-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KIIYW/SYk/fyNM/XEK6ApraWn4L4Lf7ciU9b43NwRtn6ZaSoUid31ptpIQ90DAPj mosgr/gk0jJ5GsZogVpS9Q== 0000711642-02-000100.txt : 20020513 0000711642-02-000100.hdr.sgml : 20020513 ACCESSION NUMBER: 0000711642-02-000100 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL GROWTH FUND CENTRAL INDEX KEY: 0000201529 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF NONRESIDENTIAL BUILDINGS [6512] IRS NUMBER: 942382571 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-08639 FILM NUMBER: 02643180 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 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, 2002 [ ] 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, 2002
Assets Cash and cash equivalents $ 1,596 Receivables and deposits 403 Restricted escrows 58 Other assets 888 Investment properties: Land $ 4,610 Buildings and related personal property 43,902 48,512 Less accumulated depreciation (31,954) 16,558 $ 19,503 Liabilities and Partners' Deficit Liabilities Accounts payable $ 181 Tenant security deposit liabilities 285 Accrued property taxes 177 Other liabilities 638 Mortgage notes payable 35,321 Partners' Deficit General partner $ (5,425) Limited partners (49,196 units issued and outstanding) (11,674) (17,099) $ 19,503 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, 2002 2001 Revenues: Rental income $2,669 $2,776 Other income 177 172 Casualty gain (Note C) -- 57 Total revenues 2,846 3,005 Expenses: Operating 1,039 1,230 General and administrative 110 165 Depreciation 585 570 Interest 647 558 Property taxes 188 180 Total expenses 2,569 2,703 Net income $ 277 $ 302 Net income allocated to general partner (1%) $ 3 $ 3 Net income allocated to limited partners (99%) 274 299 $ 277 $ 302 Net income per limited partnership unit $ 5.57 $ 6.08 Distribution per limited partnership unit $ -- $11.67 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, 2001 49,196 $(5,428) $(11,948) $(17,376) Net income for the three months ended March 31, 2002 -- 3 274 277 Partners' deficit at March 31, 2002 49,196 $(5,425) $(11,674) $(17,099) See Accompanying Notes to Financial Statements
d) CONSOLIDATED CAPITAL GROWTH FUND STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 2002 2001 Cash flows from operating activities: Net income $ 277 $ 302 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 585 570 Amortization of loan costs 17 19 Casualty gain -- (57) Change in accounts: Receivables and deposits (104) (101) Other assets (247) (168) Accounts payable 35 (200) Tenant security deposit liabilities 8 21 Accrued property taxes 177 180 Other liabilities 207 (89) Net cash provided by operating activities 955 477 Cash flows from investing activities: Property improvements and replacements (177) (489) Net withdrawals from restricted escrows 235 52 Insurance proceeds received -- 76 Net cash provided by (used in) investing activities 58 (361) Cash flows from financing activities: Principal payments on mortgage note payable (61) -- Distributions to partners -- (580) Net cash used in financing activities (61) (580) Net increase (decrease) in cash and cash equivalents 952 (464) Cash and cash equivalents at beginning of period 644 1,340 Cash and cash equivalents at end of period $ 1,596 $ 876 Supplemental disclosure of cash flow information: Cash paid for interest $ 630 $ 539 See Accompanying Notes to Financial Statements
e) CONSOLIDATED CAPITAL GROWTH FUND NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Consolidated Capital Growth Fund (the "Partnership" 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, 2002, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2002. 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, 2001. The General Partner is a wholly owned subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. Note B - Transactions with Affiliated Parties The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. 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 $145,000 and $150,000 for the three months ended March 31, 2002 and 2001, respectively, which is included in operating expenses. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $88,000 and $106,000 for the three months ended March 31, 2002 and 2001, respectively, which is included in general and administrative expenses and investment properties. Included in these amounts are fees related to construction management services provided by an affiliate of the General Partner of approximately $2,000 and $19,000 for the three months ended March 31, 2002 and 2001, respectively. The construction management service fees are calculated based on a percentage of current year additions to the investment properties. 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. No fee was paid during the three months ended March 31, 2002. During the three months ended March 31, 2001, affiliates of the General Partner received approximately $52,000 for providing these services, which is included in general and administrative expenses. 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 three months ended March 31, 2002 and 2001, the Partnership was charged by AIMCO and its affiliates approximately $135,000 and $187,000, respectively, for insurance coverage and fees associated with policy claims administration. 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 - Legal Proceedings The Partnership is a party to a certain legal action resulting from its operating activities. 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 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, 2002 and 2001: Average Occupancy Property 2002 2001 Breckinridge Square 84% 89% Louisville, Kentucky Churchill Park 74% 86% Louisville, Kentucky The Lakes 86% 89% Raleigh, North Carolina Doral Springs 94% 98% Miami, Florida The General Partner attributes the decrease in occupancy at all of the investment properties to a slower economy and recent job layoffs. Results of Operations The Partnership's net income for the three months ended March 31, 2002 and 2001 was approximately $277,000 and $302,000, respectively. The decrease in net income is due to a decrease in total revenues which was offset by a decrease in total expenses. Total revenues decreased due to decreases in rental income and the recognition of a casualty gain in 2001 (see "Item 1. Financial Statements - Note C"). Rental income decreased due to a decrease in average occupancy at all four of the investment properties and due to a decrease in average rental rates at Breckenridge Square Apartments, Churchill Park Apartments, and The Lakes Apartments. Total expenses decreased due to decreases in operating and general and administrative expenses partially offset by an increase in interest expense. Operating expense decreased due to decreases in utility expense, and salary expense at all four investment properties. Interest expense increased due to the refinancing of the mortgage encumbering Doral Springs Apartments in June of 2001 which resulted in a larger loan balance. General and administrative expenses decreased due to a decrease in partnership management fees which is the result of no cash being distributed from operations to the partners during the three months ended March 31, 2002. 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 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, 2002, the Partnership had cash and cash equivalents of approximately $1,596,000 compared to approximately $876,000 at March 31, 2001. The increase in cash and cash equivalents of approximately $952,000 for the three months ended March 31, 2002, from the Partnership's calendar year end of December 31, 2001, is due to approximately $955,000 and $58,000 of cash provided by operating and investing activities, respectively, which was partially offset by approximately $61,000 of cash used in financing activities. Cash provided by investing activities consisted of net withdrawals from restricted escrows, partially offset by property improvements and replacements. Cash used in financing activities consisted of principal payments on 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. Capital improvements planned for each of the Registrant's properties are detailed below. Breckinridge Square Apartments: For 2002, the Partnership has budgeted approximately $159,000 for capital improvements for HVAC, appliance, water meter and floor covering replacements. The Partnership completed approximately $63,000 in capital expenditures at Breckinridge Square Apartments as of March 31, 2002, consisting primarily of heating upgrades, plumbing upgrades, and water heater, appliance and floor covering replacements. These improvements were funded primarily from operations. 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: For 2002, the Partnership has budgeted approximately $207,000 for capital improvements for major painting, door, air conditioning and floor covering replacements and water conservation enhancement. The Partnership completed approximately $38,000 in capital expenditures at Churchill Park Apartments as of March 31, 2002, consisting primarily of sewer upgrades and floor covering replacements. These improvements were funded primarily from operations. 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: For 2002, the Partnership has budgeted approximately $201,000 for capital improvements, consisting primarily of water heater, floor covering and appliance replacements. The Partnership completed approximately $45,000 in capital expenditures at The Lakes Apartments as of March 31, 2002, consisting primarily of floor covering replacements. These improvements were funded primarily from operations and replacement reserves. 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: For 2002, the Partnership has budgeted approximately $122,000 for capital improvements, consisting primarily of air conditioning, floor covering and appliance replacements. The Partnership completed approximately $31,000 in budgeted expenditures at Doral Springs Apartments as of March 31, 2002, consisting primarily of roof, appliance and floor covering replacements. These improvements were funded from operations. 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 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 is approximately $35,321,000, of which approximately $24,690,000 requires monthly interest only payments. These notes require balloon payments on December 1, 2005. The remaining indebtedness, approximately $10,631,000, is required to make monthly principal and interest payments of approximately $60,000. This note will be fully amortized when it matures on July 1, 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. The Partnership distributed the following amounts during the three months ended March 31, 2002 and 2001 (in thousands, except per unit data): Three Months Per Limited Three Months Per Limited Ended Partnership Ended Partnership March 31, 2002 Unit March 31, 2001 Unit Operations $ -- $ -- $ 580 $11.67 The Partnership's cash available for distribution is reviewed on a monthly 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 distributions to its partners during the remainder of 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 March 31, 2002. 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 influence 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. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Partnership is a party to a certain legal action resulting from its operating activities. 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 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, 2002. 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: -----END PRIVACY-ENHANCED MESSAGE-----