-----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, OeVvcZIF2ie36aYLc7HTPTuoMsWOdH3iAuPapTr5RZj4vlOj3f3ir1AGGQSgmuvt qqOXrPk6Ce+Ifs/uXIj0yA== 0000352983-97-000001.txt : 19970506 0000352983-97-000001.hdr.sgml : 19970506 ACCESSION NUMBER: 0000352983-97-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970505 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: 97595723 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 March 31, 1997 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) March 31, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents: Unrestricted $ 8,421 $ 12,373 Restricted--tenant security deposits 326 318 Accounts receivable 23 95 Escrow for taxes 247 551 Restricted escrows 64 62 Other assets 601 209 Interest receivable on Master Loan 862 -- Net investment in Master Loan 91,940 93,370 Less: Allowance for impairment loss (40,686) (40,686) 51,254 52,684 Investment properties: Land 3,620 3,620 Building and related personal property 27,125 24,962 30,745 28,582 Less accumulated depreciation (3,612) (3,217) 27,133 25,365 $ 88,931 $ 91,657 Liabilities and Partners' Capital (Deficit) Accounts payable $ 179 $ 1,789 Tenant security deposits 325 317 Accrued taxes 16 -- Other liabilities 450 465 Mortgage note payable 4,486 4,498 Partners' Capital (Deficit) General partner (391) (380) Limited partners (199,052 units outstanding at March 31, 1997, and December 31, 1996, respectively) 83,866 84,968 83,475 84,588 $ 88,931 $ 91,657 Note: The balance sheet at December 31, 1996, 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 March 31, 1997 1996 Revenues: Rental income $ 1,863 $ 1,805 Interest income on investment in Master Loan to affiliate 862 -- Interest income 127 377 Other income 152 131 Total revenues 3,004 2,313 Expenses: Operating 1,092 1,097 Depreciation and amortization 398 246 General and administrative 88 116 Maintenance 319 208 Property taxes 140 193 Interest 81 81 Total expenses 2,118 1,941 Net income $ 886 $ 372 Net income allocated to general partner (1%) $ 9 $ 4 Net income allocated to limited partners (99%) 877 368 $ 886 $ 372 Net income per limited partnership unit $ 4.41 $ 1.85 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, 1995 199,052 $ (358) $101,134 $100,776 Distributions to partners (15) (15,484) (15,499) Net income for the three months ended March 31, 1996 4 368 372 Partners' capital (deficit) at March 31, 1996 199,052 $ (369) $ 86,018 $ 85,649 Partners' capital (deficit) at December 31, 1996 199,052 $ (380) $ 84,968 $ 84,588 Distributions to partners (20) (1,979) (1,999) Net income for the three months ended March 31, 1997 9 877 886 Partners' capital (deficit) at March 31, 1997 199,052 $ (391) $ 83,866 $ 83,475 See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net income $ 886 $ 372 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 395 245 Amortization of loan costs and lease commissions 5 4 Change in accounts: Restricted cash (8) 4 Accounts receivable 72 153 Escrows for taxes 304 342 Other assets (398) (417) Interest receivable on master loan (862) -- Accounts payable (1,610) 120 Tenant security deposit liabilities 8 (8) Accrued taxes 16 16 Other liabilities (15) (59) Net cash (used in) provided by operating activities (1,207) 772 Cash flows from investing activities: Property improvements and replacements (2,163) (480) Advances on Master Loan -- (367) Principal receipts on Master Loan 1,430 175 Net cash used in investing activities (733) (672) Cash flows from financing activities: Distributions to partners (1,999) (15,499) Mortgage principal payments (12) (12) Net cash used in financing activities (2,011) (15,511) Net decrease in cash and cash equivalents (3,951) (15,411) Cash and cash equivalents at beginning of period 12,372 26,264 Cash and cash equivalents at end of period $ 8,421 $ 10,853 Supplemental disclosure of cash flow information: Cash paid for interest $ 78 $ 67 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 month period ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. 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, 1996, for the Partnership. Certain reclassifications have been made to the 1996 information to conform to the 1997 presentation. NOTE B - RELATED PARTY TRANSACTIONS The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The Partnership paid property management fees based upon collected gross rental revenues for property management services as noted below for the three month periods ended March 31, 1997 and 1996. Such fees are included in operating expenses on the consolidated statements 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 Three Months March 31, 1997 1996 (in thousands) Property management fees $102 $ 97 Reimbursement for services of affiliates (1) 109 58 (1) Included in "reimbursements for services of affiliates" for 1997 is approximately $41,000 in reimbursements for construction oversight costs. The Partnership insures 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 At March 31, 1997, the recorded investment in the Master Loan was considered to be impaired under "FASB 114." The Partnership measures the impairment of the loan based upon the fair value of the collateral due to the fact that repayment of the loan is expected to be provided solely by the collateral. For the three months ended March 31, 1997, the Partnership recorded approximately $862,000 in income based upon an increase in the fair value of the collateral. Interest due to the Partnership pursuant to the terms of the Master Loan Agreement, but not recognized in the income statements, totaled approximately $8.3 million and $7.4 million for the three months ended March 31, 1997 and 1996, respectively. At March 31, 1997, and December 31, 1996, such cumulative unrecognized interest totaling approximately $176 million and $167.7 million was not included in the balance of the investment in Master Loan. In addition, six of the properties are collateralized by first mortgages totaling approximately $23,330,000 which are superior to the Master Loan. During the three months ended March 31, 1997, the Partnership made no advances to Consolidated Capital Equity Partners, L.P. ("CCEP") as an advance on the Master Loan. During the three months ended March 31, 1997, the Partnership received approximately $1,430,000 as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $367,000. Approximately $63,000 received was due to an excess cash flow payment received from CCEP as stipulated by the master loan agreement. Approximately $1,000,000 was received from CCEP as additional principal payments. Subsequent to March 31, 1997, CCEP paid $1,000,000 to CCIP of which approximately $411,000 was an excess cash flow payment which is required under the terms of the Master Loan Agreement. 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 $8.7 million, were greater than the reserve requirement of approximately $7.3 million at March 31, 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Partnership's investment properties consist of two properties, The Loft and The Sterling Apartment Homes and Commerce Center ("The Sterling"). The Sterling is a multiple-use facility which consists of an apartment complex and commercial space. The following table sets forth the average occupancies of the properties for the three months ended March 31, 1997 and 1996: Average Occupancy 1997 1996 Property The Loft Apartments 94% 92% Raleigh, North Carolina The Sterling Apartment Homes 84% 87% The Sterling Commerce Center 68% 64% Philadelphia, Pennsylvania The General Partner attributes the decrease in occupancy at The Sterling Apartment Homes to major capital improvements occurring at the complex, along with rental increases established in order to upgrade the tenant base. Management expects to see an upward trend in occupancy throughout 1997 as a result of the renovations and change in demographics. The increase in occupancy at The Sterling Commerce Center is attributable to the major ongoing capital improvements including exterior renovations, elevator rehabilitation, and common area renovations. The improvements at The Sterling Commerce Center are substantially complete as of March 31, 1997. Results of Operations The Partnership's net income for the three months ended March 31, 1997, was approximately $886,000 compared to net income of approximately $372,000 for the corresponding period ended March 31, 1996. The increase in net income is primarily due to an increase in interest income recorded on the investment in Master Loan to affiliate. This increase is the result of an increase in the fair value of the underlying collateral properties due to an increase in operations of such properties. Also contributing to the increase in net income was a decrease in tax expense and general and administrative expense and an increase in other income. The decrease in tax expense is the result of an assessment reduction at The Sterling in 1996. General and administrative expense has decreased due to the fact that the copying and mailing costs related to the 1996 10-K's have not been incurred at March 31, 1997. These costs were incurred in late March 1996. Other income increased for the three months ended March 31, 1997, due to increased utility collections resulting from higher commercial occupancy. Offsetting the increase in net income was an increase in depreciation and maintenance expenses and a decrease in interest income. Both depreciation and maintenance expenses increased during the three months ended March 31, 1997, as a direct result of the ongoing capital improvements and renovations at the Sterling. Interest income decreased as a result of a decrease in investment balances during the first quarter of 1997. Included in maintenance expense for the three months ended March 31, 1997, is approximately $141,000 of major repairs and maintenance comprised primarily of window coverings and interior and exterior building improvements. 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 March 31, 1997, the Partnership had unrestricted cash of approximately $8,421,000 versus approximately $10,853,000 at March 31, 1996. Net cash used in operating activities increased primarily due to a decrease in accounts payable resulting from the payment of invoices relating to the renovations at The Sterling. The increase in net cash used in operating activities is also the result of an increase in interest receivable on the Master Loan. Offsetting the increase in net cash used in operating activities was an increase in net income as explained above. Net cash used in investing activities increased as a result of an increase in property improvements and replacements related to the renovations at The Sterling. Offsetting this increase in net cash used in investing activities was the receipt of principal payments on the Master Loan from CCEP. Net cash used in financing activities decreased due to a decrease in distributions to partners. The Partnership has budgeted approximately $7.9 million for deferred maintenance and capital improvements to be made to The Sterling during 1997. These programs will be paid by existing cash and from cash generated by property operations and debt service on the Master Loan. The major capital improvements are for exterior renovations, elevator rehabilitation, residential and commercial common area renovations. As of March 31, 1997, approximately $8.6 million had been spent on these programs during 1996 and 1997. 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 $4,486,000 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 $1,979,000 were made to the limited partners during the three months ended March 31, 1997. A corresponding distribution of approximately $20,000 was made to the General Partner. Distributions of approximately $15,484,000 were made to the limited partners during the three months ended March 31, 1996. A corresponding distribution of approximately $15,000 was made to the General Partner. 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 the 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 $8.7 million, were greater than the reserve requirement of approximately $7.3 million at March 31, 1997. CCEP Property Operations For the three months ended March 31, 1997, CCEP's net loss totaled approximately $7.9 million on total revenues of approximately $5.1 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 three months ended March 31, 1997, CCEP's statement of operations includes total interest expense attributable to the Master Loan of approximately $8.3 million, all of which represents interest accrued in excess of required payments. During the three months ended March 31, 1997, CCEP made an excess cash flow principal payment of approximately $63,000 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 three months ended March 31, 1997, the Partnership received approximately $1,430,000 as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $367,000. Approximately $63,000 received was due to an excess cash flow payment from CCEP as described above. The Partnership also received an additional $1,000,000 from CCEP as principal payment on the Master Loan. Subsequent to March 31, 1997, CCEP paid $1,000,000 to the Partnership of which approximately $411,000 was an excess cash flow payment which is required under the terms of the Master Loan Agreement. 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 months ended March 31, 1997 and 1996. (b) Reports on Form 8-K: None filed during the quarter ended March 31, 1997. 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/ William H. Jarrard, Jr. William H. Jarrard, Jr. President By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: May 5, 1997 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Institutional Properties 1997 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000352983 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 1,000 3-MOS DEC-31-1997 MAR-31-1997 8,421 0 92,825 (40,686) 0 0 30,745 (3,612) 88,931 0 4,486 0 0 0 83,475 88,931 0 3,004 0 0 2,118 0 81 0 0 0 0 0 0 886 4.41 0 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 MONTHS ENDED MARCH 31, 1997 AND 1996 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (in thousands) March 31, December 31, 1997 1996 (Unaudited) (Note) Assets Cash and cash equivalents: Unrestricted $ 2,265 1,960 Restricted - tenant security deposits 547 554 Investments in limited partnerships -- 336 Accounts receivable 235 252 Escrow for taxes 755 678 Restricted escrows 639 1,420 Other assets 1,667 1,630 Investment properties: Land 10,217 10,217 Building and related personal property 95,653 95,236 105,870 105,453 Less accumulated depreciation (71,871) (70,606) 33,999 34,847 $ 40,107 $ 41,677 Liabilities and Partners' Deficit Accounts payable $ 250 $ 798 Tenant security deposits 605 611 Accrued taxes 374 313 Other liabilities 423 363 Mortgage notes 23,330 23,393 Master loan and interest payable 267,972 261,136 Partners' Deficit General partner (2,528) (2,449) Limited partners (250,319) (242,488) (252,847) (244,937) $ 40,107 $ 41,677 Note: The balance sheet at December 31, 1996, 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 EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1997 1996 Revenues: Rental income $ 4,777 $ 4,686 Interest income 35 15 Other income 321 270 Total revenues 5,133 4,971 Expenses: Operating 1,845 2,059 General and administrative 252 157 Depreciation and amortization 1,298 1,319 Maintenance 631 828 Property taxes 325 336 Interest 8,692 7,855 Total expenses 13,043 12,554 Net loss $ (7,910) $ (7,583) Net loss allocated to general partner (1%) $ (79) $ (76) Net loss allocated to limited partners (99%) (7,831) (7,507) $ (7,910) $ (7,583) See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT (Unaudited) For the Three Months Ended March 31, 1997 and 1996 (in thousands) General Limited Partners Partners Total Partners' deficit at December 31, 1995 $ (2,159) $(213,815) $(215,974) Net loss for the three months ended March 31, 1996 (76) (7,507) (7,583) Partners' deficit at March 31, 1996 $ (2,235) $(221,322) $(223,557) Partners' deficit at December 31, 1996 $ (2,449) $(242,488) $(244,937) Net loss for the three months ended March 31, 1997 (79) (7,831) (7,910) Partners' deficit at March 31, 1997 $ (2,528) $(250,319) $(252,847) See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1997 1996 Cash flows from operating activities: Net loss $ (7,910) $ (7,583) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,318 1,338 Change in accounts: Restricted cash 7 (9) Accounts receivable 17 124 Escrows for taxes (78) 115 Other assets (89) 152 Accounts payable (548) (1,035) Tenant security deposit liabilities (6) 11 Accrued taxes 60 40 Other liabilities 61 (78) Interest on Master Loan 8,266 7,401 Net cash provided by operating activities 1,098 476 Cash flows from investing activities: Property improvements and replacements (417) (1,162) Deposits to restricted escrows (22) (5) Withdrawals from restricted escrows 803 255 Distributions from investments in limited partnerships 336 -- Net cash provided by (used in) investing activities 700 (912) Cash flows from financing activities: Advances on Master Loan -- 367 Principal payments on Master Loan (1,430) (175) Principal payments on notes payable (63) (74) Loan costs paid -- (2) Net cash (used in) provided by financing activities (1,493) 116 Net increase (decrease) in cash and cash equivalents 305 (320) Cash and cash equivalents at beginning of period 1,960 1,686 Cash and cash equivalents at end of period $ 2,265 $ 1,366 Supplemental disclosure of cash flow information: Cash paid for interest $ 406 $ 371 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 month period ended March 31, 1997, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1997. Certain reclassifications have been made to the 1996 information to conform to the 1997 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. NOTE B - RELATED PARTY TRANSACTIONS CCEP has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. CCEP paid property management fees based upon collected gross rental revenues for property management services in each of the three month periods ended March 31, 1997 and 1996. Fees paid to affiliates of Insignia during the three month periods ended March 31, 1997 and 1996, are included in operating expenses on the consolidated statements 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 three months ended March 31, 1997 and 1996, as reflected in the following table. Also, CCEP is subject to an Investment Advisory Agreement between CCEP 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 reflected in the following table: For the Three Months Ended March 31, 1997 1996 (in thousands) Property management fees $253 $248 Investment advisory fees 45 45 Lease commissions 35 7 Reimbursement for services of affiliates (1) 117 113 (1) Included in "reimbursements for services of affiliates" for 1997 is approximately $20,000 in reimbursements for construction oversight costs. 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 1996 Annual Report. No interest payments were made during the three month periods ended March 31, 1997 and 1996. No advances were received under the Master Loan Agreement during the three months ended March 31, 1997. Principal payments of approximately $1,430,000 were made on the Master Loan during the three months ended March 31, 1997. CCEP insures 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 March 31, 1997, and December 31, 1996, are approximately $268.0 million and approximately $261.1 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 month periods ended March 31, 1997 and 1996, 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. During the three months ended March 31, 1997, CCEP paid approximately $1,430,000 to CCIP as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to CCIP per the Master Loan Agreement, accounted for approximately $367,000. Approximately $63,000 was due to an excess cash flow payment paid to CCIP as stipulated by the Master Loan Agreement. CCEP also paid an additional $1,000,000 to CCIP as principal payment on the Master Loan. Subsequent to March 31, 1997, CCEP paid $1,000,000 to CCIP of which approximately $411,000 was an excess cash flow payment which is required under the terms of the Master Loan Agreement. -----END PRIVACY-ENHANCED MESSAGE-----