-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QrT20hxUK7XQLDRdvSuHCXiIfKi2W92ZEzB3NQf+c+WSMWcJ9R7EsGbk9MuYyDmS hsq7E94HtTlAjQwgy7xbdg== 0000201529-97-000004.txt : 19971104 0000201529-97-000004.hdr.sgml : 19971104 ACCESSION NUMBER: 0000201529-97-000004 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971103 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL GROWTH FUND CENTRAL INDEX KEY: 0000201529 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942382571 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-08639 FILM NUMBER: 97706569 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.......to........ Commission file number 0-8639 CONSOLIDATED CAPITAL GROWTH FUND (Exact name of small business issuer as specified in its charter) California 94-2382571 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer's telephone number Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands) September 30, 1997 Assets Cash: Unrestricted $ 2,118 Restricted--tenant security deposits 309 Accounts receivable 51 Escrows for taxes 581 Restricted escrows 611 Other assets 662 Investment properties: Land $ 4,610 Buildings and related personal property 37,438 42,048 Less accumulated depreciation (22,143) 19,905 $24,237 Liabilities and Partners' Deficit Liabilities Accounts payable $ 151 Tenant security deposit liabilities 309 Accrued taxes 448 Other liabilities 455 Mortgage notes payable 30,690 Partners' Deficit General partner $ (4,263) Limited partners (49,196 units issued and outstanding) (3,553) (7,816) $24,237 See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Rental income $2,736 $2,680 $8,061 $7,905 Other income 210 242 559 593 Total revenues 2,946 2,922 8,620 8,498 Expenses: Operating 985 914 2,816 2,598 General and administrative 36 131 192 349 Partnership management fees -- 90 82 213 Maintenance 374 483 1,028 1,226 Depreciation 501 479 1,476 1,401 Interest 559 442 1,678 1,381 Property taxes 158 114 466 464 Total expenses 2,613 2,653 7,738 7,632 Income before extraordinary item 333 269 882 866 Extraordinary loss on early extinguishment of debt -- -- -- (119) Net income $ 333 $ 269 $ 882 $ 747 Net income allocated to general partner (1%) $ 3 $ 2 $ 9 $ 7 Net income allocated to limited partners (99%) 330 267 873 740 Net income $ 333 $ 269 $ 882 $ 747 Per limited partnership unit: Income before extraordinary item $ 6.70 $ 5.41 $17.75 $17.42 Extraordinary item -- -- -- (2.40) Net income per limited partnership unit $ 6.70 $ 5.41 $17.75 $15.02 See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (Unaudited) (in thousands, except for unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 49,196 $ 1 $49,196 $49,197 Partners' capital (deficit) at December 31, 1996 49,196 $(3,339) $ 2,131 $(1,208) Distributions to partners -- (933) (6,557) (7,490) Net income for the nine months ended September 30, 1997 -- 9 873 882 Partners' deficit at September 30, 1997 49,196 $(4,263) $(3,553) $(7,816) See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Nine Months Ended September 30, 1997 1996 Cash flows from operating activities: Net income $ 882 $ 747 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,476 1,401 Amortization of loan costs 61 38 Extraordinary loss on early extinguishment of debt -- 119 Change in accounts: Restricted cash 37 (26) Accounts receivable (5) (1) Escrows for taxes (358) (448) Other assets (4) 47 Accounts payable (76) (215) Tenant security deposit liabilities (37) 26 Accrued taxes 448 451 Other liabilities 4 34 Net cash provided by operating activities 2,428 2,173 Cash flows from investing activities: Property improvements and replacements (971) (851) Receipts from restricted escrows 619 118 Deposits to restricted escrows (315) (24) Net cash used in investing activities (667) (757) Cash flows from financing activities: Payments on mortgage notes payable -- (32) Repayment of mortgage notes payable -- (1,282) Loan costs paid -- (28) Prepayment penalties -- (23) Distributions to partners (7,406) (2,990) Net cash used in financing activities (7,406) (4,355) Net decrease in cash and cash equivalents (5,645) (2,939) Cash and cash equivalents at beginning of period 7,763 4,717 Cash and cash equivalents at end of period $ 2,118 $ 1,778 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,796 $ 1,239 See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL GROWTH FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Consolidated Capital Growth Fund (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. ("General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1996. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership paid property management fees based upon collected gross rental revenues for property management services as noted below for the nine month periods ended September 30, 1997 and 1996, respectively. Such fees are included in operating expense on the consolidated statement of operations and are reflected in the following table. The Limited Partnership Agreement ("Agreement") provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. The General Partner and its affiliates received reimbursements and fees as reflected in the following table: For the Nine Months Ended September 30, 1997 1996 (in thousands) Property management fees $423 $414 Reimbursement for services of affiliates 141 144 Partnership management fees (1) 82 213 (1) The Agreement provides for a fee equal to 9% of the total distributions made to the limited partners from "cash available for distribution" to the limited partners (as defined in the Agreement) to be paid to the General Partner for executive and administrative management services. For the period of January 1, 1996 to August 31, 1997, the Partnership insured its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. NOTE C - EARLY EXTINGUISHMENT OF DEBT In March 1996, the Partnership paid off the first and second mortgages of Tahoe Springs totaling approximately $1,282,000, with a portion of the refinancing proceeds received in December 1995 from the refinancing of Breckinridge Square, Churchill Park and The Lakes. An extraordinary loss on early extinguishment of debt in the amount of approximately $119,000 was recorded upon payoff of the mortgage notes. Of this amount, approximately $96,000 was recorded due to the write off of the remaining mortgage note discount and approximately $23,000 was recorded due to prepayment penalties incurred. On November 13, 1996, the Partnership financed Tahoe Springs. The Partnership received $6 million in gross proceeds from the financing. The mortgage note requires monthly interest only payments at a stated interest rate of 7.33% and has a balloon payment due November 1, 2003. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consists of four apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1997 and 1996: Average Occupancy Property 1997 1996 Breckinridge Square Louisville, Kentucky 94% 94% Churchill Park Louisville, Kentucky 93% 93% The Lakes Raleigh, North Carolina 92% 95% Tahoe Springs Miami, Florida 93% 95% The General Partner attributes the decrease in occupancy at The Lakes to the large number of units constructed in the Raleigh area. The General Partner is offering incentives to prospective tenants in an effort to increase occupancy. The Partnership's net income for the nine months ended September 30, 1997, was approximately $882,000 versus net income of approximately $747,000 for the nine months ended September 30, 1996. The Partnership's net income for the three months ended September 30, 1997 was approximately $333,000 versus net income of approximately $269,000 for the three months ended September 30, 1996. The increase in net income for the three and nine months ended September 30, 1997, is primarily attributed to an increase in rental income and decreases in general and administrative expenses, partnership management fees, maintenance and extraordinary loss on early extinguishment of debt. The increase in rental income is due to increases in rental rates at all of the Partnerships investment properties. General and administrative expenses decreased as the result of a decrease in occupational license fees and audit expense. During the nine months ended September 30, 1996, the Partnership paid approximately $36,000 for occupational license fees for Breckinridge Square and Churchill Park. During August 1997, the Partnership was notified that its request for a refund of $26,000 of the amount incurred during 1996 would be received. Approximately $12,000 of this refund has been transferred to pay the 1997 occupational tax expense, and the remaining $14,000 is included in accounts receivable. Audit expense has decreased as a result of an under accrual of audit and tax expense at December 31, 1995. Additional fees related to the 1995 audit were billed and paid in 1996, thereby increasing the 1996 audit expense. Partnership management fees decreased due to the decrease in the distribution of funds "available from operations" as defined in the Partnership Agreement. During the nine months ended September 30, 1997, approximately $6,573,000 was distributed from surplus funds. As noted in "Note B - Transactions with Affiliated Parties," the Partnership Agreement provides for a fee equal to 9% of the total distributions made to the limited partners from "cash available for distribution" to the limited partners (as defined in the Agreement) to be paid to the General Partner for executive and management services. Maintenance expense decreased due to major landscaping performed during the nine months ended September 30, 1996 at The Lakes to deter water retention. Included in maintenance expense for the nine months ended September 30, 1997 and 1996, is approximately $179,000 and $427,000, respectively, of major repairs and maintenance comprised primarily of office equipment, exterior painting, major landscaping and exterior building improvements. Finally, an extraordinary loss of approximately $119,000 was recognized by the Partnership in 1996, due to the early extinguishment of debt at Tahoe Springs (See Note C to the Notes to Consolidated Financial Statements). These decreases in expenses were offset by a decrease in interest income and an increase in interest expense. The decrease in interest income is the result of decreased cash balances invested in interest bearing accounts. The increase in interest expense is due to the financing of Tahoe Springs in November 1996, as discussed in Note C to the Notes to Consolidated Financial Statements. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of each of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. At September 30, 1997, the Partnership had unrestricted cash of approximately $2,118,000 versus approximately $1,778,000 at September 30, 1996. Net cash provided by operating activities increased as a result of a decrease in escrows for taxes. Net cash used in investing activities decreased primarily due to an increase in receipts from restricted escrows. This increase was partially offset by increases in the purchases of property improvements and replacements and deposits to restricted escrows. Net cash used in financing activities increased primarily due to an increase in distributions made to the partners in 1997. Major capital programs completed in 1997 include a chiller replacement at Churchill Park and an HVAC replacement at The Lakes. The Partnership has no other material capital programs scheduled to be performed in 1997, although certain routine capital expenditures and maintenance expenses have been budgeted. These capital expenditures and maintenance expenses will be incurred only if cash is available from operations or is received from the capital reserve account. In March 1996, the Partnership paid off the first and second mortgages of Tahoe Springs totaling approximately $1,282,000, with a portion of the refinancing proceeds received in December 1995 from the refinancing of Breckinridge Square, Churchill Park and The Lakes. An extraordinary loss on early extinguishment of debt in the amount of approximately $119,000 was recorded upon payoff of the mortgage notes. Of this amount, approximately $96,000 was recorded due to the write off of the remaining mortgage note discount and approximately $23,000 was recorded due to prepayment penalties incurred. 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 properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $30,690,000 requires monthly interest only payments. These notes require balloon payments on November 1, 2003, and December 1, 2005, at which time the properties will either be refinanced or sold. During the nine months ended September 30, 1997, the Partnership distributed approximately $6,557,000 to the limited partners and approximately $933,000 to the General Partner. During the nine months ended September 30, 1996, a distribution of approximately $2,908,000 was made to the limited partners and a distribution of approximately $82,000 was made to the General Partner. Also, during the nine months ended September 30, 1996, the Partnership paid $137,000 and $65,000, respectively, to the Georgia Department of Revenue and the North Carolina Department of Revenue for withholding taxes on behalf of the partners related to income generated by properties located in those states. These taxes were treated as distributions to the partners and were allocated $201,000 to the limited partners and $1,000 to the General Partner. Future cash distributions will depend on the levels of cash generated from operations, capital expenditure requirements, property sales, refinancings and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1997. ` SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL GROWTH FUND By: CONCAP EQUITIES, INC. the General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: November 3, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Growth Fund 1997 Third Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000201529 CONSOLIDATED CAPITAL GROWTH FUND 1,000 9-MOS DEC-31-1997 SEP-30-1997 2,118 0 51 0 0 0 42,048 (22,143) 24,237 0 30,690 0 0 0 (7,816) 24,237 0 8,620 0 0 7,738 0 1,678 0 0 0 0 0 0 882 17.75 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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