-----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, R2vzamkS0QTOn/84Zs/NhIFHiSXCCiyulm7OJednGbf9u3TE6JwMPxGMfo+A1jU1 TIKHxGSDv5Y8hFapW5HnSA== 0000352983-96-000003.txt : 19960809 0000352983-96-000003.hdr.sgml : 19960809 ACCESSION NUMBER: 0000352983-96-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960808 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CENTRAL INDEX KEY: 0000352983 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942744492 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-10831 FILM NUMBER: 96605838 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO 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 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 312905, eff. 04/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1996 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... Commission file number 0-10831 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES (Exact name of registrant as specified in its charter) California 94-2744492 (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) Registrant's telephone number (864) 239-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 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 INSTITUTIONAL PROPERTIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) June 30, December 31, 1996 1995 (Unaudited) (Note) Assets Cash and cash equivalents: Unrestricted $ 12,300 $ 26,122 Restricted--tenant security deposits 310 335 Securities available for sale 2,697 5,264 Other assets 1,281 1,444 Net investment in Master Loan 95,438 95,246 Less: Allowance for impairment loss (41,478) (41,478) 53,960 53,768 Investment properties: Land 3,620 3,620 Building and related personal property 19,576 17,756 23,196 21,376 Less accumulated depreciation (2,481) (1,958) 20,715 19,418 $ 91,263 $106,351 Liabilities and Partners' Capital (Deficit) Accounts payable and accrued expenses $ 302 $ 368 Tenant security deposits 294 323 Distributions payable 324 324 Mortgage note and interest payable 4,548 4,560 5,468 5,575 Partners' Capital (Deficit) General partner (368) (358) Limited partners (199,052 units outstanding at June 30, 1996, and December 31, 1995, respectively) 86,163 101,134 85,795 100,776 $ 91,263 $106,351 Note: The balance sheet at December 31, 1995, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 1,955 $ 434 $ 3,891 $ 757 Interest income on investment in Master Loan to affiliate -- -- -- 1,536 Other income 239 99 616 227 Total revenues 2,194 533 4,507 2,520 Expenses: Operating 1,425 154 2,924 330 Depreciation and amortization 281 105 526 210 General and administrative 260 243 376 439 Interest 82 -- 163 -- Total expenses 2,048 502 3,989 979 Net income $ 146 $ 31 $ 518 $ 1,541 Net income allocated to general partner (1%) $ 1 $ -- $ 5 $ 15 Net income allocated to limited partners (99%) 145 31 513 1,526 $ 146 $ 31 $ 518 $ 1,541 Net income per limited partnership unit $ .73 $ .16 $ 2.58 $ 7.67 See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 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 200,342 $ 1 $200,342 $200,343 Partners' capital (deficit) at December 31, 1994 199,045 $ (294) $107,498 $107,204 Distributions to partners (15) (1,521) (1,536) Net income for the six months ended June 30, 1995 15 1,526 1,541 Partners' capital (deficit) at June 30, 1995 199,052 $ (294) $107,503 $107,209 Partners' capital (deficit) at December 31, 1995 199,052 $ (358) $101,134 $100,776 Distributions to partners (15) (15,484) (15,499) Net income for the six months ended June 30, 1996 5 513 518 Partners' capital (deficit) at June 30, 1996 199,052 $ (368) $ 86,163 $ 85,795 See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net income $ 518 $ 1,541 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 523 210 Amortization of loan costs and lease commissions 9 -- Change in accounts: Restricted cash 26 -- Other assets 153 81 Interest receivable on master loan -- (1,536) Due from affiliates -- 935 Accounts payable and accrued expenses (54) 82 Tenant security deposit liabilities (29) (14) Net cash provided by operating activities 1,146 1,299 Cash flows from investing activities: Property improvements and replacements (1,820) (15) Purchase of securities available for sale -- (2,115) Proceeds from sale of securities available for sale 2,566 4,676 Advances on Master Loan (367) -- Principal receipts on Master Loan 175 -- Net cash provided by investing activities 554 2,546 Cash flows from financing activities: Distributions to partners (15,499) (1,536) Mortgage principal payments (23) -- Net cash used in financing activities (15,522) (1,536) Net (decrease) increase in cash and cash equivalents (13,822) 2,309 Cash and cash equivalents at beginning of period 26,122 1,554 Cash and cash equivalents at end of period $ 12,300 $ 3,863 Supplemental disclosure of cash flow information: Cash paid for interest $ 145 $ -- See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Consolidated Capital Institutional Properties ("Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. ("General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the annual report on Form 10-K for the year ended December 31, 1995, for the Partnership. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Note B - Related Party Transactions The Partnership paid property management fees based upon collected gross rental revenues for property management services as noted below for the six month periods ended June 30, 1996 and 1995. Fees paid to affiliates of Insignia during the six month periods ended June 30, 1996 and 1995, are included in operating expenses on the consolidated statement of operations and are reflected in the following table. The Partnership Agreement ("Agreement") also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. The General Partner, and its current affiliates, received reimbursements as reflected in the following table: For the Six Months Ended June 30, 1996 1995 (in thousands) Property management fees $ 194 $ 34 Reimbursement for services of affiliates (1) 254 212 (1) Included in "reimbursements for services of affiliates" for 1996 is approximately $113,000 in reimbursements for construction oversight costs. Property management fees and reimbursements for services of affiliates both increased during the six months ended June 30, 1996, as compared to the six months ended June 30, 1995, due to the addition of The Carlton House on November 30, 1995. Note B - Related Party Transactions - continued 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 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 - Net Investment in Master Loan Interest due to the Partnership pursuant to the terms of the Master Loan Agreement, but not recognized in the income statements, totaled approximately $14.8 million and $13.6 million for the six months ended June 30, 1996 and 1995, respectively. At June 30, 1996, and December 31, 1995, such cumulative unrecognized interest totaling approximately $153 million and $138.2 million was not included in the balance of the investment in Master Loan. During the six months ended June 30, 1996, the Partnership advanced approximately $367,000 to Consolidated Capital Equity Partners, L.P. ("CCEP") as an advance on the Master Loan. CCEP used the funds to pay for deferred maintenance and capital improvements on certain properties which collateralize the Master Loan. A portion of the advance was used to pay additional expenses related to the December 1995 financing of six of CCEP's investment properties. Also, a portion of the advance was used to pay taxes on behalf of 1801 Tower Inc., a wholly owned subsidiary of CCEP. During the six months ended June 30, 1996, the Partnership received approximately $175,000 as principal payments on the Master Loan. Approximately $101,000 was due to the return of a real estate tax escrow set up at the time of the December 1995 financing of a certain CCEP investment property. This escrow was held until CCEP was able to provide proof of payment to the mortgage lender. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $74,000. Note D - Commitment The Partnership is required by the Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined in the Agreement. In the event expenditures are made from this reserve, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, including cash and cash equivalents and securities available for sale (at market), totaling approximately $15.3 million, were greater than the reserve requirement of approximately $7.3 million at June 30, 1996. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Partnership's investment properties consists of two properties, The Loft and The Carlton House Apartment and Office Building ("The Carlton House"). The Carlton House is a multiple-use facility which consists of an apartment complex and commercial space. This property was transferred from Consolidated Capital Equity Partners, L.P. ("CCEP") to a wholly owned subsidiary of the Partnership on November 30, 1995. The operations of The Carlton House had a significant impact on the results of operations of the Partnership for the six months ended June 30, 1996, with revenues of approximately $3,170,000 and expenses of approximately $2,796,000. The following table sets forth the average occupancies of the properties for the six months ended June 30, 1996 and 1995: Average Occupancy Property 1996 1995 The Loft Apartments 94% 91% Raleigh, North Carolina The Carlton House (residential) 86% 82% The Carlton House (commercial) 65% 63% Philadelphia, Pennsylvania The General Partner attributes the increase in occupancy at The Loft to increased marketing strategies and higher traffic. Also, the General Partner attributes the increase in occupancy at The Carlton House (residential) to increased marketing strategies and concessions offered to the residential tenants. Results of Operations The Partnership's net income for the six months ended June 30, 1996, was approximately $518,000 as compared to net income of approximately $1,541,000 for the six months ended June 30, 1995. The Partnership recorded net income of approximately $146,000 for the three months ended June 30, 1996, as compared to net income of approximately $31,000 for the three months ended June 30, 1995. Net income decreased for the six months ended June 30, 1996, but increased for the three months ended June 30, 1996. The decrease in net income for the six months ended June 30, 1996, is due to the fact that no interest income is recorded on the investment in Master Loan to affiliate. This decrease is the result of decreased operations at the underlying collateral properties. Offsetting this decrease in income was the transfer of The Carlton House from CCEP to the Partnership which resulted in an increase in net income for the Partnership of approximately $248,000 and $374,000 for the three and six month periods ended June 30, 1996, respectively. The transfer resulted in significant increases in rental income, operating expenses and depreciation for the three and six month periods ended June 30, 1996. Also contributing to the increase in operating expenses during the three and six month periods ended June 30, 1996, was major landscaping work and a wood replacement project done at The Loft. General and administrative expenses decreased during the six months ended June 30, 1996, as compared to the six months ended June 30, 1995, as a result of the additional costs associated with the combined efforts of the Dallas and Greenville offices during the transition period that ended June 30, 1995. The increased costs related to the transition efforts were incurred to minimize any disruption in the 1994 year-end reporting function including K-1 preparation and distribution. Interest expense increased for the three and six month periods ended June 30, 1996, as a result of the financing of The Loft in December 1995. This property did not have a mortgage balance prior to December 1995 and as a result had no interest expense during the three and six month periods ended June 30, 1995. Other income increased during the three and six month periods ended June 30, 1996, due to the increase in cash balances due to the proceeds received from the December 1995 financing of The Loft and the principal payments received on the Master Loan in December 1995. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. Liquidity and Capital Resources At June 30, 1996, the Partnership had unrestricted cash of approximately $12,300,000 versus approximately $3,863,000 at June 30, 1995. Net cash provided by operating activities decreased primarily due to the decrease in net income as explained above. Also, due from affiliates decreased during the six months ended June 30, 1995, however, no such activity occurred during the six months ended June 30, 1996. Offsetting these decreases is a decrease in interest receivable on the Master Loan. Cash provided by investing activities decreased primarily due to an increase in property improvements and replacements during the six months ended June 30, 1996, and additional advances under the Master Loan to CCEP. Partially offsetting these decreases was the receipt of principal payments on the Master Loan. Net cash used in financing activities increased due to an increase in distributions paid to the partners as well as principal payments on the mortgage note for The Loft. The Partnership has budgeted for approximately $14 million of deferred maintenance and capital improvements to be made to The Carlton House during 1996 and 1997. These programs will be paid by existing cash and investments and from cash generated by property operations and debt service on the Master Loan. The major capital improvements are for exterior renovation, elevator rehabilitation, residential and commercial common area renovations. As of June 30, 1996, approximately $1.5 million had been spent on these programs. 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 approximately $4,522,000 requires monthly principal and interest payments and requires a balloon payment on December 1, 2005, at which time the property will either be refinanced or sold. Distributions of approximately $15,484,000 or $77.79 per Unit were made to the limited partners during the six months ended June 30, 1996. A matching distribution of approximately $15,000 was made to the General Partner. A distribution of approximately $1,485,000 or $7.46 per Unit was made to the limited partners during the six months ended June 30, 1995. A matching distribution of approximately $15,000 was made to the General Partner. In June 1995, a distribution of approximately $36,000 was accrued to pay the limited partners' income taxes due to the State of North Carolina for income generated by the Partnership's investment property located in North Carolina. Future cash distributions will depend on the levels of cash generated from operations, Master Loan interest income, capital expenditure requirements, property sales, and the availability of cash reserves. The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined by the Partnership Agreement. Reserves, including cash and cash equivalents and securities available for sale totaling approximately $15.3 million, were greater than the reserve requirement of $7.3 million as of June 30, 1996. CCEP Property Operations The Partnership invested approximately $367,000 in CCEP during the six months ended June 30, 1996, as additional advances under the Master Loan. CCEP used the funds to pay for maintenance and capital improvements on certain properties which collateralize the Master Loan. A portion of the advance was used to pay additional expenses related to the December 1995 financing of six of CCEP's investment properties. Also, a portion of the advance was used to pay taxes on behalf of 1801 Tower Inc., a wholly owned subsidiary of CCEP. For the six months ended June 30, 1996, CCEP's net loss totaled approximately $14.8 million on total revenues of approximately $10.0 million. CCEP recognizes interest expense on the New Master Loan Agreement obligation according to the note terms, although payments to the Partnership are required only to the extent of Excess Cash Flow, as defined therein. During the six months ended June 30, 1996, CCEP's statement of operations includes total interest expense attributable to the Master Loan of approximately $14.8 million, all of which represents interest accrued in excess of required payments. Subsequent to June 30, 1996, CCEP made an "Excess Cash Flow" principal payment of approximately $1,363,000 to the Partnership. CCEP is expected to continue to generate operating losses as a result of such interest accruals and noncash charges for depreciation. During the six months ended June 30, 1996, the Partnership received approximately $175,000 as principal payments on the Master Loan. Approximately $101,000 was due to the return of a real estate tax escrow set up at the time of the December 1995 financing of a certain CCEP investment property. This escrow was held until CCEP was able to provide proof of payment to the mortgage lender. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $74,000. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: S-K Reference Number Description 27 Financial Data Schedule is filed as an exhibit to this report. 99.1 Consolidated Capital Equity Partners, L.P., unaudited financial statements for the three and six months ended June 30, 1996 and 1995. (b) Reports on Form 8-K: None filed during the quarter ended June 30, 1996. 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 INSTITUTIONAL PROPERTIES 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. Vice President/CAO Date: August 8, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Institutional Properties 1996 Second Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000352983 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 1,000 6-MOS DEC-31-1996 JUN-30-1996 12,300 2,697 95,438 41,478 0 0 23,196 2,481 91,263 0 4,548 0 0 0 85,795 91,263 0 4,507 0 0 3,989 0 163 0 0 0 0 0 0 518 2.58 0 The Registrant has an unclassified balance sheet. Multiplier is 1.
EX-99.1 3 EXHIBIT 99.1 CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 EXHIBIT 99.1 (Continued) PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (in thousands)
June 30, December 31, 1996 1995 (Unaudited) (Note) Assets Cash and cash equivalents $ 3,160 $ 2,225 Investments in limited partnerships 387 460 Other assets 4,566 5,725 Investment properties: Land 10,452 10,452 Building and related personal property 96,883 94,906 107,335 105,358 Less accumulated depreciation (70,612) (68,167) 36,723 37,191 $ 44,836 $ 45,601 Liabilities and Partners' Deficit Accounts payable and accrued liabilities $ 2,123 $ 3,035 Mortgage notes and interest payable 24,964 25,050 Master loan and interest payable 248,488 233,490 275,575 261,575 Partners' Deficit General partner (2,307) (2,159) Limited partners (228,432) (213,815) (230,739) (215,974) $ 44,836 $ 45,601 Note: The balance sheet at December 31, 1995, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued) b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 1996 1995 1996 1995 Revenues: Rental income $ 5,117 $ 6,075 $ 9,959 $ 12,129 Other income 41 43 56 58 Total revenues 5,158 6,118 10,015 12,187 Expenses: Operating 2,904 3,768 6,001 7,619 General and administrative 210 458 367 674 Depreciation and amortization 1,343 1,630 2,662 3,207 Interest 7,868 6,523 15,723 15,330 Total expenses 12,325 12,379 24,753 26,830 Loss on disposition of property (15) (2) (27) (9) Casualty gain -- -- -- 45 Net loss $(7,182) $(6,263) $(14,765) $(14,607) Net loss allocated to general partner (1%) $ (72) $ (63) $ (148) $ (146) Net loss allocated to limited partners (99%) (7,110) (6,200) (14,617) (14,461) $(7,182) $(6,263) $(14,765) $(14,607) See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued) c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) For the Six Months Ended June 30, 1996 and 1995 (in thousands)
General Limited Partner Partners Total Partners' deficit at December 31, 1994 $ (1,780) $(176,260) $(178,040) Net loss for the six months ended June 30, 1995 (146) (14,461) (14,607) Partners' deficit at June 30, 1995 $ (1,926) $(190,721) $(192,647) Partners' deficit at December 31, 1995 $ (2,159) $(213,815) $(215,974) Net loss for the six months ended June 30, 1996 (148) (14,617) (14,765) Partners' deficit at June 30, 1996 $ (2,307) $(228,432) $(230,739) See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued) d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 1996 1995 Cash flows from operating activities: Net loss $(14,765) $(14,607) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 2,701 3,210 Loss on disposition of property 27 9 Casualty gain -- (45) Change in accounts: Other assets 1,137 (1,047) Accounts payable and accrued liabilities (911) 1,049 Interest on Master Loan 14,805 15,113 Due to affiliates -- (918) Interest payable 63 11 Net cash provided by operating activities 3,057 2,775 Cash flows from investing activities: Property improvements and replacements (2,164) (1,429) Proceeds from sale of securities available for sale -- 195 Net cash used in investing activities (2,164) (1,234) Cash flows from financing activities: Advances on Master Loan 367 -- Principal payments on Master Loan (175) -- Principal payments on notes payable (149) (296) Loan costs paid (1) -- Net cash provided by (used in) financing activities 42 (296) Net increase in cash and cash equivalents 935 1,245 Cash and cash equivalents at beginning of period 2,225 3,393 Cash and cash equivalents at end of period $ 3,160 $ 4,638 Supplemental disclosure of cash flow information: Cash paid for interest $ 815 $ 1,121 See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements of Consolidated Capital Equity Partners, L.P. ("CCEP") have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Holdings, Inc. ("General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Consolidation CCEP owns a 75% interest in a limited partnership ("Western Can, Ltd.") which owns 444 De Haro, an office building in San Francisco, California. CCEP's investment in Western Can, Ltd. is consolidated in CCEP's financial statements. No minority interest liability has been reflected for the 25% minority interest because Western Can, Ltd. has a net capital deficit and no minority liability exists with respect to CCEP. The operations for the six months ended June 30, 1995, for The Carlton House Apartment and Office Building ("The Carlton House") are consolidated in CCEP's financial statements pursuant to accounting guidelines regarding notes receivable in-substance foreclosed. The Carlton House was transferred to a wholly owned subsidiary of Consolidated Capital Institutional Properties ("CCIP") in a series of transactions on November 30, 1995. Note B - Related Party Transactions CCEP paid property management fees based upon collected gross rental revenues for property management services in each of the six month periods ended June 30, 1996 and 1995. Fees paid to affiliates of Insignia during the six month periods ended June 30, 1996 and 1995, are included in operating expenses on the consolidated statement of operations and are reflected in the following table. The Partnership Agreement ("Agreement") also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of CCEP activities. The General Partner, and its current affiliates, received reimbursements for the six months ended June 30, 1996 and 1995, as reflected in the following table. Note B - Related Party Transactions (continued) Also, CCEP is subject to an Investment Advisory Agreement between the Partnership and an affiliate of ConCap Holdings, Inc. ("CHI"). This agreement provides for an annual fee, payable in monthly installments, to an affiliate of CHI for advising and consulting services for CCEP's properties. Advisory fees paid pursuant to this agreement are included in general and administrative expenses on the consolidated statement of operations and are reflected in the following table: For the Six Months Ended June 30, 1996 1995 (in thousands) Property management fees $500 $615 Investment advisory fees 91 129 Lease commissions 26 -- Reimbursement for services of affiliates (1) 239 300 (1) Included in "reimbursements for services of affiliates" for 1996 is approximately $39,000 in reimbursements for construction oversight costs. The decrease in property management fees for the six months ended June 30, 1996, as compared to the six months ended June 30, 1995, is the result of the transfer of The Carlton House to CCIP on November 30, 1995. In addition to the compensation and reimbursements described above, interest payments are made to and loan advances are received from CCIP pursuant to the Master Loan Agreement, which is described more fully in the 1995 Annual Report. Interest payments made during the six month periods ended June 30, 1996 and 1995, were $0 and approximately $918,000, respectively. (See further discussion in "Note C"). Advances of approximately $367,000 were made under the Master Loan Agreement during the six months ended June 30, 1996. Principal payments of approximately $175,000 were made on the Master Loan during the six months ended June 30, 1996. On July 1, 1995, CCEP 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 CCEP'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 - Master Loan and Accrued Interest Payable The Master Loan principal and accrued interest payable balances at June 30, 1996, and December 31, 1995, are approximately $248.5 million and approximately $233.5 million, respectively. Terms of Master Loan Agreement Under the terms of the Master Loan Agreement, interest accrues at a fluctuating rate per annum adjusted annually on July 15 by the percentage change in the U.S. Department of Commerce Implicit Price Deflator for the Gross National Product subject to an interest rate ceiling of 12.5%. The interest rates for each of the three and six month periods ended June 30, 1996 and 1995, was 12.5%. Payments are currently payable quarterly in an amount equal to "Excess Cash Flow", generally defined in the Master Loan Agreement as net cash flow from operations after third-party debt service and capital expenditures. Any unpaid interest is added to principal, compounded annually, and is payable at the loan's maturity. Any net proceeds from sale or refinancing of any of CCEP's properties are paid to CCIP under the terms of the Master Loan Agreement. The Master Loan Agreement matures in November 2000. CCIP invested approximately $367,000 in CCEP during the six months ended June 30, 1996, as additional advances under the Master Loan. CCEP used the funds to pay for deferred maintenance and capital improvements on certain properties which collateralize the Master Loan. A portion of the advance was used to pay additional expenses related to the December 1995 financing of six of CCEP's investment properties. Also, a portion of the advance was used to pay taxes on behalf of 1801 Tower Inc., a wholly owned subsidiary. During the six months ended June 30, 1996, CCEP paid approximately $175,000 to CCIP as principal payments on the Master Loan. Approximately $101,000 was due to the return of a real estate tax escrow set up at the time of the December 1995 financing of a certain CCEP investment property. This escrow was held until CCEP was able to provide proof of payment to the mortgage lender. Cash received on certain investments by CCEP, which are required to be transferred to CCIP per the Master Loan Agreement, accounted for approximately $74,000. Note D - Note Receivable Deemed In-Substance Foreclosed Prior to the transfer of The Carlton House from CCEP to CCIP on November 30, 1995, CCEP held the "Carlton House Note" which was secured by a deed of trust on The Carlton House with a scheduled maturity in 1995. According to the note terms, interest accrued at 10% and compounded monthly on principal plus accrued but unpaid interest. The note receivable had been in default since 1991. As described more fully in the 1995 audited financial statements, the required debt service payments were reduced to only the amount of net cash flow from The Carlton House. In 1995 no interest income was recognized as no cash related to the note receivable was received by CCEP. Summarized below are the results of operations of The Carlton House that are included in CCEP's financial statements for the six months ended June 30, 1995, prepared on the same basis as CCEP's financial statements. Any intercompany balances between the Partnership and The Carlton House have been eliminated in CCEP's consolidated financial statements and the summarized financial statements set forth below: For the Six Months Ended June 30, 1996 (in thousands) Revenues: Rental income $ 2,908 Other income 14 Total revenues 2,922 Expenses: Operating 2,217 Depreciation and amortization 517 Interest 1 Administrative 93 Total expenses 2,828 Net income $ 94 -----END PRIVACY-ENHANCED MESSAGE-----