FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 [No Fee Required]
For the fiscal year ended December 31, 1996
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.[ ]
342,429 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 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, 1996, 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 a 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.
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 non-recourse 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 also 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 fact that: (1) EP/3 had no equity in the Sandpiper I & II
Apartments, considering the then estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments were 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, 1996, the Partnership owned eight apartment complexes located in
Florida, North Carolina, Washington, Michigan, Utah and Colorado, one office
building located in Florida and one shopping center in California, which range
in age from 10 to 27 years old. These properties are hereinafter referred to as
the "Partnership Properties".
The Partnership had two notes payable that matured in January 1995, which were
extended to 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 extended the maturity of this mortgage debt to June 30, 1997. The Tamarac
Village Apartments, located in Denver, Colorado, secured approximately $2.8
million of mortgage debt that matured in June of 1995. This indebtedness was
paid in full in December of 1995. These two property's debt were refinanced in
November of 1996, along with three other of the Partnership's investment
properties (see "Note F" of the Notes to Financial Statements for details of
this refinancing).
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 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, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity.
Additionally, a subsidiary of Insignia acquired all of the outstanding stock of
Coventry Properties, Inc., a property management entity. 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, the Insignia affiliate
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 businesses 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 subject Apartment
Renton, Washington to first mortgage. 104 units
City Heights 4/13/90 Fee ownership subject Apartment
Seattle, Washington to first mortgage. 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 subject Apartment
Belleville, Michigan to first mortgage. 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 mortgage. 564 units
Denver, Colorado
Williamsburg Manor 11/30/94 Fee ownership subject Apartment
Cary, North Carolina to first mortgage. 183 units
Sandpiper I & II 11/30/94 Fee ownership subject Apartment
St. Petersburg, Florida to first mortgage. 276 units
South City Business Center 2/14/96 Fee ownership. Commercial
Chula Vista, California . 165,687 s.f.
</TABLE>
SCHEDULE OF PROPERTY:
(dollar amounts in thousands)
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
<S> <C> <C> <C> <C> <C>
Cedar Rim $ 4,706 $1,428 3-20 yrs S/L $ 4,846
City Heights 4,806 1,480 3-20 yrs S/L 4,843
Corporate Center 3,424 1,254 5-20 yrs S/L 3,810
Hidden Cove 5,314 1,925 3-20 yrs S/L 4,335
Lamplighter Park 7,818 1,699 3-20 yrs S/L 6,892
Park Capitol 2,859 1,041 5-20 yrs S/L 2,351
Tamarac Village 14,122 2,591 5-20 yrs S/L 12,321
Williamsburg Manor 6,756 522 5-22 yrs S/L 6,329
Sandpiper I & II 7,634 586 5-22 yrs S/L 7,156
South City 4,382 108 14-25 yrs S/L 4,330
$61,821 $12,634
</TABLE>
See "Note A" of the Notes to Financial Statements included in "Item 8." for a
description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
(dollar amounts in thousands)
Principal Principal
Balance At Stated Balance
December 31, Interest Maturity Due At
Property 1996 Rate Date Maturity
Lamplighter Park $ 3,500 7.33% 11/01/03 $3,500
Park Capitol 2,725 6.95% 12/01/05 2,725
Tamarac Village 9,400 7.33% 11/01/03 9,400
Williamsburg Manor 4,150 6.95% 12/01/05 4,150
Sandpiper I & II 3,950 6.95% 12/01/05 3,950
Cedar Rim 2,000 7.33% 11/01/03 2,000
City Heights 2,600 7.33% 11/01/03 2,600
Hidden Cove 2,200 7.33% 11/01/03 2,200
$30,525
Accrued interest 183
$30,708
The mortgage loans on each of the properties mature at various times with
balloon payments due at maturity.
SCHEDULE OF RENTAL RATES AND OCCUPANCY:
(dollar amounts in thousands)
Average Annual Average Annual
Rental Rates Occupancy
Property 1996 1995 1996 1995
Cedar Rim $8,837/unit $8,512/unit 94% 89%
City Heights 9,591/unit 9,430/unit 96% 85%
Corporate Center 5.68/sq.ft. 5.42/sq.ft. 94% 99%
Hidden Cove 8,258/unit 7,716/unit 94% 95%
Lamplighter Park 7,925/unit 7,639/unit 96% 95%
Park Capitol 7,276/unit 7,007/unit 98% 96%
Tamarac Village 6,659/unit 6,332/unit 94% 86%
Williamsburg Manor 8,200/unit 7,900/unit 95% 96%
Sandpiper I & II 6,736/unit 6,873/unit 91% 87%
South City 5.38/sq.ft. (1) 88% (1)
(1) The South City Business Center was foreclosed on by the Partnership in
February of 1996. Rental rate and occupancy information for 1995 are not
available.
The General Partner attributes the increase in occupancy at Cedar Rim to
property improvements and increased leasing efforts combined with a strong local
economy. The increase in occupancy at City Heights Apartments is attributed to a
stronger employment market in the area and to water damage to six units which
negatively impacted 1995 occupancy levels. The increase in occupancy at Tamarac
Apartments is attributed to property improvements and increased leasing efforts
combined with a strong local economy. The occupancy increase at Sandpiper I &
II is due to interior renovations and increased leasing incentive programs. The
occupancy decrease at Corporate Center is due to the move-out of a tenant who
had leased 4,800 square feet.
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 1997 - 2006:
Corporate Number of % of Gross
Center Expirations Square Feet Annual Rent Annual Rent
(in thousands)
1997 2 4,740 $ 26 4.7%
1998 9 38,340 211 37.9%
1999 7 29,920 169 30.2%
2000 5 15,950 90 16.2%
2001 1 4,800 30 5.4%
2002 - 2006 0 0 0 0
South City
1997 28 48,052 $ 289 35.1%
1998 6 8,202 61 7.4%
1999 9 20,174 155 18.8%
2000 2 10,085 55 6.7%
2001 2 3,467 27 3.2%
2002 - 2006 0 0 0 0
No tenant at South City occupies 10% or more of the leasable sq. feet at South
City.
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 $5.15 10/31/98
Soil Testing 11,940 4.82 02/28/99
SCHEDULE OF REAL ESTATE TAXES AND RATES:
(dollar amounts in thousands)
1996 1996
Taxes Rate
Cedar Rim $ 68 1.42%
City Heights 75 1.31%
Corporate Center 57 2.56%
Hidden Cove 64 4.58%
Lamplighter Park 80 1.24%
Park Capitol 41 1.55%
Tamarac Village 155 8.12%
Williamsburg Manor 75 1.21%
Sandpiper I & II 178 2.46%
South City 73 1.16%
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, 1996, 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, 1996, the number of holders of record of Limited Partnership
Units was 18,875. 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 $4,821,000 and $3,644,000 and $3,530,000 for the years ended
December 31, 1996, 1995 and 1994, respectively. The Partnership also made a
distribution of cash from surplus funds of approximately $2,457,000 for the year
ended December 31, 1996. 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>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
STATEMENTS OF OPERATIONS 1996 1995 1994 1993 1992
(in thousands, except per unit data)
<S> <C> <C> <C> <C> <C>
Revenues $ 13,881 $ 12,569 $ 10,704 $ 10,441 $ 8,306
Costs and expenses (12,728) (14,175) (10,819) (11,381) (6,801)
Income (loss) from operations 1,153 (1,606) (115) (940) 1,505
Net gain (loss) on sales of securities -- -- (1) -- 48
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 1,153 (1,606) (529) (1,141) 1,319
Extraordinary item -- (18) -- -- 2,177
Net income (loss) $ 1,153 $ (1,624) $ (529)$ (1,141)$ 3,496
Net income (loss) per Limited
Partnership Unit:
Income (loss) from operations $ 2.98 $ (4.15) $ (.30)$ (2.43)$ 3.89
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 2.98 (4.15) (1.37) (2.95) 3.41
Extraordinary item -- (.05) -- -- 5.63
Net income (loss) $ 2.98 $ (4.20) $ (1.37)$ (2.95)$ 9.04
Distributions per Limited
Partnership Unit $ 18.98 $ 9.42 $ 9.12 $ 7.20 $ 10.81
Limited Partnership
Units outstanding 383,033 383,033 383,033 383,033 383,033
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
BALANCE SHEETS 1996 1995 1994 1993 1992
(in thousands)
<S> <C> <C> <C> <C> <C>
Total assets $ 69,537 $ 62,863 $ 61,910 $ 65,628 $ 69,709
Notes payable $ 30,708 $ 18,029 $ 12,318 $ 11,541 $ 11,994
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Results of Operations
1996 Compared with 1995
The Partnership realized net income for the year ended December 31, 1996, of
$1,153,000 compared to a net loss of $1,624,000 for the year ended December 31,
1995. The increase in net income is primarily attributable to the write-down
recorded in 1995 of the note receivable between the Partnership and Lincoln
South City Business Center Limited Partnership. This note receivable was
subsequently foreclosed on in February 1996. In addition, rental income
increased due to improved occupancy and increased rental rates at several
properties. Also contributing was a casualty gain of $114,000 relating to fire
damages at the Lamplighter Park Apartments. The October fire damaged 12 units
in one building at the complex. General and administrative expenses decreased
due to lower expense reimbursements related to the combined efforts of the
Dallas and Greenville partnership administration staffs during the transition
period in 1995. The increased costs related to the transition efforts were
incurred to minimize any disruption in the year-end reporting function
including the financial reporting and K-1 preparation and distribution.
Offsetting these changes were increases in operating and depreciation expenses,
which are due in part to the acquisition of South City Business Center. The
increase in operating expenses was also impacted by increased repair and
maintenance expenditures resulting from efforts to increase the curb appeal of
several of the Partnership's properties. Depreciation expense increased due to
an increase in the depreciable asset base at several of the Partnership's
properties from capital additions of approximately $1,883,000 and $1,401,000
during 1996 and 1995, respectively and the addition of South City as a
depreciable asset. The decrease in other income resulted primarily from no
interest income being recognized on the South City note receivable in 1996 while
$275,000 of interest income was recorded in 1995. The increase in interest
expense is due primarily to the refinancing of Williamsburg Manor, Park Capitol
and Sandpiper I and II, whose debt balances increased approximately $6,000,000
through the refinancings, partially offset by the retirement of the third
mortgage secured by Tamarac Village in December 1995.
Included in operating expense is approximately $1,060,000 of major repairs and
maintenance comprised primarily of interior and exterior renovations, major
landscaping, parking lot rehabilitations and exterior painting for the year
ended December 31, 1996.
1995 Compared to 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 primarily attributable to the
previously mentioned $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, accordingly, the note was written
down to the estimated value of the property. Also contributing to the
increase in net loss was an increase in operating expenses, depreciation expense
and interest expense, 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, which, along with the default
on the South City note receivable, caused the decrease in interest and other
income. General and administrative expenses increased for 1995, compared to 1994
due to combined efforts of the Dallas and Greenville offices during the
transition period that ended June 30, 1995.
Mitigating the increased expenses noted above was an increase in overall
revenues for 1995. This increase is primarily due to the acquisition of
Williamsburg Manor and Sandpiper. In addition, 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 during December
1994.
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.
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 resulted from a
prepayment penalty charged for the early payoff of the original debt secured by
Park Capitol.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
The following table summarizes the sources of Master Loan payments received from
EP/3 and EP/4 during the year ended December 31, 1994:
FOR THE YEAR ENDED DECEMBER 31,
1994
(in thousands)
Funds provided by property operations $ 3,019
Funds used for property operations (includes
administrative expenses) (1,632)
Debt service payments on underlying
notes payable (241)
Total funds from operations 1,146
Cash transferred in property transfer (26)
Net funds provided 1,120
Cash remitted in excess of (less than)
funds from operations of EP/3 properties 177
$ 1,297
Master Loan Activity:
Interest income 1,297
$ 1,297
Liquidity and Capital Resources
At December 31, 1996, the Partnership held unrestricted cash of approximately
$15,813,000 compared to approximately $9,871,000 at December 31, 1995. Net cash
provided by operations decreased primarily due to increased operating expenses,
interest payments and reduced interest income mitigated by higher rental revenue
collections and lower general and administrative expenses. Net cash used in
investing activities increased due to fewer maturities of long-term investments
as the partnership invested in primarily short-term cash equivalents during
1996, as well as increased property improvements and replacements and deposits
to restricted escrows in 1996. Net cash provided by financing activities
increased due to greater proceeds from refinancing in 1996 than in 1995, offset
by increased distributions to partners during 1996 compared to 1995.
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 $30,708,000 have maturity dates ranging from 2003 to 2005
at which time the individual properties will be refinanced or sold.
Distributions of approximately $7,318,000 and $3,644,000 were made to the
partners during 1996 and 1995, 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 $16.4 million at December
31, 1996, were greater than the reserve requirement of approximately $3.9
million.
In November of 1996, five of the Partnership's investment properties, Cedar Rim,
City Heights, Hidden Cove, Lamplighter Park and Tamarac Village, obtained
initial financing or refinanced existing notes. Proceeds from this transaction
totaled $19,700,000. The debt accrues interest at a rate of 7.33% per year,
matures on November 1, 2003, and requires balloon payments at maturity for the
full principal amount. Throughout the mortgage term, interest-only payments are
made. Loan costs of $579,000 were incurred by the properties as a result of the
refinancings, and are included in other assets on the balance sheet.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
LIST OF FINANCIAL STATEMENTS
Reports of Independent Auditors
Balance Sheets - December 31, 1996 and 1995
Statements of Operations - Years Ended December 31, 1996, 1995 and 1994
Statements of Changes in Partners' Capital (Deficit) - Years Ended December
31, 1996, 1995 and 1994
Statements of Cash Flows - Years Ended December 31, 1996, 1995 and 1994
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Institutional Properties/3
We have audited the accompanying balance sheets of Consolidated Capital
Institutional Properties/3 as of December 31, 1996 and 1995, and the related
statements of operations, changes in partners' capital (deficit) and cash flows
for the years 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 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 the Partnership's 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, 1996 and 1995, and the results of
its operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 3, 1997
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Consolidated Capital Institutional Properties/3:
We have audited the accompanying statements of operations, partners' capital
(deficit), and cash flows of Consolidated Capital Institutional Properties/3 (a
California limited partnership) for the year ended December 31, 1994. 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 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
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 results of operations, changes in partners' capital
(deficit), and cash flows of Consolidated Capital Institutional Properties/3 for
the year ended December 31, 1994, 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,
1996 1995
Assets
Cash and cash equivalents:
Unrestricted $ 15,813 $ 9,871
Restricted - tenant security deposits 432 349
Note receivable -- 4,400
Investments 109 109
Restricted escrows 2,174 1,188
Other assets 1,822 1,069
Investment properties:
Land 12,371 10,365
Buildings and related personal property 49,450 45,470
61,821 55,835
Less accumulated depreciation (12,634) (9,958)
49,187 45,877
$ 69,537 $ 62,863
Liabilities and Partners' Capital (Deficit)
Liabilities
Mortgage notes payable and accrued interest $ 30,708 $ 18,029
Accounts payable and accrued expenses 916 857
Tenant security deposits 434 339
Accrued taxes 183 177
32,241 19,402
Partners' Capital (Deficit)
General partner (443) (407)
Limited partners (383,033 units outstanding) 37,739 43,868
37,296 43,461
$ 69,537 $ 62,863
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,
1996 1995 1994
<S> <C> <C> <C>
Revenues:
Rental income $ 12,815 $ 11,223 $ 8,431
Interest and other income 952 1,346 2,273
Gain on casualty event 114 -- --
Total revenues 13,881 12,569 10,704
Expenses:
Operating 7,796 6,489 4,520
General and administrative 618 714 573
Provision for possible losses -- -- 2,557
Depreciation 2,741 2,505 2,090
Interest 1,573 1,212 1,079
Write-down of note receivable -- 3,255 --
Total expenses 12,728 14,175 10,819
Income (loss) from operations 1,153 (1,606) (115)
Loss on sales of securities -- -- (1)
Loss on settlement of Master Loan -- -- (413)
Income (loss) before extraordinary item 1,153 (1,606) (529)
Extraordinary item-loss from refinancing -- (18) --
Net income (loss) $ 1,153 $ (1,624) $ (529)
Net income (loss) allocated to general
partner (1%) $ 12 $ (16) $ (6)
Net income (loss) allocated to limited
partners (99%) 1,141 (1,608) (523)
$ 1,153 $ (1,624) $ (529)
Net income (loss) per Limited Partnership Unit:
Income (loss) from operations $ 2.98 $ (4.15) $ (.30)
Loss on settlement of Master Loan -- -- (1.07)
Income (loss) before extraordinary item 2.98 (4.15) (1.37)
Extraordinary item -- (.05) --
Net income (loss) $ 2.98 $ (4.20) $ (1.37)
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF PARTNERS' CAPITAL (DEFICIT)
For the Years Ended December 31, 1996, 1995 and 1994
(in thousands, except unit data)
<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, 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
Net income -- 12 1,141 1,153
Distributions -- (48) (7,270) (7,318)
Balance at December 31, 1996 383,033 $ (443) $ 37,739 $ 37,296
<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,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,153 $(1,624) $ (529)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation 2,741 2,505 2,090
Amortization of lease commissions
and loan costs 68 34 --
Loss on sales of investments -- -- 1
Gain on casualty event (114) -- --
Receipt of Southmark stock -- -- (9)
Loss on settlement of Master Loan -- -- 413
Loss on disposal of property 149 11 --
Write-down of note receivable -- 3,255 --
Interest reduction on note receivable -- 46 --
Provision for possible losses -- -- 2,557
Changes in accounts:
Restricted cash (83) (349) --
Other assets 38 (404) 58
Interest, taxes, accounts payable and
tenant security deposit liability (32) 544 (438)
Due from (to) affiliates -- 59 (16)
Net cash provided by
operating activities 3,920 4,077 4,127
Cash flows from investing activities:
Property improvements and replacements (1,699) (1,401) (198)
Deposits to restricted escrows (1,634) (1,188) --
Receipts from restricted escrows 648 -- --
Purchase of investments -- (11,251) (1,704)
Proceeds from sales of investments -- 14,318 3,896
Net cash received in foreclosure 74 -- --
Net cash (used in) provided by
investing activities $(2,611) $ 478 $ 1,994
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS (CONTINUED)
(in thousands)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
<S> <C> <C> <C>
Cash flows from financing activities:
Payments on mortgage notes payable $ (158) $ (448) $ (389)
Proceeds from refinancing 19,700 10,825 --
Repayment of mortgage debt (7,012) (4,699) --
Loan cost paid (579) (360) --
Partners' distributions (7,318) (3,644) (3,530)
Net cash provided by (used in)
financing activities 4,633 1,674 (3,919)
Net increase in cash and cash equivalents 5,942 6,229 2,202
Cash and cash equivalents at beginning of year 9,871 3,642 1,440
Cash and cash equivalents at end of year $15,813 $ 9,871 $ 3,642
Supplemental disclosure of cash
flow information:
Cash paid for interest $ 1,372 $ 1,139 $ 1,030
<FN>
At December 31, 1996, in connection with a fire at Lamplighter Park, investment
properties, other assets and accounts payable were adjusted $134,000, $265,000
and $269,000, respectively for non-cash activity.
Also, Notes Receivable and property improvements and replacements were adjusted
by $4,400,000 and $4,383,000 to reflect the acquisition of South City through
foreclosure of the note receivable.
See Accompanying Notes to Financial Statements
</TABLE>
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
NOTES TO FINANCIAL STATEMENTS
December 31, 1996 and 1995
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 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, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity.
Additionally, a subsidiary of Insignia acquired all of the outstanding stock of
Coventry Properties, Inc., a property management entity. 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, the Insignia affiliate
exercised the remaining portion of its option to purchase all of the remaining
outstanding capital stock of GII Realty, Inc. At December 31, 1996, Insignia
and affiliates own 39,947 Units of the Partnership.
The Partnership operates eight apartment properties and two commercial
properties 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 and Cash Equivalents
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.
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 in 1995 and Lamplighter Park, Tamarac Village,
Lake Villa, Cedar Rim, and City Heights in 1996, the following reserves were
established:
Capital Improvement Reserve - As part of the refinancings, the properties
deposited $1,416,000 in 1996 and $843,000 in 1995 with the mortgage company to
establish a Capital Reserve designated for certain capital improvements. At
December 31, 1996, this reserve totalled approximately $1,945,000.
Replacement Reserve - As part of the 1995 refinancing, each property
deposits per unit between $225 and $325 per year with the mortgage company to
establish and maintain a Replacement Reserve designated for repairs and
replacements at the properties. As part of the 1996 refinancings approximately
$27,000 was deposited with the mortgage company and has been designated for
certain repairs and replacements at the respective properties. At December 31,
1996, this reserve totalled approximately $228,000.
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 by 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 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 two commercial properties 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 25
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.
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 approximately $579,000 and $360,000 were capitalized
in 1996 and 1995, respectively (in conjunction with property refinancings). At
December 31, 1996 and 1995, a total of $939,000 and $360,000 less accumulated
amortization of $51,000 and zero, respectively are included in other assets.
Loan costs are 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 $20
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
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.
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 $292,000, $273,000, and
$186,000 during the years ended December 31, 1996, 1995 and 1994, respectively.
Reclassifications: Certain reclassifications have been made to the 1995 and
1994 information to conform to the 1996 presentation.
NOTE B - RELATED PARTY TRANSACTIONS
The Partnership has paid property management fees based on collected gross
rental revenues for property management services in each of the three years
ended December 31, 1996. 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 a portion equal to 1% of
Rental Revenues was paid to Partnership Services, Inc. ("PSI") or its
predecessor for advisory services related to day-to-day property operations
until December 1994.
In late December 1994, an affiliate of Insignia began to perform property
management services under the same management fee arrangement as the
unaffiliated management companies. Property management fees of approximately
$658,000, $572,000 and $260,000 were paid to PSI and Insignia for the years
ending December 31, 1996, 1995 and 1994, respectively.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $403,000, $429,000 and $282,000 were paid to the General Partner
and affiliates for the years ended December 31, 1996, 1995 and 1994.
Additionally, the Partnership paid $32,000 and $14,000 during the years ended
December 31, 1996 and 1995, to an affiliate of the General Partner for lease
commissions at the Partnership's commercial properties. These lease commissions
are included in other assets and amortized over the term of the respective
leases. The partnership also paid $98,000 to affiliates of Insignia for
reimbursements of costs related to the loan refinancings in November of 1996.
These costs were capitalized as loan costs and are being amortized over the term
of the loans.
In July 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.
A director of Insignia Financial Group, Inc. is affiliated with a professional
legal association that received fees in connection with the 1996 refinancing of
certain of the Partnership's properties (see "Note F"). These fees totalled
$60,000 and have been capitalized as loan costs.
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, 1996 and
1995, (dollar amounts in thousands):
DESCRIPTION COST MATURITY
Commercial Paper $100 May 1998
Equity Securities 9
$109
NOTE D - NET INVESTMENT IN MASTER LOAN
EP/3 Settlement: During 1994, Sutter D Office Building which collateralized a
third party first-lien mortgage and served as collateral for the Master Loan was
foreclosed upon by the first-lien holder. 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 interest, under the Master Loan. The
Partnership recognized a net loss of approximately $413,000 during 1994 on the
settlement of the Master Loan.
As a result of the fact that: (1) EP/3 had no equity in the Sandpiper I & II
Apartments, considering the then estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments were 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 as of 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 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. As
of May 1992, the Partnership had 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 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 remaining 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 during the
year ended December 31, 1994. Following is a summary of operations of EP/3 and
EP/4 for the year ended December 31, 1994 (dollar amounts in thousands):
Funds provided by property operations $ 3,019
Funds used for property operations (1,632)
Debt service payments on underlying notes payable (241)
Total funds from operations 1,146
Cash transferred in property foreclosure (26)
Net funds provided 1,120
Cash remitted in excess of (less than) funds
from operations of EP/3 properties 177
$ 1,297
Master Loan Activity:
Interest income $ 1,297
NOTE E - NOTES AND INTEREST RECEIVABLE
The note receivable at December 31, 1996 and 1995, consist of the following:
AS OF DECEMBER 31,
1996 1995
(in thousands)
Current note $ -- $ 4,400
This note receivable related to South City Business Center which was foreclosed
upon in February, 1996.
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 had final approval over disbursements from the property
improvement escrow account. The General Partner 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, were 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 the 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, 1996, consist of the following (in thousands):
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1996 Interest Rate Date Maturity
Lamplighter Park $ 3,500 $ 21 7.33% 11/01/03 $ 3,500
Park Capitol 2,725 16 6.95% 12/01/05 2,725
Tamarac Village 9,400 57 7.33% 11/01/03 9,400
Williamsburg Manor 4,150 24 6.95% 12/01/05 4,150
Sandpiper I & II 3,950 23 6.95% 12/01/05 3,950
Cedar Rim 2,000 12 7.33% 11/01/03 2,000
City Heights 2,600 16 7.33% 11/01/03 2,600
Hidden Cove 2,200 14 7.33% 11/01/03 2,200
30,525 $ 183
Accrued interest 183
Total $30,708
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, matures on December 1, 2005, and requires balloon
payments at maturity for the full principal amount. Throughout the mortgage
term, interest only payments are made. Loan costs of approximately $360,000
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 $18,000 for December 31, 1995.
During 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. This property's debt was refinanced in
November of 1996. In December 1995, the indebtedness secured by Tamarac Village
was paid in full.
In November of 1996, five of the Partnership's investment properties, Cedar Rim,
City Heights, Hidden Cove, Lamplighter Park and Tamarac Village, obtained
initial financing or refinanced existing notes. Proceeds from this transaction
totaled $19,700,000. The debt accrues interest at a rate of 7.33% per year,
matures on November 1, 2003, and requires balloon payments at maturity for the
full principal amount. Throughout the mortgage term, interest-only payments are
made. Loan costs of $579,000 were incurred by the properties as a result of the
refinancings, and are included in other assets on the balance sheet.
The estimated fair values of the Partnership's aggregate debt approximates its
carrying amount. 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 non-recourse 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.
Scheduled principal payments of mortgage notes payable subsequent to December
31, 1996, are as follows (in thousands):
1997 $ --
1998 --
1999 --
2000 --
2001 --
Thereafter 30,525
Total $ 30,525
NOTE G - SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITY
The following tables set forth the Partnership's noncash investing and financing
activities during the years 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 and the Partnership's foreclosure of South City
during 1996. There was no significant noncash investing or financing activity
during the year ended December 31, 1995.
(dollar amounts in thousands)
<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) 6,117(B) -- 288
$ 13,719 $ 12,966 $ (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>
On February 14, 1996, the Partnership foreclosed on South City Business Center,
the investment property collateralizing the note receivable between the
Partnership and Lincoln South City Business Center Limited Partnership. In
connection with this transaction, the following accounts were adjusted by the
amounts noted in 1996 (dollar amounts in thousands):
Receipt of cash $ 74
Accounts receivable 15
Security deposit liability (72)
Investment properties 4,383
Note receivable (4,400)
No gain or loss was recorded upon the foreclosure due to the carrying value of
the note receivable being adjusted to the value of the underlying collateral
during 1995.
NOTE H - ALLOWANCE FOR POSSIBLE LOSSES
(dollar amounts in thousands)
<TABLE>
<CAPTION>
MASTER REAL
LOAN ESTATE TOTAL
<S> <C> <C> <C>
Balance at December 31, 1993 $ 4,360 $ 1,100 $ 5,460
Provision for possible losses/(charge-offs) (4,360)(a) 2,557 (b) (1,803)
Balance at December 31, 1994 -- 3,657 3,657
(Charge-offs) -- (3,657)(c) (3,657)
Balance at December 31, 1995 $ -- $ -- $ --
<FN>
(a) This charge-off reflects the amount of allowance for losses relating to the
EP/3 property foreclosure in November 1994.
(b) 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.
(c) 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 $16.4 million, were
greater than the reserve requirement of $3.9 million at December 31, 1996.
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 $7,318,000, $3,644,000 and $3,530,000 were made
to the partners during 1996, 1995 and 1994, respectively.
NOTE L - OPERATING LEASES
Tenants of the Partnership's commercial properties 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 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, 1996, are as follows (in thousands):
1997 $ 793
1998 750
1999 374
2000 104
2001 29
$2,050
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 $ 2,000 $ 778 $ 4,322 $ 728
Renton, Washington (1,122)
City Heights 2,600 1,197 4,238 530
Seattle, Washington (1,159)
Corporate Center -- 1,071 2,949 504
Tampa, Florida (1,100)
Hidden Cove by the Lake 2,200 184 4,416 759
Belleville, Michigan (45)
Lamplighter Park 3,500 2,458 5,167 551
Bellevue, Washington (358)
Park Capitol 2,725 280 2,100 479
Salt Lake City, Utah
Tamarac Village I, II, 9,400 2,464 10,536 1,225
III, & IV (103)
Denver, Colorado
Williamsburg Manor 4,150 1,281 5,124 351
Cary, North Carolina
Sandpiper I & II 3,950 1,463 5,851 320
St. Petersburg, Florida
South City Business Center -- 2,006 2,376 --
Chula Vista, California
Totals $30,525 $13,182 $47,079 $ 1,560
Accrued interest 183
$30,708
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
at December 31, 1996
(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 $ 4,088 $ 4,706 $ 1,428 1980 4/12/91 3 - 20
City Heights 942 3,864 4,806 1,480 1985 4/13/90 3 - 20
Corporate Center 782 2,642 3,424 1,254 1982 4/13/90 5 - 20
Hidden Cove 184 5,130 5,314 1,925 1972 3/23/90 3 - 20
Lamplighter Park 2,351 5,467 7,818 1,699 1968 4/12/91 3 - 20
Park Capitol 280 2,579 2,859 1,041 1974 4/13/90 5 - 20
Tamarac Village 2,464 11,658 14,122 2,591 1978 6/10/92 5 - 20
Williamsburg Manor 1,281 5,475 6,756 522 1970 11/30/94 5 - 22
Sandpiper 1,463 6,171 7,634 586 1976/1985 11/30/94 5 - 22
South City 2,006 2,376 4,382 108 1974/1976 2/14/96 14 - 25
$12,371 $49,450 $61,821 $12,634
</TABLE>
Reconciliation of "Investment Properties and Accumulated Depreciation":
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994
(in thousands)
<S> <C> <C> <C>
REAL ESTATE:
Balance at beginning of year $ 55,835 $ 58,109 $ 44,192
Additions 1,833 1,401 198
Acquisition through foreclosure 4,383 -- 6,405
Allocation of valuation reserve -- (3,657) --
Acquisition through in-substance
foreclosure -- -- 7,314
Disposal of property (230) (18) --
Balance at end of year $61,821 $ 55,835 $ 58,109
ACCUMULATED DEPRECIATION:
Balance at beginning of year $ 9,958 $ 7,459 $ 5,369
Depreciation of real estate 2,741 2,505 2,090
Disposal of property (65) (6) --
Balance at end of year $12,634 $ 9,958 $ 7,459
</TABLE>
The aggregate cost (in thousands) for Federal income tax purposes is:
1996 $57,213
1995 $53,180
1994 $44,886
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 Registrant has no officers or directors. The General Partner manages and
controls the Registrant and has general responsibility and authority in all
matters affecting its business.
The names of the directors and executive officers of ConCap Equities, Inc.
("CEI"), the Partnership's Managing General Partner as of December 31, 1996,
their ages and the nature of all positions with CEI presently held by them are
set forth below:
Name Age Position
William H. Jarrard, Jr. 50 President
Ronald Uretta 41 Vice President/Treasurer
Martha L. Long 37 Controller
John K. Lines, Esq. 37 Vice President/Secretary
Kelley M. Buechler 39 Assistant Secretary
William H. Jarrard, Jr. has been President of CEI since December 1996 and
Managing Director-Partnership Administration for Insignia since January 1991.
Mr. Jarrard served as Managing Director - Partnership Administration and Asset
Management for Insignia from July 1994 until January 1996.
Ronald Uretta has been Vice President/Treasurer of CEI since December 1996 and
Insignia's Treasurer since January 1992. Since August 1996, he has also served
as Insignia's Chief Operating Officer. He has also served as Insignia's
Secretary from January 1992 to June 1994 and as Insignia's Chief Financial
Officer from January 1992 to August 1996. Since September 1990, Mr. Uretta has
also served as the Chief Financial Officer and Controller of Metropolitan Asset
Group.
Martha L. Long has been Controller of CEI since December 1996 and Senior Vice
President - Finance and Controller of Insignia since January 1997. In June
1994, Ms. Long joined Insignia as its Controller, and was promoted to Senior
Vice President - Finance in January 1997. Prior to that time, she was Senior
Vice President and Controller of The First Savings Bank, FSB in Greenville, SC.
John K. Lines has been Secretary of CEI since December 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.
Kelley M. Buechler has been Assistant Secretary of CEI since December 1994 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.
Market Ventures, L.L.C. ("Ventures") and Liquidity Assistance, L.L.C.
("Liquidity") delinquently reported 15 and 13 transactions, respectively, as of
December 31, 1996 on a Form 5 filed in January 1997, with respect to the
entities' purchases of Units of Limited Partner Interest of the Partnership.
Each of Insignia Financial Group, Inc., Insignia Commercial Group, Inc. and
Andrew L. Farkas also delinquently reported the same transactions on a Form 5 by
virtue of their status as affiliates of Ventures and Liquidity, through which
they may be deemed to be beneficial owners of the securities owned by such
entities.
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, 1996, 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, 1996. 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 March 1997, 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 affiliates 40,604 10.6%
One Insignia Financial Plaza
Greenville, SC 29602
The Units above are held by Insignia Properties, L.P. who holds 40,066
units (10.46% of outstanding units) and other affiliated entities who
hold nominal amounts of units.
(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 March 1997, 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%
One Insignia Financial Plaza
Greenville, SC 29602
GII Realty, Inc. is owned by an affiliate of Insignia (see "Item 1").
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 has paid property management fees based on collected gross
rental revenues for property management services in each of the three years
ended December 31, 1996. 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 a portion equal to 1% of Rental
Revenues was paid to Partnership Services, Inc. ("PSI") or its predecessor for
advisory services related to day-to-day property operations until December,
1994.
In late December 1994, an affiliate of Insignia began to perform property
management services under the same management fee arrangement as the
unaffiliated management companies. Property management fees of approximately
$658,000, $572,000 and $260,000 were paid to PSI and Insignia for the years
ending December 31, 1996, 1995 and 1994, respectively.
The Partnership Agreement also provides for reimbursement to the General Partner
and its affiliates for costs incurred in connection with administration of
Partnership activities. Reimbursements for services of affiliates of
approximately $403,000, $429,000 and $282,000 were paid to the General Partner
and affiliates for the years ended December 31, 1996, 1995 and 1994.
Additionally, the Partnership paid $32,000 and $14,000 during the years ended
December 31, 1996 and 1995, to an affiliate of the General Partner for lease
commissions at the Partnership's commercial properties. These lease commissions
are included in other assets and amortized over the term of the respective
leases. The partnership also paid $98,000 to affiliates of Insignia for
reimbursements of costs related to the loan refinancings in November of 1996.
These costs were capitalized as loan costs and are being amortized over the term
of the loans.
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, 1996 and 1995
Statements of Operations for the Years Ended December 31,
1996, 1995 and 1994
Statements of Changes in Partners' Capital (Deficit) for the Years Ended
December 31, 1996, 1995 and 1994
Statements of Cash Flows for the Years Ended December 31, 1996,
1995 and 1994
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).
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).
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. (Incorporated
by reference to the Annual Report on
Form 10-K for the year ended
December 31, 1991).
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).
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)
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..
10.37 Multifamily Note dated November 1, 1996
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.38 Multifamily Note dated November 1, 1996
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.39 Multifamily Note dated November 1, 1996
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.40 Multifamily Note dated November 1, 1996
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.41 Multifamily Note dated November 1, 1996
between CCIP/3, a California limited
partnership, and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
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 1996: None.
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.
It's General Partner,
By: /s/William H. Jarrard, Jr.
William H. Jarrard,
President
By: /s/Ronald Uretta
Ronald Uretta
Vice President/Treasurer
Date: March 28, 1997
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 dated indicated.
/s/William H. Jarrard, Jr. President
William H. Jarrard, Jr.
/s/Ronald Uretta Vice President/Treasurer
Ronald Uretta
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
Capital Institutional Properties 3 1996 Year-End 10-K and is qualified in its
entirety by reference to such 10-K filing.
</LEGEND>
<CIK> 0000768890
<NAME> CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 15,813
<SECURITIES> 109
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 61,821
<DEPRECIATION> 12,634
<TOTAL-ASSETS> 69,537
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 30,708
0
0
<COMMON> 0
<OTHER-SE> 37,296
<TOTAL-LIABILITY-AND-EQUITY> 69,537
<SALES> 0
<TOTAL-REVENUES> 13,881
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,728
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,573
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,153
<EPS-PRIMARY> 2.98<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
Exhibit 10.37 Loan No.734133626
City Heights
MULTIFAMILY NOTE
US $2,600,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Two
Million Six Hundred Thousand and 00/100 Dollars, with interest on the unpaid
principal balance from the date of this Note, until paid, at the rate of 7.33
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 Eight
Hundred Eighty-One and 67/100 Dollars (US $15,881.67) on the first day of each
month beginning December 1, 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 November 1, 2003.
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 or change the amount of such 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 the date hereof, 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.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California
limited partnership
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/ William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This first day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By:/s/ Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
Exhibit 10.38 Loan No.734133618
Cedar Rim
MULTIFAMILY NOTE
US $2,000,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Two
Million and 00/100 Dollars, with interest on the unpaid principal balance from
the date of this Note, until paid, at the rate of 7.33 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 Twelve Thousand Two Hundred Sixteen and
67/100 Dollars (US $15,881.67) on the first day of each month beginning December
1, 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
November 1, 2003.
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 or change the amount of such 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 the date hereof, 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.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California
limited partnership
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/ William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This first day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By:/s/ Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
Exhibit 10.39 Loan No.734105843
Lake Villa
MULTIFAMILY NOTE
US $2,200,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Two
Million Two Hundred Thousand and 00/100 Dollars, with interest on the unpaid
principal balance from the date of this Note, until paid, at the rate of 7.33
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 Thirteen Thousand Four
Hundred Thirty-Eight and 33/100 Dollars (US $13,438.33) on the first day of each
month beginning December 1, 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 November 1, 2003.
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 or change the amount of such 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 the date hereof, 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.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California
limited partnership
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/ William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This first day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By:/s/ Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
Exhibit 10.40 Loan No.734133642
Tamarac Village
MULTIFAMILY NOTE
US $9,400,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Nine
Million Four Hundred Thousand and 00/100 Dollars, with interest on the unpaid
principal balance from the date of this Note, until paid, at the rate of 7.33
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 Fifty-Seven Thousand Four
Hundred Eighteen and 33/100 Dollars (US $57,418.33) on the first day of each
month beginning December 1, 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 November 1, 2003.
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 or change the amount of such 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 the date hereof, 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.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California
limited partnership
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/ William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This first day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By:/s/ Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
Exhibit 10.41 Loan No.734133634
Lamplighter Park
MULTIFAMILY NOTE
US $3,500,000.00
New York, New York
As of November 1, 1996
FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS
INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World
Financial Center, New York, New York 10285, or order, the principal sum of Three
Million Five Hundred Thousand and 00/100 Dollars, with interest on the unpaid
principal balance from the date of this Note, until paid, at the rate of 7.33
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-One Thousand Three
Hundred Seventy-Nine and 17/100 Dollars (US $21,379.17) on the first day of each
month beginning December 1, 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 November 1, 2003.
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 or change the amount of such 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 the date hereof, 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.
IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same
to be executed by its representatives thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California
limited partnership
By: ConCap Equities, Inc., a
Delaware corporation, its general
partner
By: /s/ William H. Jarrard, Jr.
Name: William H. Jarrard, Jr.
Title: Vice President
PAY TO THE ORDER OF FEDERAL HOME LOAN
MORTGAGE CORPORATION WITHOUT RECOURSE.
This first day of November, 1996.
LEHMAN BROTHERS HOLDINGS INC. d/b/a
Lehman Capital, A Division of Lehman
Brothers Holdings Inc., a Delaware
corporation
By:/s/ Larry J. Kravetz
Name: Larry J. Kravetz
Title: Authorized Signatory
