 and
1993.
<TABLE>
<CAPTION>
Master Loan Notes and Net Gain (Loss)
For the Year Net Real In-Substance Interest On Property
Ended December 31, 1994 Estate Foreclosed Payable Foreclosure
<S> <C> <C> <C> <C>
Property deemed in-
substance Foreclosed $ 7,314 $ 6,849 $ (1,166) $ (701)
Property Deeded in-lieu
of Foreclosure 6,405(A) 6,116(B) -- 288
$ 13,719 $ 12,965 $ (1,166) $ (413)
<FN>
(A) Amount represents the estimated fair value of the properties based upon an
analysis of current market conditions and current property operations.
(B) Amount represents the Master Loan balance extinguished net of the allowance
for loss and collection reserve.
</TABLE>
Note H - Allowance for Possible Losses
<TABLE>
<CAPTION>
MASTER REAL
LOAN ESTATE TOTAL
(in thousands)
<S> <C> <C> <C>
Balance at December 31, 1992 $ 1,060 $ 1,100 $ 2,160
Provision for possible losses 3,300(a) -- 3,300
Balance at December 31, 1993 4,360 1,100 5,460
(charge-offs) (4,360)(b) 2,557 (c) (1,803)
Balance at December 31, 1994 -- 3,657 3,657
(charge-offs) -- (3,657)(d) (3,657)
Balance at December 31, 1995 $ -- $ -- $ --
<FN>
(a) The provision for possible losses is included in operations for the year
ended December 31, 1993, and reflects a decline in the value of the
Partnership Investment in Master Loan.
(b) This charge-off reflects the amount of allowance for losses relating to
the EP/3 property foreclosure in November 1994.
(c) The provision for possible losses is included in operations for the year
ended December 31, 1994, and reflects a decline in the estimated fair
value of certain properties due to regional economic factors.
(d) This charge off reflects the write-down of several investment properties
to net realizable value ($1,100 during 1993 and $2,557 during 1994). The
write-down has been allocated to the appropriate fixed assets at December
31, 1995.
</TABLE>
Note I - Other Income
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark's activities while it exercised control
(directly, or indirectly through its affiliates) over the Partnership. The U.S.
Bankruptcy Court set the Partnership's and the affiliated partnerships' allowed
claim at $11 million, in aggregate. In March 1994, the Partnership received
$67,791 in cash, 1,237 shares of Southmark Corporation Redeemable Series A
Preferred Stock and 9,406 shares of Southmark Corporation New Common Stock, with
an aggregate market value on the date of receipt of $9,104, representing the
Partnership's share of the recovery based on its pro rata portion of claims
filed.
Note J - Commitment and Contingencies
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
securities available for sale, totaling approximately $10.3 million, were
greater than the reserve requirement of $4.1 million at December 31, 1995.
Note J - Commitment and Contingencies - continued
The Partnership is not a party to, nor is the Partnership's property the subject
of, any material pending legal proceedings, other than ordinary litigation
routine to the Partnership's business.
Note K - Partners' Equity (Deficit)
Net profits, net losses, and distributions of "distributable cash from
operations" (as determined by the general partner) are allocated 99% to the
Limited Partners and 1% to the general partner.
Distributions of approximately $3,644,000 and $3,530,000 were made to the
partners during 1995 and 1994, respectively.
Note L - Operating Leases
Tenants of the Partnership's commercial property are responsible for payment of
their proportionate share of real estate taxes. Insurance, common area
maintenance expenses and a portion of the real estate taxes are paid directly by
the Partnership. The Partnership is then reimbursed by the tenants for their
proportionate share of the real estate taxes. The expenses paid by the
Partnership are included on the Statements of Operations in operating expenses.
The future minimum rental payments to be received under operating leases that
have initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1995 are as follows:
1996 $ 391,966
1997 378,895
1998 302,092
1999 121,903
2000 8,728
Thereafter 0
$1,203,584
Note M - Investment Properties and Accumulated Depreciation
(Amounts in thousands)
<TABLE>
<CAPTION>
Initial Cost
To Partnership
Cost
Buildings Capitalized
and Related (Removed)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
Cedar Rim $ -- $ 778 $ 4,322 $ 568
Renton, Washington (1,063)
City Heights -- 1,197 4,238 431
Seattle, Washington (1,159)
Corporate Center -- 1,071 2,949 470
Tampa, Florida (1,100)
Hidden Cove by the Lake -- 184 4,416 496
Belleville, Michigan
Lamplighter Park 4,609 2,458 5,167 326
Bellevue, Washington (335)
Park Capitol 2,725 280 2,100 414
Salt Lake City, Utah
Tamarac Village I, II, 2,562 2,464 10,536 545
III, & IV
Denver, Colorado
Williamsburg Manor 4,150 1,281 5,124 190
Cary, North Carolina
Sandpiper I & II 3,950 1,463 5,851 173
St. Petersburg, Florida
Totals $17,996 $11,176 $44,703 $ (44)
Accrued interest 33
$18,029
</TABLE>
Note M - Investment Properties and Accumulated Depreciation - continued
<TABLE>
<CAPTION>
Gross Amount At Which Carried
at December 31, 1995
(in thousands)
Buildings
And Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
<S> <C> <C> <C> <C> <C> <C> <C>
Cedar Rim $ 618 $ 3,987 $ 4,605 $ 1,203 1980 4/12/91 3 - 20
City Heights 942 3,765 4,707 1,277 1985 4/13/90 3 - 20
Corporate Center 782 2,608 3,390 1,085 1982 4/13/90 5 - 20
Hidden Cove by
the Lake 184 4,912 5,096 1,644 1972 3/23/90 3 - 20
Lamplighter Park 2,351 5,265 7,616 1,398 1968 4/12/91 3 - 20
Park Capitol 280 2,514 2,794 861 1974 4/13/90 5 - 20
Tamarac Village 2,464 11,081 13,545 1,963 1978 6/10/92 5 - 20
II, III, & IV
Williamsburg 1,281 5,314 6,595 247 1970 11/30/94 5 - 22
Sandpiper 1,463 6,024 7,487 280 1976/1985 11/30/94 5 - 22
$10,365 $45,470 $55,835 $9,958
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993
(in thousands)
<S> <C> <C> <C>
REAL ESTATE:
Balance at beginning of year $ 58,109 $ 44,192 $ 43,786
Additions 1,401 198 406
Acquisition through foreclosure -- 6,405 --
Allocation of valuation reserve (3,657) -- --
Acquisition through in-substance
foreclosure -- 7,314 --
Disposal of property (18) -- --
Balance at end of year $ 55,835 $ 58,109 $ 44,192
</TABLE>
Note M - Investment Properties and Accumulated Depreciation - continued
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ACCUMULATED DEPRECIATION:
Balance at beginning of year $ 7,459 $ 5,369 $ 3,321
Depreciation on real estate 2,505 2,090 2,048
Disposal of property (6) -- --
Balance at end of year $ 9,958 $ 7,459 $ 5,369
<FN>
(1) The aggregate cost for Federal income tax purposes is (in thousands):
</TABLE>
1995 $ 53,180
1994 $ 44,886
1993 $ 44,688
Note N - Subsequent Events
Subsequent to December 31, 1995, the Partnership declared distributions to the
partners of approximately $1.8 million attributable to cash flow from
operations and approximately $2.5 million attributable from surplus funds.
PART III
Item 9. Changes In and Disagreements with Accountants on Accounting
and Financial Disclosure
As reported in the Partnership's Form 8-K filed May 10, 1995, as of May
3, 1995, Arthur Andersen L.L.P., the independent accountant previously engaged
as the principal accountant to audit the financial statements of the
Partnership was dismissed. As of the same date, the firm of Ernst & Young
L.L.P. was engaged to provide that service for the Partnership.
Item 10. Directors and Executive Officers of the Registrant
The names of the directors and executive officers of ConCap Equities, Inc.
("CEI"), the Partnership's Managing General Partner as of
December 31, 1995, their age and the nature of all positions with CEI
presently held by them are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
NAME OF INDIVIDUAL POSITION IN CEI AGE
Carroll D. Vinson President 55
William H. Jarrard, Jr. Vice President 49
John K. Lines Secretary 36
Kelley M. Buechler Assistant Secretary 38
Robert D. Long, Jr. Chief Accounting Officer/ 28
Controller
Carroll D. Vinson has been President of CEI since December of 1994 and
President of the MAE subsidiaries since August 1994. Prior to that,
during 1993 to August 1994, Mr. Vinson was affiliated with Crisp, Hughes
& Co. (a regional CPA firm) and engaged in various other investment and
consulting activities. Briefly, in early 1993, Mr. Vinson served as President
and Chief Executive Officer of Angeles Corporation, a real estate investment
firm. From 1991 to 1993, Mr. Vinson was employed by Insignia in various
capacities including Managing Director-President during 1991. From 1986 to
1990, Mr. Vinson was President and a Director of U.S. Shelter Corporation, a
real estate services company which sold substantially all of its assets to
Insignia in December 1990.
William H. Jarrard, Jr. has been Vice President of CEI since December of
1994, Vice President of the MAE subsidiaries since January 1992 and Managing
Director - Partnership Administration of Insignia since January 1991. During
the five years prior to joining Insignia in 1991, he served in a similar
capacity for U.S. Shelter. Mr. Jarrard is a graduate of the University of South
Carolina and a certified public accountant.
John K. Lines has been Secretary of CEI since December of 1994, Secretary of
the MAE subsidiaries since August 1994 and General Counsel and Secretary of
Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the
Assistant General Counsel and Vice President of Ocwen Financial Corporation
in West Palm Beach, Florida. From October 1991 until April 1993, Mr. Lines
was a Senior Attorney with Banc One Corporation in Columbus, Ohio. From May
1984 until October 1991, Mr. Lines was employed as an associate with
Squire Sanders & Dempsey in Columbus, Ohio.
Robert D. Long, Jr. has been Controller and Chief Accounting Officer of
CEI since December 1994 and Chief Accounting Officer and Controller of the
MAE subsidiaries since February 1994. Prior to joining MAE, he was an
auditor for the State of Tennessee and was associated with the accounting firm
of Harshman Lewis and Associates. He is a graduate of the University of
Memphis.
Kelley M. Buechler has been Assistant Secretary of CEI since December 1994,
Assistant Secretary of the MAE subsidiaries since January 1992, and Assistant
Secretary of Insignia since January 1991. During the five years prior to
joining Insignia in 1991, she served in a similar capacity for U.S. Shelter.
Ms. Buechler is a graduate of the University of North Carolina.
No family relationship exists between any of the directors and officers of CEI.
Item 11. Executive Compensation
No direct compensation was paid or payable by the Partnership to directors or
officers (since it does not have any directors or officers) for the year ended
December 31, 1995, nor was any direct compensation paid or payable by the
Partnership to directors or officers of the General Partner for the year
ended December 31, 1995. The Partnership has no plans to pay any such
remuneration to any directors or officers of the General Partner in the future.
See Item 8 - Financial Statements and Supplementary Data, Note B - Related
Party Transactions, for amounts of compensation and reimbursement of
salaries paid by the Partnership to the General Partner and its affiliates and
the former corporate general partner and former affiliates.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of February, 1996, no person was
known to CEI to own of record or beneficially more than 5 percent
(5%) of the Units of the Partnership:
NUMBER OF PERCENT
NAME AND ADDRESS UNITS OF TOTAL
Insignia Financial Group, Inc. 34,560 9%
The Units reflected above were acquired by LP 3 Acceptance
Corporation, an affiliate of the Partnership and CEI, pursuant to
its offer dated November 9, 1992, to purchase Units for a purchase
price of $45.00 per Unit (the "Tender Offer").
(b) Beneficial Owners of Management
Except as described in Item 12(a) above, neither CEI nor any of the
directors, officers or associates of CEI own any Units of the
Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of February, 1996, the following persons were known to CEI to
be the beneficial owners of more than 5 percent (5%) of its common stock:
NUMBER OF PERCENT
NAME AND ADDRESS CEI SHARES OF TOTAL
GII Realty, Inc. 100,000 100%
Item 13. Certain Relationships and Related Transactions
Transactions with Current Management and Others
Except for the transactions described below, neither CEI nor any of its
directors, officers or associates, or any associates of any of them, has
had any interest in any other transaction to which the Partnership is a party.
Please refer to "Item 8 - Financial Statements and Supplementary Data," Note
B - Related Party Transactions, for the amounts and items of permissible
compensation and fees paid to the General Partner and its affiliates and
other related parties for the last three years.
The Partnership paid property management fees equal to 5% of collected gross
rental revenues ("Rental Revenues") for property management services for
the period ended December 31, 1995 and 1994. For the year ended December
31, 1994, a portion of such property management fees were paid to Coventry
Properties, Inc. ("Coventry"), an affiliate of the General Partner, for
day-to-day property management services and a portion was paid to
Partnership Services, Inc. ("PSI") for advisory services related to day-to-day
property operations. During 1993, property management services were provided
by an unaffiliated management company. In July 1993, Coventry assumed
day-to-day property management responsibilities. In late December 1994,
affiliates of Insignia Financial Group, Inc. ("Insignia") assumed day-to-day
property management responsibilities for all of the Partnership's
properties.
All of the above-referenced agreements with affiliates of CEI and related
parties of the Partnership are subject to the conditions and limitations imposed
by the Partnership Agreement.
Litigation with Former Related Parties
In 1991, the Partnership (and simultaneously each of the Affiliated
Partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding. These claims related to Southmark'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 Partnership's allowed claim at $11 million, in aggregate. In
March 1994, the Partnership received $67,791 in cash, 1,237 shares of
Southmark Corporation Redeemable Series A Preferred Stock and 9,406 shares
of New Common Stock with an aggregate market value of $9,104 on the date of
receipt representing the Partnership's share of the recovery, based on its pro
rata share of the claims filed.
PART IV
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Balance Sheets as of December 31, 1995 and 1994
Statements of Operations for the Years Ended December 31,
1995, 1994 and 1993
Statements of Changes in Partners' Capital (Deficit) for the
Years Ended December 31, 1995, 1994 and 1993
Statements of Cash Flows for the Years Ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
2. Schedules
All schedules are omitted because they are not required,
are not applicable or the financial information is included in
the financial statements or notes thereto.
3. Exhibits
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
3 Certificates of Limited Partnership,
as amended.
10.3 Participating Note Master Loan
Agreement (Incorporated by reference
to Registration Statement of Partner-
ship (File No. 2-97664) filed July 23,
1985).
10.4 Participating Note Security Agreement
(Incorporated by reference to Registra-
tion Statement of Partnership (File No.
2-97664) filed July 23, 1985).
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
10.5 Form of Deed of Trust and Rider
(Incorporated by reference to Registra-
tion Statement of Partnership (File No.
2-97664) filed July 23, 1985).
10.6 Severable Promissory Notes (Incor-
porated by reference to Registration
Statement of Partnership (File No.
2-97664) filed July 23, 1985).
10.7 Property Management Agreement No.
101 dated October 23, 1990, by and
between the Partnership and CCEC
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1990).
10.8 Property Management Agreement No.
301 dated October 23, 1990, by and
between the Partnership and CCEC
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1990).
10.9 Property Management Agreement No.
315 dated April 12, 1991, by and
between the Partnership and CCMLP.
(Incorporated by reference to the
Annual Report on Form 10-K for the
year ended December 31, 1991).
10.10 Bill of Sale and Assignment dated
October 23, 1990, by and between
CCEC and ConCap Services Company
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1990).
10.11 Assignment and Assumption dated
October 23, 1990, by and between
CCEC and ConCap Management Limited
Partnership ("CCMLP") (Incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1990).
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
10.12 Assignment and Agreement as to Certain
Property Management Services dated
October 23, 1990, by and between CCMLP
and ConCap Capital Company (Incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1990).
10.13 Assignment and Agreement as to
Certain Property Management Services
dated April 12, 1991, by and between
CCMLP and ConCap Capital Company.
(Incorporated by reference to the
1991 Annual Report on Form 10-K for
the year ended December 31, 1991).
10.14 Assignment and Agreement dated October
23, 1990, by and between CCMLP and The
Hayman Company (100 Series of Property
Management Contracts) (Incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1990).
10.15 Assignment and Agreement dated October
23, 1990, by and between CCMLP and
Metro ConCap, Inc. (300 Series of
Property Management Contracts) (Incor-
porated by reference to the Quarterly
Report on Form 10-Q for the quarter
ended September 30, 1990).
10.16 Construction Management Cost Reim-
bursement Agreement dated January 1,
1991, by and between the Partnership
and Metro ConCap, Inc. (Incorporated
by reference to the Annual Report on
Form 10-K for the year ended December
31, 1991).
10.17 Construction Management Cost Reim-
bursement Agreement dated April 12,
1991, by and between the Partnership
and Metro ConCap, Inc. (Incorporated
by reference to the Annual Report on
Form 10-K for the year ended December
31, 1991).
10.18 Construction Management Cost Reim-
bursement Agreement dated January 1,
1991, by and between the Partnership
and The Hayman Company. (Incorpor-
ated by reference to the Annual
Report on Form 10-K for the year ended
December 31, 1991).
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
10.19 Investor Services Agreement dated
October 23, 1990, by and between the
Partnership and CCEC (Incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1990).
10.20 Assignment and Assumption Agreement
(Investor Services Agreement) dated
October 23, 1990, by and between
CCEC and ConCap Services Company
(Incorporated by reference to the
Annual Report on Form 10-K for the
year ended December 31, 1990).
10.21 Letter of Notice dated December 20,
1991, from Partnership Services, Inc.
("PSI") to the Partnership regarding
the change in ownership and dissolution
of ConCap Services Company whereby PSI
assumed the Investor Services Agreement.
(Incorporated by reference to the Annual
Report on Form 10-K for the year ended
December 31, 1991).
10.22 Financial Services Agreement dated
October 23, 1990, by and between the
Partnership and CCEC (Incorporated
by reference to the Quarterly Report
on Form 10-Q for the quarter ended
September 30, 1990).
10.23 Assignment and Assumption Agreement
(Financial Services Agreement) dated
October 23, 1990, by and between CCEC
and ConCap Capital Company (Incorpor-
ated by reference to the Quarterly
Report on Form 10-Q for the quarter
ended September 30, 1990).
10.24 Letter of Notice dated December 20,
1991, from PSI to the Partnership
regarding the change in ownership and
dissolution of ConCap Capital Company
whereby PSI assumed the Financial
Services Agreement. (Incorporated
by reference to the Annual Report on
Form 10-K for the year ended December
31, 1991).
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
10.25 Joint Application for Approval of
Settlement Agreement dated August 10,
1990, between James W. Cunningham
(EP/4's Trustee) and the Partnership
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.26 Property Management Agreement
No. 415 dated May 13, 1993, by
and between the Partnership
and Coventry Properties, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
10.27 Assignment and Assumption
Agreement (Property Management
Agreement No. 415) dated May
13, 1993, by and between
Coventry Properties, Inc., R&B
Apartment Management Company Inc.
and Partnership Services, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
10.28 Assignment and Agreement as to
Certain Property Management
Services as related to Property
Management Agreement No. 415
dated May 13, 1993, by and
between Coventry Properties, Inc.
and Partnership Services, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
10.29 Property Management Agreement
No. 425 dated May 13, 1993, by
and between the Partnership
and Coventry Properties, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
10.30 Assignment and Assumption
Agreement (Property Management
Agreement No. 425) dated May
13, 1993, by and between
Coventry Properties, Inc., R&B
Apartment Management Company Inc.
and Partnership Services, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
10.31 Assignment and Agreement as to
Certain Property Management
Services as related to Property
Management Agreement No. 425
dated May 13, 1993, by and
between Coventry Properties, Inc.
and Partnership Services, Inc.
(Incorporated by reference to the
Quarterly Report on Form 10-Q for
the quarter ended September 30,
1993)
10.32 Property Management Agreement
No. 509 dated June 1, 1993, by
and between the Partnership
and Coventry Properties, Inc.
10.33 Assignment and Assumption Agree-
ment as to Certain Property
Management Services dated November
17, 1993, by and between Coventry
Properties, Inc. and Partnership
Services, Inc.
10.34 Multifamily Note dated November 30, 1995
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division
of Lehman Brothers Holdings Inc..
10.35 Multifamily Note dated November 30, 1995
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division
of Lehman Brothers Holdings Inc..
10.36 Multifamily Note dated November 30, 1995
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division
of Lehman Brothers Holdings Inc..
S-K REFERENCE
NUMBER DOCUMENT DESCRIPTION
11 Statement regarding computation of
Net Income per Limited Partnership
Unit (Incorporated by reference to
Note 8 of Item 8 - Financial State-
ments of this Form 10-K)
16 Letter, Dated August 12, 1992, from
Ernst & Young to the Securities and
Exchange Commission regarding change
in certifying accountant. (Incorporated
by reference to Form 8-K dated August 6,
1992)
27 Financial Data Schedule.
28.1 Fee Owner's General Partnership
Agreement (Incorporated by reference
to Registration Statement of
Partnership (File No. 2-97664) filed
July 23, 1985).
28.2 Fee Owner's Certificate of Partnership
(Incorporated by reference to Regi-
stration Statement of Partnership
(File No. 2-97664) filed July 23, 1985).
(b) Reports on Form 8-K, filed during the fourth quarter of 1995: None.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
SIGNATURE PAGE
Pursuant to the requirements of Section 13 or 15(d) 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/3
By: CONCAP EQUITIES, INC.
Its General Partner,
March 22, 1996 By: /s/ Carroll D. Vinson
Date Carroll D. Vinson
President
March 22, 1996 By: /s/ Robert D. Long, Jr.
Date Robert D. Long, Jr.
Controller, Principal Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
March 22, 1996 By: /s/ Carroll D. Vinson
Date Carroll D. Vinson
Director and President
March 22, 1996 By: /s/ Robert D. Long, Jr.
Date Robert D. Long, Jr.
Controller, Principal Accounting Officer
</TABLE>
EXHIBIT 10.34
Loan No. 734133456
MULTIFAMILY NOTE
US $2,725,000.00 New York, New York
As of November 30, 1995
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS
HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or order, the principal sum of Two Million Seven Hundred Twenty-five Thousand
and 00/100 Dollars, with interest on the unpaid principal balance from the date
of this Note, until paid, at the rate of 6.95 percent per annum. Interest only
shall be payable at 3 World Financial Center, New York, New York 10285, or such
other place as the holder hereof may designate in writing, in consecutive
monthly installments of Fifteen Thousand Seven Hundred Eighty Two Dollars and
Twenty-Nine Cents (US $15,782.29) on the first day of each month beginning
January, 1996, until the entire indebtedness evidenced hereby is fully paid,
except that any remaining indebtedness, if not sooner paid, shall be due and
payable on December 1, 2005.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments, unless the holder hereof shall agree otherwise in writing.
The holder hereof may require that any partial prepayments be made on the date
monthly installments are due and be in the amount of that part of one or more
monthly installments which would be applicable to principal.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed
of Trust dated as of November 30, 1995, and reference is made thereto for rights
as to acceleration of the indebtedness evidenced by this Note. This Note shall
be governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of interest due hereunder within
ten (10) calendar days after such installment of interest is due. The
undersigned shall pay any other installment due hereunder or due in accordance
with the terms of the Mortgage or Deed of Trust securing this Note, within
thirty (30) calendar days of the date such installment is due.
The monthly installment payable on January 1, 1996 shall include interest
on the outstanding principal balance of this Note for a full month at the above-
specified interest rate, notwithstanding the fact that as of the due date of
that installment principal may not have been outstanding for a full month.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3, a
California limited partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By: /s/ Robert Long
Robert Long
Vice President and Chief Accounting
Officer
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This 30th day of November, 1995.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman Brothers
Holdings Inc.
By: /s/ Eileen A. Brennan
Name: Eileen A. Brennan
Title:
EXHIBIT 10.35
Loan No. 734079486
MULTIFAMILY NOTE
US $3,950,000.00 New York, New York
As of November 30, 1995
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS
HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or order, the principal sum of Three Million Nine Hundred Fifty Thousand and
00/100 Dollars, with interest on the unpaid principal balance from the date of
this Note, until paid, at the rate of 6.95 percent per annum. Interest only
shall be payable at 3 World Financial Center, New York, New York 10285, or such
other place as the holder hereof may designate in writing, in consecutive
monthly installments of Twenty-Two Thousand Eight Hundred Seventy Seven Dollars
and Eight Cents (US $22,877.08) on the first day of each month beginning
January, 1996, until the entire indebtedness evidenced hereby is fully paid,
except that any remaining indebtedness, if not sooner paid, shall be due and
payable on December 1, 2005.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments, unless the holder hereof shall agree otherwise in writing.
The holder hereof may require that any partial prepayments be made on the date
monthly installments are due and be in the amount of that part of one or more
monthly installments which would be applicable to principal.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed
of Trust dated as of November 30, 1995, and reference is made thereto for rights
as to acceleration of the indebtedness evidenced by this Note. This Note shall
be governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of interest due hereunder within
ten (10) calendar days after such installment of interest is due. The
undersigned shall pay any other installment due hereunder or due in accordance
with the terms of the Mortgage or Deed of Trust securing this Note, within
thirty (30) calendar days of the date such installment is due.
The monthly installment payable on January 1, 1996 shall include interest
on the outstanding principal balance of this Note for a full month at the above-
specified interest rate, notwithstanding the fact that as of the due date of
that installment principal may not have been outstanding for a full month.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3, a
California limited partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
/s/Gretner Sims
Witness
By: /s/ Robert Long
/s/Lucian Bauknight Robert Long
Witness Vice President and Chief Accounting
Officer
DOCUMENTARY STAMP TAX IN THE AMOUNT OF $_____________
HAS BEEN PAID IN CONNECTION WITH THIS NOTE, AND PROPER
DOCUMENTARY STAMPS HAVE BEEN AFFIXED TO OR NOTED ON THE
MORTGAGE SECURING THIS NOTE.
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This 30th day of November, 1995.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman Brothers
Holdings Inc.
By: /s/ Eileen A. Brennan
Name: Eileen A. Brennan
Title:
EXHIBIT 10.36
Loan No. 734079478
MULTIFAMILY NOTE
US $4,150,000.00
New York, New York
As of November 30, 1995
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS
HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or order, the principal sum of Four Million One Hundred Fifty Thousand and
00/100 Dollars, with interest on the unpaid principal balance from the date of
this Note, until paid, at the rate of 6.95 percent per annum. Interest only
shall be payable at 3 World Financial Center, New York, New York 10285, or such
other place as the holder hereof may designate in writing, in consecutive
monthly installments of Twenty Four Thousand Thirty Five Dollars and 42/100 (US
$24,035.42) on the first day of each month beginning January, 1996, until the
entire indebtedness evidenced hereby is fully paid, except that any remaining
indebtedness, if not sooner paid, shall be due and payable on December 1, 2005.
If any installment under this Note is not paid when due, the entire
principal amount outstanding hereunder and accrued interest thereon shall at
once become due and payable, at the option of the holder hereof. The holder
hereof may exercise this option to accelerate during any default by the
undersigned regardless of any prior forbearance. In the event of any default in
the payment of this Note, and if the same is referred to an attorney at law for
collection or any action at law or in equity is brought with respect hereto, the
undersigned shall pay the holder hereof all expenses and costs, including, but
not limited to, attorney's fees.
Prepayments shall be applied against the outstanding principal balance of
this Note and shall not extend or postpone the due date of any subsequent
monthly installments, unless the holder hereof shall agree otherwise in writing.
The holder hereof may require that any partial prepayments be made on the date
monthly installments are due and be in the amount of that part of one or more
monthly installments which would be applicable to principal.
From time to time, without affecting the obligation of the undersigned or
the successors or assigns of the undersigned to pay the outstanding principal
balance of this Note and observe the covenants of the undersigned contained
herein, without affecting the guaranty of any person, corporation, partnership
or other entity for payment of the outstanding principal balance of this Note,
without giving notice to or obtaining the consent of the undersigned, the
successors or assigns of the undersigned or guarantors, and without liability on
the part of the holder hereof, the holder hereof may, at the option of the
holder hereof, extend the time for payment of said outstanding principal balance
or any part thereof, reduce the payments thereon, release anyone liable on any
of said outstanding principal balance, accept a renewal of this Note, modify the
terms and time of payment of said outstanding principal balance, join in any
extension or subordination agreement, release any security given herefor, take
or release other or additional security, and agree in writing with the
undersigned to modify the rate of interest or period of amortization of this
Note or change the amount of the monthly installments payable hereunder.
Presentment, notice of dishonor, and protest are hereby waived by all
makers, sureties, guarantors and endorsers hereof. This Note shall be the joint
and several obligation of all makers, sureties, guarantors and endorsers, and
shall be binding upon them and their successors and assigns.
The indebtedness evidenced by this Note is secured by a Mortgage or Deed
of Trust dated as of November 30, 1995, and reference is made thereto for rights
as to acceleration of the indebtedness evidenced by this Note. This Note shall
be governed by the law of the jurisdiction in which the Property subject to the
Mortgage or Deed of Trust is located.
The undersigned shall pay any installment of interest due hereunder within
ten (10) calendar days after such installment of interest is due. The
undersigned shall pay any other installment due hereunder or due in accordance
with the terms of the Mortgage or Deed of Trust securing this Note, within
thirty (30) calendar days of the date such installment is due.
The monthly installment payable on January 1, 1996 shall include interest
on the outstanding principal balance of this Note for a full month at the above-
specified interest rate, notwithstanding the fact that as of the due date of
that installment principal may not have been outstanding for a full month.
Witness the hand(s) and seal(s) of the undersigned.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3, a
California limited partnership
ATTEST: By: ConCap Equities, Inc., a Delaware
corporation, its general partner
/s/Leigh H. Watters
Secretary
By: /s/ Robert Long
(Corporate Seal) Robert Long
Vice President and Chief Accounting
Officer
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE. This
30th day of November, 1995.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman Brothers
Holdings Inc.
By:/s/ Eileen A. Brennan
Name: Eileen A. Brennan
Title:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Captial Institutional Properties/3 1995 Year-End 10-KSB and is qualified in its
entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000768890
<NAME> CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,871
<SECURITIES> 109
<RECEIVABLES> 4,400
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 55,835
<DEPRECIATION> (9,958)
<TOTAL-ASSETS> 62,863
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 18,029
0
0
<COMMON> 0
<OTHER-SE> 43,461
<TOTAL-LIABILITY-AND-EQUITY> 62,863
<SALES> 0
<TOTAL-REVENUES> 12,569
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 14,175
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,212
<INCOME-PRETAX> (1,606)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,606)
<DISCONTINUED> 0
<EXTRAORDINARY> (18)
<CHANGES> 0
<NET-INCOME> (1,624)
<EPS-PRIMARY> (4.20)
<EPS-DILUTED> 0
<FN>
<F1>The Registrant has an unclassified balance sheet.
</FN>
</TABLE>
