-----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, SMHb26N/Xsp+Wprk0qwNGREsGlZaw+lG2W95Exzx1vdW3YO4mm79n9PJN1JTOMG0 e0e+SOf82NZstinbsn/Pwg== 0000711642-00-000049.txt : 20000328 0000711642-00-000049.hdr.sgml : 20000328 ACCESSION NUMBER: 0000711642-00-000049 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000327 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: 10KSB SEC ACT: SEC FILE NUMBER: 000-08639 FILM NUMBER: 578967 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10KSB 1 YEAR END REPORT March 27, 2000 United States Securities and Exchange Commission Washington, D.C. 20549 RE: Consolidated Capital Growth Fund Form 10-KSB File No. 0-8639 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 [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 0-8639 CONSOLIDATED CAPTIAL GROWTH FUND (Name of small business issuer in its charter) California 94-2382571 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) Issuer's telephone number (864) 239-1000 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: Units of Limited Partnership Interests (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 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 the 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. $11,713,000 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 PART I Item 1. Description of Business Consolidated Capital Growth Fund (the "Partnership" or "Registrant") was organized on December 20, 1976 as a limited partnership under the California Uniform Limited Partnership Act. The general partner responsible for management of the Partnership's business is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). (See "Transfer of Control"). The Partnership Agreement provides that the Partnership is to terminate on December 31, 2006 unless terminated prior to such date. The Registrant is engaged in the business of operating and holding real estate properties for investment. Starting in 1977 through 1980, during its acquisition phase, the Registrant acquired twenty-five existing properties. The Registrant continues to own and operate four of these properties. All but one of these properties, Breckinridge Square Apartments, were previously sold and have been reacquired by the Partnership after the borrowers were unable to perform under the terms of their note agreements. See "Item 2. Description of Properties". Commencing February 25, 1977, the Partnership offered pursuant to a Registration Statement filed with the Securities and Exchange Commission 50,000 Units of Limited Partnership interest (the "Units") at a purchase price of $1,000 per unit. The sale of Units closed on October 10, 1978, with 49,196 Units sold at $1,000 each, or gross proceeds of approximately $49,196,000 to the Partnership. Since its initial offering, the Registrant has not received, nor are limited partners required to make, additional capital contributions. Upon the Partnership's formation in 1976, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Group ("CCG"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI 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 limited partners in the Partnership and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of this solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership and approved conversion of the general partner interest of the non-corporate general partner, CCG, to that of a special limited partner ("Special Limited Partner") without voting and without other rights of a limited partner except to the economic interest previously held as a general partner. Pursuant to an amendment to the Partnership Agreement, the non-corporate general partner interest of CCG was converted to that of a Special Limited Partner and CEI became the sole general partner of the Partnership on December 31, 1991. The Registrant has no employees. Management and administrative services are performed by the General Partner and by agents retained by the General Partner. An affiliate of the General Partner has been providing such property management services. Both the income and expenses of operating the properties 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 properties owned by the Partnership. The Partnership monitors its properties 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. The real estate business in which the Partnership is engaged is highly competitive. There are other residential properties within the market area of the Partnership's properties. 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 properties 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 the apartments is local. 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. Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. ("Insignia") and Insignia Properties Trust ("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 Properties: The following table sets forth the Partnership's investment in properties:
Date of Property Purchase Type of Ownership Use Breckinridge Square Apartments 10/78 Fee ownership, subject to Apartment Louisville, Kentucky first mortgage 294 units Churchill Park Apartments 05/90 Fee ownership, subject to Apartment Louisville, Kentucky first mortgage 384 units The Lakes Apartments 05/88 Fee ownership, subject to Apartment Raleigh, North Carolina first mortgage 600 units Doral Springs Apartments (formerly Tahoe Springs) 11/87 Fee ownership, subject to Apartment Miami, Florida first mortgage 368 units
Schedule of Properties: Set forth below for each of the Registrant's properties is the gross carrying value, accumulated depreciation, depreciable life, method of depreciation and Federal tax basis.
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis (in thousands) (in thousands) Breckinridge Square Apartments $ 8,603 $ 6,411 5-22 yrs S/L $ 2,443 Churchill Park Apartments 8,918 4,738 5-20 yrs S/L 4,333 The Lakes Apartments 15,280 9,081 5-19 yrs S/L 8,667 Doral Springs Apartments (formerly Tahoe Springs) 12,402 6,650 5-20 yrs S/L 7,959 Total $45,203 $26,880 $23,402
See "Note A" to the financial statements included in "Item 7. Financial Statements" for a description of the Partnership's depreciation policy and "Note H - Change in Accounting Principle". Schedule of Property Indebtedness The following table sets forth certain information relating to the loans encumbering the Registrant's properties.
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1999 Rate Amortized Date Maturity (2) (in thousands) (in thousands) Breckinridge Square Apartments 1st mortgage $ 6,000 6.95% (1) 12/1/05 $ 6,000 Churchill Park Apartments 1st mortgage 6,450 6.95% (1) 12/1/05 6,450 The Lakes Apartments 1st mortgage 12,240 6.95% (1) 12/1/05 12,240 Doral Springs Apartments (formerly Tahoe Springs) 1st mortgage 6,000 7.33% (1) 11/1/03 6,000 Total $ 30,690 $ 30,690
(1) Interest only payments (2) See "Item 7. Financial Statements - Note C" for information with respect to the Registrant's ability to repay these loans and other specific details about the loans. Rental Rates and Occupancy: The following table sets forth the average annual rental rates and occupancy for 1999 and 1998 for each property.
Average Annual Average Annual Rental Rates Occupancy (per unit) Property 1999 1998 1999 1998 Breckinridge Square Apartments $7,663 $7,420 95% 91% Churchill Park Apartments 7,034 6,797 96% 92% The Lakes Apartments 7,292 7,182 92% 91% Doral Springs Apartments 8,046 7,912 95% 93% (formerly Tahoe Springs)
The General Partner attributes the increase in occupancy at Breckinridge Square Apartments and Churchill Apartments to aggressive and effective marketing campaigns during the latter part of 1998 and into 1999. As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties are subject to competition from other residential apartment complexes in the area. The General Partner believes that all of the properties are adequately insured. The properties are apartment complexes which lease units for lease terms of one year or less. As of December 31, 1999, no tenant leases 10% or more of the available rental space. All of the properties are in good condition, subject to normal depreciation and deterioration as is typical for assets of this type and age. Real Estate Taxes and Rates: Real estate taxes and rates in 1999 for each property were: 1999 1999 Billing Rate (in thousands) Breckinridge Square Apartments $ 46 1.05% Churchill Park Apartments 101 0.90% The Lakes Apartments 170 1.33% Doral Springs Apartments 306 2.16% (formerly Tahoe Springs) Capital Improvements: Breckinridge Square Apartments: The Partnership completed approximately $455,000 in capital expenditures at Breckinridge Square Apartments as of December 31, 1999, consisting primarily of HVAC system upgrades, parking lot improvements, roof improvements, appliances, electrical improvements and floor covering replacements. These improvements were funded primarily from replacement reserves and operations. 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 $88,200. 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. Churchill Park Apartments: The Partnership completed approximately $389,000 in capital expenditures at Churchill Park Apartments as of December 31, 1999, consisting primarily of swimming pool improvements, electrical improvements, air conditioning upgrades, appliances, interior and exterior building improvements, and floor covering replacements. These improvements were funded primarily from replacement reserves and operations. 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 $115,200. 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 Lakes Apartments: The Partnership completed approximately $744,000 in capital expenditures at The Lakes Apartments as of December 31, 1999, consisting primarily of air conditioning upgrades, major landscaping, roof replacements and floor covering replacements. These improvements were funded primarily from replacement reserves and operations. 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 $180,000. 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. Doral Springs Apartments: The Partnership completed approximately $394,000 in capital expenditures at Doral Springs Apartments as of December 31, 1999, consisting primarily of swimming pool upgrades, major landscaping, parking lot improvements, appliances, and floor covering replacements. These improvements were funded primarily from replacement reserves and operations. 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 $110,400. 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 The Partnership is unaware of any 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 matter was submitted to a vote of security holders through the solicitation of proxies or otherwise. PART II Item 5. Market for Partnership Equity and Related Partner Matters The Partnership, a publicly-held limited partnership, offered and sold 49,196 limited partnership units aggregating $49,196,000. The Partnership currently has 2,331 holders of record owning an aggregate of 49,196 Units. Affiliates of the General Partner owned 24,990.15 units or approximately 50.80% at December 31, 1999. No public trading market has developed for the Units, and it is not anticipated that such a market will develop in the future. 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. Distributions Per Limited Aggregate Partnership Unit 01/01/98 - 12/31/98 $ 4,313,000 (1) $76.77 01/01/99 - 12/31/99 1,491,000 (2) 30.00 01/01/00 - 03/01/00 1,010,000 (3) 20.33 (1) Consists of $3,976,000 ($3,444,000 to the limited partners or $70.00 per limited partnership unit) from surplus funds and $337,000 ($333,000 to the limited partners or $6.77 per limited partnership unit) from operations. These amounts included $42,000 in withholding taxes paid by the Partnership on behalf of the Partners. (2) Distribution was made from operations ($1,476,000 to the limited partners or $30.00 per limited partnership unit), and includes $26,000 in withholding taxes paid by the Partnership on behalf of the Partners. (3) Distribution was made from operations ($1,000,000 to the limited partners or $20.33 per limited partnership unit). Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings, and/or property sales. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners in 2000 or subsequent periods. See "Item 2. Description of Properties - Capital Improvements" for information relating to anticipated capital expenditures at the properties. Several tender offers were made by various parties, including affiliates of the General Partner, during the fiscal years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 24,990.15 limited partnership interest in the Partnership representing approximately 50.80% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to 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 Registrant from time to time. The discussion of the Registrant'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 Registrant'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's net income for the year ended December 31, 1999 was approximately $1,784,000 as compared to approximately $1,404,000 for the year ended December 31, 1998. The increase in net income is due to an increase in total revenues, which was partially offset by an increase in total expenses. The increase in total revenues is attributable to an increase in rental income which was partially offset by a decrease in other income. The increase in rental income is primarily attributable to an increase in average rental rates and an increase in occupancy at all four of the Partnership's properties. The decrease in other income is due primarily to lower interest income as a result of a decrease in the average amount of interest bearing cash balances as a result of distributions paid during 1998 and 1999. Total expenses increased primarily due to an increase in general and administrative expenses, depreciation expense and to a lesser extent, an increase in property tax expense. These increases were partially offset by a decrease in operating expense. Operating expense decreased primarily due to decreases in maintenance and insurance expenses. Maintenance expense decreased due to interior and exterior building improvements which were incurred during 1998. Insurance expense decreased at all four of the investment properties due to a change in the hazard insurance carrier during the third quarter of 1998. The decrease in operating expense was slightly offset by an increase in advertising costs incurred to increase occupancy at all four of the Partnership's properties. The increase in depreciation expense resulted from an increase in capital improvements performed at all of the investment properties during the past two years to improve the overall appearance and quality of the properties. The increase in property tax expense is due to increased tax billings due to an increase in the assessed value of the properties by the taxing authorities for Doral Springs Apartments and Churchill Park Apartments. General and administrative expenses increased due to Partnership management fees paid as a result of the increase in distributions from operations in 1999 as compared to 1998, as required by the Partnership Agreement. Included in general and administrative expense at both December 31, 1999 and 1998 are management reimbursements to the General Partner allowed under the Partnership Agreement. 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 also included. 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 in 1999 was to increase net income by approximately $128,000 ($2.58 per limited partnership unit). 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 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 December 31, 1999, the Partnership had cash and cash equivalents of approximately $1,988,000 compared to approximately $968,000 at December 31, 1998. The increase in cash and cash equivalents of approximately $1,020,000 is primarily due to approximately $4,159,000 of cash provided by operating activities, which was partially offset by approximately $1,648,000 of cash used in investing activities and approximately $1,491,000 of cash used in financing activities. Cash used in financing activities consisted of partner distributions. Cash used in investing activities consisted primarily of property improvements and replacements, which was partially offset by net withdrawals from escrow accounts maintained by the mortgage lender and insurance proceeds received as a result of hurricane damage at The Lakes Apartments. The Partnership invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the investment properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, local, legal and regulatory requirements. The Partnership is currently evaluating the capital improvement needs of the properties for the upcoming year. The minimum amount to be budgeted is expected to be $300 per unit or $493,800. Additional improvements may be considered and will depend on the physical condition of the properties as well as replacement reserves and anticipated cash flow generated by the properties. The additional capital expenditures will be incurred only if cash is available from operations and Partnership reserves. To the extent that such budgeted capital improvements are completed, the Registrant's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. 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. The General Partner may attempt to refinance such indebtedness and/or sell the properties prior to such maturity date. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such properties through foreclosure. During the year ended December 31, 1999, cash distributions of approximately $1,491,000 ($1,476,000 of which was paid to the limited partners, $30.00 per limited partnership unit) were paid from operations. During the year ended December 31, 1998, the Partnership distributed approximately $3,976,000 ($3,444,000 to the limited partners or $70.00 per limited partnership unit) from surplus funds and approximately $337,000 ($333,000 to the limited partners or $6.77 per limited partnership unit) from operations. Payments were made by the Partnership of $26,000 and $42,000 in 1999 and 1998, respectively, to 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. Subsequent to December 31, 1999, the Partnership declared and paid a distribution of approximately 1,010,000 ($1,000,000 of which was paid to the limited partners, $20.33 per limited partnership unit) from operations. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves and the timing of debt maturities, refinancings, and/or property sales. The Registrant's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners in 2000 or subsequent periods. 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. No material failure or erroneous results have occurred in the Managing Agent's computer applications related to the failure to reference the Year 2000 to date. 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. Item 7. Financial Statements CONSOLIDATED CAPTIAL GROWTH FUND LIST OF FINANCIAL STATEMENTS Report of Ernst & 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 - Years ended December 31, 1999 and 1998 Statements of Cash Flows - Years ended December 31, 1999 and 1998 Notes to Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Consolidated Capital Growth Fund We have audited the accompanying balance sheet of Consolidated Capital Growth Fund as of December 31, 1999, and the related statements of operations, changes in partners' deficit 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 Consolidated Capital Growth Fund 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. As discussed in Note H to the financial statements, the Partnership changed its method of accounting to capitalize the cost of exterior painting and major landscaping effective January 1, 1999. /s/ ERNST & YOUNG LLP Greenville, South Carolina February 24, 2000 CONSOLIDATED CAPITAL GROWTH FUND BALANCE SHEET (in thousands, except unit data) December 31, 1999
Assets Cash and cash equivalents $ 1,988 Receivables and deposits 394 Restricted escrows 359 Other assets 510 Investment properties (Notes C and E): Land $ 4,610 Buildings and related personal property 40,593 45,203 Less accumulated depreciation (26,880) 18,323 $ 21,574 Liabilities and Partners' Deficit Liabilities Accounts payable $ 267 Tenant security deposit liabilities 241 Accrued property taxes 23 Other liabilities 434 Mortgage notes payable (Note C) 30,690 Partners' Deficit General partner $ (4,779) Limited partners (49,196 units issued and outstanding) (5,302) (10,081) $ 21,574
See Accompanying Notes to Financial Statements CONSOLIDATED CAPTIAL GROWTH FUND STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 1999 1998 Revenues: Rental income $11,066 $10,554 Other income 647 694 Total revenues 11,713 11,248 Expenses: Operating 4,294 4,564 General and administrative 536 351 Depreciation 2,227 2,098 Interest 2,234 2,234 Property taxes 638 597 Total expenses 9,929 9,844 Net income (Note F) $ 1,784 $ 1,404 Net income allocated to general partner (1%) $ 18 $ 14 Net income allocated to limited partners (99%) 1,766 1,390 $ 1,784 $ 1,404 Net income per limited partnership unit $ 35.90 $ 28.25 Distributions per limited partnership unit $ 30.00 $ 76.77
See Accompanying Notes to Financial Statements CONSOLIDATED CAPTIAL GROWTH FUND STATEMENT OF CHANGES IN PARTNERS' DEFICIT (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) Distribution to partners -- (536) (3,777) (4,313) Net income for the year ended December 31, 1998 -- 14 1,390 1,404 Partners' deficit at December 31, 1998 49,196 (4,782) (5,592) (10,374) Distribution to partners -- (15) (1,476) (1,491) Net income for the year ended December 31, 1999 -- 18 1,766 1,784 Partners' deficit at December 31, 1999 49,196 $ (4,779) $ (5,302) $(10,081)
See Accompanying Notes to Financial Statements CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 1999 1998 Cash flows from operating activities: Net income $ 1,784 $ 1,404 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,227 2,098 Amortization of loan costs 78 78 Loss on disposal of property -- 18 Casualty gain (29) -- Bad debt 123 158 Changes in assets and liabilities: Receivables and deposits 131 4 Other assets (47) 17 Accounts payable 103 34 Tenant security deposit liabilities (70) 20 Accrued property taxes (152) 16 Other liabilities 11 73 Net cash provided by operating activities 4,159 3,920 Cash flows used in investing activities: Property improvements and replacements (1,982) (1,090) Net withdrawals from (deposits to) restricted escrows 286 (42) Insurance proceeds received 48 -- Net cash used in investing activities (1,648) (1,132) Cash flows used in financing activities: Distributions to partners (1,491) (4,313) Net cash used in financing activities (1,491) (4,313) Net increase (decrease) in cash and cash equivalents 1,020 (1,525) Cash and cash equivalents at beginning of period 968 2,493 Cash and cash equivalents at end of period $ 1,988 $ 968 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,156 $ 2,156
See Accompanying Notes to Financial Statements CONSOLIDATED CAPITAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS December 31, 1999 Note A - Organization and Significant Accounting Policies Organization: Consolidated Capital Growth Fund (the "Partnership" or "Registrant") was organized on December 20, 1976 as a limited partnership under the California Uniform Limited Partnership Act. The general partner responsible for management of the Partnership's business is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The General Partner is a subsidiary of Apartment Investment and Management Company ("AIMCO"). See "Note B - - Transfer of Control". The director and officers of the General Partner also serve as executive officers of AIMCO. The Partnership Agreement provides that the Partnership is to terminate on December 31, 2006 unless terminated prior to such date. The Partnership commenced operations in 1977 and completed its acquisition of apartment properties in 1980. The Partnership operates four apartment properties located in the southern United States. Uses 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. Cash and Cash Equivalents: Includes cash on hand and in banks and money market accounts. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Restricted Escrows: Replacement Reserve Account - At the time of the December 15, 1995, refinancing, approximately $357,000 of the proceeds were designated for a "replacement reserve fund" for certain capital replacements (as defined in the Replacement Reserve Agreement) at Breckinridge Square Apartments, Churchill Park Apartments, and The Lakes Apartments. At December 31, 1999, the balance was approximately $359,000. Repair Escrow Account - In addition to the Replacement Reserve Account, approximately $542,000 of the refinancing proceeds were designated for a "repair escrow" to cover necessary repairs and replacements to be completed at Breckinridge Square Apartments, Churchill Park Apartments, and The Lakes Apartments within one year of closing. Additionally, at the time of the November 13, 1996, financing of Doral Springs Apartments, approximately $58,000 of the proceeds were also designated for a "repair escrow". During 1999 the remaining balance in this account was returned to the properties as all required capital improvements had been completed. Depreciation: Depreciation is provided by the straight-line method over the estimated lives of the apartment properties and related personal property. For Federal income tax purposes, the accelerated cost recovery method is used (1) for real property over 15 years for additions prior to March 16, 1984, 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 modified accelerated cost recovery method is used for depreciation of (1) real property additions over 27 1/2 years and (2) personal property additions over 5 to 15 years. Effective January 1, 1999 the Partnership changed its method to capitalize the cost of exterior painting and major landscaping (see Note H). Loan Costs: Loan costs of approximately $695,000, less accumulated amortization of approximately $292,000 are included in other assets and are being amortized on a straight-line basis over the life of the loans. 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. Leases: The Partnership generally leases apartment units for twelve-month terms or less. The Partnership recognizes income as earned on its 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. Partners' Capital (Deficit): The Limited Partnership Agreement ("Agreement") provides that net income and net losses from operations for both financial and tax reporting purposes shall be allocated 99% to the Limited Partners and 1% to the General Partner. Net income per limited partnership unit for both 1999 and 1998 was computed as 99% of net income divided by 49,196 units outstanding. All distributions other than Surplus Funds distributions (as defined in the Agreement) are allocated 99% to the Limited Partners and 1% to the General Partner. Distributions of Surplus Funds were allocated 100% to the Limited Partners until 1986 when the Limited Partners had received a return of their capital contributions plus a 10% cumulative return. Pursuant to the provisions of the Agreement, the General Partner has been entitled to 14% of Surplus Fund distributions since 1986. However, in connection with a settlement agreement between CEI and two affiliated partnerships, a portion of the General Partner's interest in the Partnership was assigned to the two affiliated partnerships. The two affiliated partnerships received distributions of approximately $12,000 and $424,000 from the Partnership during 1999 and 1998, respectively. 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. Distributions Per Limited Aggregate Partnership Unit 01/01/98 - 12/31/98 $ 4,313,000 (1) $76.77 01/01/99 - 12/31/99 1,491,000 (2) 30.00 01/01/00 - 03/01/00 1,010,000 (3) 20.33 (1) Consists of $3,976,000 ($3,444,000 to the limited partners or $70.00 per limited partnership unit) from surplus funds and $337,000 ($333,000 to the limited partners or $6.77 per limited partnership unit) from operations. These amounts included $42,000 in withholding taxes paid by the Partnership on behalf of the Partners. (2) Distribution was made from operations ($1,476,000 to the limited partners or $30.00 per limited partnership unit) and includes $26,000 in withholding taxes paid by the Partnership on behalf of the Partners. (3) Distribution was made from operations ($1,000,000 to the limited partners or $20.33 per limited partnership unit). Investment Properties: Investment properties consist of four apartment complexes and are 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. Costs of apartment properties that have been permanently impaired have been written down to appraised value. No adjustments for impairment of value were recorded in the years ended December 31, 1999 and 1998. 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 establishes standards for related disclosures about products and services, geographic areas, and major customers. (See "Note G" for segment disclosures.) Advertising: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $181,000 and $127,000 for the years ended December 31, 1999 and 1998, respectively, were charged to operating expense as incurred. 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. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust 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 - Mortgage Notes Payable The principle terms of mortgage notes payable are as follows:
Principal Monthly Principal Balance At Payment Stated Balance December 31, Including Interest Maturity Due At Property 1999 Interest Rate Date Maturity (in thousands) (in thousands) Breckinridge Square Apartments 1st mortgage $ 6,000 $ 35 6.95% 12/1/05 $ 6,000 Churchill Park Apartments 1st mortgage 6,450 37 6.95% 12/1/05 6,450 The Lakes Apartments 1st mortgage 12,240 71 6.95% 12/1/05 12,240 Doral Springs Apartments (formerly Tahoe Springs) 1st mortgage 6,000 37 7.33% 11/1/03 6,000 Total $ 30,690 $180 $ 30,690
The mortgage notes payable are nonrecourse and are secured by pledge of the Partnership's rental properties and by pledge of revenues from the respective rental properties. Certain of the notes impose prepayment penalties if repaid prior to maturity and prohibit resale of the properties subject to existing indebtedness. Note D - 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 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 amounts were paid or accrued to the General Partner and affiliates during the years ended December 31, 1999 and 1998: 1999 1998 (in thousands) Property management fees (included in operating expense) $ 598 $ 572 Reimbursement for services of affiliates (included in investment properties, operating expense and general and administrative expense) 229 198 Partnership management fees (included in general and administrative expense) 131 30 During the years ended December 31, 1999 and 1998, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $598,000 and $572,000 for the years ended December 31, 1999 and 1998, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $229,000 and $198,000 for the years ended December 31, 1999 and 1998, respectively. The Partnership Agreement provides for a fee equal to 9% of the total distributions made to the limited partners from "cash available for distribution" (as defined in the Agreement) to be paid to the General Partner for executive and administrative management services. During the years ended December 31, 1999 and 1998, the General Partner received $131,000 and $30,000, respectively, for providing these services. Several tender offers were made by various parties, including affiliates of the General Partner, during the fiscal years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 24,990.15 of limited partnership interest in the Partnership representing approximately 50.80% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to 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 E - Investment Properties and Accumulated Depreciation Initial Cost To Partnership (in thousands)
Buildings Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition (in thousands) (in thousands) Breckinridge Square Apartments Louisville, Kentucky $ 6,000 $ 641 $ 4,720 $ 3,242 Churchill Park Apartments Louisville, Kentucky 6,450 566 6,510 1,842 The Lakes Apartments Raleigh, North Carolina 12,240 946 9,605 4,729 Doral Springs Apartments (formerly Tahoe Springs) Miami, Florida 6,000 2,848 8,492 1,062 Totals $30,690 $ 5,001 $29,327 $10,875
Gross Amount At Which Carried At December 31, 1999 (in thousands) Buildings And Related Personal Accumulated Date of Date Depreciable Description Land Property Total Depreciation Construction Acquired Life-Years (in thousands) Breckinridge Square Apartments Louisville, Kentucky $ 641 $7,962 $ 8,603 $6,411 1971 10/78 5-22 ChurchillPark Apartments Louisville, Kentucky 566 8,352 8,918 4,738 1970 05/90 5-20 The Lakes Apartments Raleigh, North 946 14,334 15,280 9,081 1973 05/88 5-19 Carolina Doral Springs Apartments (formerly Tahoe Springs) Miami, Florida 2,457 9,945 12,402 6,650 1972 - 1975 11/87 5-20 Totals $4,610 $40,593 $45,203 $26,880
Reconciliation of "Investment Properties and Accumulated Depreciation": Years Ended December 31, 1999 1998 (in thousands) Real Estate Balance at beginning of year $43,307 $42,258 Property improvements 1,982 1,090 Disposals of property (86) (41) Balance at end of Year $45,203 $43,307 Accumulated Depreciation Balance at beginning of year $24,705 $22,630 Additions charged to expense 2,227 2,098 Disposals of property (52) (23) Balance at end of year $26,880 $24,705 The aggregate cost of the real estate for Federal income tax purposes at December 31, 1999 and 1998, is approximately $42,596,000 and $40,656,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 1999 and 1998, is approximately $19,194,000 and $17,390,000. Note F - 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 per unit data): 1999 1998 Net income as reported $1,784 $1,404 Add (deduct): Fixed asset write-offs and casualty gain (29) 19 Depreciation differences 418 457 Prepaid rent (41) 14 Other 19 28 Federal taxable income $2,151 $1,922 Federal taxable income per limited partnership unit $43.28 $38.68 The tax basis of the Partnership's assets and liabilities is approximately $10,959,000 greater than the assets and liabilities as reported in the financial statements. Note G - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consist of four apartment complexes located in Florida, Kentucky (2), and North Carolina. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those of the Partnership as described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segment consists of investment properties that offer similar products and services. Although each of the investment properties is managed separately, they have been aggregated into one segment as they provide services with similar 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 segment. 1999 Residential Other Totals (in thousands) Rental income $11,066 $ -- $11,066 Other income 628 19 647 Interest expense 2,234 -- 2,234 Depreciation 2,227 -- 2,227 General and administrative expense -- 536 536 Segment profit (loss) 2,301 (517) 1,784 Total assets 21,375 199 21,574 Capital expenditures for investment properties 1,982 -- 1,982 1998 Residential Other Totals (in thousands) Rental income $10,554 $ -- $10,554 Other income 582 112 694 Interest expense 2,234 -- 2,234 Depreciation 2,098 -- 2,098 General and administrative expense -- 351 351 Segment profit (loss) 1,643 (239) 1,404 Total assets 20,775 614 21,389 Capital expenditures for investment properties 1,090 -- 1,090 Note H - 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 in 1999 was to increase net income by approximately $128,000 ($2.58 per limited partnership unit). 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. 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 The Registrant has no officers or directors. The General Partner is ConCap Equities, Inc. The names and ages of, as well as the position and offices held by, the present executive officers and director of the General Partner are set forth below. There are no family relationships between or among any officers or 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 Forms 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. Item 11. Security Ownership of Certain Beneficial Owners and Management (a) Security Ownership of Certain Beneficial Owners Except as noted below, no person or entity was known by the Registrant to own of record or beneficially more than 5% of the Limited Partnership Units of the Registrant as of December 31, 1999. Entity Number of Units Percentage AIMCO Properties, LP 2,989.50 6.08% (an affiliate of AIMCO) Madison River Properties LLC 2,690.00 5.47% (an affiliate of AIMCO) Insignia Properties LP 19,310.65 39.25% (an affiliate of AIMCO) Insignia Properties, L.P. and Madison River Properties LLC are indirectly ultimately owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC 29602. AIMCO Properties, LP is indirectly ultimately controlled by AIMCO. Its business address is 2000 South Colorado Boulevard, Denver, CO 80222. (b) Beneficial Owners of Management No director or officer of the General Partner owns any units of the Partnership of record or beneficially. (c) Change in Control Beneficial Owners of CEI As of December 31, 1999, an affiliate of the General Partner was the sole shareholder of its common stock: Number of Percent Name and Address Units Of Total Insignia Properties Trust 55 Beattie Place Greenville, SC 29602 100,000 100% 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. 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 amounts were paid or accrued to the General Partner and affiliates during the years ended December 31, 1999 and 1998: 1999 1998 (in thousands) Property management fees $ 598 $ 572 Reimbursement for services of affiliates 229 198 Partnership management fees 131 30 During the years ended December 31, 1999 and 1998, affiliates of the General Partner were entitled to receive 5% of gross receipts from all of the Registrant's properties for providing property management services. The Registrant paid to such affiliates approximately $598,000 and $572,000 for the years ended December 31, 1999 and 1998, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $229,000 and $198,000 for the years ended December 31, 1999 and 1998, respectively. 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 administrative management services. During the years ended December 31, 1999 and 1998, the General Partner received $131,000 and $30,000, respectively, for providing these services. Several tender offers were made by various parties, including affiliates of the General Partner, during the fiscal years ended December 31, 1999 and 1998. As a result of these tender offers, AIMCO and its affiliates currently own 24,990.15 limited partnership interest in the Partnership representing approximately 50.80% of the outstanding units. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Consequently, AIMCO is in a position to 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 13. Exhibits 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 during the fourth quarter of fiscal year 1999: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL GROWTH FUND By: ConCap Equities, Inc. Its 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 on the date indicated. /s/Patrick J. Foye Executive Vice President Date: Patrick J. Foye and Director /s/Martha L. Long Senior Vice President and Date: Martha L. Long Controller EXHIBIT INDEX Exhibit 2.1 Agreement and Plan of Merger, dated as of October 1, 1998 between AIMCO and IPT. 3 Certificate of Limited Partnership, as amended to date. 10.1 Property Management Agreement No. 201 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. 302 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 Property Management Agreement No. 401 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). 10.4 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). 10.5 Assignment and Assumption Agreement 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). 10.6 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). 10.7 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Horn-Barlow Companies (200 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 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). EXHIBIT INDEX 10.9 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and R&B Realty Group (400 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1999). 10.10Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCGF Associates, Ltd. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.11Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Horn-Barlow Companies (the "Horn-Barlow Construction Management Agreement"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.12Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCGF Associates, Ltd. (Horn-Barlow Construction Management Agreement). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.13Construction 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). 10.14Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and R&B Apartment Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.15Investor 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). 10.16Assignment 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). 10.17Letter 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). 10.18Financial 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). EXHIBIT INDEX 10.19Assignment and Assumption Agreement (Financial Service Agreement) dated October 23, 1990, by and between CCEC and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.20Letter of Notice dated December 20, 1991, from PSI to the Partnership regarding the change in ownership and dissolution of ConCap Captial 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). 10.21Property Management Agreement No. 414 dated May 13, 1993, by and between the Partnership and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.22Assignment and Assumption Agreement (Property Management Agreement No. 414) dated May 13, 1993, by and between Coventry Properties, Inc., R&B Apartment Management Company, Inc., and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.23Assignment Agreement as to Certain Property Management Services dated May 13, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.24Property Management Agreement No. 506 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.25Assignment and Assumption Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.27Assignment and Assumption Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.28Multifamily Note dated November 30, 1995 between Consolidated Capital Growth Fund, a California limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 10.29Multifamily Note dated November 30, 1995 between Consolidated Capital Growth Fund, a California limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 10.30Multifamily Note dated November 30, 1995 between Consolidated Capital Growth Fund, a California limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 10.31Multifamily Note dated November 1, 1996 between Consolidated Capital Growth Fund, a California limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings, Inc. 11 Statement regarding computation of Net Income per Limited Partnership Unit (Incorporated by reference to Note A of Item 7 - Financial Statements of this Form 10-K). 16 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). 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 Consolidated Capital Growth Fund 55 Beattie Place P.O. Box 1089 Greenville, South Carolina 29602 Dear Mr. Foye: Note H of Notes to the Financial Statements of Consolidated Capital Growth Fund 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 EX-27 2 YEAR END 10-KSB
5 This schedule contains summary financial information extracted from Consolidated Capital Growth Fund 1999 Fourth Quarter 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000201529 Consolidated Capital Growth Fund 1,000 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 1,988 0 0 0 0 0 45,203 26,880 21,574 0 30,690 0 0 0 (10,081) 0 0 11,713 0 0 9,929 0 2,234 0 0 0 0 0 0 1,784 35.90 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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