FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY OR TRANSITIONAL REPORT
U.S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from.........to.........
Commission file number 0-16010
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
(Exact name of small business issuer as specified in its charter)
California 94-3004963
(State or other jurisdiction of (IRS Employer
incorporation or organization) (Identification No.)
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C>
Assets
Cash and cash equivalents $ 1,817
Receivables and deposits, net of allowance of $127 249
Restricted escrows 193
Other assets 431
Investment properties:
Land $ 1,571
Buildings and related personal property 11,892
13,463
Less accumulated depreciation (6,498) 6,965
$ 9,655
Liabilities and Partners' (Deficit) Capital
Accounts payable $ 15
Tenant security deposit liabilities 56
Accrued property taxes 128
Other liabilities 79
Notes payable 2,325
Partners' (Deficit) Capital
General partner $ (175)
Corporate limited partner on behalf
of the Unitholders - (128,810 Units
issued and outstanding) 7,227 7,052
$ 9,655
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
b)
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Rental income $ 553 $ 486 $1,670 $1,568
Other income 39 61 183 158
Casualty gain 11 -- 226 --
Gain on sale of investment
property -- -- -- 437
Total revenues 603 547 2,079 2,163
Expenses:
Operating 234 264 678 716
General and administrative 61 58 200 173
Depreciation 133 125 397 369
Interest 46 45 138 137
Property taxes 43 34 128 112
Bad debt (recovery) expense -- (16) (18) 32
Total expenses 517 510 1,523 1,539
Net income $ 86 $ 37 $ 556 $ 624
Net income allocated to
general partner (1%) $ 1 $ -- $ 6 $ 6
Net income allocated to
limited partners (99%) 85 37 550 618
Net income $ 86 $ 37 $ 556 $ 624
Net income per Unit of
Depositary Receipt $ .66 $ .29 $ 4.27 $ 4.80
Distributions per Unit of
Depositary Receipt $ -- $ 7.69 $ 7.69 $ 7.69
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
c)
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(Unaudited)
(in thousands, except unit data)
<TABLE>
<CAPTION>
Unitholders
Units of
Units of Depositary
Depositary General Receipt
Receipt Partner (Note A) Total
<S> <C> <C> <C> <C>
Original capital contributions 129,266 $ 1 $32,317 $32,318
Partners' (deficit) capital
at December 31, 1997 128,810 $ (171) $ 7,667 $ 7,496
Net income for the nine months
ended September 30, 1998 -- 6 550 556
Distributions to partners -- (10) (990) (1,000)
Partners' (deficit) capital at
September 30, 1998 128,810 $ (175) $ 7,227 $ 7,052
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income $ 556 $ 624
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 397 369
Amortization of lease commissions
and loan costs 47 37
Gain on sale of investment property -- (437)
Bad debt (recovery) expense (18) 32
Casualty gain (226) --
Change in accounts:
Receivables and deposits (105) (101)
Other assets (167) (130)
Accounts payable (380) 11
Tenant security deposit liabilities 2 9
Accrued property taxes 128 58
Other liabilities 21 (23)
Net cash provided by operating activities 255 449
Cash flows from investing activities:
Proceeds from sale of investment property -- 1,287
Property improvements and replacements (530) (90)
Net receipts from (deposits to) restricted escrows 68 (19)
Net insurance proceeds from casualty gain 254 --
Net cash (used in) provided by investing activities (208) 1,178
Cash flows from financing activities:
Loan costs paid -- (11)
Distributions to partners (1,000) (1,000)
Net cash used in financing activities (1,000) (1,011)
Net (decrease) increase in cash and cash equivalents (953) 616
Cash and cash equivalents at beginning of period 2,770 1,583
Cash and cash equivalents at end of period $ 1,817 $ 2,199
Supplemental disclosure of cash flow information
Cash paid for interest: $ 128 $ 128
<FN>
See Accompanying Notes to Financial Statements
</FN>
</TABLE>
e)
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited financial statements of Johnstown/Consolidated Income
Partners, (the "Partnership") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods ended
September 30, 1998, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1998. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's annual report on Form 10-KSB for the fiscal year ended December
31, 1997.
Certain reclassifications have been made to the 1997 balances to conform to the
1998 presentation.
Units of Depositary Receipt
Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"),
an affiliate of the General Partner, serves as a depositary of certain Units of
Depositary Receipt ("Units"). The Units represent economic rights attributable
to the limited partnership interests in the Partnership and entitle the
Unitholders thereof ("Unitholders") to certain economic benefits, allocations
and distributions of the Partnership. For this reason, Partners' (deficit)
capital is herein represented as an interest of the Unitholder.
NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities. The General Partner is wholly-owned by Insignia Properties Trust
("IPT").
The Partnership Agreement provides for certain payments to affiliates for
services and as reimbursement of certain expenses incurred on behalf of the
Partnership. The following transactions with affiliates of the General Partner
were incurred for the nine months ended September 30, 1998 and 1997:
1998 1997
(in thousands)
Property management fees (included in operating expenses) $ 86 $ 82
Reimbursement for services of affiliates (included in
investment properties and general and 87 88
administrative and operating expenses) (1)
(1) Included in "Reimbursements for services of affiliates" are $17,000 and
$23,000 of construction oversight costs for the nine months ended September
30, 1998 and 1997, respectively.
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 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. Under this provision, fees of approximately $68,000 and
$73,000 were paid to the General Partner and its affiliates for the nine months
ended September 30, 1998 and 1997, respectively, and are included in general and
administrative expense.
In addition, lease commissions of $80,000 and $43,000 for the nine months ended
September 30, 1998 and 1997, respectively, were paid to affiliates and are
included in other assets.
For the period January 1, 1997 to August 31, 1997, the Partnership insured its
properties under a master policy through an agency affiliated with the General
Partner with an 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 master policy. The agent assumed the financial obligations
to the affiliate of the General Partner which received 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 was not significant.
On December 19, 1997, an affiliate of the General Partner (the "Purchaser")
commenced a tender offer for limited partnership interests in the Partnership.
The Purchaser offered to purchase up to 39,000 units of the outstanding units of
limited partnership interest in the Partnership, at $68.00 per Unit, net to the
seller in cash. During February 1998, the tender offer was completed and the
Purchaser acquired 13,985.5 units of limited partnership interest in the
Partnership.
NOTE C - 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 and tenant security deposits totaling approximately $1,873,000 at
September 30, 1998, exceeded the Partnership's reserve requirement of
approximately $1,385,000.
NOTE D - DISTRIBUTIONS
During the nine months ended September 30, 1998, the Partnership paid
distributions attributable to cash flow from operations of approximately
$1,000,000. During the nine months ended September 30, 1997, the Partnership
paid distributions of approximately $1,000,000 attributable to sales proceeds
from the sale of the Florida #6 mini-warehouse (see "Note E").
NOTE E - SALE OF INVESTMENT PROPERTY HELD FOR SALE
In May 1997, the Partnership sold its one-third undivided interest in the
Florida #6 Mini-Warehouse, located in Lauderhill, Florida, to an unaffiliated
party, Shurgard Storage Centers, Inc., a Delaware corporation. The
Partnership's share of the net proceeds was $1,287,000, after payment of closing
costs. The Partnership realized a gain of $437,000 on the sale during the
second quarter of 1997.
The sales transaction is summarized as follows (amounts in thousands):
Cash proceeds received $1,287
Net real estate (1) (850)
Gain on sale of investment property $ 437
(1) Real estate at cost, net of accumulated depreciation of $243,000.
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
IPT. Also, effective October 1, 1998 IPT and AIMCO entered into
an Agreement and plan of Merger pursuant to which IPT is to be merged with and
into AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires
the approval of the holders of a majority of the outstanding IPT Shares.
AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT
Merger and has granted an irrevocable limited proxy to unaffiliated
representatives of IPT to vote the IPT Shares acquired by AIMCO and its
subsidiaries in favor of the IPT Merger. As a result of AIMCO's ownership and
its agreement, the vote of no other holder of IPT is required to approve the
merger. The Managing General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of one apartment complex and two
commercial properties. The following table sets forth the average occupancy of
the properties for the nine months ended September 30, 1998 and 1997:
Average Occupancy
1998 1997
Cedar Brooke Apartments
Independence, Missouri 94% 97%
Florida #11 Mini-Warehouse
Davie, Florida 96% 99%
Phoenix Business Campus
College Park, Georgia 71% 66%
Occupancy at Cedar Brooke Apartments decreased due to increased rental rates and
attractive mortgage rates resulting in increased home ownership. Florida #11
Mini-Warehouse's occupancy dropped for the nine months ended September 30, 1998
as compared to the same period in 1997 as a result of the nearby construction of
a new mini-storage facility. The increase in occupancy at Phoenix Business
Campus is directly attributable to greater demands for rental space due to
nearby airport expansion, which has displaced many local businesses.
The Partnership realized net income of approximately $86,000 and $556,000 for
the three and nine months ended September 30, 1998, respectively, compared to
net income of approximately $37,000 and $624,000 for the three and nine months
ended September 30, 1997, respectively. The decrease in net income for the
comparable nine month periods is primarily due to an overall decrease in
revenues attributable to the gain on the sale of the Florida #6 Mini-Warehouse
recorded during the nine months ended September 30, 1997 (see discussion below).
Excluding the gain on sale, net income increased by $369,000 for the comparable
nine month periods. Rental income increased due to increased rental
rates at all of the investment properties and an increase in other income
attributable to lease cancellation fees received from a tenant at Phoenix
Business Campus. In addition, for the nine months ended September 30, 1998,
there was a casualty gain related to a fire at Cedar Brooke Apartments (see
discussion below) and a recovery on bad debt at Phoenix Business Campus. Also,
operating expense decreased for the nine months ended September 30, 1998 due to
an exterior maintenance project at Cedar Brooke Apartments during the same
period in 1997. Partially offsetting these gains were increases in
depreciation, property taxes and general and administrative expenses. The
increase in depreciation expense is attributable to the addition of
approximately $570,000 of capital improvements and replacements at the
Partnership's investment properties over the last twelve months. General and
administrative expense increased due to increased professional fees for the
comparable nine month periods.
In May 1997, the Partnership sold its one-third undivided interest in the
Florida #6 Mini-Warehouse, located in Lauderdale, Florida (see Note E). The
Partnership's share of the net proceeds was $1,287,000, after payment of closing
costs. As a result of the sale, the Partnership realized a gain of $437,000
during the second quarter of 1997.
In the fourth quarter of 1997, there was a fire at Cedar Brooke Apartments that
caused extensive damage to the clubhouse. Insurance proceeds of approximately
$254,000 were received during the first part of 1998 and reconstruction of the
clubhouse is now complete. The Partnership recorded a casualty gain of
approximately $226,000 as a result of combining the proceeds received less the
write off of the undepreciated balance of the assets destroyed in the fire.
For the nine months ended September 30, 1998, approximately $32,000 of major
repairs and maintenance, comprised primarily of parking lot repairs and
construction oversight costs, is included in operating expense. For the nine
months ended September 30, 1997, approximately $98,000 of major repairs and
maintenance, comprised primarily of exterior building repairs and construction
oversight costs related to repair projects at Cedar Brooke Apartments, is
included in operating expense.
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.
At September 30, 1998, the Partnership held cash and cash equivalents of
approximately $1,817,000 compared to approximately $2,199,000 at September 30,
1997. Cash and cash equivalents had a net decrease of approximately $953,000
for the nine months ended September 30, 1998 as compared to a net increase of
approximately $616,000 for the same period in 1997. Net cash provided by
operating activities decreased primarily due to a large decrease in accounts
payable. Accounts payable decreased due to the payment of tenant improvements at
Phoenix Business Campus. This decrease was partially offset by an increase in
accrued property taxes and other liabilities. Net cash used in investing
activities increased as a result of increased property improvements and
replacements primarily attributable to the reconstruction of the clubhouse at
Cedar Brooke Apartments and tenant improvements at Phoenix Business Campus. In
addition, the Partnership received sales proceeds due to the sale of the Florida
#6 Mini-Warehouse in 1997. These unfavorable variances were partially offset by
insurance proceeds received related to the Cedar Brooke casualty and an increase
in net receipts from restricted escrows. Net cash used in financing activities
remained constant for the nine months ended September 30, 1998 and 1997.
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 investment properties to adequately maintain the
physical assets and other operating needs of the Partnership and to comply with
federal, state and local legal and regulatory requirements. Such assets are
currently thought to be sufficient for any near-term needs of the Partnership.
The General Partner is currently assessing the need for capital improvements at
each of the Partnership's properties. To the extent that additional capital
improvements are required, the Partnership's distributable cash flow, if any,
may be adversely affected at least in the short term. The mortgage indebtedness
of $2,325,000, which carries a stated interest rate of 7.33% (interest only)
matures in November 2003. The General Partner will attempt to refinance such
remaining indebtedness or sell the related property prior to such maturity date.
If the property cannot be refinanced or sold for a sufficient amount, the
Partnership will risk losing such property through foreclosure. During each of
the nine month periods ended September 30, 1998 and 1997, the Partnership made
distributions to the partners of $1,000,000. 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. The
Partnership's distribution policy will be reviewed on a quarterly basis. There
can be no assurance, however, that the Partnership will generate sufficient
funds from operations to permit further distributions to its partners in 1998 or
subsequent periods.
Transfer of Control - Subsequent Event
On October 1, 1998, Insignia Financial Group, Inc. completed its merger with and
into Apartment Investment and Management Company ("AIMCO"), a publicly traded
real estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result of the Insignia Merger, AIMCO acquired control
of the Managing General Partner. In addition, AIMCO also acquired
approximately 51% of the outstanding common shares of beneficial interest of
Insignia Properties Trust ("IPT"), the sole shareholder of the General Partner
of the Partnership. Also, effective October 1, 1998 IPT and AIMCO entered into
an Agreement and plan of Merger pursuant to which IPT is to be merged with and
into AIMCO or a subsidiary of AIMCO (the "IPT Merger"). The IPT Merger requires
the approval of the holders of a majority of the outstanding IPT Shares.
AIMCO has agreed to vote all of the IPT Shares owned by it in favor of the IPT
Merger and has granted an irrevocable limited proxy to unaffiliated
representatives of IPT to vote the IPT Shares acquired by AIMCO and its
subsidiaries in favor of the IPT Merger. As a result of AIMCO's ownership and
its agreement, the vote of no other holder of IPT is required to approve the
merger. The Managing General Partner does not believe that this transaction
will have a material effect on the affairs and operations of the Partnership.
Year 2000
GENERAL DESCRIPTION OF THE YEAR 2000 ISSUE AND THE NATURE AND EFFECTS OF THE
YEAR 2000 ON INFORMATION TECHNOLOGY (IT) AND NON-IT SYSTEMS
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any computer programs or hardware
that have date-sensitive software or embedded chips may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
The Managing Agent has determined that it will be required to modify or replace
significant portions of its software and certain hardware so that those systems
will properly utilize dates beyond December 31, 1999. The Managing Agent
presently believes that with modifications or replacements of existing software
and certain hardware, the Year 2000 Issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Managing
Agent and the Partnership.
STATUS OF PROGRESS IN BECOMING YEAR 2000 COMPLIANT
The Managing Agent's plan to resolve the Year 2000 Issue involves the following
four phases: assessment, remediation, testing and implementation. To date, the
Managing Agent has fully completed its assessment of all information systems
that could be significantly affected by the Year 2000, and has begun the
remediation, testing and implementation phase on both hardware and software
systems. Assessments are continuing in regards to embedded systems in operating
equipment. The Managing Agent anticipates having all phases complete by June 1,
1999.
In addition to the areas the Partnership is relying on the Managing Agent to
verify compliance with, the Partnership has certain operating equipment,
primarily at the property sites, which needed to be evaluated for Year 2000
compliance. The focus of the General Partner was to the security systems,
elevators, heating-ventilation-air-conditioning systems, telephone systems and
switches, and sprinkler systems. The General Partner is currently engaged in the
identification of all non-compliant operational systems, and is in the process
of estimating the costs associated with any potential modifications or
replacements needed to such systems in order for them to be Year 2000 compliant.
It is not expected that such costs would have a material adverse affect upon
the operations of the Partnership.
RISK ASSOCIATED WITH THE YEAR 2000
The General Partner believes that the Managing Agent has an effective program in
place to resolve the Year 2000 issue in a timely manner and has appropriate
contingency plans in place for critical applications that could affect the
Partnership's operations. To date, the General Partner is not aware of any
external agent with a Year 2000 issue that would materially impact the
Partnership's results of operations, liquidity or capital resources. However,
the General Partner has no means of ensuring that external agents will be Year
2000 compliant. The General Partner does not believe that the inability of
external agents to complete their Year 2000 resolution process in a timely
manner will have a material impact on the financial position or results of
operations of the Partnership. However, the effect of non-compliance by
external agents is not readily determinable.
Other
Certain items discussed in this quarterly report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "Reform Act") and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Partnership to be materially different from any future
results, performance or achievements expressed or implied by such forward-
looking statements. Such forward-looking statements speak only as of the date
of this quarterly report. The Partnership expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in the Partnership's
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, the Managing General Partner was named in a legal action entitled
ROSALIE NUANCES, ET AL. V. INSIGNIA FINANCIAL GROUP, INC., ET AL. in the
Superior Court of the State of California for the County of San Mateo. The
plaintiffs named as defendants, among others, the General Partner and several of
their affiliated partnerships and corporate entities. The complaint purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging the acquisition by Insignia Financial
Group, Inc. ("Insignia") and entities which were, at the time, affiliates of
Insignia ("Insignia Affiliates") of interests in certain general partner
entities, past tender offers by Insignia Affiliates to acquire limited
partnership units, the management of partnerships by Insignia Affiliates as well
as a recently announced agreement between Insignia and Apartment Investment and
Management Company. The complaint seeks monetary damages and equitable relief,
including judicial dissolution of the Partnership. On June 25, 1998, the
General Partner filed a motion seeking dismissal of the action. In lieu of
responding to the motion, plaintiffs have recently filed an amended complaint.
The General Partner has filed demurrers to the amended complaint which are
scheduled to be heard on January 8, 1999. The General Partner believes the
action to be without merit, and intends to vigorously defend it.
On July 30, 1998 certain entities claiming to own limited partnership interests
in certain limited partnerships whose general partners were, at the time,
affiliates of Insignia filed a complaint in the Superior Court of the State of
California, County of Los Angeles. The action, entitled EVEREST PROPERTIES LLC
V. INSIGNIA FINANCIAL GROUP, INC., involves 44 real estate limited partnerships
(including the Partnership) in which the plaintiffs allegedly own interests and
which Insignia Affiliates allegedly manage or control (the "Subject
Partnerships"). The complaint names as defendants Insignia, several Insignia
Affiliates alleged to be managing partners of the defendant limited
partnerships, the Partnership and the General Partner. Plaintiffs allege that
they have requested from, but have been denied by each of the Subject
Partnerships, lists of their respective limited partners for the purpose of
making tender offers to purchase up to 4.9% of the limited partner units of each
of the Subject Partnerships. The complaint also alleges that certain of the
defendants made tender offers to purchase limited partner units in many of the
Subject Partnerships, with the alleged result that plaintiffs have been deprived
of the benefits they would have realized from ownership of the additional units.
The plaintiffs assert eleven causes of action, including breach of contract,
unfair business practices, and violations of the partnership statutes of the
states in which the Subject Partnerships are organized. Plaintiffs seek
compensatory, punitive and treble damages. The General Partner filed an answer
to the complaint on September 15, 1998. The General Partner believes the claims
to be without merit and intends to defend the action vigorously.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature. The General Partner believes that all such other
pending or outstanding litigation will be resolved without a material adverse
effect upon the business, financial conditions, or operations of the
Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Partnership
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
By: CONCAP EQUITIES, INC.
Its General Partner
By: /s/Patrick Foye
Patrick Foye
Executive Vice President
By: /s/Timothy R. Garrick
Timothy R. Garrick
Vice President - Accounting
(Duly Authorized Officer)
Date: November 12, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Johnstown/Consolidated Income Partners 1998 Third Quarter 10-QSB and is
qualified in its entirety by reference to such 10-QSB filing.
</LEGEND>
<CIK> 0000787621
<NAME> JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,817
<SECURITIES> 0
<RECEIVABLES> 249
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 13,463
<DEPRECIATION> 6,498
<TOTAL-ASSETS> 9,655
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 2,325
0
0
<COMMON> 0
<OTHER-SE> 7,052
<TOTAL-LIABILITY-AND-EQUITY> 9,655
<SALES> 0
<TOTAL-REVENUES> 2,079
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,523
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 138
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 556
<EPS-PRIMARY> 4.27<F2>
<EPS-DILUTED> 0
<FN>
<F1>Registrant has an unclassified balance sheet.
<F2>Multiplier is 1.
</FN>
</TABLE>
