-----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, TUBWEAkpH0j1ieV9TqFO4kDaEbJYC4083VTR/7iNI4MPS/IuxQWSbmFAA39y6nrs QnwI71is2uCPT1NR7rkVuw== 0000763049-97-000005.txt : 19970401 0000763049-97-000005.hdr.sgml : 19970401 ACCESSION NUMBER: 0000763049-97-000005 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970331 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES III CENTRAL INDEX KEY: 0000317331 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942653686 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-10273 FILM NUMBER: 97568997 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLZ STREET 2: P O BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391591 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10KSB 1 FORM 10-KSB--ANNUAL OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) FORM 10-KSB [ ] 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, 1996 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period.........to......... Commission file number 0-10273 CONSOLIDATED CAPITAL PROPERTIES III (Name of small business issuer in its charter) California 94-2653686 (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 (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 Interest (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 registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ ] State issuer's revenues for its most recent fiscal year: $6,227,000 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, 1996: Market value information for the Registrant's partnership interests is not available. Should a trading market develop for these interests, it is management's belief that such trading would not exceed $25,000,000. PART I ITEM 1. DESCRIPTION OF BUSINESS Consolidated Capital Properties III (the "Registrant" or "Partnership") was organized on May 22, 1980, as a limited partnership under the California Uniform Limited Partnership Act. On November 25, 1980, the Partnership registered with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 (File No. 2-68018) and commenced a public offering for sale of $60 million of Units, with the General Partner's right to increase the offering to $120 million. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The Partnership subsequently filed a Form 8-A Registration Statement with the SEC and registered its units under the Securities Exchange Act of 1934 (File No. 0-10273) in March 1982. The sale of Limited Partnership Units closed on December 17, 1981, with 158,945 Units sold at $500 each, or gross proceeds of $79.5 million to the Partnership. At the request of certain Limited Partners and in accordance with its Partnership Agreement (herein so called), the Partnership has retired a total of 309 Units. The Partnership gave no consideration for these units. By the end of fiscal 1985, approximately 71% of the proceeds raised had been invested in twenty-eight properties. Of the remaining 29%, 11% was required for organizational and offering expenses, sales commissions and acquisition fees, and 18% was retained in Partnership reserves for project improvements and working capital as required by the Partnership Agreement. The General Partner of the Partnership is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The principal place of business for the Partnership and for the General Partner is One Insignia Financial Plaza, Greenville, South Carolina 29602. The Partnership's primary business and only industry segment is real estate related operations. The Partnership was formed to acquire, own, operate and ultimately dispose of income-producing real properties for the benefit of its partners. At December 31, 1996, the Partnership owns four properties as described in "Item 2 - Description of Property". Prior to 1996, the Partnership disposed of twenty-five (25) properties, two of which were reacquired through foreclosure. On September 25, 1995, the General Partner proxied the Limited Partners to modify the Partnership Agreement to eliminate the minimum working capital reserve requirement whereby reserves had been required to be greater than the 5% of Net Invested Capital. On October 31, 1995, the proposals were adopted with a majority of the outstanding units approving the proposals. See "Item 4 - Submission of Matters to a Vote of Security Holders" and "Item 6 - Management's Discussion and Analysis or Plan of Operations", for a discussion of Partnership liquidity and capital resources. The real estate business is highly competitive. The Registrant's real property investments are subject to competition from similar types of properties in the vicinities in which they are located and the Partnership is not a significant factor in its industry. In addition, various limited partnerships have been formed by related parties to engage in businesses which may be competitive with the Registrant. The Registrant has no employees. Management and administrative services are performed by affiliates of Insignia Financial Group, Inc. ("Insignia"), an affiliate of the General Partner. The property manager is responsible for the day-to-day operations of each property. The General Partner has also selected affiliates of Insignia to provide real estate advisory and asset management services to the Partnership. As advisor, such affiliates provide all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing. For further discussion of property and partnership management, see "Item 12". Upon the Partnership's formation in 1980, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the 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. All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As a part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc. ITEM 2. DESCRIPTION OF PROPERTY The Partnership originally acquired twenty-eight properties, of which twenty- five were disposed of in years prior to 1996, and subsequently reacquired two of these properties through foreclosure on notes receivable. One property was relinquished through a foreclosure during 1996, thus, at December 31, 1996, the Partnership held four income-producing properties, including one office building and three apartment complexes. Date of Property Purchase Type of Ownership Use Professional Plaza 03/03/81 Fee ownership Office Bldg. - Office Building 72,559 sq.ft. Salt Lake City, Utah Ventura Landing Apartments 10/07/81 Fee ownership Apartment - Orlando, Florida to first mortgage 184 units Village Green Apartments 12/20/91 Fee ownership Apartment - Altamonte Springs, to first mortgage 164 units Florida West Chase Apartments 09/17/90 Fee ownership Apartment - Lexington, Kentucky 120 units SCHEDULE OF PROPERTIES: (dollar amounts in thousands)
Gross Carrying Accumulated Useful Federal Property Value Depreciation Life Method Tax Basis Professional Plaza $ 4,217 $3,066 5-19 years S/L $ 1,556 Ventura Landing 4,854 4,250 5-19 years S/L 728 Village Green 2,641 926 3-15 years S/L 4,087 West Chase 2,106 956 5-15 years S/L 1,944 Totals $13,818 $9,198 $ 8,315
See "Note A" of the Notes to Consolidated Financial Statements included in "Item 7" for a description of the Partnership's depreciation policy. SCHEDULE OF MORTGAGES: (dollar amounts in thousands)
Principal Principal Balance At Balance December 31, Interest Period Maturity Due At Property 1996 Rate Amortized Date Maturity Ventura Landing $ 2,200 7.33% 7 yrs 11/03 $2,200 Village Green 2,000 7.33% 7 yrs 11/03 2,000 Totals $ 4,200 $4,200
During the second quarter of 1996, the Partnership entered into an interim financing arrangement for both Ventura Landing and Village Green for $2.2 million and $2 million, respectively. The previous Ventura Landing note of $3.2 million was repaid at that time. The interest rate was 250 basis points over the 30-day LIBOR, resulting in a total note rate of 8.00%. The loans matured on August 1, 1996, with a 60-day extension option. The Partnership exercised this option to convert the interim loans to fixed rate amortizing loans with an interest rate equal to the Treasury Rate, as defined in the financing agreement, plus 2.15%. Such converted loans would mature in ten years with monthly payments of principal and interest based on a schedule which would fully amortize the loans over a thirty year term. The Partnership, however, continued seeking alternative long-term financing to obtain a lower interest rate. In November of 1996, these two properties obtained long-term refinancing. Proceeds from this transaction totalled $4,200,000. The debt accrues interest at a rate of 7.33% per year, matures on November 1, 2003, and requires balloon payments at maturity for the full principal amount. Throughout the mortgage term, interest only payments are required. Loan costs of $201,000 were incurred by the properties as a result of the interim and long-term refinancing, and are included in other assets on the balance sheet. SCHEDULE OF RENTAL RATES AND OCCUPANCY: Average Annual Average Rental Rates (1) Occupancy Property 1996 1995 1996 1995 Professional Plaza $10.21 $10.19 97% 96% Ventura Landing 5,813 5,658 95% 92% Village Green 5,910 5,743 95% 93% West Chase 6,046 5,891 93% 90% (1) The average annual rental rate for Professional Plaza is per square foot. The rate is per unit for the apartment properties. As noted under "Item 1. Description of Business," the real estate industry is highly competitive. The Partnership's properties are subject to competition from other properties in their area. The Managing General Partner believes that the Partnership's properties are adequately insured. The multifamily residential properties' lease terms are one year or less. No residential tenant leases 10% or more of the available rental space. The following is a schedule of lease expirations at Professional Plaza for the years 1997-2006: Number of % of Gross Expirations Square Feet Annual Rent Annual Rent (in thousands) 1997 17 28,274 $290 37.7% 1998 13 22,215 228 29.5% 1999 13 14,800 167 21.7% 2000 2 4,118 51 6.6% 2001 2 3,149 41 5.4% 2002-2006 0 0 0 0 The following schedule reflects information on tenants leasing 10% or more of the leasable square footage for each property:
Square Footage Annual Rent Lease Nature of Business Leased Square Foot Expiration Professional Plaza Engineering Firm 10,411 $9.84 (1) (1) The tenant leases four spaces with lease expiration dates of 4/30/97, 5/31/97, 1/31/98 and 1/31/98.
SCHEDULE OF REAL ESTATE TAXES AND RATES: (dollar amounts in thousands) 1996 1996 Taxes Rate Professional Plaza 41 1.3% Ventura Landing 76 2.3% Village Green 67 2.0% West Chase 21 1.0% ITEM 3. LEGAL PROCEEDINGS In November 1994, Robert Lewis filed an alleged class action in the United States District Court for the Northern District of California seeking declaratory and injunctive relief, but not monetary damages in connection with a tender offer by LP 4 Acceptance Corporation for limited partnership units of the Partnership. The complaint named ConCap Equities, Inc., the general partner of the Partnership, LP 4 Acceptance Corporation and one other party as defendants. The tender offer was terminated in December 1994. In January 1995, the Plaintiff amended the complaint to add Insignia, MAE, and MAE-ICC, Inc. as additional defendants in connection with a new tender offer commenced by Insignia CCP III Acquisition L.L.C. but the added defendants were not properly served. The tender offer closed on January 20, 1995, and the offeror purchased the tendered units. Plaintiff Lewis filed a Stipulation for Dismissal of Case Without Prejudice in June of 1995 which requested the Court to dismiss the above action without prejudice and without costs to any party. The Court approved the stipulation on July 21, 1995. In November of 1994, C.E. and Berniece Patterson, each of whom is a limited partner of the Partnership, filed an action in the United States District Court for the Northern District of California seeking declaratory and injunctive relief, but not monetary damages, alleging, among other things, that a tender offer by LP 4 Acceptance Corporation for limited partnership units of the Partnership violated the federal securities laws and the partnership agreements and breached the general partner's fiduciary duties. The complaint named ConCap Equities, Inc., the general partner of the Partnership and others as defendants. These actions were filed by the Pattersons as individuals and were not class actions. The tender offer was terminated in December 1994. In December 1994, the complaint in this action was amended to include Insignia, MAE and MAE-ICC, Inc. and others as defendants in connection with a tender offer commenced in December 1994 by Insignia CCP III Acquisition, L.L.C. for limited partnership units of the Partnership. On January 20, 1995, the District Court denied Plaintiffs' motion for a preliminary injunction to enjoin the tender offer. The tender offer closed on January 20, 1995, and the offeror purchased the tendered units. C.E. and Berniece Patterson had also initiated other causes of action against two affiliated entities, which held limited partnership units in Consolidated Capital Properties IV and Consolidated Capital Properties VI regarding other tender offers. On March 31, 1995, the parties to the above referenced actions entered into a settlement agreement and a standstill agreement for all actions pursuant to which (i) Plaintiffs filed a notice of dismissal with respect to the first amended complaints in the actions; (ii) Plaintiffs and defendants released each other from all claims which were or could have been asserted in connection with the first amended complaints in the actions; (iii) Plaintiffs and MacKenzie Patterson, Inc. ("MacKenzie) will refrain from certain activities relating to the acquisition of limited partnership units in any partnership of which Insignia or any of its affiliates is a general partner; (iv) Plaintiffs and their affiliates granted to a subsidiary of Insignia a right of first refusal in connection with the sale of limited partnership interests in the Partnership by plaintiffs; and (v) Plaintiffs and their affiliates will assign to a subsidiary of Insignia irrevocable proxies to vote any limited partnership interests in Consolidated Capital Properties VI acquired by MacKenzie as a result of the tender offer by MacKenzie and affiliates to acquire limited partnership interests in Consolidated Capital Properties VI or thereafter. The Partnership is not a party to, nor are any of the Partnership's properties the subject of, any material pending legal proceedings, other than ordinary litigation routine to the Partnership's business (the "Proposals"). 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. The General Partner formulated the Proposals as a means of increasing operational flexibility and improving Partnership operations. The Proposals seek to achieve these goals by amending the Partnership Agreement to modify certain existing capital reserve and property disposition limitations. Proposal 1 provides the General Partner with additional flexibility in establishing the timing and amount of distributions by eliminating the requirements that the Partnership maintain reserves equal to at least 5% of Invested Capital and distribute any net economic gains realized upon the sale of any Partnership assets within 90 days of the close of the fiscal year in which such gains are realized. Proposal 2 provides the General Partner with the authority to take advantage of certain property disposition opportunities by authorizing the General Partner to sell multiple properties that represent less than 50% of the net book value of all of the Partnership's properties as of the end of the most recently completed calendar quarter to the same purchaser or its affiliates in any six-month period or any single Partnership property, without obtaining Limited Partner approval. Importantly, Proposal 2 did not seek to modify the Partnership Agreement provision prohibiting Partnership property sales to the General Partner or its affiliates. This matter was open until October 25, 1995. In regards to Proposal 1, the unitholders voted 51% in favor of the matter, 9% opposed or abstained and 40% did not respond. In regards to Proposal 2, the unitholders voted 51% in favor of the matter, 9% opposed or abstained and 40% did not respond. Accordingly, the proposals were adopted with a majority of the outstanding units approving the proposals. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED SECURITY HOLDER MATTERS (A) No established public trading market for the Partnership's Units exists nor is one expected to develop. (B) Title of Class Number of Unit Holders of Record Limited Partnership Units 7,623 as of December 31, 1996 (C) In January 1995, the Partnership declared distributions, representing return of capital, totalling approximately $1,428,000 to the Partners. In December 1995, the Partnership declared and paid distributions, representing a return of capital, totalling approximately $905,000 to the Partners. Additionally, the Partnership declared and paid distributions in December of 1995, attributable to cash flow from operations, totalling approximately $640,000 to the Partners. In September of 1996, the General Partner declared and paid distributions attributable to cash flow from operations, totalling approximately $368,000 to the partners. In April of 1996, the Partnership paid state withholding taxes of $12,000 for non- resident limited partners. This payment is reflected as a distribution to the Limited Partners. See also "Item 6 - Management's Discussion and Analysis or Plan of Operations". (D) On January 20, 1995, an affiliate of the General Partner, Insignia CCP III Acquisition, L.L.C., closed an offer to purchase Units (the "Tender Offer") for a cash price of $50.00 per Unit to Limited Partners of record as of December 15, 1994. Approximately 2,260 Limited Partners holding 36,951 Units (23.29% of total Units) accepted the Tender Offer and sold their Units to Insignia CCP III Acquisition, L.L.C. effective January 20, 1995, for an aggregate sales price of approximately $1.8 million. During January of 1997, ownership of these units were transferred to another affiliate of Insignia. ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS Results of Operations The Partnership realized net income of $2,842,000 for the year ended December 31, 1996, compared to a net loss of $891,000 for the year ended December 31, 1995. The increased net income is due primarily to the foreclosure of the Mountain Plaza property during the third quarter of 1996. This foreclosure resulted in an extraordinary gain on foreclosure in 1996 of $1,149,000, as well as a gain recorded to increase the carrying value of Mountain Plaza assets to their estimated market value of $1,820,000. (See "Note F" in the Notes to the Consolidated Financial Statements). Rental income decreased for the year ended December 31, 1996, compared to the year ended December 31, 1995, due primarily to the foreclosure noted above. Lost revenues from the foreclosed property were partially offset by rental rate increases at the Partnership's other properties. Interest and other income decreased for 1996, compared to 1995 due to decreased interest income from the Columns of Castleton note receivable, which was collected in March of 1995 (See "Note E" in the Notes to Consolidated Financial Statements). Interest income also decreased in 1996, compared to 1995 due to the liquidation of short term interest bearing investments. Operating expenses, depreciation and interest expense decreased for the year ended December 31, 1996, compared to the year ended December 31, 1995, due primarily to the disposition of Mountain Plaza during the third quarter of 1996. The decrease in interest expense was also impacted by the retirement of notes payable secured by the Professional Plaza Office Building and the Village Green Apartments in August 1995 (See "Note G" in the Notes to the Consolidated Financial Statements). The interest expense decrease resulting from these items was partially offset by the refinancing of the Ventura Landing note payable, a new mortgage note payable secured by Village Green Apartments, and default interest on the mortgage note payable secured by Mountain Plaza Apartments which was foreclosed upon during the third quarter of 1996 (see "Note F" in the Notes to Consolidated Financial Statements). General and administrative expenses decreased for the year ended December 31, 1996, compared to the year ended December 31, 1995, due to increased legal, printing and postage costs associated with the Partnership's required responses to various tender offers (See "Item 3. Legal Proceedings") and increased expense reimbursements related to the combined efforts of the Dallas and Greenville partnership administration staffs during the transition period in the first and second quarters of 1995. The 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 decrease in property taxes resulted from the foreclosure at Mountain Plaza, partially offset by the payment of a 1990 tax liability of $168,000, of which $68,000 was underaccrued, in order to secure the new note payable at Village Green Apartments. The increase in maintenance expense in 1996, compared to 1995 is primarily due to a painting project at Ventura Landing. Exterior building improvements at Village Green also contributed to higher maintenance expense. The foreclosure of Mountain Plaza partially offset the increases noted above. Included in maintenance expense is approximately $168,000 in major repairs and maintenance comprised primarily of exterior building improvements. 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 expenses. 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 As of December 31, 1996, the Partnership held cash and cash equivalents of $3,603,000 compared to $2,854,000 at December 31, 1995. Net cash provided by operating activities increased primarily due to a decrease in general and administrative expenses for the year ended December 31, 1996, compared to the year ended December 31, 1995. The decrease in general and administrative expenses was essentially due to expense reimbursements related to the combined efforts of the Dallas and Greenville partnership administration staffs during the transition period during the first and second quarters of 1995. These costs were related to the transition efforts incurred to minimize any disruption in the year-end reporting function including the financial reporting and K-1 preparation and distribution. Net cash used in investing activities increased due to the final collection of the Columns of Castleton note receivable in March of 1995 which favorably impacted 1995's cash flows. In addition, net proceeds from sales of long-term investments were reduced in 1996 due to the Partnership investing primarily in short-term cash equivalents. Net cash provided by financing activities increased due to cash received from the refinancing of the Village Green Apartments and Ventura Landing Apartments and lower distributions to the partners during 1996 compared to 1995. The partners amended its Partnership Agreement during 1995 to modify the requirement that the Partnership maintain reserves equal to at least 5% of invested capital to instead require reserves in an amount deemed reasonable and prudent by the General Partner (See "Item 4 - Submission of Matters to a Vote of Security Holders"). 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 meet 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 $4.2 million secured by the Village Green and Ventura Landing Apartments matures in November of 2003 with a balloon payment due at maturity, at which time the property will either be refinanced or sold. Distributions of approximately $380,000 and $2,973,000 were made to the partners during 1996 and 1995, respectively. Future cash distributions will depend on the levels of net cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. ITEM 7. FINANCIAL STATEMENTS CONSOLIDATED CAPITAL PROPERTIES III LIST OF FINANCIAL STATEMENTS Report of Independent Auditors Consolidated Balance Sheet - December 31, 1996 Consolidated Statements of Operations - Years ended December 31, 1996 and 1995 Consolidated Statements of Changes in Partners - Capital (Deficit) - Years ended December 31, 1996 and 1995 Consolidated Statements of Cash Flows - Years ended December 31, 1996 and 1995 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Consolidated Capital Properties III We have audited the accompanying consolidated balance sheet of Consolidated Capital Properties III as of December 31, 1996, and the related consolidated statements of operations, changes in partners= capital (deficit) and cash flows for each of the two years in the period ended December 31, 1996. 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 generally accepted auditing standards. 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 consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consolidated Capital Properties III as of December 31, 1996, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP Greenville, South Carolina January 28, 1997 CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED BALANCE SHEET (in thousands, except for unit data) December 31, 1996 Assets Cash and cash equivalents: Unrestricted $3,603 Restricted-tenant security deposits 115 Accounts receivable 48 Escrows for taxes and insurance 89 Restricted escrows 222 Other assets 302 Investment properties (Notes A, H and K): Land $ 1,552 Buildings and related personal property 12,266 13,818 Less accumulated depreciation (9,198) 4,620 $8,999 Liabilities and Partners' Capital (Deficit) Liabilities Accounts payable $ 114 Tenant security deposits 114 Other liabilities 161 Mortgage notes payable (Note H) 4,200 Partners' Capital (Deficit) (Note A) General partner $ (1,853) Limited partners (158,636 units and outstanding) issued and outstanding) 6,263 4,410 $8,999 See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data) Years Ended December 31, 1996 1995 Revenues: Rental income $4,044 $ 4,167 Other income 363 516 Gain on disposition of property (Note F) 1,820 -- Total revenues 6,227 4,683 Expenses: Operating 1,685 1,877 General and administrative 360 696 Maintenance 680 653 Depreciation 842 1,116 Interest 646 782 Property taxes 321 334 Total expenses 4,534 5,458 Income (loss) before extraordinary items 1,693 (775) Extraordinary loss on early extinguishment of debt -- (116) Extraordinary gain on foreclosure (Note F) 1,149 -- Net income (loss) $2,842 $ (891) Net income (loss) allocated to general partners (4%) $ 114 (36) Net income (loss) allocated to limited partners (96%) 2,728 (855) Net income (loss) $2,842 $ (891) Net income (loss) per limited partnership unit: Income (loss) before extraordinary item $10.25 $ (4.69) Extraordinary loss on early extinguishment of debt -- (.70) Extraordinary gain on foreclosure 6.95 -- Net income (loss) $17.20 $ (5.39) See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (DEFICIT) (in thousands, except unit data)
Limited Partnership General Limited Units Partners Partners Total Original capital contributions 158,945 $ 1 $79,473 $79,474 Partners' capital (deficit) at December 31, 1994 158,636 $(1,890) $ 7,702 $ 5,812 Distributions paid -- (26) (2,947) (2,973) Net loss for the year ended December 31, 1995 -- (36) (855) (891) Partners' capital (deficit) at December 31, 1995 158,636 (1,952) 3,900 1,948 Distributions paid -- (15) (365) (380) Net income for the year ended December 31, 1996 -- 114 2,728 2,842 Partners' capital (deficit) at December 31, 1996 158,636 $(1,853) $ 6,263 $ 4,410 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 1996 1995 Cash flows from operating activities: Net income (loss) $ 2,842 $ (891) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Gain on disposition of property (1,820) -- Loss on repayment of mortgage notes payable -- 116 Extraordinary gain on foreclosure (1,149) -- Depreciation 842 1,116 Amortization of lease commissions and loan costs 48 51 Loss on disposal of property -- 38 Change in accounts: Restricted cash 8 (59) Accounts receivable 57 (16) Note interest receivable -- 15 Escrow for taxes and insurance (11) 93 Other assets (16) (4) Accounts payable (72) 126 Tenant security deposit liabilities (8) 4 Accrued taxes 3 (110) Other liabilities 77 108 Net cash provided by operating activities 801 587 Cash flows from investing activities: Property improvements and replacements (249) (378) Purchase of securities available for sale -- (15,273) Proceeds from sale of securities available for sale -- 18,292 Collection of note receivable -- 2,316 Deposits to restricted escrow (222) (7) Receipts from restricted escrow 7 -- Net cash (used in) provided by investing activities (464) 4,950 Cash flows from financing activities: Prepayment penalty on mortgage notes payable -- (17) Payments on notes payable (33) (191) Proceeds from notes payable 8,400 -- Repayment of notes payable (7,374) (1,592) Loan costs paid (201) -- Partners' distributions (380) (2,973) Net cash provided by (used in) financing activities 412 (4,773) Net increase in cash and cash equivalents 749 764 Cash and cash equivalents at beginning of period 2,854 2,090 Cash and cash equivalents at end of period $ 3,603 $ 2,854 Supplemental disclosure of cash flow information: Cash paid for interest $ 636 $ 685 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES III NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (December 31, 1996) NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Consolidated Capital Properties III, a California limited partnership (the "Partnership"), was formed on May 22, 1980, to acquire and operate commercial and residential properties. As of December 31, 1996, the Partnership owns three residential properties and one commercial property located in or near major urban areas in the United States. At the time of the Partnership's formation, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), 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. As part of CCEC's reorganization plan, ConCap Equities, Inc. (the "General Partner" or "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. As part of the solicitation for approval of CEI as general partner, the limited partners also approved the conversion of CCMC from a general partner to a limited partner, thereby leaving CEI as the sole general partner of the Partnership. All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding stock of GII Realty, Inc. At December 31, 1996, Insignia and affiliates own a total of 36,989 Units of the Partnership. Consolidation The Partnership's financial statements include the accounts of ConCap Mountain Plaza Associates, Ltd., and ConCap Village Green Associates, Ltd., two majority- owned limited partnerships. All intercompany transactions have been eliminated. Investment Properties Prior to 1995, investment properties were carried at the lower of cost or estimated fair value, which was determined using the higher of the property's non-recourse debt amount, when applicable, or the net operating income of the investment property capitalized at a rate deemed reasonable for the type of property. During 1995, the Partnership adopted "FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The effect of adoption was not material. Depreciation Buildings and improvements are depreciated on the straight-line basis over an estimated useful life of 3 to 19 years. Tenant improvements are depreciated over the term of the lease. Cash and Cash Equivalents: Unrestricted - Unrestricted cash and cash equivalents includes cash on hand, demand deposits, money market funds, and certificates of deposit with original maturities of three months or less. At certain times the amount of cash deposited at a bank may exceed the limit on insured deposits. Restricted cash - tenant security deposits - The Partnership requires security deposits from new lessees for the duration of the lease with such deposits being considered restricted cash. Deposits are refunded when the tenant vacates, provided the tenant has not damaged its space and is current on its rental payments. Restricted Escrows: Capital Improvement Reserve - As a result of the refinancing of Ventura Landing Apartments and Village Green Apartments in 1996, the properties deposited approximately $216,000 with the mortgage company to establish a Capital Reserve designated for certain capital improvements. Replacement Reserve - As a result of the 1996 refinancing, each property will make monthly deposits to establish and maintain a Replacement Reserve designated for repairs and replacements at the properties. At December 31, 1996, this reserve totalled approximately $6,000. Reclassifications Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Fair Value In 1995, the Partnership implemented "Statement of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value. The carrying amount of the Partnership's cash and cash equivalents approximates fair value due to short- term maturities. The Partnership estimates the fair value of its fixed rate mortgages by discounted cash flow analysis, based on estimated borrowing rates currently available to the Partnership. Lease Commissions Lease commissions are capitalized and amortized using the straight-line method over the terms of the applicable leasees and are included in other assets. Loan Costs Loan costs are capitalized and amortized by the straight-line method over the terms of the related notes. Loan costs of approximately $201,000 were capitalized in the 1996 refinancing of two properties. The unamortized balance of the loan costs are included in other assets. Rental Income The Partnership leases its residential property under short-term operating leases. Lease terms are generally one year or less in duration. The Partnership expects that in the normal course of business these leases will be renewed or replaced by other leases. Commercial property leases vary from one to six years. Income Taxes No provision has been made in the financial statements for Federal income taxes. Under current law, no Federal income taxes are paid directly by the Partnership, however, the Partners are responsible for their respective shares of Partnership net income or loss. The Partnership reports certain transactions differently for tax than for financial statement purposes. Allocation of Net Income and Net Loss The Partnership Agreement provides for net income and net losses for both financial and tax reporting purposes to be allocated 96% to the Limited Partners and 4% to the General Partner. Advertising Costs Advertising costs of $60,000 in 1996, and $75,000 in 1995 were charged to expenses as incurred and are included in operating expenses. Use of Estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has paid property management fees based on collected gross rental revenues for property management services in each of the years ended December 31, 1996 and 1995. Property management fees of approximately $207,000 and $220,000 were paid to affiliates of the General Partner for the years ended December 31, 1996 and 1995, respectively. These fees are included in operating expenses. The Limited Partnership Agreement ("Partnership Agreement") provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow from operations to be paid to the General Partner for executive and administrative management services. Under this provision of the Partnership Agreement, fees of $32,000 and $55,000 were paid to affiliates of the General Partner during the years ended December 31, 1996 and 1995, respectively. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $205,000 and $285,000 were paid to the General Partner and affiliates for the years ended December 31, 1996 and 1995, respectively. Additionally, the Partnership paid $33,000 and $24,000 during the years ended December 31, 1996 and 1995, respectively, to an affiliate of the General Partner for lease commissions at the Partnership's commercial property. These lease commissions are included in other assets and amortized over the terms of the respective leases. The partnership also paid $34,000 to affiliates of Insignia for reimbursements of costs related to the loan refinancing in November of 1996. These costs were capitalized as loan costs and are being amortized over the terms of the respective loans. In July 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 payment 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 - COMMITMENT The Partnership modified its Partnership Agreement during 1995 to eliminate the requirement that the Partnership maintain reserves equal to at least 5% of invested capital as defined in the Partnership Agreement. Reserves, including cash and cash equivalents and securities available for sale totaling approximately $3,718,000 at December 31, 1996, were deemed to be sufficient by the General Partner to fund the Partnership's liquidity requirements in 1996. NOTE D - DISTRIBUTIONS In September of 1996, the General Partner declared and paid distributions attributable to cash flow from operations, totaling approximately $368,000 to the partners. In April of 1996, the Partnership paid state withholding taxes of $12,000 for non-resident limited partners. This payment is reflected as a distribution to the Limited Partners. In January of 1995, the General Partner declared and paid distributions, representing a return of capital, as defined in the partnership agreement of approximately $1,428,000. In December 1995, the General Partner declared and paid distributions, representing a return of capital, totalling approximately $905,000 to the Partners. Additionally, the Partnership declared and paid distributions in December 1995, attributable to cash flow from operations, totalling approximately $640,000 to the Partners. NOTE E - COLLECTION OF NOTE RECEIVABLE In October of 1988, the Partnership accepted a $2.1 million note receivable in connection with the sale of the Columns of Castleton Apartments. In March of 1995, the Partnership collected the outstanding balance of approximately $2.3 million, which represented the original principal balance, plus unpaid interest, in payment of the borrower's liability under the note agreement. NOTE F - FORECLOSURE OF MOUNTAIN PLAZA APARTMENTS On September 3, 1996, the lender foreclosed on Mountain Plaza Apartments. The mortgage note payable had been in default since May 13, 1996. In the General Partner's opinion, it was not in the Partnership's best interest to contest the foreclosure action. During the third quarter of 1996, the Partnership recorded a gain on the disposition of property of $1,820,000, to increase the carrying value of the Mountain Plaza assets to their estimated market value and an extraordinary gain on the foreclosure of $1,149,000. The following noncash investing and financing amounts were recorded in the consolidated financial statements for the year ended December 31, 1996 (in thousands): Net real estate (a) $ (544) Net other liabilities 54 (490) Debt discharged (b) 3,459 Total gain $ 2,969 Gain on disposition of real estate (c) $ 1,820 Extraordinary gain on foreclosure (d) 1,149 $ 2,969 (a) Amount is net of accumulated depreciation of approximately $4.4 million. (b) Amount includes accrued interest. (c) The gain on disposition of real estate represents the difference between the carrying value of the real estate and the estimated fair value of the property at disposition. The gain is included in "Gain on disposition of real estate" in the accompanying consolidated financial statements. (d) The gain on extinguishment of debt represents the difference between the estimated fair value of the property at foreclosure and the amount of debt, including accrued interest, extinguished. The gain is reflected as an extraordinary item in the accompanying consolidated financial statements. The 1996 and 1995 results of operations for Mountain Plaza Apartments are summarized in the following table (in thousands): For the Period From January 1 to September 3, 1996 1995 Revenues $ 716 $ 998 Loss from operations (261) (418) NOTE G - REPAYMENT OF NOTES PAYABLE At December 31, 1994, the Partnership was obligated under two mortgage notes payable aggregating $963,000, net of a $119,000 mortgage discount, secured by the Professional Plaza Office Building. The $734,000 first lien-note, with an original maturity of April 1996, and the $301,000 second-lien note, with an original maturity of November 2000, were paid off in August 1995, to retire debt with interest rates higher than the current market rate. The Partnership realized a loss of $110,000 on the transactions, resulting from $99,000 of non- cash expenses to amortize the remaining mortgage discounts associated with the retired notes and $11,000 of prepayment penalties paid on the early extinguishment of the debt. At December 31, 1994, the Partnership was obligated under a mortgage note payable in the amount of $615,000 secured by the Village Green Apartments. The $557,000 first-lien note, with an original maturity of May 1997, was paid off in August 1995, to retire debt with interest rates higher than the current market rate. The Partnership realized a loss of $6,000 on the transaction resulting from prepayment penalties paid on the early extinguishment of the debt. NOTE H - MORTGAGE NOTES PAYABLE (dollar amounts in thousands)
Principal Monthly Principal Balance At Payment Stated Balance December 31, Interest Interest Maturity Due At Property 1996 Only Rate Date Maturity Ventura Landing Apartment $2,200 13 7.33% 11/03 $2,200 Village Green Apartments 2,000 12 7.33% 11/03 2,000 Totals $4,200 $ 25 $4,200
During the second quarter of 1996, the Partnership entered into an interim financing arrangement for both Ventura Landing and Village Green for $2.2 million and $2 million, respectively. The previous Ventura Landing note of $3.2 million was repaid at that time. The interest rate was 250 basis points over the 30-day LIBOR, resulting in a total note rate of 8.00%. The loans matured on August 1, 1996, with a 60-day extension option. The Partnership exercised this option to convert the interim loans to fixed rate amortizing loans with an interest rate equal to the Treasury Rate, as defined in the financing agreement, plus 2.15%. Such converted loans would mature in ten years with monthly payments of principal and interest based on a schedule which would fully amortize the loans over a thirty year term. The Partnership, however, continued seeking alternative long- term financing to obtain a lower interest rate. In November of 1996, these two properties obtained long-term refinancing. Proceeds from this transaction totalled $4,200,000. The debt accrues interest at a rate of 7.33% per year, matures on November 1, 2003, and requires balloon payments at maturity for the full principal amount. Throughout the mortgage term, interest only payments are made. Loan costs of $201,000 were incurred by the properties as a result of the interim and long-term refinancing, and are included in other assets on the balance sheet. The estimated fair values of the Partnership's aggregate debt approximates its carrying amount. This estimate represents a general approximation of possible value and is not necessarily indicative of the amounts the Partnership might pay in actual market transactions. The entire amount of the Partnership's outstanding indebtedness of $4,200,000 is scheduled to mature in November of 2003. NOTE I - OPERATING LEASES The Partnership leases its residential properties under short-term operating leases. Lease terms are generally one year or less in duration. The Partnership expects that in the normal course of business these leases will be renewed or replaced by other leases. Commercial office property leases vary from one to six years. The future minimum rental payments at the Partnership's commercial property to be received under operating leases that have initial or remaining noncancellable lease terms in excess of one year as of December 31, 1996, are as follows (in thousands): 1997 $ 485 1998 356 1999 185 2000 89 2001 25 $1,140 For leases with scheduled rental increases, rental income is recognized on a straight-line basis over the life of the applicable leases. There is no assurance that this income will continue at the same level when the leases expire. NOTE J - PARTNER TAX INFORMATION The following is a reconciliation between net income (loss) as reported in the consolidated financial statements and federal taxable income allocated to the partners in the Partnership's information return for the years ended December 31, 1996 and 1995 (in thousands, except per unit data): 1996 1995 Net income (loss) as reported $2,842 $ (891) Add (deduct): Deferred revenue and other liabilities (157) 217 Depreciation differences (103) 197 Accrued expenses 28 (32) (Loss) gain on disposition/foreclosure (80) 2,264 Federal taxable income $ 2,530 $ 1,755 Federal taxable income per limited partnership unit $(15.31) $ 10.62 The following is a reconciliation between the Partnership's reported amounts and Federal tax basis of net assets at December 31, 1996 (in thousands): Net assets as reported $ 4,410 Differences in basis of assets and liabilities: Investment properties at cost 3,494 Accumulated depreciation (107) Other assets and liabilities 430 Syndication costs 8,692 Net assets - tax basis $16,919 NOTE K - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (dollar amounts in thousands) Initial Cost To Partnership Buildings Cost and Related Capitalized Personal Subsequent to Description Encumbrances Land Property Acquisition Professional Plaza $ -- $1,045 $2,033 $1,139 Ventura Landing 2,200 282 3,754 818 Village Green 2,000 125 2,375 141 West Chase -- 100 1,702 304 Totals $4,200 $1,552 $ 9,864 $2,402
Gross Amount At Which Carried At December 31, 1996 Buildings And Related Personal Accumulated Date Depreciable Description Land Property Total Depreciation Acquired Life-Years Professional Plaza $1,045 $ 3,172 $ 4,217 $ 3,066 03/03/81 5-19 Ventura Landing 282 4,572 4,854 4,250 10/07/81 5-19 Village Green 125 2,516 2,641 926 12/20/91 3-15 West Chase 100 2,006 2,106 956 9/17/90 5-15 Totals $1,552 $12,266 $13,818 $ 9,198
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years Ended December 31, 1996 1995 Investment Properties Balance at beginning of year $ 18,525 $18,204 Property improvements 249 378 Dispositions through foreclosure (4,956) -- Write-down of properties -- (57) Balance at End of Year $ 13,818 $18,525 Accumulated Depreciation Balance at beginning of year $ 12,767 $11,671 Additions charged to expense 842 1,116 Accumulated depreciation on real estate foreclosed (4,411) -- Accumulated depreciation on asset write-down -- (20) Balance at end of year $ 9,198 $12,767
The aggregate cost of the real estate for Federal income tax purposes at December 31, 1996 and 1995 is approximately $17,621,000 and $23,792,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996 and 1995, is approximately $9,306,000 and $14,041,000, respectively. NOTE L- CONTINGENCY The Partnership is unaware of any pending or outstanding litigation that is not of a routine nature. The Managing General Partner of the Partnership believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. 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 manages and controls the Registrant and has general responsibility and authority in all matters affecting its business. The names of the directors and executive officers of ConCap Equities Inc. ("CEI"), the Partnership's General Partner, as of December 31, 1996, their ages and the nature of all positions with CEI presently held by them are set forth below. There are no family relationships between or among any officers and directors. Name Age Position William H. Jarrard, Jr. 50 President Ronald Uretta 41 Vice President/Treasurer Martha L. Long 37 Controller John K. Lines, Esq. 37 Vice President/Secretary Kelley M. Buechler 39 Assistant Secretary William H. Jarrard, Jr. has been President of CEI since December 1996 and Managing Director-Partnership Administration for Insignia since January 1991. Mr. Jarrard served as Managing Director - Partnership Administration and Asset Management for Insignia from July 1994 until January 1996. Ronald Uretta has been Vice President/Treasurer of CEI since December 1996 and Insignia's Treasurer since January 1992. Since August 1996, he has also served as Insignia's Chief Operating Officer. He has also served as Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief Financial Officer from January 1992 to August 1996. Since September 1990, Mr. Uretta has also served as the Chief Financial Officer and Controller of Metropolitan Asset Group. Martha L. Long has been Controller of CEI since December 1996 and Senior Vice President - Finance and Controller of Insignia since January 1997. In June 1994, Ms. Long joined Insignia as its Controller, and was promoted to Senior Vice President - Finance in January 1997. Prior to that time, she was Senior Vice President and Controller of The First Savings Bank, FSB in Greenville, SC. John K. Lines has been Secretary of CEI since December 1994 and General Counsel and Secretary of Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation in West Palm Beach, Florida. From October 1991 until April 1993, Mr. Lines was a Senior Attorney with Banc One Corporation in Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was employed as an associate with Squire Sanders & Dempsey in Columbus, Ohio. Kelley M. Buechler has been Assistant Secretary of CEI since December 1994 and Assistant Secretary of Insignia since January 1991. During the five years prior to joining Insignia in 1991, she served in a similar capacity for U.S. Shelter. Liquidity Assistance, L.L.C. ("Liquidity") delinquently reported 3 transactions as of December 31, 1996 on a Form 5 filed in January 1997, with respect to the entities' purchases of Units of Limited Partner Interest of the Partnership. Each of Insignia Financial Group, Inc., Insignia Commercial Group, Inc. and Andrew L. Farkas also delinquently reported the same transactions on a Form 5 by virtue of their status as affiliates of Ventures and Liquidity, through which they may be deemed to be beneficial owners of the securities owned by such entities. ITEM 10. EXECUTIVE COMPENSATION No direct compensation was paid or payable by the Partnership to directors or officers for the year ended December 31, 1996, nor was any direct compensation paid or payable by the Partnership to directors or officers of the General Partner for the year ended December 31, 1996. The Partnership has no plans to pay any such remuneration to any directors or officers of the General Partner in the future. See "Item 7 - Financial Statements", "Note B - Related Party Transactions", for amounts of compensation and reimbursement of salaries paid by the Partnership to the General Partner and its affiliates and the former general partner and former affiliates. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners Except as provided below, as of March 1997, no person was known to CEI to own of record or beneficially more than five percent of the Units of the Partnership. Number of Percent Name and Address Units Of Total Insignia and affiliates 36,999 23.32% One Insignia Financial Plaza Greenville, SC 29602 The units above are held by Insignia Properties, L.P. who holds 32,116 units (20.25% of outstanding units) and other affiliated entities who hold nominal amounts of units. (b) Beneficial Owners of Management Neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially. (c) Changes in Control Beneficial Owners of CEI As of March 1997, the following persons were known to CEI to be the beneficial owners of more than 5 percent (5%) of its common stock: Number of Percent Name and Address CEI Shares Of Total GII Realty, Inc. 100,000 100% One Insignia Financial Plaza Greenville, SC- 29602 GII Realty, Inc. is owned by an affiliate of Insignia (see "Item 1"). ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Current Management and Others Except for the transactions described below, neither CEI nor any of its directors, officers or associates, or any associates of any of them, has had any interest in any other transaction to which the Partnership is a party. Please refer to "Item 7 - Financial Statements, Note B - Related Party Transactions," for the amounts and items of permissible compensation and fees paid to the General Partner and its affiliates and other related parties for the last two years. The Partnership has paid property management fees based on collected gross rental revenues for property management services in each of the years ended December 31, 1996 and 1995. Property management fees of approximately $207,000 and $220,000 were paid to affiliates of the General Partner for the years ended December 31, 1996 and 1995, respectively. These fees are included in operating expenses. The Limited Partnership Agreement ("Partnership Agreement") provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow from operations to be paid to the General Partner for executive and administrative management services. Under this provision of the Partnership Agreement, fees of $32,000 and $55,000 were paid to affiliates of the General Partner during the years ended 1996 and 1995, respectively. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. Reimbursements for services of affiliates of approximately $205,000 and $262,000 were paid to the General Partner and affiliates for the years ended December 31, 1996 and 1995, respectively. Additionally, the Partnership paid $33,000 and $24,000 during the year ended December 1996 and 1995, respectively, to an affiliate of the General Partner for lease commissions at the Partnership's commercial property. These lease commissions are included in other assets and amortized over the terms of the respective leases. The partnership also paid $34,000 to affiliates of Insignia for reimbursements of costs related to the loan refinancing in November of 1996. These costs were capitalized as loan costs and are being amortized over the terms of the respective loans. All of the above-referenced agreements with affiliates of CEI and related parties of the Partnership are subject to the conditions and limitations imposed by the Partnership Agreement. ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) Exhibits: See Exhibit Index contained herein. Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. (b) Reports on Form 8-K filed during the fourth quarter of 1996: None. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES III By: CONCAP EQUITIES, INC. General Partner By: /s/William H. Jarrard, Jr. William H. Jarrard, President By: /s/Ronald Uretta Ronald Uretta Vice President/Treasurer Date: March 28, 1997 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 and on the date indicated. /s/William H. Jarrard, Jr. President March 28, 1997 William H. Jarrard, Jr. /s/Ronald Uretta Vice President/Treasurer March 28, 1997 Ronald Uretta INDEX OF EXHIBITS EXHIBIT NO. DOCUMENT DESCRIPTION 3 Certificate of Limited Partnership, as amended to date. (Incorporated by refer- ence to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.1 Property Management Agreement No. 104 dated October 23, 1990, by and between the 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. 204 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. 305 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.4 Property Management Agreement No. 402 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.5 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). 10.6 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). 10.7 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). 10.8 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and The Hayman Company (100 Series of Property Management Contracts) (Incorporated by refer- ence 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 Horn-Barlow Companies (200 Series of Property Management Contracts) (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.10 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Metro ConCap, Inc. (300 Series of Property Management Contracts) (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.11 Assignment and Assumption Agreement dated October 23, 1990, by and between 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, 1990). 10.12 Assignment and Assumption of Property Manage- ment Agreements dated August 1, 1991, by and between R & B Arizona Management Company, Inc. 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). 10.13 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP III Associates, Ltd. (Property Management Agreement No. 305). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.14 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP III Associates, Ltd. (Property Management Agreement No. 104). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.15 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP III Associates, Ltd. (Property Management Agreement No. 204). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.16 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). 10.17 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP III Associates, Ltd. (Horn-Barlow Construc- tion Management Agreement). (Incorporated by refer- ence to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.18 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (the "Metro Construction Management Agreement"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.19 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partner- ship and CCP III Associates, Ltd. (Metro Construc- tion Management Agreement). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.20 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and The Hayman Company (the "Hayman Construction Management Agreement"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.21 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partner- ship and CCP III Associates, Ltd. (Hayman Construction Management Agreement). (Incor- porated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.22 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). 10.23 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). 10.24 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). 10.25 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). 10.26 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). 10.27 Assignment and Assumption Agreement (Financial Services 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). 10.28 Letter of Notice dated December 20, 1991, from PSI to the Partnership regarding the change in ownership and dissolution of ConCap Capital 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). 10.29 Property Management Agreement No. 416 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). 10.30 Assignment and Assumption Agreement (Property Management Agreement No. 416) 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). 10.31 Assignment and 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). 10.32 Property Management Agreement No. 418 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). 10.33 Assignment and Assumption Agreement (Property Management Agreement No. 418) 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). 10.34 Assignment and 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). 10.35 Property Management Agreement No. 426 dated June 30, 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). 10.36 Assignment and Assumption Agreement (Property Management Agreement No. 426) dated June 30, 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). 10.37 Assignment and Agreement as to Certain Property Management Services dated June 30, 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). 10.38 Property Management Agreement No. 510 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.39 Property Management Agreement No. 510A dated August 18, 1993, by and between the Partnership and Coventry Properties, Inc. 10.40 Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.41 Property Management Agreement No. 511 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.42 Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.43 Property Management Agreement No. 512 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.44 Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.45 Stock and Asset Purchase Agreement, dated December 8, 1994 (the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"), Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and certain other parties. (Incorporated by reference to Form 8-K dated December 8, 1994) 10.46 Exercise of the Option (as defined in the Gordon Agreement), dated December 8, 1994, between MAE- ICC and Gordon. (Incorporated by reference to Form 8-K dated December 8, 1994) 10.47 Multifamily Note dated November 14, 1996 between CCP III, a California limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.48 Multifamily Note dated November 14, 1996 between CCP III, 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 1 of Item 8 - Financial Statements of this Form 10-K). 16.1 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). 16.2 Letter dated May 9, 1995 from the Registrant's former independent accountant regarding its concurrence with the statements made by the Registrant regarding a change in the certifying accountant. (Incorporated by reference to Form 8-K dated May 3, 1995) 19.1 Modified First Amended Plan of Reorganiza- tion for CCP/III Associates, Ltd., dated and filed March 24, 1992, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 19.2 Modified First Amended Disclosure Statement for the Modified First Amended Plan of Reor- ganization for CCP/III Associates, Ltd., dated and filed March 24, 1992, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 19.3 First Modification to Modified First Amended Plan of Reorganization for CCP/III Associates, Ltd., dated and filed April 22, 1992, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 19.4 Second Modification to Modified First Amended Plan of Reorganization for CCP/III Associates, Ltd., dated and filed April 29, 1992, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 19.5 Third Modification to Modified First Amended Plan of Reorganization for CCP/III Associates, Ltd., dated and filed April 29, 1992, in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. (Incorporated by refer- ence to the Annual Report on Form 10-K for the year ended December 31, 1992). 27 Financial Data Schedule EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties III 1996 Year-End 10-KSB and is qualified in its entirety by reference to such 10-KSB filing. 0000317331 CONSOLIDATED CAPITAL PROPERTIES III 1,000 12-MOS DEC-31-1996 DEC-31-1996 3,603 0 48 0 0 0 13,818 9,198 8,999 0 4,200 0 0 0 4,410 8,999 0 6,227 0 0 4,534 0 646 0 0 0 0 0 0 2,842 17.20 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.47 3 Exhibit 10.47 Loan No. 734079788 Ventura Landing MULTIFAMILY NOTE US $2,200,000.00 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of Two Million Two Hundred Thousand and 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Thirteen Thousand Four Hundred Thirty-Eight and 33/100 Dollars (US $13,438.33) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located. The undersigned shall pay any installment of interest due hereunder within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other installment due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES III, a California limited partnership d/b/a Consolidated Capital Properties III, Ltd. in Florida By: ConCap Equities, Inc.,a Delaware corporation, its general partner By: /s/ William H. Jarrard, Jr. Name: William H. Jarrard, Jr. Title: Vice President PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This 1st day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Vice President EX-10.48 4 Exhibit 10.48 Loan No. 734079761 Village Green MULTIFAMILY NOTE US $2,000,000.00 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of Two Million and 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Twelve Thousand Two Hundred Sixteen and 67/100 Dollars (US $12,216.67) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located. The undersigned shall pay any installment of interest due hereunder within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other installment due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. CONCAP VILLAGE GREEN ASSOCIATES, LTD., a Texas limited partnership By: ConCap CCP/III Properties, Inc.,a Texas corporation, its general partner By: /s/ William H. Jarrard, Jr. Name: William H. Jarrard, Jr. Title: Vice President PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This 1st day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----