-----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, LQ0Eqiuxpw1FhqD2nS6spG8v9xH6suTZxFMpIpNXMgMrSMQaR3wwC0bbYLIkmxda vDZnCihNf4nkmeRRet4BBQ== 0000802200-95-000002.txt : 19951212 0000802200-95-000002.hdr.sgml : 19951212 ACCESSION NUMBER: 0000802200-95-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951109 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL GROWTH FUND CENTRAL INDEX KEY: 0000201529 STANDARD INDUSTRIAL CLASSIFICATION: 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: 95588476 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10QSB 1 FORM 10-QSB--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Quarterly or Transitional Report (As last amended by 34-32231, eff. 6/3/93.) U. S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1994 For the transition period.........to......... Commission file number 0-8639 CONSOLIDATED CAPITAL GROWTH FUND (Exact name of small business issuer as specified in its charter) California 94-2382571 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Issuer's telephone number (803) 239-1000 Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X . No . PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data)
September 30, 1995 Assets Cash and cash equivalents $ 5,087 Securities available for sale 9 Prepaid and other assets 955 Investment properties: Land $ 4,610 Buildings and related personal property 34,777 39,387 Less accumulated depreciation (18,329) 21,058 $27,109 Liabilities and Partners' Capital (Deficit) Liabilities Mortgage notes and interest payable $ 6,308 Tenant security deposits 316 Accrued taxes 327 Other liabilities 914 Partners' Capital (Deficit) General partners $ (677) Limited partners (49,196 units issued and outstanding) 19,921 19,244 $27,109
[FN] See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Nine Months Ended September 30, September 30, 1995 1994 1995 1994 Revenues: Rental income $ 2,686 $ 3,456 $ 8,356 $ 10,124 Interest and dividend income on investments 53 89 199 249 Total revenues 2,739 3,545 8,555 10,373 Expenses: Operating 1,527 2,118 4,417 5,879 General and administrative 138 112 315 303 Partnership management fees 123 -- 613 -- Depreciation 462 750 1,392 2,279 Interest 160 410 534 1,277 Total expenses 2,410 3,390 7,271 9,738 Other income -- -- -- 77 Reorganization items -- (18) -- (26) Gain on sale of investment property -- -- 3,693 -- Loss on disposal of property -- -- (67) -- Income before extraordinary item 329 137 4,910 686 Extraordinary gain on troubled debt restructuring -- -- -- 555 Extraordinary gain on early extinguishment of debt -- -- 121 -- Net income $ 329 $ 137 $ 5,031 $ 1,241 Net income allocated to general partners (1%) $ 3 $ 1 $ 50 $ 12 Net income allocated to limited partners (99%) 326 136 4,981 1,229 $ 329 $ 137 $ 5,031 $ 1,241 Per limited partnership unit: Income before extraordinary items $ 6.62 $ 2.76 $ 98.80 $ 13.81 Extraordinary gain on troubled debt restructuring -- -- -- 11.17 Extraordinary gain on early extinguishment of debt -- -- 2.44 -- Net income per limited partnership unit $ 6.62 $ 2.76 $101.24 $ 24.98
[FN] See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL (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' capital (deficit) at December 31, 1994 49,196 $ (653) $ 21,973 $ 21,320 Distributions -- (74) (7,033) (7,107) Net income for the nine months ended September 30, 1995 -- 50 4,981 5,031 Partners' capital (deficit) at September 30, 1995 49,196 $ (677) $ 19,921 $ 19,244
[FN] See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL GROWTH FUND CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 1995 1994 Cash flows from operating activities: Net income $ 5,031 $ 1,241 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,392 2,279 Amortization of discounts and loan costs 23 34 Gain on troubled debt restructuring -- (555) Gain on early extinguishment of debt (121) -- Gain on sale of investment property (3,693) -- Loss on disposal of property 67 -- Change in accounts: Prepaid and other assets (37) (101) Interest payable 24 141 Tenant security deposits (85) (27) Accrued taxes 38 271 Other liabilities 382 (51) Net cash provided by operating activities 3,021 3,232 Cash flows from investing activities: Property improvements and replacements (806) (496) Cash received from sale of securities available for sale 4,441 -- Cash used for purchase of securities -- (2,142) Proceeds from sale of investment property 7,966 -- Principal receipts on note receivable -- 760 Net cash provided by (used in) investing activities 11,601 (1,878) Cash flows from financing activities: Payments on mortgage notes payable (332) (1,294) Repayment of mortgage notes payable (4,850) -- Distributions paid (7,107) -- Net cash used in financing activities (12,289) (1,294) Net increase in cash and cash equivalents 2,333 60 Cash and cash equivalents at beginning of period 2,754 2,188 Cash and cash equivalents at end of period $ 5,087 $ 2,248 Supplemental disclosure of cash flow information: Cash paid for interest $ 487 $ 1,102
[FN] See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL GROWTH FUND NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 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 the General Partner, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 1995, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1995. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the year ended December 31, 1994. Note B - Related Party Transactions Consolidated Capital Growth Fund ("Partnership") paid property management fees based upon collected gross rental revenues for property management services for the nine month periods ended September 30, 1995, and September 30, 1994. For the nine months ended September 30, 1994, a portion of such property management fees were paid to Coventry Properties, Inc. ("Coventry"), an affiliate of the General Partner, for day-to-day property management services and a portion was paid to Partnership Services, Inc. ("PSI") for advisory services related to day-to-day property operations. Affiliates of Insignia Financial Group, Inc. ("Insignia"), an affiliate of the General Partner, assumed day-to-day management responsibilities for the Partnership's properties in late December 1994. Fees paid to affiliates of Insignia during the nine months ended September 30, 1995, and fees paid to Coventry and PSI during the nine months ended September 30, 1994, are reflected in the following table: For the Nine Months Ended September 30, 1995 1994 (in thousands) Property management fees $405 $388 Partnership management fees 613(1) -- (1)The Limited Partnership Agreement ("Agreement") provides for a fee equal to 9% of the total distributions made to the limited partners from "cash available for distribution" to the limited partners (as defined in the Agreement) to be paid to the General Partner for executive and administrative management services. Note B - Related Party Transactions - continued The Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with administration of Partnership activities. The General Partner and its current and former affiliates (including Coventry), received reimbursements as reflected in the following table: For the Nine Months Ended September 30, 1995 1994 (in thousands) Reimbursement for services of affiliates $184 $142 Reimbursements for services of affiliates increased during the nine months ended September 30, 1995, compared to the nine months ended September 30, 1994, due to increased expense reimbursements related to the combined efforts of the Dallas and Greenville offices during the transition period for the nine months ended September 30, 1995. These increased costs related to the transition efforts were incurred to minimize any disruption in the year-end reporting function including the financial reporting and K-1 preparation and distribution. The administrative expenses have decreased in the third quarter of 1995 as the transition efforts are now complete. As of September 30, 1995, the Partnership has accrued $13,654 in reimbursements to an affiliate of the General Partner relating to the potential refinancings of three of its investment properties. On July 1, 1995, the Partnership began insuring its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payments on these obligations from the agent. The amount of the partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. Note C - Chapter 11 Proceeding The note payable of approximately $6.5 million (including accrued interest) secured by the Forest Hills Apartments matured in November 1990. The General Partner was unable to obtain an extension and modification of the note's term from the lender. In the General Partner's opinion, the lender's mortgage note was fully secured by the estimated fair value of the property, and the Chapter 11 proceeding was the best alternative to maintain control of the property while pursuing debt modification negotiations with the lender and/or a sale of the property. Note C Chapter 11 Proceeding - continued During the first quarter of 1994, CCGF Associates filed a first amendment to the Plan of Reorganization with the Bankruptcy Court and in May 1994, the Plan of Reorganization was approved. The Partnership recognized a gain of approximately $555,000 on the early extinguishment and modification of indebtedness pursuant to the Plan of Reorganization. Note D - Disposition of Real Estate On February 10, 1995, the General Partner, on behalf of the Partnership, executed a contract for the sale of Forest Hills Apartments for a gross sales price of $8.25 million. The Partnership realized a net gain of approximately $3.7 million on the sale after repayment of the related mortgage debt and other closing costs. The Partnership also realized an extraordinary gain of approximately $121,000 on early extinguishment of debt related to the sale of Forest Hills Apartments. Also, in October 1994, the U.S. Department of Housing and Urban Development ("HUD") foreclosed on the Ridgemar Square Apartments. The following table sets forth the statement of operations for each of these investment properties at September 30, 1994:
For the Three Months Ended For the Nine Months Ended September 30, 1994 September 30, 1994 Forest Ridgemar Forest Ridgemar Hills Square Hills Square Apartments Apartments Apartments Apartments Revenues: Rental income $ 539 $ 385 $1,581 $1,141 Interest income 2 1 9 1 Total revenues 541 386 1,590 1,142 Expenses: Operating 455 355 1,219 910 General and administrative 4 2 4 11 Depreciation 138 114 413 342 Interest 91 137 347 410 Total expenses 688 608 1,983 1,673 Reorganization items (1) -- (9) -- Loss before extraordinary item (148) -- (402) (531) Extraordinary gain on troubled debt restructuring -- -- 555 -- Net (loss) income $(148) $(222) $ 153 $ (531)
Note E - Other Income In 1991, the Partnership (and simultaneously other affiliated partnerships) entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding. These claims related to Southmark Corporation's activities while it exercised control (directly, or indirectly through its affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and other affiliated partnerships' allowed claim at $11 million, in the aggregate. In March 1994, the Partnership received approximately $68,000 in cash, 1,233 shares of Southmark Corporation Redeemable Series A Preferred Stock, and 9,020 shares of Southmark Corporation New Common Stock with an aggregate market value on the date of receipt of $9,075, representing the Partnership's share of the recovery, based on its pro rata share of the claims filed. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The Partnership's investment properties consist of four apartment complexes. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 1995 and 1994: Average Occupancy Property 1995 1994 Breckinridge Square Louisville, Kentucky 92% 95% Churchill Park Louisville, Kentucky 94% 92% The Lakes Raleigh, North Carolina 93% 94% Tahoe Springs Miami, Florida 92% 93% The Partnership's net income for the nine months ended September 30, 1995, was $5,031,000 compared to $1,241,000 for the same period in 1994. The Partnership's net income for the three months ended September 30, 1995, was $329,000 compared to $137,000 for the same period in 1994. The increase in net income for the nine month period is primarily due to the recognition of a $3,693,000 gain on the sale of the Forest Hills Apartment complex. The increase in net income for the three month period ended September 30, 1995, as compared to the three month period ended September 30, 1994, is primarily due to the foreclosure of Ridgmar Square Apartments during the fourth quarter of 1994 and the sale of Forest Hills Apartments during the first quarter of 1995. Ridgmar Square and Forest Hills reported operating losses during the third quarter of 1994. Rental income has decreased for the three and nine month periods ended September 30, 1995, as a result of the sale of Forest Hills in February 1995, and the foreclosure on the Ridgemar Square Apartment complex. Interest and dividend income on investments decreased due to a decrease in securities available for sale in the three and nine months ended September 30, 1995, versus the three and nine months ended September 30, 1994. All securities available for sale except the Southmark stock was liquidated prior to March 31, 1995, to facilitate the $5,449,000 distribution paid to the limited partners in March 1995. (See further discussion below). In addition, operating, depreciation and interest expense decreased during the three and nine month periods ended September 30, 1995, as compared to the three and nine month periods ended September 30, 1994. The decreases in these items are the result of the disposition of Ridgemar Square Apartments and the Forest Hills Apartments. General and administrative expenses increased during the nine months ended September 30, 1995, as compared to the nine months ended September 30, 1994, due to the payment of accrued penalties and interest on the 1993 taxes due for income generated by The Lakes. Partnership management fees of $613,000 were incurred in connection with the distributions to the limited partners. The Limited Partnership Agreement ("Agreement") provides for a fee equal to 9% of the total distributions made to the limited partners from "cash available for distribution" to the limited partners (as defined in the Agreement) to be paid to the General Partner for executive and administrative management services. No such fee was incurred in the first nine months of 1994 as no distributions were made to the limited partners. Other income has decreased as a result of the receipt of approximately $77,000 in cash and stock in March 1994 as partial recovery of claims against Southmark Corporation's Chapter 11 bankruptcy proceeding which was included in other income for the nine months ended September 30, 1994. No additional judgements were granted on the Partnership's claims in 1995. The loss on disposal of property was the result of roof write-offs at three of the investment properties due to ongoing roof repairs. The extraordinary gain on early extinguishment of debt is the result of a partial forgiveness of debt by the mortgage holder at the time the Forest Hills Apartment complex was sold. 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. At September 30, 1995, the Partnership had cash of $5,087,000 versus $2,248,000 for the corresponding period of 1994. Net cash provided by operating activities decreased primarily due to a decrease in depreciation expense which resulted from the sale of two investment properties. Additionally, cash provided by operating activities decreased as a result of the decrease in tenant security deposits. Net cash provided by investing activities increased due to cash received from securities available for sale and the proceeds from the sale of Forest Hills Apartments. Net cash used in financing activities increased due to the repayment of the mortgage note payable with the proceeds from the sale of Forest Hills and the payment of cash distributions. 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 property to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $6,308,000 is amortized over varying periods and requires a balloon payment in September 1996. The General Partner is attempting to refinance all of its properties other than Tahoe Springs. The General Partner believes that the partnership will generate approximately $15,700,000 in net refinancing proceeds. If such refinancing does occur, the General Partner anticipates it would use a portion of such refinancing proceeds to make a special distribution to the partners of up to approximately $14,000,000. The remainder of the refinancing proceeds would be used to pay off the debt due on Tahoe Springs. A distribution of $5,449,000 or $110.77 per Unit was made to the limited partners in March 1995. A matching distribution of $60,000 was made to the General Partner. During the third quarter of 1995, the Partnership paid $114,000 to the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment property located in North Carolina. Also, as of September 30, 1995, the Partnership owes $106,000 to the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment property located in North Carolina during 1993 which was not paid by the previous General Partner. These taxes have been treated as a distribution to the limited partners. The General Partner received a distribution of $1,000 related to this payment. Also during the third quarter of 1995, the Partnership distributed $1,363,000, or $27.71 per Unit, to the limited partners. The General Partner received a matching distribution of $14,000. Future cash distributions will depend on the levels of cash generated from operations, capital expenditure requirements, property sales, refinancings and the availability of cash reserves. PART II - OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On September 25, 1995, the General Partner proxied the Limited Partners to modify the Partnership Agreement with regards to long term debt restrictions. The Proposal would permit the General Partner to explore an expanded array of property refinancing options by modifying the leverage limitations to provide that, with respect to any refinanced properties, the maximum aggregate indebtedness may equal 80% of the aggregate fair market value of all refinanced properties, as determined by the lender as of the date of refinancing and eliminating the restrictions requiring that the Partnership's aggregate financing of its properties be comprised of no more than 10% in second mortgages, no more than 40% in first mortgages with 30-year amortization and balloon payments due in no less than 20 years, and at least 50% in fully amortizing mortgages. The unit holders voted 63% in favor of the matter, 4% opposed or abstained and 33% did not respond. With a majority of the outstanding units approving the proposal, the proposal was adopted. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended September 30, 1995. 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/ Carroll D. Vinson Carroll D. Vinson President By:/s/ Robert D. Long, Jr. Robert D. Long, Jr. Controller and Principal Accounting Officer Date: November 9, 1995 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Growth Fund 1995 Third Quarter 10-QSB and is qualified in its entirety to reference to such 10-QSB. 0000201529 CONSOLIDATED CAPITAL GROWTH FUND 1,000 9-MOS DEC-31-1995 SEP-30-1995 5,087 9 0 0 0 0 39,387 (18,329) 27,109 0 6,308 0 0 0 19,244 27,109 0 8,555 0 0 7,271 0 534 4,910 0 4,910 0 121 0 5,031 101.24 0 The Registrant has an unclassified balance sheet.
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