-----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, FyrumyYN3o2RiA/EYUhRwM4k5r6U8hdn2i+3X0ANI5qBXee8/MLIwi8Ij8jp0ygp PEval+D9h3xKPj8aUsNYzw== 0000711642-98-000007.txt : 19980512 0000711642-98-000007.hdr.sgml : 19980512 ACCESSION NUMBER: 0000711642-98-000007 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 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: 98614836 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 OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 [ ] TRANSITION REPORT PURSUANT TO 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, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer's telephone number Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL GROWTH FUND BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1998 Assets Cash and cash equivalents $ 2,326 Receivables and deposits 758 Restricted escrows 668 Other assets 564 Investment properties: Land $ 4,610 Buildings and related personal property 37,769 42,379 Less accumulated depreciation (23,139) 19,240 $ 23,556 Liabilities and Partners' Deficit Liabilities Accounts payable $ 118 Tenant security deposit liabilities 283 Accrued property taxes 147 Other liabilities 387 Mortgage notes payable 30,690 Partners' Deficit General partner $ (4,382) Limited partners (49,196 units issued and outstanding) (3,687) (8,069) $ 23,556 See Accompanying Notes to Financial Statements b) CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 2,603 $ 2,531 Other income 156 171 Total revenues 2,759 2,702 Expenses: Operating 1,151 1,207 General and administrative 96 161 Depreciation 509 481 Interest 558 558 Property taxes 154 154 Total expenses 2,468 2,561 Net income $ 291 $ 141 Net income allocated to general partner (1%) $ 3 $ 1 Net income allocated to limited partners (99%) 288 140 $ 291 $ 141 Net income per limited partnership unit $ 5.85 $ 2.84 See Accompanying Notes to Financial Statements c) CONSOLIDATED CAPITAL GROWTH FUND STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 49,196 $ 1 $ 49,196 $ 49,197 Partners' deficit at December 31, 1997 49,196 $ (4,260) $ (3,205) $ (7,465) Distributions -- (125) (770) (895) Net income for the three months ended March 31, 1998 -- 3 288 291 Partners' deficit at March 31, 1998 49,196 $ (4,382) $ (3,687) $ (8,069) See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 291 $ 141 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 509 481 Amortization of loan costs 19 19 Change in accounts: Receivables and deposits 37 (108) Other assets 53 12 Accounts payable (12) 2 Tenant security deposit liabilities (8) -- Accrued property taxes (12) 148 Other liabilities 37 (13) Net cash provided by operating activities 914 682 Cash flows from investing activities: Property improvements and replacements (121) (453) Net (deposits to) receipts from restricted escrows (65) 343 Net cash used in investing activities (186) (110) Cash flows used in financing activities: Distributions paid (895) (6,892) Net decrease in cash and cash equivalents (167) (6,320) Cash and cash equivalents at beginning of period 2,493 7,763 Cash and cash equivalents at end of period $ 2,326 $ 1,443 Supplemental disclosure of cash flow information: Cash paid for interest $ 539 $ 539 See Accompanying Notes to Financial Statements e) CONSOLIDATED CAPITAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited 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. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the year ended December 31, 1997. Certain reclassifications have been made to the 1997 information to conform to the 1998 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 General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership paid property management fees based upon collected gross rental revenues for property management services as noted below for the three month periods ended March 31, 1998 and 1997, respectively. 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 Three Months Ended March 31, 1998 1997 (in thousands) Property management fees (included in $140 $137 operating expense) Reimbursement for services of affiliates (included in operating and general and administrative expenses and investment property) (1) 53 49 Partnership management fees (included in general and administrative expenses) (2) -- 82 (1) Included in "reimbursement for services of affiliates" is approximately $4,000 in reimbursements for construction oversight costs for the period ended March 31, 1997. (2) 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, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the General Partner, which 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 was not significant. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. During December 1997, Insignia affiliates (the "Purchaser") commenced tender offers for limited partnership interests in ten real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 15,000 of the outstanding units of limited partnership interest in the Partnership, at $300 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 19, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on December 19, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the Managing General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, including as a result of the Purchaser's affiliation with various Insignia affiliates that provide property management services to the Partnership's properties, the manner in which the Purchaser votes its limited partner interest in the Partnership may not always be consistent with the best interests of the other limited partners. During February 1998, the tender offers were completed and an affiliate of Insignia tendered 2,690 units of limited partnership interest in the Partnership. NOTE C - DISTRIBUTIONS During the three months ended March 31, 1998, the Partnership distributed approximately $770,000 to the limited partners and approximately $125,000 to the General Partner. Subsequent to March 31, 1998, payments were made by the Partnership to the Georgia Department of Revenue and the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment properties located in these states. These payments were treated as distributions to the partners and are included in the distribution amounts above. During the three months ended March 31, 1997, a distribution of approximately $6,723,000 was made to the limited partners and a distribution of approximately $169,000 was made to the General Partner. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of four apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1998 and 1997: Average Occupancy Property 1998 1997 Breckinridge Square (1) Louisville, Kentucky 89% 89% Churchill Park (2) Louisville, Kentucky 92% 88% The Lakes (1) Raleigh, North Carolina 88% 91% Tahoe Springs Miami, Florida 94% 96% (1) The low occupancy at Breckenridge Square and The Lakes is due to softening real estate markets and increased competition from new complexes in the Louisville and Raleigh areas. The General Partner is offering incentives to prospective tenants in an effort to increase occupancy. (2) The General Partner attributes the increase in occupancy at Churchill Park to increased marketing efforts and the composition of its resident profile which has not been affected by the increase in competition affecting Breckenridge Square. Results of Operations The Partnership's net income for the three months ended March 31, 1998, was approximately $291,000 versus net income of approximately $141,000 for the three months ended March 31, 1997. The increase in net income is primarily the result of an increase in rental income and a decrease in operating and general and administrative expenses. Rental income increased due to an increase in average annual rental rates at all of the investment properties, despite decreases in occupancy at The Lakes and Tahoe Springs. General and administrative expenses decreased due to the decrease in the distribution of funds "available from operations" as defined in the Partnership Agreement. During the period ended March 31, 1998, approximately $895,000 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 Partnership Agreement) to be paid to the General Partner for executive and management services. Operating expense decreased due to a decrease in interior building repairs at Breckinridge Square. Also, maintenance expense decreased at Churchill Park as a result of exterior painting and office enhancements, which were both done during the three months ended March 31, 1997. Included in operating expenses for the period ended March 31, 1998, is approximately $29,000 of major repairs and maintenance mainly comprised of exterior building improvements, exterior painting and window coverings. Included in operating expenses for the period ended March 31, 1997, is approximately $91,000 of major repairs and maintenance mainly comprised of exterior building repairs, exterior painting and office equipment. 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. Liquidity and Capital Resources At March 31, 1998, the Partnership had cash and cash equivalents of approximately $2,326,000 versus approximately $1,443,000 at March 31, 1997. The net decrease in cash and cash equivalents for the periods ended March 31, 1998 and 1997 is approximately $167,000 and $6,320,000, respectively. Net cash provided by operating activities increased as a result of the increase in net income, as described above, along with a decrease in receivables and deposits, offset partially by a decrease in accrued property taxes. These changes were due to the timing of tax payments from escrow funds. Net cash used in investing activities increased primarily due to the net increase in deposits to restricted escrows. This was partially offset by a smaller increase in property improvements and replacements due to a chiller replacement project at Churchill Park and an HVAC replacement project at The Lakes, during the three months ended March 31, 1997. Net cash used in financing activities decreased due to a decrease in distributions made to the partners. The Partnership has no material capital programs scheduled to be performed in 1998, 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. 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 three months ended March 31, 1998, the Partnership distributed approximately $770,000 to the limited partners and approximately $125,000 to the General Partner. Subsequent to March 31, 1998, payments were made by the Partnership to the Georgia Department of Revenue and the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment properties located in these states. These payments were treated as distributions to the partners and are included in the distribution amounts above. During the three months ended March 31, 1997, a distribution of approximately $6,723,000 was made to the limited partners and a distribution of approximately $169,000 was made to the General Partner. The General Partner is planning on making a distribution in the third quarter of 1998. Year 2000 The Partnership is dependent upon the General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 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 March 31, 1998. 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/Director By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: May 11, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Growth Fund 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000201529 CONSOLIDATED CAPITAL GROWTH FUND 1,000 3-MOS DEC-31-1998 MAR-31-1998 2,326 0 758 0 0 0 42,379 (23,139) 23,556 0 30,690 0 0 0 (8,069) 23,556 0 2,759 0 0 2,468 0 558 0 0 0 0 0 0 291 5.85 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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