10QSB 1 ccgf.txt CCGF FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-8639 CONSOLIDATED CAPITAL GROWTH FUND (Exact name of small business issuer as specified in its charter) California 94-2382571 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO 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 Partnership 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, 2001
Assets Cash and cash equivalents $ 876 Receivables and deposits 398 Restricted escrows 332 Other assets 589 Investment properties: Land $ 4,610 Buildings and related personal property 42,610 47,220 Less accumulated depreciation (29,672) 17,548 $19,743 Liabilities and Partners' Deficit Liabilities Accounts payable $ 122 Tenant security deposit liabilities 262 Accrued property taxes 221 Other liabilities 471 Mortgage notes payable 30,690 Partners' Deficit General partner $ (4,798) Limited partners (49,196 units issued and outstanding) (7,225) (12,023) $ 19,743 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, 2001 2000 Revenues: Rental income $2,776 $2,759 Other income 172 147 Casualty gain (Note C) 57 -- Total revenues 3,005 2,906 Expenses: Operating 1,230 1,139 General and administrative 165 148 Depreciation 570 604 Interest 558 558 Property taxes 180 175 Total expenses 2,703 2,624 Net income $ 302 $ 282 Net income allocated to general partner (1%) $ 3 $ 3 Net income allocated to limited partners (99%) 299 279 $ 302 $ 282 Net income per limited partnership unit $ 6.08 $ 5.67 Distribution per limited partnership unit $11.67 $20.33 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, 2000 49,196 $ (4,795) $(6,950) $(11,745) Distribution to partners -- (6) (574) (580) Net income for the three months ended March 31, 2001 -- 3 299 302 Partners' deficit at March 31, 2001 49,196 $ (4,798) $ (7,225) $(12,023) See Accompanying Notes to Financial Statements
d) CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2001 2000 Cash flows from operating activities: Net income $ 302 $ 282 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 570 604 Amortization of loan costs 19 19 Casualty gain (57) -- Change in accounts: Receivables and deposits (101) (12) Other assets (168) (64) Accounts payable (200) (102) Tenant security deposit liabilities 21 (23) Accrued property taxes 180 180 Other liabilities (89) 119 Net cash provided by operating activities 477 1,003 Cash flows from investing activities: Property improvements and replacements (489) (420) Net withdrawals from (deposits to) restricted escrows 52 (49) Insurance proceeds received 76 -- Net cash used in investing activities (361) (469) Cash flows used in financing activities: Distributions to partners (580) (1,010) Net decrease in cash and cash equivalents (464) (476) Cash and cash equivalents at beginning of period 1,340 2,069 Cash and cash equivalents at end of period $ 876 $ 1,593 Supplemental disclosure of cash flow information: Cash paid for interest $ 539 $ 539 Included in property improvements and replacements for the three months ended March 31, 2001 are approximately $83,000 of improvements which were included in accounts payable at December 31, 2000. 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" or "Registrant") 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, 2001, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2001. 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, 2000. The General Partner is a wholly owned subsidiary of Apartment Investment and Management Company ("AIMCO"). Segment Reporting: Statement of Financial Accounting Standards ("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. As defined in SFAS 131, the Partnership has only one reportable segment. The General Partner believes that segment-based disclosures will not result in a more meaningful presentation than the financial statements as currently presented. Note B - Distributions During the three months ended March 31, 2001, the Partnership declared and paid distributions of approximately $580,000 (approximately $574,000 paid to the limited partners or $11.67 per limited partnership unit) from operations. Cash distributions of approximately $1,010,000 (approximately $1,000,000 paid to the limited partners or $20.33 per limited partnership unit) were paid from operations during the three months ended March 31, 2000. Subsequent to March 31, 2001, the Partnership declared and paid distributions of approximately $517,000 (approximately $512,000 paid to the limited partners or $10.41 per limited partnership unit) from operations. Note C - Casualty Event During the three months ended March 31, 2001, a net casualty gain of approximately $57,000 was recorded at Doral Springs Apartments. The casualty gain related to a flood that occurred in October 2000. The gain was a result of insurance proceeds of approximately $76,000 and the write-off of the net book value of the destroyed assets totaling approximately $19,000. 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 General Partner and its affiliates received reimbursements and fees during the three months ended March 31, 2001 and 2000 as reflected in the following table: 2001 2000 (in thousands) Property management fees (included in operating expenses) $ 150 $ 147 Reimbursement for services of affiliates (included in operating and general and administrative expense and investment properties) 106 50 Partnership management fees (included in general and administrative expense) 52 90 Affiliates of the General Partner are 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 $150,000 and $147,000 for the three months ended March 31, 2001 and 2000, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $106,000 and $50,000 for the three months ended March 31, 2001 and 2000, 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 three months ended March 31, 2001 and 2000, affiliates of the General Partner received $52,000 and $90,000, respectively, for providing these services. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 30,703.75 limited partnership units (the "Units") in the Partnership representing 62.41% of the outstanding Units at March 31, 2001. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 62.41% of the outstanding Units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. 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 its affiliation with the General Partner. Note E - Legal Proceedings The Partnership is a party to certain legal actions resulting from its operating activities. These actions are routine litigation and administrative proceedings arising in the ordinary course of business and none of which are expected to have a material adverse effect on the financial condition or results of operations of the Partnership. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB 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. 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, 2001 and 2000: Average Occupancy Property 2001 2000 Breckinridge Square 89% 93% Louisville, Kentucky Churchill Park 86% 97% Louisville, Kentucky The Lakes 89% 85% Raleigh, North Carolina Doral Springs 98% 96% Miami, Florida The General Partner attributes the increase in occupancy at The Lakes Apartments to a fire in January 2000 which rendered 12 units unleaseable. During January 2001, these units were leaseable and occupancy rates returned to what they were before the fire. The General Partner attributes the decrease in occupancy at Breckenridge Apartments and Churchill Park Apartments to a slower economy in the Louisville area and several new apartment complexes in the area. Results of Operations The Partnership's net income for the three months ended March 31, 2001 and 2000 was approximately $302,000 and $282,000, respectively. The increase in net income is due to an increase in total revenues which was partially offset by an increase in total expenses. Total revenues increased due to increases in rental revenue and other income and due to a casualty at Doral Springs Apartments. Rental income increased due to increased occupancy at Doral Springs and The Lakes and due to an increase in average annual rental rates at all four investment properties, offset by decreases in occupancy at Breckinridge Square and Churchill Park. Other income increased due to an increase in laundry income at Churchill Park and due to increases in interest income at all of the properties. Total expenses increased due to increases in operating and general and administrative expenses offset by a decrease in depreciation expense. Operating expense increased due to increases in utilities and payroll expenses at all four investment properties. These increases were offset by decreases in maintenance expense at Churchill Park and The Lakes. Depreciation expense decreased due to the building at Breckinridge Square becoming fully depreciated in the last quarter of 2000. During the three months ended March 31, 2001, a net casualty gain of approximately $57,000 was recorded at Doral Springs Apartments. The casualty gain related to a flood that occurred in October 2000. The gain was a result of insurance proceeds of approximately $76,000 and the write-off of the net book value of the destroyed assets totaling approximately $19,000. General and administrative expenses increased due to an increase in the cost of services included in the management reimbursements to the General Partner as allowed under the Partnership Agreement. In addition to these reimbursements, cost associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are also included. 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, 2001, the Partnership had cash and cash equivalents of approximately $876,000 compared to approximately $1,593,000 at March 31, 2000. The decrease in cash and cash equivalents of approximately $464,000 for the three months ended March 31, 2001, from the Partnership's calendar year end of December 31, 2000, is due to approximately $580,000 and $361,000 of cash used in financing and investing activities, respectively, which was partially offset by approximately $477,000 of cash provided by operating activities. Cash used in investing activities consisted of property improvements and replacements, partially offset by net withdrawals from escrow accounts maintained by the mortgage lender and insurance proceeds received. Cash used in financing activities consisted of partner distributions. The Partnership invests its working capital reserves in interest bearing 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. Capital improvements planned for each of the Registrant's properties are detailed below. Breckinridge Square Apartments: For 2001, the Partnership has budgeted approximately $153,000 for capital improvements for interior and exterior building improvements. The Partnership completed approximately $40,000 in capital expenditures at Breckinridge Square Apartments as of March 31, 2001, consisting primarily of heating and air conditioning upgrades, water heater replacements, plumbing upgrades and appliance and floor covering replacements. These improvements were funded primarily from operations. Churchill Park Apartments: For 2001, the Partnership has budgeted approximately $172,000 for capital improvements for interior and exterior building improvements. The Partnership completed approximately $30,000 in capital expenditures at Churchill Park Apartments as of March 31, 2001, consisting primarily of interior decoration and floor covering replacements. These improvements were funded primarily from operations. The Lakes Apartments: For 2001, the Partnership has budgeted approximately $165,000 for capital improvements, consisting primarily of floor covering, appliance, and water heater replacements. The Partnership completed approximately $123,000 in capital expenditures at The Lakes Apartments as of March 31, 2001, consisting primarily of building improvements, maintenance equipment, floor covering and appliance replacements and other enhancements. These improvements were funded primarily from operations. Doral Springs Apartments: For 2001, the Partnership has budgeted approximately $185,000 for capital improvements, consisting primarily of cabinet, floor covering and appliance replacements. The Partnership completed approximately $213,000 in budgeted and non-budgeted capital expenditures at Doral Springs Apartments as of March 31, 2001, consisting primarily of plumbing upgrades, floor covering and appliance replacement and other building improvements. These improvements were funded from operations and replacement reserves. 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 three months ended March 31, 2001, the Partnership declared and paid distributions of approximately $580,000 (approximately $574,000 paid to the limited partners or $11.67 per limited partnership unit) from operations. Cash distributions of approximately $1,010,000 (approximately $1,000,000 paid to the limited partners or $20.33 per limited partnership unit) were paid from operations during the three months ended March 31, 2000. Subsequent to March 31, 2001, the Partnership declared and paid distributions of approximately $517,000 (approximately $512,000 paid to the limited partners or $10.41 per limited partnership unit) from operations. The Partnership's distribution policy is reviewed on a quarterly basis. 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. There can be no assurance that the Partnership will generate sufficient funds from operations, after required capital expenditures, to permit any additional distributions to its partners during the remainder of 2001 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 30,703.75 limited partnership units (the "Units") in the Partnership representing 62.41% of the outstanding Units at March 31, 2001. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO either through private purchases or tender offers. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters, which would include without limitation, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 62.41% of the outstanding Units, AIMCO is in a position to influence all voting decisions with respect to the Registrant. 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 its affiliation with the General Partner. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership is a party to certain legal actions resulting from its operating activities. These actions are routine litigation and administrative proceedings arising in the ordinary course of business and none of which are expected to have a material adverse effect on the financial condition or results of operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: None. b) Reports on Form 8-K: None filed during the quarter ended March 31, 2001. 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. 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: May 14, 2001