10KSB 1 ccgf.txt CCGF 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, 2001 [ ] 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 CAPITAL 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. [X] State issuer's revenues for its most recent fiscal year. $12,121,000 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, 2001. 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"), a publicly traded real estate investment trust. 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. 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 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 $ 9,381 $ 7,159 5-22 yrs S/L $ 2,487 Churchill Park Apartments 9,434 5,741 5-20 yrs S/L 4,123 The Lakes Apartments 16,381 10,734 5-19 yrs S/L 8,123 Doral Springs Apartments 13,139 7,735 5-20 yrs S/L 7,585 Total $48,335 $31,369 $22,318
See "Note A" to the financial statements included in "Item 7. Financial Statements" for a description of the Partnership's depreciation policy. 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 2001 Rate Amortized Date Maturity (2) (in thousands) (in thousands) Breckinridge Square Apartments $ 6,000 6.95% (1) 12/01/05 $ 6,000 Churchill Park Apartments 6,450 6.95% (1) 12/01/05 6,450 The Lakes Apartments 12,240 6.95% (1) 12/01/05 12,240 Doral Springs Apartments 10,692 7.53% 20 yrs 07/01/21 -- Total $35,382 $24,690
(1) Interest only payments (2) See "Item 7. Financial Statements - Note B" for information with respect to the Registrant's ability to repay these loans and other specific details about the loans. On June 28, 2001, the Partnership refinanced the mortgage encumbering Doral Springs Apartments. The refinancing replaced indebtedness of approximately $6,000,000 with a new mortgage in the amount of $10,790,000. The new mortgage carries a stated interest rate of 7.53%. Interest on the old mortgage was 7.33%. Principal and interest payments on the mortgage loan of approximately $87,000 are due monthly until the loan matures in July 2021 at which time the loan will be fully amortized. Total capitalized loan costs were approximately $371,000. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $64,000 due to the write-off of unamortized loan costs. Rental Rates and Occupancy The following table sets forth the average annual rental rates and occupancy for 2001 and 2000 for each property. Average Annual Average Annual Rental Rates Occupancy (per unit) Property 2001 2000 2001 2000 Breckinridge Square Apartments $7,949 $7,906 90% 93% Churchill Park Apartments 7,467 7,263 87% 92% The Lakes Apartments 7,552 7,403 92% 86% Doral Springs Apartments 8,913 8,324 97% 97% The General Partner attributes the decrease in occupancy at Churchill Apartments and Breckinridge Square Apartments to poor market conditions and first time home purchases by many residents. The General Partner attributes the increase in occupancy at The Lakes Apartments to aggressive marketing and recent capital improvements to the property. 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, 2001, 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 2001 for each property were: 2001 2001 Billing Rate (in thousands) Breckinridge Square Apartments $ 99 1.04% Churchill Park Apartments 101 0.90% The Lakes Apartments 224 0.95% Doral Springs Apartments 312 2.20% Capital Improvements Breckinridge Square Apartments: The Partnership completed approximately $417,000 in capital expenditures at Breckinridge Square Apartments during the year ended December 31, 2001, consisting primarily of heating and air conditioning upgrades, structural improvements, roof replacements, major landscaping, appliances, and floor covering replacements. These improvements were funded primarily from 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 $231,000 in capital expenditures at Churchill Park Apartments as of December 31, 2001, consisting primarily of interior decoration, air conditioning unit replacement, electrical upgrades, and plumbing, floor covering, appliance, and water heater replacements. These improvements were funded from 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 $485,000 in capital expenditures at The Lakes Apartments as of December 31, 2001, consisting primarily of building and other improvements, maintenance equipment, structural improvements, and air conditioning, appliance, cabinet, water heater, and floor covering replacements. These improvements were funded from 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 $421,000 in capital expenditures at Doral Springs Apartments as of December 31, 2001, consisting primarily of plumbing upgrades, lighting upgrades, floor covering and appliance replacement and other building improvements. These improvements were funded from operations, replacement reserves, and insurance proceeds. 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 anticipated cash flow generated by the property. During the year ended December 31, 2001, a net casualty gain of approximately $80,000 was recorded at Doral Springs Apartments. Approximately $57,000 of this gain related to a flood that occurred in October 2000. This gain was a result of the receipt of insurance proceeds of approximately $76,000 and the write-off of the net book value of the destroyed assets totaling approximately $19,000. Approximately $23,000 of this gain related to sewer and water line damage that occurred in November 2000. This gain was a result of the receipt of insurance proceeds of approximately $39,000 and the write-off of the net book value of the destroyed assets totaling approximately $16,000. Item 3. Legal Proceedings The Partnership is a party to certain legal actions resulting from its operating activities. As of December 31, 2001, one case has been settled and paid by the Partnership's insurance carrier and the other case is still pending. This action is a routine litigation and administrative proceeding arising in the ordinary course of business and is not expected to have a material adverse effect on the financial condition or results of operations of the Partnership. Item 4. Submission of Matters to a Vote of Security Holders During the quarter ended December 31, 2001, 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 2,060 holders of record owning an aggregate of 49,196 Units. Affiliates of the General Partner owned 31,398.25 units or approximately 63.82% at December 31, 2001. 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, 2000 and 2001 (see "Item 6. Management's Discussion and Analysis or Plan of Operation" for further detail). Distributions Per Limited Aggregate Partnership Unit 01/01/00 - 12/31/00 $2,872,000 (1) $ 57.81 01/01/01 - 12/31/01 6,431,000 (2) 117.69 (1) Distributions were made from operations. (2) Distribution of approximately $1,998,000 from operations and approximately $4,433,000 from the refinancing proceeds of Doral Springs. 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 cash available for distribution is reviewed on a monthly 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 2002 or subsequent periods. See "Item 2. Description of Properties - Capital Improvements" for information relating to anticipated capital expenditures at the properties. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 31,398.25 limited partnership units (the "Units") in the Partnership representing 63.82% of the outstanding Units at December 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 voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 63.82% of the outstanding Units, AIMCO is in a position to control all such 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. 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, 2001 was approximately $800,000 as compared to approximately $1,208,000 for the year ended December 31, 2000. The decrease in net income is due to the recognition of an extraordinary loss on early extinguishment of debt and an increase in total expenses which was partially offset by an increase in total revenues. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $64,000 due to the June 2001 refinancing of Doral Springs Apartments resulting in the write off of unamortized loan costs. The increase in total expenses is primarily attributable to an increase in operating and interest expenses which was partially offset by a decrease in depreciation expense. Operating expenses increased due to increases in insurance premiums at all of the Partnership's properties and utilities, especially electrical and natural gas costs, at Breckinridge Square and Churchill Park. Interest expense increased due to the refinancing of the mortgage encumbering Doral Springs in June 2001. Depreciation expense decreased primarily due to the building becoming fully depreciated during third quarter of 2000 at Breckinridge Square Apartments. The increase in total revenues is due to an increase in rental income which was partially offset by a decrease in other income and casualty gain. The increase in rental income is due to the increase in average rental rates at all of the Registrant's properties and an increase in occupancy at The Lakes which more than offset a decrease in occupancy at Breckinridge Square and Churchill Park. Other income decreased due to a decrease in interest income at all the Registrant's properties as a result of lower average cash balances in interest bearing accounts. During the year ended December 31, 2001, a net casualty gain of approximately $80,000 was recorded at Doral Springs Apartments. Approximately $57,000 of this gain related to a flood that occurred in October 2000. This gain was a result of the receipt of insurance proceeds of approximately $76,000 and the write-off of the net book value of the destroyed assets totaling approximately $19,000. Approximately $23,000 of this gain related to sewer and water line damage that occurred in November 2000. This gain was a result of the receipt of insurance proceeds of approximately $39,000 and the write-off of the net book value of the destroyed assets totaling approximately $16,000. During the year ended December 31, 2000, a net casualty gain of approximately $183,000 was recorded at The Lakes Apartments. The casualty gain related to a fire that destroyed 12 apartment units in January 2000. The gain was the result of insurance proceeds of approximately $242,000 and the write-off of the net book value of the destroyed assets totaling $59,000 which were replaced in 2000. General and administrative expenses remained relatively constant for the years ended December 31, 2001 and 2000, respectively. Included in general and administrative expenses are reimbursements to the General Partner as allowed under the Partnership Agreement. In addition, costs associated with the quarterly and annual communications with the 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 December 31, 2001, the Partnership had cash and cash equivalents of approximately $644,000 compared to approximately $1,340,000 at December 31, 2000. The decrease in cash and cash equivalents of approximately $696,000 is primarily due to approximately $1,431,000 and $2,110,000 of cash used in investing and financing activities, respectively, which was partially offset by approximately $2,845,000 of cash provided by operating activities. 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 by insurance proceeds received. Cash used in financing activities consisted of partner distributions, the repayment of the mortgage encumbering Doral Springs Apartments, principal payments on mortgage notes payable and loan costs paid partially offset by proceeds received from the refinancing of the mortgage encumbering Doral Springs Apartments. 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, and 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. On June 28, 2001, the Partnership refinanced the mortgage encumbering Doral Springs Apartments. The refinancing replaced indebtedness of approximately $6,000,000 with a new mortgage in the amount of $10,790,000. The new mortgage carries a stated interest rate of 7.53%. Interest on the old mortgage was 7.33%. Principal and interest payments on the mortgage loan of approximately $87,000 are due monthly until the loan matures in July 2021 at which time the loan will be fully amortized. Total capitalized loan costs were approximately $371,000. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $64,000 due to the write-off of unamortized loan costs. 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 is approximately $35,382,000. The mortgages for The Lakes Apartments, Churchill Park Apartments, and Breckinridge Square Apartments require monthly interest only payments. These notes require balloon payments on December 1, 2005. The mortgage encumbering Doral Springs Apartments is being amortized over 20 years and will be fully amortized on July 21, 2021. The General Partner may attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant will risk losing such properties through foreclosure. Pursuant to the Partnership Agreement, the term of the Partnership is scheduled to expire on December 31, 2006. Accordingly, prior to such date the Partnership will need to either sell its investment properties or extend the term of the Partnership. If the Partnership is unable to extend its term, the ultimate sale price of the investment properties may be adversely affected. During the year ended December 31, 2001, the Partnership paid distributions of approximately $6,431,000 (approximately $5,790,000 paid to the limited partners or $117.69 per limited partnership unit) of which approximately $1,998,000 (approximately $1,977,000 to the limited partners or $40.18 per limited partnership unit) was from operations and approximately $4,433,000 (approximately $3,813,000 to the limited partners or $77.51 per limited partnership unit) was from the refinancing proceeds of Doral Springs Apartments. During the year ended December 31, 2000, cash distributions of approximately $2,872,000 (approximately $2,844,000 of which was paid to the limited partners or $57.81 per limited partnership unit) were paid 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 cash available for distribution is reviewed on a monthly 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 2002 or subsequent periods. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 31,398.25 limited partnership units (the "Units") in the Partnership representing 63.82% of the outstanding Units at December 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 voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 63.82% of the outstanding Units, AIMCO is in a position to control all such 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. Recent Accounting Pronouncements In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides accounting guidance for financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The General Partner does not anticipate that its adoption will have a material effect on the financial position or results of operations of the Partnership. Item 7. Financial Statements CONSOLIDATED CAPITAL GROWTH FUND LIST OF FINANCIAL STATEMENTS Report of Ernst & Young LLP, Independent Auditors Balance Sheet - December 31, 2001 Statements of Operations - Years ended December 31, 2001 and 2000 Statements of Changes in Partners' Deficit - Years ended December 31, 2001 and 2000 Statements of Cash Flows - Years ended December 31, 2001 and 2000 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, 2001, 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, 2001. 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, 2001, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States. /s/ERNST & YOUNG LLP Greenville, South Carolina February 15, 2002 CONSOLIDATED CAPITAL GROWTH FUND BALANCE SHEET (in thousands, except unit data) December 31, 2001
Assets Cash and cash equivalents $ 644 Receivables and deposits 299 Restricted escrows 293 Other assets 658 Investment properties (Notes B and D): Land $ 4,610 Buildings and related personal property 43,725 48,335 Less accumulated depreciation (31,369) 16,966 $ 18,860 Liabilities and Partners' Deficit Liabilities Accounts payable $ 146 Tenant security deposit liabilities 277 Other liabilities 431 Mortgage notes payable (Note B) 35,382 Partners' Deficit General partner $ (5,428) Limited partners (49,196 units issued and outstanding) (11,948) (17,376) $ 18,860 See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 2001 2000 Revenues: Rental income $ 11,410 $ 11,085 Other income 631 681 Casualty gain (Note F) 80 183 Total revenues 12,121 11,949 Expenses: Operating 5,117 4,695 General and administrative 670 668 Depreciation 2,284 2,369 Interest 2,422 2,234 Property taxes 764 775 Total expenses 11,257 10,741 Income before extraordinary loss 864 1,208 Extraordinary loss on early extinguishment of debt (64) -- Net income $ 800 $ 1,208 Net income allocated to general partner (1%) $ 8 $ 12 Net income allocated to limited partners (99%) 792 1,196 $ 800 $ 1,208 Per limited partnership unit: Income before extraordinary loss $ 17.38 $ 24.31 Extraordinary loss (1.28) -- Net income $ 16.10 $ 24.31 Distributions per limited partnership unit $ 117.69 $ 57.81 See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL 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, 1999 49,196 $ (4,779) $ (5,302) $(10,081) Distribution to partners -- (28) (2,844) (2,872) Net income for the year ended December 31, 2000 -- 12 1,196 1,208 Partners' deficit at December 31, 2000 49,196 (4,795) (6,950) (11,745) Distribution to partners -- (641) (5,790) (6,431) Net income for the year ended December 31, 2001 -- 8 792 800 Partners' deficit at December 31, 2001 49,196 $ (5,428) $(11,948) $(17,376) See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 2001 2000 Cash flows from operating activities: Net income $ 800 $ 1,208 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,284 2,369 Amortization of loan costs 75 78 Casualty gain (80) (183) Bad debt 193 182 Extraordinary loss on early extinguishment of debt 64 -- Changes in assets and liabilities: Receivables and deposits (195) (85) Other assets 14 (8) Accounts payable (176) 55 Tenant security deposit liabilities 36 -- Accrued property taxes (41) 18 Other liabilities (129) 126 Net cash provided by operating activities 2,845 3,760 Cash flows used in investing activities: Property improvements and replacements (1,637) (1,753) Net withdrawals from (deposits to) restricted escrows 91 (25) Insurance proceeds received 115 242 Net cash used in investing activities (1,431) (1,536) Cash flows used in financing activities: Distributions to partners (6,431) (2,872) Proceeds from mortgage note payable 10,790 -- Repayment of mortgage note payable (6,000) -- Loan costs paid (371) -- Principal payments on mortgage notes payable (98) -- Net cash used in financing activities (2,110) (2,872) Net decrease in cash and cash equivalents (696) (648) Cash and cash equivalents at beginning of period 1,340 1,988 Cash and cash equivalents at end of period $ 644 $ 1,340 Supplemental disclosure of cash flow information: Cash paid for interest $ 2,317 $ 2,156 Supplemental disclosure of non-cash flow information: Property improvements and replacements included in accounts payable $ -- $ 83 See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS December 31, 2001 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"), a publicly traded real estate investment trust. 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 accounting principles generally accepted in the United States 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. At certain times, the amount of cash deposited at a bank may exceed the limit on insured deposits. Cash balances included approximately $464,000 at December 31, 2001 that are maintained by the affiliated management company on behalf of affiliated entities in cash concentration accounts. Restricted Escrows: At December 31, 2001 approximately $293,000 is held in replacement reserve funds for certain capital replacements (as defined in the Replacement Reserve Agreement) at Breckinridge Square Apartments, Churchill Park Apartments, and The Lakes Apartments. 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 for real property over 18 years for additions after March 15, 1984, and before May 9, 1985, and 19 years for additions after May 8, 1985, and before January 1, 1987. 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. Loan Costs: Loan costs of approximately $874,000, less accumulated amortization of approximately $316,000, are included in other assets and are being amortized 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 2001 and 2000 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 $513,000 and $23,000 from the Partnership during 2001 and 2000, respectively. The following table sets forth the distributions made by the Partnership for the years ended December 31, 2000 and 2001. Distributions Per Limited Aggregate Partnership Unit 01/01/00 - 12/31/00 $2,872,000 (1) $ 57.81 01/01/01 - 12/31/01 6,431,000 (2) 117.69 (1) Distributions were made from operations. (2) Distribution of approximately $1,998,000 from operations and approximately $4,433,000 from the refinancing proceeds of Doral Springs. 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 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, 2001 and 2000. See "Recent Accounting Pronouncements" below. Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. 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. Advertising: The Partnership expenses the costs of advertising as incurred. Advertising costs of approximately $202,000 and $219,000 for the years ended December 31, 2001 and 2000, 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. Recent Accounting Pronouncements: In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No. 144 provides accounting guidance for financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The General Partner does not anticipate that its adoption will have a material effect on the financial position or results of operations of the Partnership. Note B - 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 2001 Interest Rate Date Maturity (in thousands) (in thousands) Breckinridge Square Apartments $ 6,000 $ 35 6.95% 12/01/05 $ 6,000 Churchill Park Apartments 6,450 37 6.95% 12/01/05 6,450 The Lakes Apartments 12,240 71 6.95% 12/01/05 12,240 Doral Springs Apartments 10,692 87 7.53% 07/01/21 -- Total $35,382 $230 $24,690
On June 28, 2001, the Partnership refinanced the mortgage encumbering Doral Springs Apartments. The refinancing replaced indebtedness of approximately $6,000,000 with a new mortgage in the amount of $10,790,000. The new mortgage carries a stated interest rate of 7.53%. Interest on the old mortgage was 7.33%. Principal and interest payments on the mortgage loan of approximately $87,000 are due monthly until the loan matures in July 2021 at which time the loan will be fully amortized. Total capitalized loan costs were approximately $371,000. The Partnership recognized an extraordinary loss on the early extinguishment of debt of approximately $64,000 due to the write-off of unamortized loan costs. 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. Scheduled principle payments of the mortgage notes payable subsequent to December 31, 2001 are as follows (in thousands): 2002 $ 249 2003 268 2004 289 2005 25,002 2006 336 Thereafter 9,238 $35,382 Note C - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. 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 years ended December 31, 2001 and 2000 as reflected in the following table: 2001 2000 (in thousands) Property management fees (included in operating expenses) $ 607 $ 577 Reimbursement for services of affiliates (included in general and administrative expenses and investment properties) 876 410 Partnership management fees (included in general and administrative expenses) 178 256 Loan costs (included in other assets) 108 -- 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 $607,000 and $577,000 for the years ended December 31, 2001 and 2000, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $876,000 and $410,000 for the years ended December 31, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $495,000 and $52,000 for the years ended December 31, 2001 and 2000, respectively. The construction management service fees are calculated based on a percentage of current and certain prior year additions to investment properties and are being depreciated over 15 years. 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. Affiliates of the General Partner received approximately $178,000 and $256,000 for the years ended December 31, 2001 and 2000, respectively, for providing these services. In connection with the refinancing of Doral Springs Apartments on June 28, 2001, the Partnership paid the General Partner a fee of approximately $108,000 pursuant to the Partnership Agreement. Beginning in 2001, the Partnership began insuring its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the year ended December 31, 2001, the Partnership paid AIMCO and its affiliates approximately $132,000 for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 31,398.25 limited partnership units (the "Units") in the Partnership representing 63.82% of the outstanding Units at December 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 voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 63.82% of the outstanding Units, AIMCO is in a position to control all such 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 D - 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 $ 4,020 Churchill Park Apartments Louisville, Kentucky 6,450 566 6,510 2,358 The Lakes Apartments Raleigh, North Carolina 12,240 946 9,605 5,830 Doral Springs Apartments Miami, Florida 10,692 2,848 8,492 1,799 Totals $35,382 $ 5,001 $29,327 $14,007
Gross Amount At Which Carried At December 31, 2001 (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 $ 8,740 $ 9,381 $ 7,159 1971 10/78 5-22 Churchill Park Apartments Louisville, Kentucky 566 8,868 9,434 5,741 1970 05/90 5-20 The Lakes Apartments Raleigh, North Carolina 946 15,435 16,381 10,734 1973 05/88 5-19 Doral Springs Apartments Miami, Florida 2,457 10,682 13,139 7,735 1972 - 1975 11/87 5-20 Totals $4,610 $43,725 $48,335 $31,369
Reconciliation of "Investment Properties and Accumulated Depreciation": Years Ended December 31, 2001 2000 (in thousands) Real Estate Balance at beginning of year $46,872 $45,203 Property improvements 1,554 1,836 Disposals of property (91) (167) Balance at end of Year $48,335 $46,872 Accumulated Depreciation Balance at beginning of year $29,141 $26,880 Additions charged to expense 2,284 2,369 Disposals of property (56) (108) Balance at end of year $31,369 $29,141 The aggregate cost of the real estate for Federal income tax purposes at December 31, 2001 and 2000, is approximately $45,625,000 and $44,185,000, respectively. The accumulated depreciation taken for Federal income tax purposes at December 31, 2001 and 2000, is approximately $23,307,000 and $21,270,000, respectively. Note E - 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): 2001 2000 Net income as reported $ 800 $1,208 Add (deduct): Fixed asset write-offs and casualty gain (80) (209) Depreciation differences 247 292 Prepaid rent (97) 32 Other 19 29 Federal taxable income $ 889 $1,352 Federal taxable income per limited partnership unit $17.88 $27.21 The tax basis of the Partnership's assets and liabilities is approximately $11,191,000 greater than the assets and liabilities as reported in the financial statements. Note F - Casualty Gain During the year ended December 31, 2001, a net casualty gain of approximately $80,000 was recorded at Doral Springs Apartments. Approximately $57,000 of this gain related to a flood that occurred in October 2000. This gain was a result of the receipt of insurance proceeds of approximately $76,000 and the write-off of the net book value of the destroyed assets totaling approximately $19,000. Approximately $23,000 of this gain related to sewer and water line damage that occurred in November 2000. This gain was a result of the receipt of insurance proceeds of approximately $39,000 and the write-off of the net book value of the destroyed assets totaling approximately $16,000. During the year ended December 31, 2000, a net casualty gain of approximately $183,000 was recorded at The Lakes Apartments. The casualty gain related to a fire that destroyed 12 apartment units in January 2000. The gain was the result of insurance proceeds of approximately $242,000 and the write-off of the net book value of the destroyed assets totaling $59,000 which were replaced in 2000. Note G - Legal Proceedings The Partnership is a party to certain legal actions resulting from its operating activities. As of December 31, 2001, one case has been settled and paid by the Partnership's insurance carrier and the other case is still pending. This action is a routine litigation and administrative proceeding arising in the ordinary course of business and is not expected to have a material adverse effect on the financial condition or results of operations of the Partnership. 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 44 Executive Vice President and Director Martha L. Long 42 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 since October 1998 as a result of the acquisition of Insignia Financial Group, Inc. As of February 2001, Ms. Long was also appointed head of the service business for AIMCO. 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. One or more of the above persons are also directors and/or officers of a general partner (or general partner of a general partner) of limited partnerships which either have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15(d) of such Act. Further, one or more of the above persons are also directors and/or officers of Apartment Investment and Management Company and the general partner of AIMCO Properties, L.P., entities that have a class of securities registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, or are subject to the reporting requirements of Section 15 (d) of such Act. The executive officers and director of the General Partner fulfill the obligations of the Audit Committee and oversee the Partnership's financial reporting process on behalf of the General Partner. Management has the primary responsibility for the financial statements and the reporting process including the systems of internal controls. In fulfilling its oversight responsibilities, the executive officers and director of the General Partner reviewed the audited financial statements with management including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures in the financial statements. The executive officers and director of the General Partner reviewed with the independent auditors, who are responsible for expressing an opinion on the conformity of those audited financial statements with accounting principles generally accepted in the United States, their judgments as to the quality, not just the acceptability, of the Partnership's accounting principles and such other matters as are required to be discussed with the Audit Committee or its equivalent under auditing standards generally accepted in the United States. In addition, the Partnership has discussed with the independent auditors the auditors' independence from management and the Partnership including the matters in the written disclosures required by the Independence Standards Board and considered the compatibility of non-audit services with the auditors' independence. The executive officers and director of the General Partner discussed with the Partnership's independent auditors the overall scope and plans for their audit. In reliance on the reviews and discussions referred to above, the executive officers and director of the General Partner has approved the inclusion of the audited financial statements in the Form 10-KSB for the year ended December 31, 2001 for filing with the Securities and Exchange Commission. The General Partner has reappointed Ernst & Young LLP as independent auditors to audit the financial statements of the Partnership for the current fiscal year. Fees for the last fiscal year were audit services of approximately $53,000 and non-audit services (principally tax-related) of approximately $27,000. 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, 2001. Entity Number of Units Percentage AIMCO Properties, LP (an affiliate of AIMCO) 9,397.60 19.10% Madison River Properties LLC (an affiliate of AIMCO) 2,690.00 5.47% Insignia Properties LP (an affiliate of AIMCO) 19,310.65 39.25% 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, 2001, 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 General Partner and its affiliates received reimbursements and fees during the years ended December 31, 2001 and 2000 as reflected in the following table: 2001 2000 (in thousands) Property management fees $ 607 $ 577 Reimbursement for services of affiliates 876 410 Partnership management fees 178 256 Loan costs 108 -- 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 $607,000 and $577,000 for the years ended December 31, 2001 and 2000, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $876,000 and $410,000 for the years ended December 31, 2001 and 2000, respectively. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $495,000 and $52,000 for the years ended December 31, 2001 and 2000, respectively. The construction management service fees are calculated based on a percentage of current and certain prior year additions to investment properties and are being depreciated over 15 years. 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. Affiliates of the General Partner received approximately $178,000 and $256,000 for the years ended December 31, 2001 and 2000, respectively, for providing these services. In connection with the refinancing of Doral Springs Apartments on June 28, 2001, the Partnership paid the General Partner a fee of approximately $108,000 pursuant to the Partnership Agreement. Beginning in 2001, the Partnership began insuring its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the year ended December 31, 2001, the Partnership paid AIMCO and its affiliates approximately $132,000 for insurance coverage and fees associated with policy claims administration. In addition to its indirect ownership of the general partner interest in the Partnership, AIMCO and its affiliates owned 31,398.25 limited partnership units (the "Units") in the Partnership representing 63.82% of the outstanding Units at December 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 voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 63.82% of the outstanding Units, AIMCO is in a position to control all such 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. Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: None. (b) Reports on Form 8-K filed during the fourth quarter of fiscal year 2001: 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 Date: Martha L. Long and 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). 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). 10.10 Assignment 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). 10.11 Construction 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). 10.12 Assignment 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). 10.13 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.14 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and R&B Apartment Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.15 Investor Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.16 Assignment and Assumption Agreement (Investor Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1990). 10.17 Letter of Notice dated December 20, 1991, from Partnership Services, Inc. ("PSI") to the Partnership regarding the change in ownership and dissolution of ConCap Services Company whereby PSI assumed the Investor Services Agreement. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.18 Financial Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.19 Assignment 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). 10.20 Letter 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). 10.21 Property 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). 10.22 Assignment 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). 10.23 Assignment 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). 10.24 Property Management Agreement No. 506 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.25 Assignment and Assumption Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.27 Assignment and Assumption Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.28 Multifamily 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. 10.29 Multifamily 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. 10.30 Multifamily 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. 10.31 Multifamily 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).