FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER
SECTION 13 OR 15(d)
(As last amended by 34-31905, eff. 4/26/93)
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period.........to.........
Commission file number 0-16010
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(Name of small business issuer in its charter)
California 94-3004963
(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 Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Depositary Receipts
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes X No
Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $2,425,000
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests, as of December 31, 1995. Market value information for the
Registrant's partnership interests is not available. Should a trading market
develop for these interests, it is management's belief that such trading would
not exceed $25,000,000.
PART I
Item 1. Business
Johnstown/Consolidated Income Partners (the "Partnership") was organized on
January 9, 1986, as a limited partnership under the California Revised Limited
Partnership Act. On June 20, 1986, the Partnership registered with the
Securities and Exchange Commission ("SEC") under the Securities Act of 1933
(File No. 33-2637) and commenced a public offering for sale of $150 million of
Units. The Units represent economic rights attributable to the limited
partnership interests in the Partnership and entitle the holders thereof
(hereinafter referred to as "Unitholders") to the economic benefits
attributable to equity interests in the Partnership and to participate in
certain allocations and distributions of the Partnership. The limited partner
of the Partnership is Johnstown/Consolidated Depositary Corporation (the
"Corporate Limited Partner"), an affiliate of the General Partner (as
hereinafter defined). The Corporate Limited Partner serves as depositary for
the Units pursuant to a Depositary Agreement entered into with the
Partnership. The Partnership subsequently filed a Form 8-A Registration
Statement with the SEC and registered the Units under the Securities Exchange
Act of 1934 (File No. 0-16010). The sale of Units closed on June 19, 1987,
with 129,266 Units sold at $250 each, for gross proceeds of approximately
$32.3 million to the Partnership. The Partnership has retired a total of 456
Units which were returned to the Partnership by Unitholders. The Partnership
gave no consideration for the Units retired. The Partnership may reacquire or
retire any Units, at its absolute discretion, but is under no obligation to do
so.
By the end of fiscal year 1988, approximately 79% of the monies raised had
been invested in four (4) properties, five (5) mortgage loans, and
approximately $1.6 million in guaranteed mortgage-backed securities ("MBS").
Of the remaining 21%, 11.8% was required for organizational and offering
expenses and sales commissions and 9.2% was retained in Partnership reserves
for working capital as required by the Partnership Agreement (herein so
called).
The General Partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The principal place of business
for the Partnership and the General Partner is One Insignia Financial Plaza,
Greenville, South Carolina 29602. The General Partner and the Corporate
Limited Partner shall together be called the "Partners."
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership was formed for the benefit of its
Unitholders: (i) to acquire, own and operate existing income-producing
properties and newly constructed properties with income-producing capabilities
including office buildings, industrial properties, shopping centers, mobile
home parks and residential properties; (ii) to invest in mortgage loans
originated or purchased by the Partnership; and (iii) to invest in MBS's. As
of December 31, 1995, the Partnership owned three (3) properties and a one-
third (1/3) undivided interest in another property. In years previous to
1995, the Partnership liquidated its investments in MBSs, sold two (2)
properties (accepting a note on one of the sales), received payment on two (2)
of the mortgage loans, completed a judicial foreclosure on three (3)
properties which secured three (3) mortgage loans, and disposed of one (1)
property which was foreclosed upon by the lender.
As of December 31, 1995, the Partnership's working capital reserves are in
excess of the 5% of Net Invested Capital (as defined in the Partnership
Agreement) as required by the Partnership Agreement. See "Current Operating
Plan" below and "Item 6 - Management's Discussion and Analysis" for discussion
of Partnership liquidity and capital resources.
The real estate business is highly competitive. The Registrant's real
property investments are subject to competition from similar types of
properties in the vicinities in which they are located and the Partnership is
not a significant factor in its industry. In addition, various limited
partnerships have been formed by related parties to engage in business which
may be competitive with the Registrant.
The Registrant has no employees. Management and administrative services are
performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an
affiliate of the General Partner. The property manager is responsible for the
day-to-day operations of each property. The General Partner has also selected
an affiliate of Insignia to provide real estate advisory and asset management
services to the Partnership. As advisor, such affiliate provides all
partnership accounting and administrative services, investment management, and
supervisory services over property management and leasing. For a further
discussion of property and partnership management, see "Item 12".
Upon the Partnership's formation in 1986, Consolidated Capital Equities
Corporation ("CCEC") was the sole General Partner of the Partnership, and
Johnstown/Consolidated Depositary Corporation, a wholly-owned subsidiary of
CCEC, was the sole limited partner. In 1988, Southmark Corporation
("Southmark") gained control of CCEC. In December 1988, CCEC filed for
reorganization under Chapter 11 of the United States Bankruptcy Code. As part
of its reorganization plan, CEI acquired CCEC's general partner interests in
the Partnership and in 15 other affiliated public limited partnerships (the
"Affiliated Partnerships") and 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 Unitholders in the Partnership and
the limited partners in each of the Affiliated Partnerships pursuant to a
solicitation of the Unitholders dated August 10, 1990. As part of this
solicitation, the Unitholders also approved an amendment to the Partnership
Agreement to limit changes of control of the Partnership.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which, among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P. ("MAE") and an affiliate of
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 a part of
the Insignia Transaction, MAE-ICC, Inc. also acquired all of the outstanding
stock of Partnership Services, Inc., an asset management entity, and 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, MAE-ICC, Inc. exercised the remaining portion of its option
to purchase all of the remaining capital stock of GII Realty, Inc.
Item 2. Description of Property
The Partnership originally acquired four (4) properties and funded five (5)
loans. At December 31, 1995, the Partnership owns three (3) properties and a
one-third (1/3) undivided interest in another property. The following table
sets forth the properties held by the Partnership. Additional information
about the properties is found in "Item 7 - Financial Statements", "Note K" -
Investment Properties and Accumulated Depreciation.
<TABLE>
<CAPTION>
Date of
Property Purchase Type of Ownership Use
<S> <C> <C> <C>
Cedar Brooke 02/27/87 Fee ownership subject Apartment
Independence, Missouri to first mortgage 158 units
Florida #6 Mini-Warehouse 10/15/90 Fee ownership Storage Center
Lauderhill, Florida 61,121 sq.ft.
Florida #11 Mini-Warehouse 10/15/90 Fee ownership Storage Center
Davie, Florida 64,240 sq.ft.
Phoenix Business Campus 08/26/86 Fee ownership Office Building
Atlanta, Georgia 79,196 sq.ft.
</TABLE>
Schedule of Properties:
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(dollar amounts in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke $ 3,998 $2,362 5-19 years S/L $2,785
Florida #6 Mini-
Warehouse (a) 1,093 204 3-20 years S/L 969
Florida #11 Mini-
Warehouse 2,746 471 5-20 years S/L 2,462
Phoenix Business
Campus 5,787 2,383 5-28 years S/L 3,013
Totals $13,624 $5,420 $9,229
<FN>
(a) Amounts represent the Partnership's one-third interest in the property.
Johnstown/Consolidated Income Partners/2, an affiliated Partnership, owns
the remaining two-thirds interest in the property.
</TABLE>
See "Note A" of the Financial Statements included in "Item 7" for a
description of the Partnership's depreciation policy.
Schedule of Mortgages:
Principal Principal
Balance At Balance
December 31, Interest Maturity Due At
Property 1995 Rate Date Maturity
(dollar amounts in thousands)
Cedar Brooke $2,111 7.50% 07/13 $ --
1st mortgage
Less unamortized
discount (223)
Totals $1,888
Schedule of Rental Rates and Occupancy:
<TABLE>
<CAPTION>
Average Annual Average
Rental Rates Occupancy
Property 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Cedar Brooke $5,231/per unit $5,018/per unit 99% 99%
Florida #6 Mini-Warehouse 10.44/per sq. ft. 9.77/per sq. ft. 90% 97%
Florida #11 Mini-Warehouse 10.27/per sq. ft. 9.63/per sq. ft. 96% 98%
Phoenix Business Campus 8.76/per sq. ft. 8.03/per sq. ft. 58% 84%
</TABLE>
The decrease in occupancy at the Florida #6 Mini-Warehouse is due to commercial
clients reducing their inventory levels, which resulted in less usage of
storage facilities in 1995 compared to 1994. The decrease in occupancy at the
Phoenix Business Center is primarily due to a large tenant vacating their space
after building their own office facilities in 1995. As of December 31, 1995,
this space remains vacant with the Partnership actively searching for new
tenants, as well as considering sub-dividing the space to increase its
leasability. The impact of the decrease in rental income as a result of this
tenant vacating has been mitigated by rent increases on the Partnership's other
investment properties.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties of the Partnership are subject to
competition from other similar properties in the area. The General Partner
believes that all of the properties are adequately insured. With the exception
of the Phoenix Business Campus, the properties' lease terms are for one year or
less and no tenant leases 10% or more of the available rental space.
The following is a schedule of lease expirations for the years 1996-2005:
<TABLE>
<CAPTION>
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
<S> <C> <C> <C> <C>
Phoenix Business Campus
1996 1 1,980 $ 15,764 3.88%
1997 1 3,990 28,338 6.98%
1998 2 25,776 176,610 43.51%
1999 1 5,170 41,360 10.19%
2000 2 6,858 65,628 16.17%
2001-2005 0 -- -- --
</TABLE>
The following schedule reflects information on tenants leasing 10% or more of
the leasable square footage for each property:
<TABLE>
<CAPTION>
Square
Nature of Footage Annual Rent/ Lease
Business Leased Square Foot Expiration
<S> <C> <C> <C> <C>
Phoenix Business Campus
Computer software 17,342 $6.50 1-31-98
Airline services 8,434 $7.57 10-31-98
</TABLE>
Schedule of Real Estate Taxes and Rates:
Real estate taxes and rates in 1995 for each property were:
1995 1995
Taxes Rate
(in thousands)
Cedar Brooke $43 6.0%
Florida #6 Mini-Warehouse (a) 22 2.4%
Florida #11 Mini-Warehouse 65 2.6%
Phoenix Business Campus 29 3.7%
(a) Represents the Partnership's one-third share of real estate taxes.
Item 3. Legal Proceedings
The Partnership is unaware of any pending or outstanding litigation that is not
of a routine nature. The 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 year ended December 31, 1995, no matters were
submitted to a vote of the Unitholders, through the solicitation of proxies or
otherwise.
PART II
Item 5. Market for the Registrant's Units of Depositary Receipts and Related
Security Holder Matters
(A) No established public trading market for the Units exists nor is one
expected to develop.
(B) Title of Class: Number of Unitholders of Record:
Units of Depositary Receipts 2,749 as of December 31, 1995
(C) In December 1995, an affiliate of the General Partner, Liquidity
Assistance, LLC, purchased 10,062 units (7.81% of total outstanding
units) from an unaffiliated Unitholder at a cash price of $61.10 per
unit, (approximately $615,000 in total).
(D) In March 1994, the General Partner paid distributions, representing
return of capital, totalling approximately $2.2 million or $17.27 per
Unit. In September 1994, the General Partner paid distributions
totalling approximately $1.5 million or $11.60 per Unit, representing
return of capital from proceeds of a property sale. Cumulative
distributions to Unitholders since the inception of the Partnership
totaled $11.2 million at December 31, 1995.
In March 1995, the General Partner paid distributions attributable to
cash flow from operations totalling approximately $495,000 or $3.84
per Unit to the Unitholders, and a corresponding $5,000 General
Partner distribution. In September 1995, the General Partner paid
distribution attributable to cash flow from operations totalling
approximately $495,000 or $3.84 per Unit to the unitholders along with
a corresponding General Partner distribution of approximately $5,000.
Subsequent to December 31, 1995, the General Partner declared a
distribution attributable to cash flow from operations totalling
approximately $495,000 or $3.84 per Unit to the Unitholders along with
a corresponding General Partner distribution of approximately $5,000.
Item 6. Management's Discussion and Analysis or Plan of Operation
Results of Operations
The Partnership realized net income of $350,000 for the year ended December 31,
1995, compared to net income of $500,000 for the year ended December 31, 1994.
Property operations expense increased for the year ended December 31, 1995, due
to increased personnel costs at the Partnership's properties. Depreciation
expense decreased due to the reduced carrying values of depreciable assets
resulting from the valuation reserves recorded in prior years. Administrative
expenses increased for the year ended December 31, 1995, due to increased
mailing costs, professional fees, and expense reimbursements related to the
combined efforts of the Dallas and Greenville partnership administration staffs
during the transition period. The reimbursements for the Dallas office
amounted to approximately $63,000 for the year ended December 31, 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. The General Partner expects
recurring administrative expenses to be reduced now that the management
transition is completed.
Other income realized during the year ended December 31, 1994, related
primarily to the receipt of the Partnership's pro rata share of the claims
filed in Southmark's Chapter 11 bankruptcy proceeding (See "Note C" of the
Notes to the Financial Statements in "Item 7").
During 1995, the Partnership received a liquidating dividend of approximately
$79,000 from Southmark, of which approximately $27,000 was credited to the
investment in stock account. The remaining stock balance is included in
prepaid and other assets at December 31, 1995 at its estimated market value of
approximately $3,000.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that
the General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
As of December 31, 1995, the Partnership held unrestricted cash of $1,967,000
compared to $564,000 at December 31, 1994. Net cash provided by operating
activities increased slightly due to reduced interest payments, partially
offset by the Partnership's receipt of approximately $222,000 in cash related
to the Southmark bankruptcy discussed below that did not recur in 1995. Net
cash provided by investing activities decreased due to the receipt of proceeds
from the sale of the Evergreen Heights Office Building in March of 1994 (See
"Note J" of the Notes to Financial Statements in "Item 7"), partially offset by
a decrease in purchases of securities available for sale. Net cash used in
financing activities decreased as a result of reduced Partners' distributions
for the year ended December 31, 1995, compared to the year ended December 31,
1994.
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 these reserves, operating revenue shall be allocated to such reserves to
the extent necessary to maintain the foregoing level. Reserves, including cash
and cash equivalents, tenant security deposits and securities available for
sale totalling approximately $2.5 million at December 31, 1995, exceeded the
Partnership's reserve requirement of approximately $1.4 million.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the property to adequately maintain the physical
assets and meet other operating needs of the Partnership. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The mortgage indebtedness of approximately $1.9 million, net of discount,
matures in 2013, at which time the related property will either be refinanced
or sold. Future cash distributions will depend on the levels of net cash
generated from operations, capital expenditure requirements, property sales and
the availability of cash reserves. As part of the Partnership's ongoing
attempt to maximize return to the Unitholders, the Partnership is exploring the
possibility of selling the Florida #6 Mini-Warehouse. Currently, the property
disposition is not considered imminent. Additionally, other investing parties
are involved who must be considered before such a transaction can be approved.
For the year ended December 31, 1995, cash distributions of approximately $1
million were paid compared to cash distributions of approximately $3.7 million
for the year ended December 31, 1994.
In 1991, the Partnership (and simultaneously other affiliated partnerships)
entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding.
These claims related to Southmark Corporation's activities while it exercised
control (directly or indirectly through its affiliates) over the Partnership.
The Bankruptcy Court set the Partnership's and the other affiliated
partnerships' allowed claim at an aggregate $11 million. In March 1994, the
Partnership received 4,405 shares of Southmark Corporation Redeemable Series A
Preferred Stock and 29,585 shares of Southmark Corporation New Common Stock
with an aggregate market value on the date of receipt of approximately $29,000
and $222,000 in cash representing the Partnership's share of the recovery,
based on its pro rata share of the claims filed.
In March 1994, the Partnership sold the Evergreen Heights Office Building for a
gross sales price of approximately $1.6 million. The Partnership received net
cash proceeds of $1.5 million after payment of related closing costs. As a
result of the sale, $665,000 was charged to the allowance for possible losses
in the year ended December 31, 1994. No gain or loss was recognized on the
sale.
Item 7. Financial Statements
JONHSTOWN/CONSOLIDATED INCOME PARTNERS
LIST OF FINANCIAL STATEMENTS
Reports of Independent Auditors
Balance Sheet - December 31, 1995
Statements of Operations - Years ended December 31, 1995
and 1994
Statements of Changes in Partners Capital (Deficit) - Years ended
December 31, 1995 and 1994
Statements of Cash Flows - Years ended December 31, 1995 and 1994
Notes to Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Johnstown/Consolidated Income Partners
We have audited the accompanying balance sheet of Johnstown/Consolidated Income
Partners as of December 31, 1995, and the related statements of operations,
changes in partners capital (deficit) and cash flows for the year then ended.
These financial statements are the responsibility of the Partnership s
management. Our responsibility is to express an opinion on these financial
statements based on our 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 the Partnership s management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Johnstown/Consolidated Income
Partners as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 15, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Partners of
Johnstown/Consolidated Income Partners:
We have audited the accompanying statements of operations, partners' capital
(deficit) and cash flows of Johnstown/Consolidated Income Partners (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 and cash flows of
Johnstown/Consolidated Income Partners for the year ended December 31, 1994, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen, LLP
Dallas, Texas
March 23, 1995
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
BALANCE SHEET
(in thousands, except unit data)
December 31, 1995
Assets
Cash and cash equivalents:
Unrestricted $1,967
Restricted-tenant security deposits 52
Securities available for sale 447
Prepaid expenses and other assets 441
Investment properties
Land $ 1,896
Buildings and related personal property 11,728
13,624
Less accumulated depreciation (5,420) 8,204
$11,111
Liabilities and Partners' Capital (Deficit)
Liabilities
Accounts payable and accrued expenses $ 145
Notes and interest payable 1,902
Partners' Capital (Deficit)
General partner $ (155)
Corporate limited partner - on behalf of the
Unitholders (128,810 Units issued and
outstanding) 9,219 9,064
$11,111
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1995 1994
Revenues:
Rental income $2,251 $2,254
Interest and other income 174 447
Total revenues 2,425 2,701
Expenses:
Property operations 1,015 988
Depreciation and amortization 545 698
Interest 180 192
Administrative 335 323
Total expenses 2,075 2,201
Net income $ 350 $ 500
Net income allocated to general partners (1%) $ 3 $ 5
Net income allocated to limited partners (99%) 347 495
$ 350 $ 500
Net income per Unit of Depositary Receipt: $ 2.69 $ 3.84
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Unitholders
Units of Units of
Depositary General Depositary
Receipts Partners Receipts Total
<S> <C> <C> <C> <C>
Original capital contributions 129,266 $ 1 $32,317 $32,318
Partners' capital (deficit) at
December 31, 1993 128,856 (153) 13,087 12,934
Abandonment of units of
depositary receipts (46) -- -- --
Net income for the year ended
December 31, 1994 -- 5 495 500
Distributions paid -- -- (3,720) (3,720)
Partners' capital (deficit)
at December 31, 1994 128,810 (148) 9,862 9,714
Net income for the year ended
December 31, 1995 -- 3 347 350
Distributions paid -- (10) (990) (1,000)
Partners' capital (deficit) at
December 31, 1995 128,810 $ (155) $ 9,219 $ 9,064
<FN>
See Accompanying Notes to Financial Statements
</TABLE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
1995 1994
Cash flows from operating activities:
Net income $ 350 $ 500
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization of
discounts, loan costs and lease
commissions 559 715
Change in accounts:
Restricted tenant security deposits (25) (1)
Prepaids and other assets (45) (26)
Accounts payable and accrued
expenses 31 (308)
Interest payable 13 --
Net cash provided by operating
activities 883 880
Cash flows from investing activities:
Property improvements and replacements (112) (69)
Purchase of securities available for sale (1,009) (1,705)
Proceeds from sale of securities
available for sale 2,713 2,922
Deposits to restricted escrows (21) --
Proceeds from sale of real estate -- 1,500
Net cash provided by investing
activities 1,571 2,648
Cash flows from financing activities:
Payments on notes payable (51) (52)
Partners' distributions (1,000) (3,720)
Net cash used in financing
activities (1,051) (3,772)
Net increase (decrease) in cash 1,403 (244)
Cash and cash equivalents at beginning of year 564 808
Cash and cash equivalents at end of year $ 1,967 $ 564
Supplemental disclosure of cash flow information:
Cash paid for interest $ 147 $ 176
See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1995 and 1994
Note A - Organization and Summary of Significant Accounting Policies
Organization
Johnstown/Consolidated Income Partners (the "Partnership"), a California
limited partnership, was formed on January 9, 1986, to acquire and operate
commercial and residential properties and to invest in mortgage loans and
mortgage-backed securities. Consolidated Capital Equities Corporation
("CCEC"), the general partner, and Johnstown/Consolidated Depositary
Corporation (the "Corporate Limited Partner"), which serves as depositary of
certain Units of Depositary Receipts ("Units"), contributed $1,000 and
$100,000, respectively. The Units represent economic rights attributable to
the limited partnership interests in the Partnership and entitle the holders
thereof ("Unitholders") to the economic benefits attributable to equity
interests in the Partnership and to participate in certain allocations and
distributions of the Partnership. For this reason, partners' equity (deficit)
is herein represented as an interest of the Unitholders. As of December 31,
1995, the Partnership owned one residential and two commercial properties and a
one-third undivided interest in another commercial property, all of which are
located near major urban areas in the United States.
At the time of the Partnership's formation, CCEC was the sole general partner
of the Partnership, and the Corporate Limited Partner was a wholly-owned
subsidiary of CCEC. In 1988, Southmark Corporation ("Southmark") gained
control of CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. As part of its reorganization plan,
ConCap Equities, Inc. ("General Partners" or "CEI") acquired CCEC's general
partner interests in the Partnership and in 15 other affiliated public limited
partnerships (the "Affiliated Partnerships") and acquired the stock of the
corporate limited partner, replacing CCEC as managing general partner in all 16
partnerships.
All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994,
the parent of GII Realty, Inc., entered into a transaction (the "Insignia
Transaction") in which among other things, MAE-ICC, Inc., a wholly owned
subsidiary of Metropolitan Asset Enhancement, L.P., an affiliate of Insignia
Financial Group, Inc. ("Insignia"), acquired an option (exercisable in whole or
in part from time to time) to purchase all of the stock of GII Realty, Inc.
and, pursuant to a partial exercise of such option, acquired 50.5% of that
stock. As a part of the Insignia Transaction, MAE-ICC, Inc. also acquired all
of the outstanding stock of Partnership Services, Inc., an asset management
entity, and 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, MAE-ICC, Inc. exercised the remaining portion of
its option to purchase all of the remaining capital stock of GII Realty, Inc.
Note A - Organization and Summary of Significant Accounting Policies (continued)
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, demand deposits,
money market funds and U.S. Treasury Bills with original maturities of three
months or less. At certain times the amount of cash deposited at a bank may
exceed the limit on insured deposits.
Restricted cash - tenant security deposits - The Partnership requires
security deposits from new 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.
The Partnership maintains cash restricted for use at its U.S. Housing and Urban
Development ("HUD") regulated property in Cash and Cash Equivalents. At
December 31, 1995 and 1994, approximately $342,000 and $186,000, respectively,
was held for use at the Partnership's HUD property.
Depreciation
Buildings and improvements are depreciated using the straight-line method over
the estimated useful lives of the assets, ranging from 5 to 28 years.
Reclassification
Certain reclassifications have been made to the 1994 information to conform to
the 1995 presentation.
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 values 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. The cost of
securities sold is determined using the specific identification method.
The Securities mature as follows:
Cost
Description (in thousands) Maturity
U.S. Treasury Note $ 447 October 1997
Note A - Organization and Summary of Significant Accounting Policies (continued)
Fair Value
In 1995, the Partnership implemented Statement of Financial Accounting
Standards No. 107, "Disclosure about Fair Value of Financial Instruments,"
which requires disclosure of fair value information about financial instruments
for which it is practicable to estimate that value. The carrying amount of the
Partnerships' cash and cash equivalents approximates fair value due to short-
term maturities. 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.
Investment Properties
Prior to 1995, investment properties were carried at the lower of cost or
estimated fair value, which was determined using the higher of the property's
non-recourse debt amount, when applicable, or the net operating income of the
investment property capitalized at a rate deemed reasonable for the type of
property. 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 recorded on long-
lived assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are less
than the assets' carrying amount. The impairment loss is measured by comparing
the fair value of the asset to its carrying amount. The effect of adoption was
not material.
Rental Income
The Partnership leases its residential property and its commercial mini-
warehouses 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. Commercial
office property leases vary from one to five years. Rental income is
recognized on a straight-line basis over the life of the applicable leases.
Deferred Loan Fees
Deferred loan fees are amortized using the straight-line method over the lives
of the related mortgage notes. Unamortized deferred fees are included in
prepaid expenses and other assets.
Lease Commissions
Lease commissions are capitalized and amortized using the straight-line method
over the life of the applicable lease. Unamortized lease commissions are
included in prepaid expenses and other assets.
Note A - Organization and Summary of Significant Accounting Policies (continued)
Discounts on Notes Payable
Discounts on notes payable are amortized using the effective interest method
over the remaining terms of the related notes. Unamortized discounts are
included in notes and interest payable.
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 Unitholders are responsible for their respective shares of
Partnership net income or loss. The Partnership reports certain transactions
differently for tax than for financial statement purposes.
The tax basis of the Partnership's assets and liabilities is approximately $4.6
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 Unitholders and
1% to the General Partner.
Advertising Costs
Advertising cost of approximately $39,000 and $43,000 in 1995 and 1994,
respectively are charged to operating expense as incurred.
Units of Depositary Receipts
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited
Partner"), an affiliate of the General Partner, serves as a depositary of
certain Units of Depositary Receipts ("Units"). The Units represent economic
rights attributable to the limited partnership interests in the Partnership and
entitle the holders thereof ("Unitholders") to certain economic benefits,
allocations and distributions of the Partnership. For this reason, Partners'
capital (deficit) is herein represented as an interest of the Unitholder.
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.
Note B - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and
affiliates of Insignia for the management and administration of all of the
partnership activities.
The Partnership Agreement provides that the Partnership shall pay in monthly
installments to the General Partner, or an affiliate, a yearly asset management
fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage
loans outstanding at the end of the month preceding the installment payment;
(ii) 1/8 of 1% of the market value of guaranteed mortgage-backed securities
("MBS") as of the end of the Partnership quarter immediately preceding the
installment payment; and (iii) 5/8 of 1% of the purchase price of the
properties plus improvements for managing the Partnership's assets. In the
event the property was not owned at the beginning or end of the year, such fee
shall be pro-rated for the short year period of ownership. These asset
management fees are included in compensation to related parties in the
following table for the years ended December 31, 1995 and 1994.
The Partnership has paid property management fees noted below based upon
collected gross rental revenues ("Rental Revenues") for property management
services in each of the two years ended December 31, 1995 and 1994,
respectively. For the year ended December 31, 1994, a portion of such
property management fees equal to 4% of Rental Revenues has been paid to the
property management companies performing day-to-day property management
services and the portion equal to 1% of Rental Revenues has been paid to
Partnership Services, Inc. ("PSI") or its predecessor for advisory services
related to day-to-day property operations. In July 1993, Coventry Properties,
Inc. ("Coventry"), an affiliate of the General Partner, assumed day-to-day
property management responsibilities for three of the Partnership's properties
under the same management fee arrangement as the unaffiliated Management
Companies. In late December 1994, an affiliate of Insignia assumed day-to-day
property management responsibilities for all of the Partnership's properties
except for Cedar Brooke Apartments. Management of Cedar Brooke was assumed by
an Insignia affiliate on February 15, 1995. Fees paid to Insignia and
affiliates for the year ended December 31, 1995, and fees paid to PSI and
Coventry for the year ended December 31, 1994, have been reflected in the
following table as compensation to related parties in the applicable periods:
Years Ended December 31,
1995 1994
(in thousands)
Asset management fee $98 $101
Property management fees 115 59
Note B - Related Party Transactions (continued)
The Partnership Agreement also provides for reimbursement to the General
Partner and its affiliates for costs incurred in connection with the
administration of Partnership activities. The General Partner and its
affiliates, which includes Coventry for the year ended December 31, 1994,
received reimbursements as reflected in the following table:
Years Ended December 31,
1995 1994
(in thousands)
Reimbursement for services of affiliates $131 $103
During the year ended December 31, 1995, the Partnership paid an affiliate of
Insignia approximately $4,000 in leasing commissions. These costs were
capitalized and are included in prepaid expenses and other assets.
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 current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payment 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.
In December 1995, an affiliate of the General Partner, Liquidity Assistance,
LLC, purchased 10,062 units from an unaffiliated Limited Partner at a cash
price of $61.04 per unit, or approximately $614,000.
Note C - 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 Corporation's activities while it exercised
control (directly or indirectly through its affiliates) over the Partnership.
The Bankruptcy Court set the Partnership's and the other affiliated
partnerships' allowed claim at an aggregate $11 million. In March 1994, the
Partnership received 4,405 shares of Southmark Corporation Redeemable Series A
Preferred Stock and 29,585 shares of Southmark Corporation New Common Stock
with an aggregate market value on the date of receipt of approximately $29,000
and $222,000 in cash representing the Partnership's share of the recovery,
based on its pro rata share of the claims filed. During 1995, the Partnership
received a liquidating dividend of approximately $79,000 from Southmark, of
which approximately $27,000 was credited to the investment in stock account.
The remaining stock balance is included in prepaid and other assets at December
31, 1995 at its estimated market value of approximately $3,000.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital for contingencies of not less than 5% of Net Invested Capital as
defined in the Partnership Agreement. In the event expenditures are made from
these reserves, operating revenues shall be allocated to such reserves to the
extent necessary to maintain the foregoing level. Reserves, including cash and
cash equivalents, tenant security deposits and securities available for sale
totalling approximately $2.5 million at December 31, 1995, exceeded the
Partnership's reserve requirement of approximately $1.4 million.
Note E - Distributions
In March of 1995, the General Partner paid distributions attributable to cash
flow from operations totalling approximately $495,000 or $3.84 per Unit to the
Unitholders along with a corresponding General Partner distribution of
approximately $5,000. In September 1995, the General Partner paid
distributions attributable to cash flow from operations totalling approximately
$495,000 or $3.84 per Unit to the Unitholders along with a corresponding
General Partner distribution of approximately $5,000.
In March 1994, the General Partner paid distributions of approximately $2.2
million or $17.27 per Unit to the Unitholders, representing a return of capital
from repayment of a note receivable in September 1993. In September 1994, the
General Partner paid distributions of approximately $1.5 million or $11.60 per
Unit to the Unitholders, representing a return of capital from proceeds of a
property sale in March 1994.
Note F - Notes Payable
Principal Monthly Principal
Balance At Payment Stated Balance
December Including Interest Maturity Due At
Property 1995 Interest Rate Date Maturity
(dollar amounts in thousands)
Cedar Brooke
1st mortgage $2,111 $18 7.50% 07/13 $ --
Less unamortized
discount (223)
Totals $1,888
(1) The estimated fair value of the Partnerships' debt is approximately $1.9
million. This value represents a general approximation of possible value and
is not necessarily indicative of the amounts the Partnership might pay in
actual market transactions.
The discount is reflected as a reduction of the notes payable and increases the
effective rate of the debt to 9.25% for Cedar Brooke Apartments.
Scheduled maturities of principal are as follows:
Years Ending December 31, (in thousands)
1996 $ 61
1997 65
1998 70
1999 76
2000 82
thereafter $ 1,757
$ 2,111
Note G - Operating Leases
Lessor
Tenants of Phoenix Business Campus are responsible for their own utilities and
maintenance of their space, and payment of their proportionate share of common
area maintenance, utilities, insurance and real estate taxes. A portion of the
real estate taxes, insurance, and common area maintenance expenses are paid
directly by the Partnership. The Partnership is then reimbursed by the tenants
for their proportionate share.
Note G - Operating Leases (continued)
The future minimum rental payments at the Partnership's commercial property to
be received under operating leases that have initial or remaining
noncancellable lease terms in excess of one year as of December 31, 1995, are
as follows:
Years Ending December 31, (in thousands)
1996 $ 325
1997 303
1998 170
1999 76
2000 - Thereafter 37
$ 911
Note J - Sale of Real Estate
In March 1994, the Partnership sold the Evergreen Heights Office Building for a
gross sales price of approximately $1.6 million. The Partnership received net
cash proceeds of $1.5 million after payment of related closing costs. As a
result of the sale, $665,000 was charged to the allowance for possible losses
in the year ended December 31, 1994. No gain or loss was recognized on the
sale. The sales transaction is summarized in the following table:
(in thousands)
Cash proceeds received $1,500
Cost of sales:
Net real estate $1,578
Other (78)
Total cost of sales $1,500
Net real estate represents real estate, net of accumulated depreciation and
allowance for possible loss.
Note K - Investment Properties and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Cost
Buildings Capitalized
and Related (Written down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
<S> <C> <C> <C> <C>
Cedar Brooke $2,111 $ 275 $ 4,040 $ (317)
Florida #6 Mini-
Warehouse -- 325 758 10
Florida #11 Mini-
Warehouse -- 979 1,741 26
Phoenix Business Campus -- 496 6,148 (857)
Totals $2,111 $2,075 $12,687 $(1,138)
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1995
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
<S> <C> <C> <C> <C>
Cedar Brooke
Independence, Missouri $ 213 $ 3,785 3,998 $2,362 2/27/87 5-19
Florida #6 Mini-Warehouse
Lauderhill, FL 325 768 1,093 204 10/15/90 3-20
Florida #11 Mini-Warehouse
Davie, Florida 979 1,767 2,746 471 10/15/90 5-20
Phoenix Business Campus
Atlanta, GA 379 5,408 5,787 2,383 8/26/86 5-28
Totals $1,896 $11,728 $13,624 $5,420
</TABLE>
Note K - Investment Properties and Accumulated Depreciation (continued)
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31,
1995 1994
Investment Properties
Balance at beginning of year $15,482 $17,913
Property improvements 112 69
Allocation of allowance for possible loss (1,970) --
Dispositions through sales -- (2,500)
Balance at End of Year $13,624 $15,482
Accumulated Depreciation
Balance at beginning of year $ 4,900 $ 4,481
Additions charged to expense 520 676
Accumulated depreciation on real estate sold -- (257)
Balance at end of year $ 5,420 $ 4,900
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1995, is approximately $14,444,000. The accumulated depreciation
taken for Federal income tax purposes at December 31, 1995, is approximately
$5,215,000.
Note L - Abandoned Units of Depositary Receipts
For the year ended December 31, 1994, the number of Units of Depositary
Receipts decreased by 46 units, due to Unitholders abandoning their units. In
abandoning Units of Depositary Receipts, a Unitholder relinquishes all right,
title and interest in the Partnership as of the date of abandonment.
Note M - Subsequent Event
Subsequent to December 31, 1995, the General Partner declared a distribution
attributable to cash flow from operation totaling approximately $491,000 or
$3.81 per Unit to the Unitholders along with a corresponding General Partner
distribution of approximately $5,000.
Item 8. 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 LLP was engaged
to provide that service for the Partnership.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
The Registrant has no officers or directors. The Managing General Partner
manages and controls the Registrant and has general responsibility and
authority in all matters affecting its business.
The name of the directors and executive officers of ConCap Equities, Inc.
("CEI"), the Partnership's General Partner, as of December 31, 1995, their ages
and the nature of all positions with CEI presently held by them are set forth
below. There are no family relationships between or among any officers and
directors.
Name Age Position
Carroll D. Vinson 55 President, Director
Robert D. Long, Jr. 28 Controller, Chief
Accounting Officer
William H. Jarrard, Jr. 49 Vice President
John K. Lines 36 Secretary
Kelley M. Buechler 38 Assistant Secretary
Carroll D. Vinson has been President of CEI since December 1994 and President
of the Metropolitan Asset Enhancement, L.P. ("MAE") subsidiaries since August
1994. Prior to that, during 1993 to August 1994, Mr. Vinson was affiliated
with Crisp, Hughes & Co. (regional CPA firm) and engaged in various other
investment and consulting activities, which included portfolio acquisitions,
asset dispositions, debt restructurings and financial reporting. Briefly, in
early 1993, Mr. Vinson served as President and Chief Executive Officer of
Angeles Corporation, a real estate investment firm. From 1991 to 1993 Mr.
Vinson was employed by Insignia in various capacities including Managing
Director-President during 1991. From 1986 to 1990, Mr. Vinson was President
and Director of U.S. Shelter Corporation, a real estate services company, which
sold substantially all of its assets to Insignia in December 1990.
Robert D. Long, Jr. has been Controller and Chief Accounting Officer of CEI
since December 1994 and Chief Accounting Officer and Controller of the MAE
subsidiaries since February 1994. Prior to joining MAE in September 1993, Mr.
Long served as a senior regional accountant with Insignia Management Group, Inc.
since December 1991. From January 1991 until December 1991, Mr. Long was
associated with the accounting firm of Harshman, Lewis and Associates. From
July 1989 until January 1991, Mr. Long was an auditor for the State of
Tennessee. He is a graduate of the University of Memphis.
William H. Jarrard, Jr. has been Vice President of CEI since December 1994,
Vice President of the MAE subsidiaries since January 1992, and Managing
Director - Partnership Administration of Insignia since January 1991. During
the five years prior to joining Insignia in 1991, he served in a similar
capacity for U.S. Shelter. Mr. Jarrard is a graduate of the University of
South Carolina and a certified public accountant.
John K. Lines has been Secretary of CEI since December 1994, Secretary of the
MAE subsidiaries since August 1994 and General Counsel and Secretary of
Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the
Assistant General Counsel and Vice President of Ocwen Financial Corporation in
West Palm Beach, Florida. From October 1991 until April 1993, Mr. Lines was a
Senior Attorney with Banc One Corporation in Columbus, Ohio. From May 1984
until October 1991, Mr. Lines was employed as an associate with Squire Sanders
& Dempsey in Columbus, Ohio.
Kelley M. Buechler has been Assistant Secretary of CEI since December 1994,
Assistant Secretary or the MAE subsidiaries since 1992 and Assistant Secretary
of Insignia since 1991. During the five years prior to joining Insignia in
1991, she served in a similar capacity for U.S. Shelter. Ms. Buechler is a
graduate of the University of North Carolina.
CEI is the General Partner of the Partnership and 15 other affiliated
partnerships as of December 31, 1995.
Item 10. Executive Compensation
No direct compensation was paid or payable by the Partnership to directors or
officers for the year ended December 31, 1995, nor was any direct compensation
paid or payable by the Partnership to directors or officers of the General
Partner for the year ended December 31, 1995. The Partnership has no plans to
pay any such remuneration to any directors or officers of the General Partner
in the future.
See "Item 7 - Financial Statements," 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 general partner and
former affiliates.
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of February, 1996, no person was known to
CEI to own of record or beneficially more than five percent of the Units
of the Partnership.
Number of Percent
Name and Address Units of total
Liquidity Assistance LLC 10,062 7.81%
One Insignia Financial Plaza
Greenville, SC 29602
The Units reflected were acquired by Liquidity Assistance LLC from an
unaffiliated Unitholder in December 1995 at a price of $61.10 per unit.
Liquidity Assistance LLC is owned by Insignia.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own
any Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of February, 1996, the following persons were known to CEI to be the
beneficial owners of more than 5 percent (5%) of its common stock:
NUMBER OF PERCENT
NAME AND ADDRESS CEI SHARES OF TOTAL
GII Realty, Inc. 100,000 100%
One Insignia Financial Plaza
Greenville, SC 29602
GII Realty, Inc. is owned by MAE-ICC, Inc. (See Item 1)
Item 12. 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 7 - Financial Statements," "Note 2 - 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 two years.
The Partnership Agreement provides that the Partnership shall pay in monthly
installments to the General Partner, or an affiliate, a yearly asset management
fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage
loans outstanding at the end of the month preceding the installment payment;
(ii) 1/8 of 1% of the market value of guaranteed mortgage-backed securities
("MBS") as of the end of the Partnership quarter immediately preceding the
installment payment; and (iii) 5/8 of 1% of the purchase price of the
properties plus improvements for managing the Partnership's assets. In the
event the property was not owned at the beginning or end of the year, such fee
shall be pro-rated for the short year period of ownership.
The Partnership has paid property management fees based upon collected gross
rental revenues ("Rental Revenues") for property management services in each of
the years ended December 31, 1995 and 1994, respectively. A portion of such
property management fees equal to 4% of Rental Revenues has been paid to the
management company performing day-to-day property management services and the
portion equal to 1% of Rental Revenues has been paid to PSI for advisory
services related to day-to-day property operations. Property management fees
equal to 4% of Rental Revenues paid by three of the Partnership's properties in
1994 were paid to Coventry Properties, Inc. ("Coventry"), an affiliate of CEI.
In late December 1994, management of all of the Partnership's properties except
for Cedar Brooke Apartments, was assumed by an affiliate of Insignia.
Management of Cedar Brooke was assumed by an Insignia affiliate on February 15,
1995.
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.
Please refer to "Item 7 - Financial Statements," "Note B - Related Party
Transactions," for the amounts and items of compensation and fees paid to
former affiliates.
Litigation with Former Related Parties
In 1991, the Partnership (and simultaneously each of the Affiliated
Partnerships) entered claims in Southmark'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 Partnerships' allowed
claim at an aggregate $11 million. In March 1994, the Partnership received
4,405 shares of Southmark Corporation Redeemable Series A Preferred Stock and
29,585 shares of Southmark Corporation New Common Stock with an aggregate
estimated market value on the date of receipt of approximately $29,000 and
$222,000 in cash representing the Partnership's share of the recovery, based on
its pro rata share of the claims filed.
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Exhibits: See Exhibit Index contained herein.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed during the fourth quarter of 1995:
A form 8-K dated October 24, 1995, was filed reporting a change in
the ownership of GII Realty, Inc., the sole stockholder of the
general partner of the Registrant.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Carroll D. Vinson
Carroll D. Vinson
President
By: /s/Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: March 27, 1996
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the Registrant and in the capacities and on
the date indicated.
/s/Carroll D. Vinson President March 27, 1996
Carroll D. Vinson
/s/Robert D. Long, Jr. Controller and Principal March 27, 1996
Robert D. Long, Jr. Accounting Officer
INDEX OF EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
3 Certificates of Limited Partnership, as
amended to date (Incorporated by refer-
ence to the Annual Report on Form 10-K
for the year ended December 31, 1991)
10.1 Property Management Agreement No. 114
dated October 23, 1990, by and between the
Partnership and CCEC (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.2 Property Management Agreement No. 309
dated October 23, 1990, by and between the
Partnership and CCEC (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.3 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).
10.4 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).
10.5 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).
10.6 Assignment and Assumption 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).
10.7 Assignment and Assumption Agreement dated
October 23, 1990, by and between CCMLP and
Metro ConCap, Inc. (300 Series of Property
Management Contracts) (Incorporated by refer-
ence to the Quarterly Report on Form 10-Q for
the quarter ended September 30, 1990).
10.8 Property Management Agreement No. 121
dated October 1, 1991, by and between the
Partnership, Johnstown/Consolidated Income
Partners/2 ("JCIP/2") and CCMLP (Incorporated
by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.9 Property Management Agreement No. 122
dated October 1, 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 Assignment and Assumption Agreement dated
October 1, 1991, by and between CCMLP and
The Hayman Company (Property Management
Agreements No. 121 and 122) (Incorporated by
reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.11 Assignment and Agreement as to Certain
Property Management Services dated October
1, 1991, by and between CCMLP and ConCap
Capital Company (Incorporated by reference
to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.12 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partner-
ship, and JCIP Associates, Ltd. (Incorporated
by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.13 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and Metro ConCap Inc. (Incorpor-
ated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.14 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and The Hayman Company (the
"Hayman Construction Management Agreement")
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1991).
10.15 Assignment and Assumption Agreement dated
September 1, 1991, by and between the Partner-
ship, and JCIP Associates, Ltd. (Hayman Con-
struction Management Agreement) (Incorporated
by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.16 Construction Management Cost Reimbursement
Agreement dated October 1, 1991, by and between
the Partnership and The Hayman Company (Incor-
porated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.17 Construction Management Cost Reimbursement
Agreement dated October 1, 1991, by and between
the Partnership, Johnstown/Consolidated Income
Partners/2 and The Hayman Company (Incorporated
by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.18 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).
10.19 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).
10.20 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).
10.21 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).
10.22 Financial Services Agreement dated October 23, 1990,
by and between the Partnership and CCEC (Incorpor-
ated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1990).
10.23 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).
10.24 Property Management Agreement No. 502 dated
February 16, 1993, by and between the Partnership
and Coventry Properties, Inc. (Incorporated by refer-
ence to the Annual Report on Form 10-K for the year
ended December 31, 1992).
10.25 Property Management Agreement No. 516 dated
June 1, 1993, by and between the Partnership and
Coventry Properties, Inc.
10.26 Property Management Agreement No. 517 dated
June 1, 1993, by and between the Partnership and
Coventry Properties, Inc.
10.27 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993,
by and between Coventry Properties, Inc. and
Partnership Services, Inc.
10.28 Assignment and Agreement as to Certain Property
Management Services dated November 17, 1993,
by and between Coventry Properties, Inc. and
Partnership Services, Inc.
10.29 Stock and Asset Purchase Agreement, dated December 8,
1994 (the "Gordon Agreement"), among MAE-ICC, Inc.
("MAE-ICC"), Gordon Realty Inc. ("Gordon"), GII
Realty, Inc. ("GII Realty"), and certain other
parties. (Incorporate by reference to Form 8-K dated
December 8, 1994)
10.30 Exercise of the Option (as defined in the Gordon
Agreement), dated December 8, 1994, between
MAE-ICC and Gordon. (Incorporated by reference to
Form 8-K dated December 8, 1994)
11 Statement regarding computations of Net Income
per Limited Partnership Unit (Incorporated by
reference to Note 1 of Item 8 - Financial Statements
of this Form 10-K).
16.1 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).
16.2 Letter dated May 9, 1995 from the Registrant's
former independent accountant regarding its
concurrence with the statements made by the
Registrant regarding a change in the certifying
accountant. (Incorporated by reference to Form
8-K dated May 3, 1995)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Johnstown/Consolidated Income Partners 1995 Year-End 10-KSB and is qualified in
its entirety by reference to such 10-KSB filing.
</LEGEND>
<CIK> 0000787621
<NAME> JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 1,967
<SECURITIES> 447
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 13,624
<DEPRECIATION> 5,420
<TOTAL-ASSETS> 11,111
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,902
0
0
<COMMON> 0
<OTHER-SE> 9,064
<TOTAL-LIABILITY-AND-EQUITY> 11,111
<SALES> 0
<TOTAL-REVENUES> 2,425
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,075
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 180
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 350
<EPS-PRIMARY> 2.69
<EPS-DILUTED> 0
<FN>
<F1>The Partnership has an unclassified balance sheet.
</FN>
</TABLE>
