March 28, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Johnstown/Consolidated Income Partners
Form 10-KSB
File No. 0-16010
To Whom it May Concern:
The accompanying Form 10-KSB for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
FORM 10-KSB--Annual or Transitional Report Under
Section 13 or 15(d)
FORM 10-KSB
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from 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.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Depositary Receipt
(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. [ ]
State issuer's revenues for its most recent fiscal year: $1,157,000
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, 1999. No market exists for the limited partnership
interests of the Registrant and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART I
Item 1. Description of Business
Johnstown/Consolidated Income Partners (the "Partnership" or "Registrant") was
organized on January 9, 1986, as a limited partnership under the California
Revised Limited Partnership Act. The Partnership is engaged in the business of
operating and holding real estate properties for investment. On June 20, 1986,
the Partnership commenced a public offering for the sale of $150,000,000 of
units (the "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 sale of Units closed on June 19, 1987,
with 129,266 Units sold at $250 each, for gross proceeds of approximately
$32,317,000 to the Partnership. By the end of fiscal year 1988, approximately
79% of the proceeds raised had been invested in four (4) properties, five (5)
mortgage loans, and approximately $1,600,000 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. 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. Since its initial offering, the Registrant has not received,
nor are Unitholders required to make, additional capital contributions. As of
December 31, 1999, the Partnership held and operated one residential property.
(See "Item 2. Description of Property").
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The General Partner and the
Corporate Limited Partner shall together be called the "Partners." The General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"). The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2017 unless terminated prior to such date.
The business in which the Partnership is engaged is highly competitive. There
are other residential properties within the market area of the Partnership's
property. The number and quality of competitive properties, including those
which may be managed by an affiliate of the General Partner in such market area,
could have a material effect on the rental market for the apartments at the
Partnership's property and the rents that may be charged for such apartments.
While the General Partner and its affiliates own and/or control a significant
number of apartment units in the United States, such units represent an
insignificant percentage of total apartment units in the United States, and
competition for apartments is local.
The Registrant has no employees. Partnership management and administrative
services as well as property management services are provided by an affiliate of
the General Partner. The General Partner has also selected affiliates to provide
real estate advisory and asset management services to the Partnership. As
advisor, such affiliates provided all partnership accounting and administrative
services, investment management, and supervisory services over property
management.
<PAGE>
Both the income and expenses of operating the property owned by the Partnership
are subject to factors outside of the Partnership's control, such as changes in
the supply and demand for similar properties resulting from various market
conditions, increases/decreases in unemployment or population shifts, changes in
the availability of permanent mortgage financing, changes in zoning laws, or
changes in patterns or needs of users. In addition, there are risks inherent in
owning and operating residential properties because such properties are
susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the property
owned by the Partnership.
The Partnership monitors its property for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed, which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis or Plan of Operation" included in "Item 6" of this Form
10-KSB.
Transfers of Control
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 interest 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.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of the General
Partner 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, the General Partner affiliate also acquired all of the outstanding
stock of Partnership Services, Inc., an asset management entity and Insignia
Financial Group, Inc. ("Insignia") acquired all of the outstanding stock of
Coventry Properties, Inc., a property management entity. In addition,
confidentiality, non-competition, and standstill arrangements were entered into
between certain of the parties. Those arrangements, among other things, prohibit
GII Realty's former sole shareholder from purchasing Partnership Units for a
period of three years. On October 24, 1995, the General Partner affiliate
exercised the remaining portion of its option to purchase all of the remaining
outstanding capital stock of GII Realty, Inc. As of December 31, 1999, Insignia
Properties Trust ("IPT") owned 100% of the outstanding stock of CEI.
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the
General Partner. The General Partner does not believe that this transaction has
had or will have a material effect on the affairs and operations of the
Partnership.
Item 2. Description of Property
The following table sets forth the property held by the Partnership.
Date of
Property Purchase Type of Ownership Use
Cedar Brooke Apartments 02/27/87 Fee ownership subject Apartment
Independence, Missouri to first mortgage 158 units
Schedule of Property
Set forth below for the Partnership's property is the gross carrying value,
accumulated depreciation, depreciable life, method of depreciation, and Federal
tax basis:
<TABLE>
<CAPTION>
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke Apartments $4,699 $2,962 5-19 yrs S/L $2,542
</TABLE>
See "Note A" to the financial statements in "Item 7. Financial Statements" for a
description of the Partnership's depreciation policy and "Note M - Change in
Accounting Principle.
<PAGE>
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loan
encumbering the Partnership's investment property:
<TABLE>
<CAPTION>
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke Apartments
1st mortgage $2,325 7.33% (1) 11/03 $2,325
</TABLE>
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Item 7. Financial Statements - Note F" for information with respect
to the Partnership's ability to prepay this loan and other specific
details about the loan.
Schedule of Rental Rates and Occupancy
Average annual rental rate and occupancy for 1999 and 1998 for the property:
Average Annual Average
Rental Rate Occupancy
(per unit)
Property 1999 1998 1999 1998
Cedar Brooke Apartments $6,888 $6,486 97% 94%
The increase in average occupancy at Cedar Brooke Apartments is due to increased
marketing efforts and the clubhouse becoming fully functional late in 1998 after
repairs for the fire in the fourth quarter of 1997 (See "Item 7. Financial
Statements - Note I").
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The Partnership's property is subject to competition from
other similar properties in the area. The General Partner believes that the
property is adequately insured and in good physical condition, subject to normal
depreciation and deterioration as is typical for assets of this type and age.
The property's lease terms are for one year or less and no tenant leases 10% or
more of the available rental space.
<PAGE>
Schedule of Real Estate Taxes and Rates
Real estate taxes and rates in 1999 for the property are as follows:
1999 1999
Billing Rate
(in thousands)
Cedar Brooke Apartments $ 66 6.6%
Capital Improvements
Cedar Brooke Apartments
During 1999, the Partnership completed approximately $262,000 of capital
improvements at Cedar Brooke Apartments consisting primarily of roof
replacement, carpet and vinyl replacement, cabinet replacement, heating
upgrades, parking lot upgrades, major landscaping, and appliance replacement.
These improvements were funded from replacement reserves and operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $47,400. Additional improvements may be
considered and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, 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 Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action 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 one 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 and the Insignia Merger (see
"Item 7. Financial Statements, Note B - Transfer of Control"). The plaintiffs
seek 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, the plaintiffs
have filed an amended complaint. The General Partner filed demurrers to the
amended complaint which were heard February 1999. Pending the ruling on such
demurrers, settlement negotiations commenced. On November 2, 1999, the parties
executed and filed a Stipulation of Settlement settling claims, subject to final
court approval, on behalf of the Partnership and all limited partners who own
units as of November 3, 1999. Preliminary approval of the settlement was
obtained on November 3, 1999 from the Superior Court of the State of California,
County of San Mateo, at which time the Court set a final approval hearing for
December 10, 1999. Prior to the December 10, 1999 hearing the Court received
various objections to the settlement, including a challenge to the Court's
preliminary approval based upon the alleged lack of authority of class
plaintiffs' counsel to enter the settlement. On December 14, 1999, the General
Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
During the quarter ended December 31, 1999, no matters were submitted to a vote
of the Unitholders, through the solicitation of proxies or otherwise.
<PAGE>
PART II
Item 5. Market for the Registrant's Units of Depository Receipt and Related
Security Holder Matters
No established public trading market for the Units exists nor is one expected to
develop. As of December 31, 1999, the approximate number of holders of Units of
Depositary Receipt was 1,524. Affiliates of the General Partner held 59,996
Units or 46.577% as of December 31, 1999.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1998 and 1999, as well as for the subsequent period
from January 1, 2000 to February 29, 2000 (See "Item 6. Management's Discussion
and Analysis or Plan of Operation" for further details):
Distributions
Per Unit of
Aggregate Depositary Receipt
(in thousands)
1/1/98 - 12/31/98 $1,000 (1) $ 7.69
1/1/99 - 12/31/99 $ 575 (1) $ 4.42
1/1/00 - 2/29/00 $8,000 (2) $61.49
(1) Distribution was made from cash from operations.
(2) Consists of approximately $262,000 ($2.01 per unit of depositary receipt) of
cash from operations and approximately $7,738,000 ($59.48 per unit of depositary
receipt) of sale proceeds from the sale of Florida #11 Mini Warehouse and
Phoenix Business Campus during the fourth quarter of 1999.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of working capital reserves and the timing of the
debt maturity, refinancing, and/or property sale. The Partnership's distribution
policy is reviewed on an annual basis. There can be no assurance, however, that
the Partnership will generate sufficient funds from operations after required
capital expenditures and required working capital reserves to permit any
additional distributions to its partners in the year 2000 or subsequent periods
(See "Item 6" for further details).
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 59,996 units of
depositary receipt in the Partnership representing 46.577% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional units of depositary receipt in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Item 6. Management's Discussion and Analysis or Plan of Operation
The matters discussed in this Form 10-KSB contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-KSB and the other filings with the Securities and
Exchange Commission made by the Partnership from time to time. The discussion of
the Partnership's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Partnership's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
The partnership had net income of approximately $3,626,000 for the year ended
December 31, 1999, compared to approximately $639,000 for the year ended
December 31, 1998. The increase in net income is primarily attributable to the
gain on sale of discontinued operations from the sale of Florida #11
Mini-Warehouse and Phoenix Business Campus during 1999 as discussed below.
Excluding the operations of the discontinued commercial segment discussed below,
the Partnership had a loss from continuing operations of approximately $27,000
for the year ended December 31, 1999, compared to income of approximately
$160,000 for the year ended December 31, 1998. The loss is primarily
attributable to a decrease in total revenues and an increase in total expenses.
Total revenues decreased due to a decrease in other income and the fact that no
casualty gain was recognized in 1999 as was in 1998, all of which more than
offset an increase in rental income. Rental income increased due to increased
average rental rates and occupancy at Cedar Brooke. Other income decreased due
to lower cash balances in interest bearing accounts which was partially offset
by increased tenant charges at Cedar Brooke. The casualty gain in 1998 was due
to insurance proceeds received less the write-off of the undepreciated value of
the assets destroyed in a fire at Cedar Brooke which caused extensive damage to
the clubhouse.
The increase in total expenses is due to an increase in depreciation expense,
general and administrative expense, and property tax expense partially offset by
a decrease in operating expense. Depreciation expense increased due to capital
improvements completed during the last twelve months which are now being
depreciated. General and administrative expenses increased due primarily to
increased legal expenses due to the settlement of a lawsuit as disclosed in the
Partnership's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1998, partially offset by decreased general partner reimbursements. Included
in general and administrative expenses at December 31, 1999 and 1998, are
reimbursements to the General Partner allowed under the Partnership Agreement
associated with its management of the Partnership. In addition, costs associated
with the quarterly and annual communications with investors and regulatory
agencies and the annual audit required by the Partnership Agreement are
included. Property tax expense increased due to an increase in the assessed
value of Cedar Brooke Apartments. Operating expense decreased due to decreased
maintenance expenses at Cedar Brooke, and decreased property insurance expense
due to a change in insurance carriers late in 1998. These decreases were
partially offset by increased employee payroll costs at Cedar Brooke.
On November 4, 1999, the Partnership sold the Florida #11 Mini Warehouse to an
unaffiliated third party for net sales proceeds of approximately $4,470,000
after payment of closing costs. For financial statement purposes, the sale
resulted in a gain of approximately $2,525,000.
On December 30, 1999, Phoenix Business Campus, located in College Park, Georgia,
was sold to an unaffiliated party for $4,200,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$4,084,000. For financial statement purposes, the sale resulted in a gain of
approximately $619,000.
Florida #11 Mini Warehouse and Phoenix Business Campus were the only commercial
properties owned by the Partnership and represented one segment of the
Partnership's operations. Due to the sale of these properties, the results of
the commercial segment have been shown as income from discontinued operations
and gain on sale of discontinued operations. The revenues of these properties
were approximately $1,334,000 and $1,376,000 for 1999 and 1998, respectively.
Income from discontinued operations were approximately $509,000 and $479,000 for
1999 and 1998, respectively.
The increase in income from discontinued operations is due to increased rental
rates and occupancy at Phoenix Business Campus, as well as a reduction in
property tax expense due to refunds received during the first quarter of 1999 on
behalf of Phoenix Business Campus for 1997 and 1998 taxes. These increases in
net income were partially offset by the sale of Florida #11 Mini-Warehouse in
early November which resulted in only ten months of operations for 1999 compared
to a full twelve months in 1998.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change on net income in 1999
is not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
General Partner and affiliates.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of its investment property 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
At December 31, 1999, the Partnership held cash and cash equivalents of
approximately $10,579,000, compared to approximately $1,754,000 at December 31,
1998. The net increase in cash and cash equivalents for the year ended December
31, 1999 was approximately $8,825,000. The net increase in cash and cash
equivalents is due to approximately $1,197,000 of cash provided by operating
activities and approximately $8,203,000 of cash provided by investing
activities, which was partially offset by approximately $575,000 of cash used in
financing activities. Cash provided by investing activities consisted of
proceeds from the sale of Florida's #11 Mini-Warehouse and Phoenix Business
Campus, partially offset by property improvements and replacements and net
deposits to escrow accounts maintained by the mortgage lender. Cash used in
financing activities consisted of distributions paid to the partners. The
Partnership invests its working capital reserves in money market accounts.
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 and tenant security deposits of both continuing and
discontinued operations totaling approximately $10,654,000 at December 31, 1999,
exceed the Partnership's reserve requirement of approximately $1,339,000.
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 property 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. The minimum amount
to be budgeted is expected to be $300 per unit or $47,400. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property. The capital expenditures will be incurred only if cash is
available from operations or from partnership reserves. To the extent that such
budgeted capital improvements are completed, the Partnership's distributable
cash flow, if any, may be adversely affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness on Cedar Brooke Apartments of $2,325,000, which carries a
stated interest rate of 7.33% (interest only), matures in 2003. The General
Partner will attempt to refinance such indebtedness and/or sell the 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 the year ended December 31, 1999, a cash distribution attributable to
cash flow from operations of approximately $575,000 (approximately $569,000 to
the limited partners, $4.42 per unit of depositary receipt) was paid to the
Partners. During the year ended December 31, 1998, a cash distribution from
operations of approximately $1,000,000 (approximately $990,000 to the limited
partners, $7.69 per unit of depositary receipt) was paid to the Partners.
Subsequent to December 31, 1999, a distribution of approximately $8,000,000 was
declared and paid. Of this amount, approximately $262,000 (approximately
$259,000 to the limited partners, $2.01 per unit of depositary receipt) was paid
from operations and approximately $7,738,000 (approximately $7,661,000 to the
limited partners, $59.48 per unit of depositary receipt) was paid from the sales
proceeds of the Florida #11 Mini Warehouse and Phoenix Business Campus which
were sold during the fourth quarter of 1999. Future cash distributions will
depend on the levels of net cash generated from operations, the availability of
working capital reserves, and the timing of the debt maturity, refinancing,
and/or property sale. The Partnership's distribution policy is reviewed on an
annual basis. There can be no assurance, however, that the Partnership will
generate sufficient funds from operations after required capital expenditures
and required working capital reserves to permit further distributions to its
partners in the year 2000 or subsequent periods.
Tender Offers
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 59,996 units of
depositary receipt in the Partnership representing 46.577% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional units of depositary receipt in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted 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.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. To date, no material failure or erroneous results have occurred in
the Managing Agent's computer applications related to the failure to reference
the Year 2000.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
<PAGE>
Item 7. Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
LIST OF FINANCIAL STATEMENTS
Report of Ernst and Young, LLP, Independent Auditors
Balance Sheet - December 31, 1999
Statements of Operations - Years ended December 31, 1999 and 1998
Statements of Changes in Partners' (Deficit) Capital - Years ended
December 31, 1999 and 1998
Statements of Cash Flows - Years ended December 31, 1999 and 1998
Notes to Financial Statements
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
To the Partners
Johnstown/Consolidated Income Partners
We have audited the accompanying balance sheet of Johnstown/Consolidated Income
Partners as of December 31, 1999, and the related statements of operations,
changes in partners' (deficit) capital and cash flows for each of the two years
in the period ended December 31, 1999. These financial statements are the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Johnstown/Consolidated Income
Partners at December 31, 1999, and the results of its operations and its cash
flows for each of the two years in the period ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 24, 2000
<PAGE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
BALANCE SHEET
(in thousands, except unit data)
December 31, 1999
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Cash and cash equivalents $ 10,579
Receivables and deposits (net of allowance of $159,000) 172
Restricted escrows 223
Other assets 92
Investment property (Notes F and G):
Land $ 213
Buildings and related personal property 4,486
4,699
Less accumulated depreciation (2,962) 1,737
$ 12,803
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 97
Tenant security deposit liabilities 35
Accrued property taxes 67
Other liabilities 93
Mortgage note payable (Note F) 2,325
Partners' (Deficit) Capital
General partner $ (145)
Corporate limited partner on behalf of the
Unitholders - (128,810 units issued and
outstanding) 10,331 10,186
$ 12,803
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended
December 31,
<TABLE>
<CAPTION>
1999 1998
(restated)
<S> <C> <C>
Revenues:
Rental income $ 1,045 $ 960
Other income 112 135
Casualty gain (Note I) -- 205
Total revenues 1,157 1,300
Expenses:
Operating 438 471
General and administrative 281 265
Depreciation 213 170
Interest 185 185
Property taxes 67 49
Total expenses 1,184 1,140
(Loss) income from continuing operations (27) 160
Income from discontinued operations 509 479
Gain on sale of discontinued operations 3,144 --
Net income (Note J) $ 3,626 $ 639
Net income allocated to general partner (1%) $ 36 $ 6
Net income allocated to limited partners (99%) 3,590 633
$ 3,626 $ 639
Per Unit of Depositary Receipt:
(Loss) income from continuing operations (.20) 1.23
Income from discontinued operations 3.91 3.68
Gain on sale of discontinued operations 24.16 --
Net income per Unit of Depositary Receipt $ 27.87 $ 4.91
Distributions per Unit of Depositary Receipt $ 4.42 $ 7.69
See Accompanying Notes to Financial Statements
</TABLE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
<TABLE>
<CAPTION>
Unitholders
Units of Units of
Depositary General Depositary
Receipt Partner Receipt Total
(Note A)
<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
Distribution paid -- (10) (990) (1,000)
Net income for the year ended
December 31, 1998 -- 6 633 639
Partners' (deficit) capital at
December 31, 1998 128,810 (175) 7,310 7,135
Distribution paid -- (6) (569) (575)
Net income for the year ended
December 31, 1999 -- 36 3,590 3,626
Partners' (deficit) capital at
December 31, 1999 128,810 $ (145) $10,331 $10,186
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
Cash flows from operating activities:
<S> <C> <C>
Net income $ 3,626 $ 639
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 582 537
Amortization of lease commissions and loan costs 14 62
Gain on sale of discontinued operations (3,144) --
Casualty gain -- (205)
Change in accounts:
Receivables and deposits 6 (91)
Other assets 52 (27)
Accounts payable 84 (381)
Tenant security deposit liabilities (38) 18
Accrued property taxes 18 49
Other liabilities (3) 40
Net cash provided by operating activities 1,197 641
Cash flows from investing activities:
Proceeds from sale of discontinued operations 8,554 --
Property improvements and replacements (342) (837)
Net (deposits to) receipts from restricted escrows (9) 47
Lease commissions paid -- (160)
Net insurance proceeds from casualty -- 293
Net cash provided by (used in) investing
activities 8,203 (657)
Cash flows used in financing activities:
Distributions to partners (575) (1,000)
Net increase (decrease) in cash and cash equivalents 8,825 (1,016)
Cash and cash equivalents at beginning of year 1,754 2,770
Cash and cash equivalents at end of year $10,579 $ 1,754
Supplemental disclosure of cash flow information:
Cash paid for interest $ 170 $ 170
See Accompanying Notes to Financial Statements
</TABLE>
<PAGE>
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Summary of Significant Accounting Policies
Organization
Johnstown/Consolidated Income Partners (the "Partnership" or "Registrant"), a
California limited partnership, was formed on January 9, 1986, to operate and
hold commercial and residential properties and to invest in mortgage loans and
mortgage-backed securities. Consolidated Capital Equities Corporation ("CCEC"),
the former general partner, and Johnstown/Consolidated Depositary Corporation
(the "Corporate Limited Partner"), which serves as depositary of certain Units
of Depositary Receipt ("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' (deficit) capital is herein represented as an interest of
the Unitholders. The general partner of the Partnership is ConCap Equities, Inc.
("CEI" or the "General Partner"), a Delaware corporation. Additionally, the
General Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO") (See "Note B - Transfer of Control"). The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2017 unless
terminated prior to that date. As of December 31, 1999, the Partnership owned
one residential property, which is located in Missouri.
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, CEI acquired CCEC's
general partner interest 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.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of the General
Partner 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, the General Partner affiliate also acquired all of the outstanding
stock of Partnership Services, Inc., an asset management entity and Insignia
Financial Group, Inc., ("Insignia") acquired all of the outstanding stock of
Coventry Properties, Inc., a property management entity. In addition,
confidentiality, non-competition, and standstill arrangements were entered into
between certain of the parties. Those arrangements, among other things, prohibit
GII Realty's former sole shareholder from purchasing Partnership Units for a
period of three years. On October 24, 1995, the General Partner affiliate
exercised the remaining portion of its option to purchase all of the remaining
outstanding capital stock of GII Realty, Inc. As of December 31, 1999, Insignia
Properties Trust ("IPT") owned 100% of the outstanding stock of CEI.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, in banks and money market
accounts. At certain times the amount of cash deposited at a bank may exceed the
limit on insured deposits.
Tenant Security Deposits
The Partnership requires security deposits from lessees for the duration of the
lease and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.
Depreciation
Depreciation is provided by the straight-line method over the estimated lives of
the investment property and related personal property. For Federal income tax
purposes, the accelerated cost recovery method is used (1) for real property
over 18 years for additions after March 15, 1984, and before May 9, 1985, and 19
years for additions after May 8, 1985 and before January 1, 1987, and (2) for
personal property over 5 years for additions prior to January 1, 1987. As a
result of the Tax Reform Act of 1986, for additions after December 31, 1986, the
alternative depreciation system is used for depreciation of (1) real property
over 40 years and (2) personal property additions over 5-20 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note M).
Investment Properties
The Partnership's investment property consists of one apartment complex, which
is stated at cost. Acquisition fees are capitalized as a cost of real estate. In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of", the Partnership records impairment losses on long-lived assets
used in operations when events and circumstances indicate that the assets might
be impaired and the undiscounted cash flows estimated to be generated by those
assets are less than the carrying amounts of those assets. For the years ended
December 31, 1999 and 1998, no adjustments for impairment of value were
recorded.
Fair Value of Financial Instruments
SFAS No. 107, "Disclosures about Fair Value of Financial Instruments", as
amended by SFAS No. 119, "Disclosures about Derivative Financial Instruments and
Fair Value of Financial Instruments", requires disclosure of fair value
information about financial instruments, whether or not recognized in the
balance sheet, for which it is practicable to estimate fair value. Fair value is
defined in the SFAS as the amount at which the instruments could be exchanged in
a current transaction between willing parties, other than in a forced or
liquidation sale. The Partnership believes that the carrying amount of its
financial instruments (except for long term debt) approximates their fair value
due to the short term maturity of these instruments. The fair value of the
Partnership's long term debt, after discounting the scheduled loan payments to
maturity, approximates its carrying balance.
Replacement Reserves
The Partnership maintains a replacement reserve with the holder of the mortgage
note payable on Cedar Brooke Apartments. These funds are available for the
maintenance of the property. The balance at December 31, 1999 was approximately
$223,000.
Leases
The Partnership generally leases apartment units for one year or less. The
Partnership recognizes income as earned on its residential leases. In addition,
the General Partner's policy is to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.
Loan Costs
Loan costs are approximately $101,000 net of accumulated amortization of
approximately $45,000, at December 31, 1999 and are amortized using the
straight-line method over the life of the related mortgage note. Unamortized
loan costs are included in other assets. Amortization of loan costs is included
in interest expense.
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
The Partnership expenses the cost of advertising as incurred. Advertising
expense for Cedar Brooke Apartments, which is included in operating expenses,
was approximately $33,000 and $37,000 for the years ended December 31, 1999 and
1998, respectively.
Units of Depositary Receipt
The Corporate Limited Partner, an affiliate of the General Partner, serves as a
depositary of the Units. The Units represent economic rights attributable to the
limited partnership interests in the Partnership and entitle the 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.
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.
Segment Reporting
SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information" established standards for the way that public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports. It also established standards for related
disclosures about products and services, geographic areas, and major customers
(see "Note K" for required disclosures).
Reclassifications
Certain reclassifications have been made to the 1998 balances to conform to the
1999 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and IPT merged into AIMCO, a publicly traded real
estate investment trust, with AIMCO being the surviving corporation (the
"Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the
General Partner. The General Partner does not believe that this transaction has
had or will have a material effect on the affairs and operations of the
Partnership.
Note C - 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 Partnership activities,
as provided for in the Partnership Agreement. The Partnership Agreement provides
for (i) certain payments to affiliates for services and (ii) reimbursement of
certain expenses incurred by affiliates on behalf of the Partnership. The
following expenses were paid or accrued to the General Partner and affiliates
during the years ended December 31, 1999 and 1998:
1999 1998
(in thousands)
Asset management fees (included in
general and administrative expense) $ 94 $ 91
Property management fees (included
in operating expenses) 97 110
Reimbursement for services of affiliates
(included in operating and general and
administrative expenses, and investment
properties) 44 111
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 $94,000 and
$91,000 were paid to the General Partner and its affiliates for the years ended
December 31, 1999 and 1998, respectively.
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Partnership's
residential property for providing property management services. The Partnership
paid to such affiliates approximately $55,000 and $50,000 for the years ended
December 31, 1999 and 1998, respectively. For the years ended December 31, 1999
and 1998, affiliates of the General Partner were entitled to receive varying
percentages of gross receipts from the Partnership's Florida #11 Mini-Warehouse
commercial property for property management services. The Partnership paid to
such affiliates approximately $42,000 and $45,000 for the years ended December
31, 1999 and 1998, respectively. For the nine months ended September 30, 1998,
affiliates of the General Partner were entitled to receive varying percentages
of gross receipts from the Partnership's Phoenix Business Campus commercial
property for providing property management services. For the nine months ended
September 30, 1998, the Partnership paid approximately $15,000 to such
affiliates for providing property management services for Phoenix Business
Campus. Effective October 1, 1998 (the effective date of the Insignia Merger)
these services for the Phoenix Business Campus commercial property were provided
by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $44,000 and $111,000 for the
years ended December 31, 1999 and 1998, respectively.
The Partnership paid leasing commissions of approximately $80,000 to an
affiliate of the General Partner during the year ended December 31, 1998. No
lease commissions were paid to affiliates during the year ended December 31,
1999. Leasing commissions were capitalized and amortized over the lives of the
respective leases.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 59,996 units of
depositary receipt in the Partnership representing 46.577% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional units of depositary receipt in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Note D - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital
as defined in the Partnership Agreement. 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 of both continuing and
discontinued operations totaling approximately $10,654,000 at December 31, 1999,
exceed the Partnership's reserve requirement of approximately $1,339,000.
Note E - Distributions
During the year ended December 31, 1999, the General Partner declared and paid a
distribution attributable to cash flow from operations of approximately $575,000
(approximately $569,000 to the limited partners, $4.42 per Unit). In March of
1998, the Partnership paid a distribution attributable to cash flow from
operations of approximately $1,000,000 (approximately $990,000 to the limited
partners, $7.69 per Unit). Subsequent to December 31, 1999, a distribution of
approximately $8,000,000 was declared and paid. Of this amount, approximately
$262,000 (approximately $259,000 to the limited partners, $2.01 per Unit) was
paid from operations and approximately $7,738,000 (approximately $7,661,000 to
the limited partners, $59.48 per Unit) was paid from the sales proceeds of the
Florida #11 Mini Warehouse and Phoenix Business Campus which were sold during
the fourth quarter of 1999. See "Note H" for additional information about the
property sales.
Note F - Mortgage Note Payable
The principle terms of the mortgage note payable are as follows:
<TABLE>
<CAPTION>
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Interest Interest Maturity Due At
Property 1999 Only Rate Date Maturity
(in thousands) (in thousands)
<S> <C> <C> <C> <C> <C>
Cedar Brooke Apartments
1st mortgage $2,325 $ 14 7.33% 11/03 $2,325
</TABLE>
The mortgage note is non-recourse and is secured by pledge of the apartment
property and by pledge of revenues from the apartment property. The note
requires prepayment penalties if repaid prior to maturity and prohibits resale
of the property subject to existing indebtedness.
Note G - Real Estate and Accumulated Depreciation
<TABLE>
<CAPTION>
Initial Cost
To Partnership
(in thousands)
Buildings Net Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Cedar Brooke Apartments $2,325 $ 275 $4,040 $ 384
</TABLE>
<TABLE>
<CAPTION>
Gross Amount At Which Carried
At December 31, 1999
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Cedar Brooke Apartments $ 213 $4,486 $4,699 $2,962 02/27/87 5-19
</TABLE>
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998
(in thousands)
Real Estate
Balance at beginning of year $13,720 $13,092
Property improvements 342 837
Property dispositions -- (209)
Sale of discontinued operations (9,363) --
Balance at end of year $ 4,699 $13,720
Accumulated Depreciation
Balance at beginning of year $ 6,609 $ 6,193
Additions charged to expense 582 537
Property dispositions -- (121)
Sale of discontinued operations (4,229) --
Balance at end of year $ 2,962 $ 6,609
The aggregate cost of the Partnership's investment properties for Federal income
tax purposes at December 31, 1999 and 1998, respectively, is approximately
$5,033,000 and $14,463,000. The accumulated depreciation taken for Federal
income tax purposes at December 31, 1999 and 1998, respectively, is
approximately $2,491,000 and $6,928,000.
Note H - Sale of Discontinued Operations
On November 4, 1999, the Partnership sold the Florida #11 Mini Warehouse to an
unaffiliated third party for net sales proceeds of approximately $4,470,000
after payment of closing costs. For financial statement purposes, the sale
resulted in a gain of approximately $2,525,000.
The sales transaction is summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 4,470
Net real estate (1) (1,945)
Gain on sale of real estate $ 2,525
(1) Net of accumulated depreciation of approximately $813,000.
On December 30, 1999, Phoenix Business Campus, located in College Park, Georgia,
was sold to an unaffiliated party for $4,200,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$4,084,000. For financial statement purposes, the sale resulted in a gain of
approximately $619,000.
The Phoenix Business Campus sale transaction is summarized as follows (amounts
in thousands):
Net sales price, net of selling costs $ 4,084
Net real estate (1) (3,187)
Other assets (278)
Gain on sale of real estate $ 619
(1) Net of accumulated depreciation of approximately $3,416,000.
The following pro-forma information reflects the operations of the Partnership
for the years ended December 31, 1999 and 1998 as if Phoenix Business Campus and
Florida #11 Mini-Warehouse had been sold January 1, 1998:
1999 1998
(in thousands, except per
unit data)
Revenues $ 1,157 $ 1,300
Net (loss) income (27) 160
Net (loss) income per Unit
Depositary Receipt (.20) 1.23
Florida #11 Mini Warehouse and Phoenix Business Campus were the only commercial
properties owned by the Partnership and represented one segment of the
Partnership's operations. Due to the sale of these properties, the results of
the commercial segment have been shown as income from discontinued operations
and gain on sale of discontinued operations. The revenues of these properties
were approximately $1,334,000 and $1,376,000 for 1999 and 1998, respectively.
Income from discontinued operations was approximately $509,000 and $479,000 for
1999 and 1998, respectively.
<PAGE>
Note I - Casualty Gain
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
$293,000 were received and reconstruction of the clubhouse was completed in
1998. The Partnership recorded a casualty gain of approximately $205,000 during
the year ended December 31, 1998 as a result of the proceeds received less the
write-off of the undepreciated balance of the assets destroyed in the fire.
Note J - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the financial statements
of the Partnership. Taxable income or loss of the Partnership is reported in the
income tax returns of its partners.
The following is a reconciliation of reported net income and Federal taxable
income (in thousands, except unit data):
1999 1998
Net income as reported $ 3,626 $ 639
Add (deduct):
Depreciation differences (54) (86)
Unearned income (35) (7)
Allowance for bad debt -- (22)
Other 32 51
Casualty gain -- (220)
Gain on sale of property 283 --
Accruals and prepaids 45 23
Federal taxable income $ 3,897 $ 378
Federal taxable income per unit of
Depositary Receipt $ 29.95 $ 2.91
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net assets as reported $10,186
Land and buildings 334
Accumulated depreciation 471
Syndication and distribution costs 3,825
Other (14)
Net assets - Federal tax basis $14,802
Note K - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership had two reportable segments:
residential properties and commercial properties. The Partnership's residential
property segment consists of one apartment complex located in Independence,
Missouri. The Partnership rents apartment units to tenants for terms that are
typically twelve months or less. The commercial property segment consisted of an
office building located in Atlanta, Georgia, and a self-storage mini-warehouse
located in Davie, Florida. The two commercial properties held by the Partnership
were sold to unrelated parties during 1999. Therefore, the commercial segment is
reflected as discontinued operations (see "Note H - Sale of Discontinued
Operations" for further discussion regarding the commercial sales).
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments consisted of investment properties that
offered different products and services. The reportable segments were each
managed separately because they provided distinct services with different types
of products and customers.
Segment information for the years 1999 and 1998 is shown in the tables below.
The "Other" column includes Partnership administration related items and income
and expense not allocated to the reportable segments (in thousands).
<TABLE>
<CAPTION>
1999 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 1,045 $ -- $ -- $ 1,045
Other income 51 -- 61 112
Interest expense 185 -- -- 185
Depreciation 213 -- -- 213
General and administrative expense -- -- 281 281
Gain on sale of discontinued
operations -- 3,144 -- 3,144
Income from discontinued operations -- 509 -- 509
Segment profit (loss) 193 3,653 (220) 3,626
Total assets 2,332 360 10,111 12,803
Capital expenditures for
investment properties 262 80 -- 342
</TABLE>
<TABLE>
<CAPTION>
1998 Residential Commercial Other Totals
(discontinued)
<S> <C> <C> <C> <C>
Rental income $ 960 $ -- $ -- $ 960
Other income 54 -- 81 135
Interest expense 185 -- -- 185
Depreciation 170 -- -- 170
General and administrative expense -- -- 265 265
Casualty gain 205 -- -- 205
Income from discontinued operations -- 479 -- 479
Segment profit (loss) 344 479 (184) 639
Total assets 2,159 6,510 1,024 9,693
Capital expenditures for
investment properties 488 349 -- 837
</TABLE>
Note L - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, 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 Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action 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 one 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 and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek 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, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note M - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change on net income in 1999
is not material. The cumulative effect, had this change been applied to prior
periods, is not material. The accounting principle change will not have an
effect on cash flow, funds available for distribution or fees payable to the
General Partner and affiliates.
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Johnstown/Consolidated Income Partners (the "Partnership" or the "Registrant")
has no officers or directors. Concap Equities, Inc. ("CEI" or the "General
Partner") manages and controls the Registrant and has general responsibility and
authority in all matters affecting its business.
The names of the directors and executive officers of the General Partner, 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
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council. He
received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 4 with respect to its
acquisition of Units.
Item 10. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant during the year ended December 31, 1999.
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 1999, 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
Insignia Properties LP (1) 12,146.0 9.429%
(an affiliate of AIMCO)
Madison River Properties LLC (1) 14,061.5 10.917%
(an affiliate of AIMCO)
AIMCO Properties LP (2) 33,788.5 26.231%
(an affiliate of AIMCO)
(1) Entity is indirectly ultimately owned by AIMCO. Its business address
is 55 Beattie Place, Greenville, SC 29601.
(2) Entity is indirectly ultimately controlled by AIMCO. Its business
address is 2000 South Colorado Boulevard, Denver, CO 80222.
(b) Beneficial Owners of Management
Except as noted below, 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 December 31, 1999, 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
Insignia Properties Trust 100,000 100%
55 Beattie Place
Greenville, SC 29601
Insignia Properties Trust is indirectly ultimately owned by AIMCO.
Item 12. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities,
as provided for in the Partnership Agreement. The Partnership Agreement provides
for (i) certain payments to affiliates for services and (ii) reimbursement of
certain expenses incurred by affiliates on behalf of the Partnership. The
following expenses were paid or accrued to an affiliate of the General Partner
and affiliates during the years ended December 31, 1999 and 1998:
1999 1998
---- ----
(in thousands)
Asset management fees $ 94 $ 91
Property management fees 97 110
Reimbursement for services of affiliates 44 111
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 $94,000 and
$91,000 were paid to the General Partner and its affiliates for the years ended
December 31, 1999 and 1998, respectively.
During the years ended December 31, 1999 and 1998, affiliates of the General
Partner were entitled to receive 5% of gross receipts from the Partnership's
residential property for providing property management services. The Partnership
paid to such affiliates approximately $55,000 and $50,000 for the years ended
December 31, 1999 and 1998, respectively. For the years ended December 31, 1999
and 1998, affiliates of the General Partner were entitled to receive varying
percentages of gross receipts from the Partnership's Florida #11 Mini-Warehouse
commercial property for property management services. The Partnership paid to
such affiliates approximately $42,000 and $45,000 for the years ended December
31, 1999 and 1998, respectively. For the nine months ended September 30, 1998,
affiliates of the General Partner were entitled to receive varying percentages
of gross receipts from the Partnership's Phoenix Business Campus commercial
property for providing property management services. For the nine months ended
September 30, 1998, the Partnership paid approximately $15,000 to such
affiliates for providing property management services for Phoenix Business
Campus. Effective October 1, 1998 (the effective date of the Insignia Merger)
these services for the Phoenix Business Campus commercial property were provided
by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $44,000 and $111,000 for the
years ended December 31, 1999 and 1998, respectively.
The Partnership paid leasing commissions of approximately $80,000 to an
affiliate of the General Partner during the year ended December 31, 1998. No
leasing commissions were paid to affiliates during the year ended December 31,
1999. Leasing commissions were capitalized and amortized over the lives of the
respective leases.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999 and 1998. As a result
of these tender offers, AIMCO and its affiliates currently own 59,996 units of
depositary receipt in the Partnership representing 46.577% of the outstanding
units. It is possible that AIMCO or its affiliates will make one or more
additional offers to acquire additional units of depositary receipt in the
Partnership for cash or in exchange for units in the operating partnership of
AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the Units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
<PAGE>
Item 13. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) Exhibits:
Exhibit 18, Independent Accountants' Preferability Letter for Change
in Accounting Principle, is filed as an exhibit to this report.
Exhibit 27, Financial Data Schedule, is filed as an exhibit to this
report.
(b) Reports on Form 8-K filed in the fourth quarter of calendar year
1999:
Current Report on Form 8-K dated November 4, 1999 and filed November
30, 1999, disclosing sale of Florida #11 Mini-Warehouse on November
4, 1999.
<PAGE>
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/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
and Controller
Date:
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/Patrick J. Foye Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
<PAGE>
JOHNSTOWN CONSOLIDATED INCOME PARTNERS
INDEX OF EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of October 1, 1998, by and
between AIMCO and IPT; incorporated by reference to the Registrant's
Current Report on Form 8-K dated October 1, 1998.
3 Certificates of Limited Partnership, as amended to date (Incorporated
by reference 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 reference 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 reference 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 reference 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 Partnership, 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.
(Incorporated 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 Partnership, and JCIP Associates, Ltd. (Hayman
Construction 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
(Incorporated 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 (Incorporated 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 reference 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)
10.31 Exercise of the remaining portion 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 October 24,
1995).
10.32 Multifamily Note dated November 1, 1996, between
Johnstown/Consolidated Income Partners, a California limited
partnership, and Lehman Brokers Holdings Inc. d/b/a Lehman Capital, A
Division of Lehman Brothers Holdings, Inc. (Incorporated by
reference to the annual report on Form 10-K for the year ended
December 31, 1996)
10.33 Agreement for Purchase and Sale of Existing Facilities dated March
19, 1997, executed by and between Johnstown/Consolidated Income
Partners and Johnstown/Consolidated Income Partners/2, each a
California limited partnership and Shurgard Storage Centers, Inc.,
a Delaware corporation, covering certain real property situated in
Broward County, Florida (the "Property").
10.34 Special Warranty Deed dated May 8, 1997, executed by
Johnstown/Consolidated Income Partners and Johnstown/Consolidated
Income Partners/2, each a California limited partnership in favor
of Shurgard Storage Center, Inc., a Delaware corporation.
10.35 Assignment of Rental Agreements dated May 8, 1997, executed by
Johnstown/Consolidated Income Partners and Johnstown/Consolidated
Income Partners/2, each a California limited partnership and
Shurgard Storage Center, Inc., a Delaware corporation.
10.36 Purchase and Sale Contract between Johnstown/Consolidated Income
Partners and Everest Storage Holdings, LLC dated July 2, 1999,
documenting the sale of Florida #11 Mini Warehouse located in
Davie, Florida. (Incorporated by reference to current report on
Form 8-K dated November 4, 1999).
10.37 First Amendment to Purchase and Sale Contract between
Johnstown/Consolidated Income Partners and Everest Storage
Holdings, LLC dated September 7, 1999, documenting the sale of
Florida #11 Mini Warehouse located in Davie, Florida.
(Incorporated by reference to current report on Form 8-K dated
November 4, 1999).
10.38 Purchase and Sale Contract between Registrant and Cadle's Phoenix
Business Center, an Ohio Limited Liability Company, dated October
8, 1999. (Incorporated by reference to current report on Form 8-K
dated December 30, 1999).
10.39 Addendum to Purchase and Sale Contract between Registrant and
Cadle's Phoenix Business Center, an Ohio Limited Liability
Company, dated December 8, 1999.(Incorporated by reference to current
report on Form 8-K dated December 30, 1999)
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)
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
27 Financial Data Schedule.
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
ConCap Equities, Inc.
General Partner of Johnstown/Consolidated Income Partners
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note M of Notes to the Financial Statements of Johnstown/Consolidated Income
Partners included in its Form 10-KSB for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Johnstown/Consolidated Income Partners 1999 Fourth Quarter 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-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 10,579
<SECURITIES> 0
<RECEIVABLES> 172
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0 <F1>
<PP&E> 4,699
<DEPRECIATION> 2,962
<TOTAL-ASSETS> 12,803
<CURRENT-LIABILITIES> 0 <F1>
<BONDS> 2,325
0
0
<COMMON> 0
<OTHER-SE> 10,186
<TOTAL-LIABILITY-AND-EQUITY> 12,803
<SALES> 0
<TOTAL-REVENUES> 1,157
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,184
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 185
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 3,653
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,626
<EPS-BASIC> 27.87 <F2>
<EPS-DILUTED> 0
<FN>
<F1> Registrant has an unclassified balance sheet. <F2> Multiplier is 1.
</FN>
</TABLE>
