-----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, E/SyPeivHt9yTHLCoeDlViEppJ3/P7mDgPWQzooaAlSShqxl/G0Q8Dzf61yfs6T3 j0AzHo0Cme98eiJJtzrY4w== 0000711642-05-000625.txt : 20051114 0000711642-05-000625.hdr.sgml : 20051111 20051114140440 ACCESSION NUMBER: 0000711642-05-000625 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20050930 FILED AS OF DATE: 20051114 DATE AS OF CHANGE: 20051114 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: 051199816 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET 17TH FLOOR STREET 2: PO BOX 1089 CITY: DENVER STATE: CO ZIP: 80222 10-Q 1 ccip.txt CCIP UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 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.) 55 Beattie Place, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Registrant's telephone number) 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___ Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 120-2 of the Exchange Act). Yes ____ No __X__ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ___ No _X__ PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data)
September 30, December 31, 2005 2004 (Unaudited) (Restated) (Note A) Assets Cash and cash equivalents $ 1,456 $ 955 Receivables and deposits 799 1,155 Restricted escrows 261 662 Other assets 1,318 989 Investment in affiliated partnerships (Note D) 634 624 Investment properties: Land 20,365 20,365 Buildings and related personal property 106,091 98,265 126,456 118,630 Less: Accumulated depreciation (31,661) (27,837) 94,795 90,793 $ 99,263 $ 95,178 Liabilities and Partners' Capital Liabilities Accounts payable $ 370 $ 1,499 Tenant security deposit liabilities 841 825 Accrued property taxes 713 100 Other liabilities 1,148 1,229 Due to affiliates (Note C) 6,698 2,596 Mortgage notes payable 64,945 65,768 74,715 72,017 Partners' Capital General partner 147 133 Limited partners (199,043.2 units issued and outstanding) 24,401 23,028 24,548 23,161 $ 99,263 $ 95,178 Note: The restated consolidated balance sheet at December 31, 2004 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
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except per unit data)
Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Revenues: (Restated) (Note A) Rental income $ 5,817 $ 5,629 $17,213 $16,305 Other income 499 504 1,477 1,554 Casualty gain (Note H) 51 -- 51 -- Total revenues 6,367 6,133 18,741 17,859 Expenses: Operating 2,736 2,973 7,966 8,694 General and administrative 177 225 589 710 Depreciation 1,289 1,318 3,830 3,989 Interest 1,104 1,157 3,371 3,465 Property taxes 514 451 1,425 1,317 Casualty loss (Note H) -- 427 125 453 Total expenses 5,820 6,551 17,306 18,628 Income (loss) from continuing operations 547 (418) 1,435 (769) Loss from discontinued operations (Notes A and E) -- (13) -- (1,113) (Loss) gain on sale of discontinued operations (Note E) -- -- (58) 1,716 Gain on foreclosure of real estate (Note B) -- -- -- 156 Equity in income from investment (Note D) 10 -- 10 17 Net income (loss) $ 557 $ (431) $ 1,387 $ 7 Net income (loss) allocated to general partner (1%) $ 6 $ (4) $ 14 $ -- Net income (loss) allocated to limited partners (99%) 551 (427) 1,373 7 $ 557 $ (431) $ 1,387 $ 7 Per limited partnership unit: Income (loss) from continuing operations 2.72 (2.08) 7.14 (3.82) Loss from discontinued operations -- (0.07) -- (5.54) (Loss) gain on sale of discontinued operations -- -- (0.29) 8.54 Gain on foreclosure of real estate -- -- -- 0.77 Equity in income from investment 0.05 -- 0.05 0.08 Net income (loss) per limited partnership unit $ 2.77 $ (2.15) $ 6.90 $ 0.03 Distributions per limited partnership unit $ -- $ 11.63 $ -- $ 20.76 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 200,342.0 $ 1 $200,342 $200,343 Partners' capital at December 31, 2004, as restated (Note A) 199,043.2 $ 133 $ 23,028 $ 23,161 Net income for the nine months ended September 30, 2005 -- 14 1,373 1,387 Partners' capital at September 30, 2005 199,043.2 $ 147 $ 24,401 $ 24,548 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Nine Months Ended September 30, 2005 2004 (Restated) (Note A) Cash flows from operating activities: Net income $ 1,387 $ 7 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 3,830 4,126 Amortization of loan costs, lease commissions and mortgage premiums (128) (155) Casualty (gain) loss, net 74 453 Equity in income of investment (10) (17) Loss on sale of discontinued operations 58 (1,716) Loss on early extinguishment of debt -- 1,161 Gain on foreclosure of real estate -- (156) Change in accounts: Receivables and deposits 107 (483) Other assets (328) (501) Accounts payable (34) 52 Tenant security deposit liabilities 16 (100) Accrued property taxes 613 193 Other liabilities (81) (135) Due to affiliates (154) (200) Net cash provided by operating activities 5,350 2,529 Cash flows from investing activities: Net proceeds from sale of discontinued operations -- 12,589 Net receipts from restricted escrows 401 43 Property improvements and replacements (9,041) (3,270) Insurance proceeds received 232 284 Receipts on Master Loan -- 156 Net cash (used in) provided by investing activities (8,408) 9,802 Cash flows from financing activities: Distributions to partners -- (4,132) Payments on mortgage notes payable (1,285) (1,232) Repayment of mortgage note payable (3,925) (7,099) Proceeds from mortgage notes payable 4,600 -- Prepayment penalties -- (1,527) Loan costs paid (49) -- Lease commissions paid (38) (6) Advances from general partner 4,933 -- Repayment of advances from general partner (677) -- Net cash provided by (used in) financing activities 3,559 (13,996) Net increase (decrease) in cash and cash equivalents 501 (1,665) Cash and cash equivalents at beginning of period 955 2,417 Cash and cash equivalents at end of period $ 1,456 $ 752 Supplemental disclosure of cash flow information: Cash paid for interest $ 3,869 $ 3,789 Supplemental disclosure of non-cash activity: Property improvements and replacements in accounts payable $ 177 $ 868 Included in property improvements and replacements for the nine months ended September 30, 2005 are approximately $1,272,000 of improvements which were included in accounts payable at December 31, 2004. See Accompanying Notes to Consolidated Financial Statements
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 (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-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. (the "General Partner"), which is ultimately owned by Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended September 30, 2005 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2005. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K/A No. 2 for the fiscal year ended December 31, 2004. The Partnership amended its Form 10-K for the year ended December 31, 2004 to adjust for the recording in 2002 of an investment in an affiliated partnership and to reverse the related equity in gains on sale of investment properties in the affiliated partnership recognized in 2003 and 2004. The value of the investment in 2002 should have been recorded at the discounted value of operating cash flows that were reasonably expected at the date the Partnership foreclosed on the investment. In addition, the equity in gains on sale of investment properties recognized in 2003 and 2004 should not have been recognized because the related sales proceeds will not be distributed to the Partnership. Because of the errors noted above, the balance sheet as of December 31, 2004, the statement of operations for the nine months ended September 30, 2004, the statement of cash flows for the nine months ended September 30, 2004 and the partners' capital account at December 31, 2004, have been restated to reflect the correction of these errors in the restated financial statements. Certain 2004 balances have been reclassified to conform with the 2005 presentation. As a result of the sales of Silverado Apartments and Tates Creek Village Apartments to third parties during the nine months ended September 30, 2004 and in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the accompanying consolidated statements of operations for the three and nine months ended September 30, 2004 reflect the operations of Silverado Apartments and Tates Creek Village Apartments as loss from discontinued operations of approximately $13,000 and $1,113,000 for the three and nine months ended September 30, 2004, respectively, including revenues of approximately $1,043,000 for the nine months ended September 30, 2004. Segment Reporting: Statement of Financial Accounting Standards ("SFAS") SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" established standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also established standards for related disclosures about products and services, geographic areas, and major customers. (See "Note G" for detailed disclosure of the Partnership's segments). Note B - Net Investment in Master Loan The Partnership was initially formed for the benefit of its limited partners to lend funds to Consolidated Capital Equity Partners ("CCEP"), a California general partnership. The general partner of CCEP is an affiliate of the General Partner. The Partnership loaned funds to CCEP subject to a nonrecourse note with a participation interest (the "Master Loan"). The loans were made to, and the real properties that secured the Master Loan were purchased and owned by CCEP. The Master Loan matured in November 2000. The General Partner had been negotiating with CCEP with respect to its options which included foreclosing on the properties which collateralized the Master Loan or extending the terms of the Master Loan. The General Partner decided to foreclose on the properties that collateralized the Master Loan. The General Partner began the process of foreclosure or executing deeds in lieu of foreclosure during 2002 on all the properties in CCEP. During August 2002, the General Partner executed deeds in lieu of foreclosure on four of the active properties of CCEP: Silverado, The Knolls, Indian Creek Village and Tates Creek Village Apartments. In addition, one of the properties held by CCEP was sold in December 2002. On November 10, 2003 the Partnership acquired the four remaining properties held by CCEP: Plantation Gardens Apartments, Regency Oaks Apartments, The Dunes Apartments, and Palm Lake Apartments. These properties were sold at a foreclosure sale due to CCEP's inability to repay the Master Loan and accrued interest. As the deeds were executed, title in the properties previously owned by CCEP was transferred to the Partnership subject to the existing liens on such properties, including the first mortgage loans. As a result, during the years ended December 2003 and 2002, the Partnership assumed responsibility for the operations of such properties. During the nine months ended September 30, 2004, the Partnership received approximately $156,000 from CCEP as the final payment on the Master Loan. The results of operations of the eight properties foreclosed on in 2003 and 2002 are reflected in the accompanying consolidated statements of operations for the three and nine month periods ended September 30, 2005 and 2004. Note C - Related Party Transactions The Partnership has no employees and depends on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for (i) certain payments to affiliates for services and (ii) reimbursement of certain expenses incurred by affiliates on behalf of the Partnership. Affiliates of the General Partner receive 5% of gross receipts from the Partnership's properties for providing property management services. The Partnership paid to such affiliates approximately $913,000 and $926,000 for the nine months ended September 30, 2005 and 2004, respectively, which is included in operating expenses and loss from discontinued operations. Affiliates of the General Partner charged the Partnership for reimbursement of accountable administrative expenses amounting to approximately $956,000 and $872,000 for the nine months ended September 30, 2005 and 2004, respectively which is included in general and administrative expenses and investment properties. The portion of these reimbursements included in investment properties for the nine months ended September 30, 2005 and 2004 are fees related to construction management services provided by an affiliate of the General Partner of approximately $526,000 and $328,000, respectively. The construction management fees are calculated based on a percentage of additions to investment properties. In connection with the sale of Silverado Apartments on March 31, 2004 (see "Note E"), the General Partner earned a disposition fee of approximately $333,000. In connection with the sale of Tates Creek Village Apartments on June 28, 2004 the General Partner earned a disposition fee of approximately $349,000. These fees are included in gain on sale of discontinued operations and were paid during the nine months ended September 30, 2004. In accordance with the Partnership Agreement, the General Partner advanced the Partnership approximately $4,933,000 for expenses at the Partnership's properties, to fund redevelopment costs at The Sterling Apartment Homes and The Knolls Apartments and to fund capital improvements and refinance deposits at The Loft Apartments during the nine months ended September 30, 2005. Interest was charged at the prime rate plus 2% (8.75% at September 30, 2005) and amounted to approximately $299,000 for the nine months ended September 30, 2005. There were no advances to the Partnership or associated interest expense during the nine months ended September 30, 2004. During the nine months ended September 30, 2005, the Partnership made payments on the outstanding loans and accrued interest of approximately $945,000. At September 30, 2005, the amount of the outstanding loans and accrued interest was approximately $6,698,000 and is included in due to affiliates. Subsequent to September 30, 2005, the Partnership made a payment on the outstanding loans and accrued interest of approximately $1,100,000. The Partnership insures its properties up to certain limits through coverage provided by AIMCO which is generally self-insured for a portion of losses and liabilities related to workers compensation, property casualty, general liability and vehicle liability. The Partnership insures its properties above the AIMCO limits through insurance policies obtained by AIMCO from insurers unaffiliated with the General Partner. During the nine months ended September 30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates approximately $290,000 and $282,000, respectively, for insurance coverage and fees associated with policy claims administration. Note D - Investment in Affiliated Partnerships
Ownership Investment Balance Partnership Type of Ownership Percentage September 30, 2005 (in thousands) Consolidated Capital Special Limited Growth Fund Partner 0.40% $ 12 Consolidated Capital Special Limited Properties III Partner 1.85% 18 Consolidated Capital Special Limited Properties IV Partner 1.85% 604 $ 634
These investments were assumed during the foreclosure of investment properties from CCEP (see "Note B") and are accounted for on the equity method of accounting. Distributions from the affiliated partnerships are accounted for as a reduction of the investment balance until the investment balance is reduced to zero. When the investment balance has been reduced to zero, subsequent distributions received are recognized as income in the accompanying statements of operations. During the nine months ended September 30, 2005, the Partnership recognized approximately $10,000 in equity in income from investment related to its allocated share of the income (loss) for the investments. During the nine months ended September 30, 2004, the Partnership recognized approximately $17,000 in equity in income from investment related to its allocated share of the income (loss) for the investments. Note E - Sale of Investment Property On March 31, 2004, the Partnership sold Silverado Apartments, located in El Paso, Texas, to a third party for $6,650,000. After payment of closing costs, the net sales proceeds received by the Partnership were approximately $6,169,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $3,248,000. The sale resulted in a gain on sale of investment property of approximately $1,510,000 during the nine months ended September 30, 2004. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $685,000 as a result of prepayment penalties paid, partially offset by the write off of the unamortized mortgage premium which is included in loss from discontinued operations. Pursuant to the Partnership Agreement and in conjunction with the sale, a disposition fee of approximately $333,000 was earned by and paid to the General Partner during the nine months ended September 30, 2004. Included in loss from discontinued operations for the nine months ended September 30, 2004 are results of the property's operations of a loss of approximately $672,000, including revenues of approximately $339,000. On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located in Lexington, Kentucky, to a third party for $6,980,000. After payment and accrual of closing costs, the net sales proceeds received by the Partnership were approximately $6,420,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $3,851,000. The sale resulted in a gain on sale of investment property of approximately $206,000 during the nine months ended September 30, 2004. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $476,000 as a result of prepayment penalties paid, partially offset by the write off of the unamortized mortgage premium which is included in loss from discontinued operations. Pursuant to the Partnership Agreement and in conjunction with the sale, a disposition fee of approximately $349,000 was earned by and paid to the General Partner during the nine months ended September 30, 2004. Included in loss from discontinued operations for the three months ended September 30, 2004 are results of the property's operations of approximately $13,000. There were no revenues included in loss from discontinued operations during the three months ended September 30, 2004. Included in loss from discontinued operations for the nine months ended September 30, 2004 are results of the property's operations of approximately $441,000, including revenues of approximately $704,000. During the nine months ended September 30, 2005, the Partnership recognized a reduction of the gain on the sale of Tates Creek Village Apartments of approximately $58,000 due to the revision of the collectibility of receivables expected at the time of the sale. Note F - Refinancing of Mortgage Note Payable On August 31, 2005, the Partnership refinanced the mortgage encumbering The Loft Apartments. The refinancing replaced the existing mortgage of approximately $3,925,000 with a new mortgage in the amount of approximately $4,600,000. The new mortgage requires monthly payments of principal and interest beginning on October 10, 2005 until the loan matures September 10, 2012, with a fixed interest rate of 5.04% and a balloon payment due at maturity of approximately $4,076,000. The Partnership may not prepay the new mortgage loan prior to October 10, 2007. On or after this date the Partnership may prepay subject to a prepayment penalty. Total capitalized loan costs were approximately $49,000 and are included in other assets. Unamortized loan costs for the prior mortgage of approximately $4,000 were written off and are included in interest expense. As a condition to making the new mortgage loan, the lender required AIMCO to guarantee the obligations and liabilities of the Partnership with respect to the new mortgage. Note G - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has two reportable segments: residential properties and commercial property. The Partnership's property segments consist of seven apartment complexes one each in North Carolina, Colorado, and Kansas, four in Florida and one multiple use facility consisting of apartment units and commercial space in Pennsylvania. The Partnership rents apartment units to tenants for terms that are typically less than twelve months. The commercial property leases space to various medical offices, career service facilities, and retail shops at terms ranging from month to month to six years. Measurement of segment profit and loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Factors management used to identify the enterprise's reportable segment: The Partnership's reportable segments are business units (investment properties) that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers. Segment information for the three and nine months ended September 30, 2005 and 2004 is shown in the tables below (in thousands). The "Other" Column includes partnership administration related items and income and expense not allocated to reportable segments.
For the three months ended September 30, 2005 Residential Commercial Other Totals Rental income $ 5,477 $ 340 $ -- $ 5,817 Other income 462 36 1 499 Casualty gain 51 -- -- 51 Equity in income of investment -- -- 10 10 Interest expense 912 55 137 1,104 Depreciation 1,214 75 -- 1,289 General and administrative expense -- -- 177 177 Segment profit (loss) 887 (27) (303) 557
For the nine months ended September 30, 2005 Residential Commercial Other Totals Rental income $ 16,149 $ 1,064 $ -- $17,213 Other income 1,372 102 3 1,477 Casualty gain 51 -- -- 51 Equity in income of investment -- -- 10 10 Loss on sale of discontinued operations (58) -- -- (58) Interest expense 2,900 164 307 3,371 Depreciation 3,613 217 -- 3,830 General and administrative expense -- -- 589 589 Casualty loss (125) -- -- (125) Segment profit (loss) 2,392 (122) (883) 1,387 Total assets 96,879 1,686 698 99,263 Capital expenditures 7,841 105 -- 7,946
For the three months ended September 30, 2004 Residential Commercial Other Totals Rental income $ 5,267 $ 362 $ -- $ 5,629 Other income 457 46 1 504 Casualty loss (427) -- -- (427) Interest expense 1,099 56 2 1,157 Depreciation 1,233 85 -- 1,318 General and administrative expenses -- -- 225 225 Loss from discontinued operations (13) -- -- (13) Segment loss (126) (79) (226) (431)
For the nine months ended September 30, 2004 Residential Commercial Other Totals (restated) Rental income $15,232 $ 1,073 $ -- $16,305 Other income 1,453 98 3 1,554 Equity in income from investment -- -- 17 17 Casualty loss (453) -- -- (453) Interest expense 3,292 167 6 3,465 Depreciation 3,773 216 -- 3,989 General and administrative expense -- -- 710 710 Gain on sale of investment 1,716 -- -- 1,716 Loss from discontinued operations (1,113) -- -- (1,113) Gain on foreclosure of real estate 156 -- -- 156 Segment profit (loss) 1,121 (418) (696) 7 Total assets 90,319 1,710 1,109 93,138 Capital expenditures 3,423 715 -- 4,138
Note H - Casualty Events During the nine months ended September 30, 2004, the Partnership's investment property, Regency Oaks Apartments, sustained damages from Hurricanes Charlie, Frances and Jeanne. The damages incurred totaled approximately $329,000, which will not be covered by insurance proceeds. There was a casualty loss of approximately $204,000 recorded at Regency Oaks Apartments related to the damages to the property caused by the hurricanes during 2004 of which $142,000 was recorded during the nine months ended September 30, 2004. During the nine months ended September 30, 2005 the Partnership recognized an additional casualty loss of approximately $105,000 as a result of the write-off of additional undepreciated damaged assets. In 2004, the Partnership estimated total clean up costs from the hurricanes would be approximately $73,000. During the nine months ended September 30, 2005, the Partnership revised downward the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $24,000. This income is included in operating expenses and these costs are not covered by insurance proceeds. During the nine months ended September 30, 2004, the Partnership's investment property, The Dunes Apartments, sustained damages from Hurricanes Frances and Jeanne. The damages incurred totaled approximately $62,000, which will not be covered by insurance proceeds. There was a casualty loss of approximately $38,000 recorded at The Dunes Apartments during 2004 related to the damages to the property caused by the hurricanes of which approximately $34,000 was recorded during the nine months ended September 30, 2004. During the nine months ended September 30, 2005 the Partnership recognized an additional casualty loss of approximately $20,000 as a result of the write off of additional undepreciated damaged assets. During 2004, the Partnership estimated total clean up costs from the hurricanes would be approximately $16,000. During the nine months ended September 30, 2005, the property incurred approximately $35,000 in additional clean up costs which were not covered by insurance proceeds. These costs are included in operating expenses. During the nine months ended September 30, 2004, the Partnership's investment property, Palm Lake Apartments, sustained damages from Hurricane Frances. There was a casualty loss of approximately $51,000 recorded at Palm Lake Apartments during the nine months ended September 30, 2004. During the fourth quarter of 2004, the casualty loss was reversed and recorded as clean up costs. During the nine months ended September 30, 2005, the Partnership revised downward the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $30,000. This income is included in operating expenses and these costs are not covered by insurance proceeds. In July 2004 there was a fire at Indian Creek Village Apartments that damaged nine units. The property suffered damages of approximately $482,000. During the nine months ended September 30, 2004 a casualty loss of approximately $200,000 was recorded as the result of the write off of net fixed assets of approximately $442,000, net of the receipt of insurance proceeds of approximately $242,000. This loss was reversed during the fourth quarter of 2004 due to a revision in the estimated insurance proceeds to be received. During the nine months ended September 30, 2005, there was a casualty gain of approximately $51,000 recorded as a result of the receipt of additional insurance proceeds of approximately $232,000 related to this fire, net of the write off of net fixed assets of approximately $181,000. During the nine months ended September 30, 2004, there was a casualty loss of approximately $26,000 recorded at Regency Oaks Apartments related to a fire that damaged four apartment units. The loss was the result of the write off of net fixed assets of approximately $79,000, net of the receipt of insurance proceeds of approximately $42,000 and a receivable for an additional $11,000 of insurance proceeds, which was received subsequent to September 30, 2004. Note I - Contingencies In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. The Partnership is unaware of any other pending or outstanding litigation matters involving it or its investment properties that are not of a routine nature arising in the ordinary course of business. Environmental Various Federal, state and local laws subject property owners or operators to liability for management, and the costs of removal or remediation, of certain hazardous substances present on a property. Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release or presence of the hazardous substances. The presence of, or the failure to manage or remedy properly, hazardous substances may adversely affect occupancy at affected apartment communities and the ability to sell or finance affected properties. In addition to the costs associated with investigation and remediation actions brought by government agencies, and potential fines or penalties imposed by such agencies in connection therewith, the presence of hazardous substances on a property could result in claims by private plaintiffs for personal injury, disease, disability or other infirmities. Various laws also impose liability for the cost of removal, remediation or disposal of hazardous substances through a licensed disposal or treatment facility. Anyone who arranges for the disposal or treatment of hazardous substances is potentially liable under such laws. These laws often impose liability whether or not the person arranging for the disposal ever owned or operated the disposal facility. In connection with the ownership, operation and management of its properties, the Partnership could potentially be liable for environmental liabilities or costs associated with its properties. Mold The Partnership is aware of lawsuits against owners and managers of multifamily properties asserting claims of personal injury and property damage caused by the presence of mold, some of which have resulted in substantial monetary judgments or settlements. The Partnership has only limited insurance coverage for property damage loss claims arising from the presence of mold and for personal injury claims related to mold exposure. Affiliates of the General Partner have implemented a national policy and procedures to prevent or eliminate mold from its properties and the General Partner believes that these measures will minimize the effects that mold could have on residents. To date, the Partnership has not incurred any material costs or liabilities relating to claims of mold exposure or to abate mold conditions. Because the law regarding mold is unsettled and subject to change the General Partner can make no assurance that liabilities resulting from the presence of or exposure to mold will not have a material adverse effect on the Partnership's consolidated financial condition or results of operations. SEC Investigation The Central Regional Office of the United States Securities and Exchange Commission (the "SEC") continues its formal investigation relating to certain matters. Although the staff of the SEC is not limited in the areas that it may investigate, AIMCO believes the areas of investigation have included AIMCO's miscalculated monthly net rental income figures in third quarter 2003, forecasted guidance, accounts payable, rent concessions, vendor rebates, capitalization of payroll and certain other costs, tax credit transactions and tender offers for limited partnership interests. AIMCO is cooperating fully. AIMCO is not able to predict when the investigation will be resolved. AIMCO does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. Note J - Redevelopment of Property One of the Partnership's investment properties, The Knolls Apartments, is currently under redevelopment. Based on current redevelopment plans, the General Partner anticipates the redevelopment, which began in 2004, to be completed during 2005 at a total estimated cost of approximately $8,341,000 of which approximately $5,871,000 was completed as of September 30, 2005. Included in these construction costs are capitalized interest costs of approximately $304,000, capitalized property tax expenses of approximately $11,000 and other construction period operating costs of approximately $19,000 for the nine months ended September 30, 2005. In addition, The Sterling Apartment Homes is also under redevelopment. Based on current redevelopment plans, the General Partner anticipates the redevelopment, which began in 2004, to be completed during 2007 at a total estimated cost of approximately $24,201,000 of which approximately $1,023,000 was completed as on September 30, 2005. ITEM 2. Management's Discussion and Analysis Of Financial Condition and Results of Operations The matters discussed in this report contain certain forward-looking statements, including, without limitation, statements regarding future financial performance and the effect of government regulations. Actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors including, without limitation: national and local economic conditions; the terms of governmental regulations that affect the Registrant and interpretations of those regulations; the competitive environment in which the Registrant operates; financing risks, including the risk that cash flows from operations may be insufficient to meet required payments of principal and interest; real estate risks, including variations of real estate values and the general economic climate in local markets and competition for tenants in such markets; litigation, including costs associated with prosecuting and defending claims and any adverse outcomes, and possible environmental liabilities. Readers should carefully review the Registrant's financial statements and the notes thereto, as well as the risk factors described in the documents the Registrant files from time to time with the Securities and Exchange Commission. The Partnership's investment properties consist of eight properties. The Sterling is a multiple-use facility which consists of an apartment complex and commercial space. The following table sets forth the average occupancy of the properties for the nine months ended September 30, 2005 and 2004: Average Occupancy Property 2005 2004 The Loft Apartments 87% 86% Raleigh, North Carolina The Sterling Apartment Homes 93% 93% The Sterling Commerce Center (2) 82% 79% Philadelphia, Pennsylvania The Knolls Apartments (3) 52% 84% Colorado Springs, Colorado Indian Creek Village Apartments (1) 91% 88% Overland Park, Kansas Plantation Gardens Apartments (1) 97% 91% Plantation, Florida Palm Lake Apartments (1) 96% 93% Tampa, Florida The Dunes Apartments (1) 97% 94% Indian Harbor, Florida Regency Oaks Apartments (1) 97% 93% Fern Park, Florida (1) The General Partner attributes the increase in occupancy at Indian Creek Village Apartments, Plantation Gardens Apartments, Palm Lake Apartments, The Dunes Apartments and Regency Oaks Apartments to an increase in marketing outreach and promotions. (2) The General Partner attributes the increase in occupancy at The Sterling Commerce Center to improved market conditions. (3) The General Partner attributes the decrease in occupancy at The Knolls Apartments to a redevelopment project currently in process. The redevelopment project, which began during the fourth quarter of 2004 is scheduled to be completed during the fourth quarter of 2005. The low occupancy for the nine months ended September 30, 2005 was partially due to 57 units not rented due to ongoing redevelopment work. The Partnership's financial results depend upon a number of factors including the ability to attract and maintain tenants at the investment properties, interest rates on mortgage loans, costs incurred to operate the investment properties, general economic conditions and weather. 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 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, the General Partner may use rental concessions and rental rate reductions to offset softening market conditions, accordingly, there is no guarantee that the General Partner will be able to sustain such a plan. Further, a number of factors that are outside the control of the Partnership, such as the local economic climate and weather, can adversely or positively affect the Partnership's financial results. Results of Operations The Partnership's net income for the three and nine months ended September 30, 2005 was approximately $557,000 and $1,387,000 compared to net (loss) income of approximately $(431,000) and $7,000 for the corresponding periods in 2004. The increase in net income for the three and nine months ended September 30, 2005 as compared to the three and nine months ended September 30, 2004 is primarily due to an increase in total revenues, a decrease in total expenses and decrease in the loss from discontinued operations during the three and nine months ended September 30, 2004 partially offset by the decrease in gain on the sale of Silverado Apartments and Tates Creek Village Apartments and gain on foreclosure of real estate during the nine months ended September 30, 2004. On March 31, 2004, the Partnership sold Silverado Apartments, located in El Paso, Texas, to a third party for $6,650,000. After payment of closing costs, the net sales proceeds received by the Partnership were approximately $6,169,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $3,248,000. The sale resulted in a gain on sale of investment property of approximately $1,510,000 during the nine months ended September 30, 2004. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $685,000 as a result of prepayment penalties paid, partially offset by the write off of the unamortized mortgage premium which is included in loss from discontinued operations. Pursuant to the Partnership Agreement and in conjunction with the sale, a disposition fee of approximately $333,000 was earned by and paid to the General Partner during the nine months ended September 30, 2004. Included in loss from discontinued operations for the nine months ended September 30, 2004 are results of the property's operations of a loss of approximately $672,000, including revenues of approximately $339,000. On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located in Lexington, Kentucky, to a third party for $6,980,000. After payment and accrual of closing costs, the net sales proceeds received by the Partnership were approximately $6,420,000. The Partnership used a portion of the proceeds to repay the mortgage encumbering the property of approximately $3,851,000. The sale resulted in a gain on sale of investment property of approximately $206,000 during the nine months ended September 30, 2004. In addition, the Partnership recorded a loss on early extinguishment of debt of approximately $476,000 as a result of prepayment penalties paid, partially offset by the write off of the unamortized mortgage premium which is included in loss from discontinued operations. Pursuant to the Partnership Agreement and in conjunction with the sale, a disposition fee of approximately $349,000 was earned by and paid to the General Partner during the nine months ended September 30, 2004. Included in loss from discontinued operations for the three months ended September 30, 2004 are results of the property's operations of approximately $13,000. There were no revenues included in loss from discontinued operations during the three months ended September 30, 2004. Included in loss from discontinued operations for the nine months ended September 30, 2004 are results of the property's operations of approximately $441,000, including revenues of approximately $704,000. During the nine months ended September 30, 2005, the Partnership recognized a reduction of the gain on the sale of Tates Creek Village Apartments of approximately $58,000 due to the revision of the collectibility of receivables expected at the time of the sale. During the nine months ended September 30, 2004, the Partnership received approximately $156,000 from CCEP as the final payment on the Master Loan which is recognized as gain on foreclosure of real estate. The Partnership's net income from continuing operations for the three and nine months ended September 30, 2005 was approximately $547,000 and $1,435,000 compared to net loss of approximately $418,000 and $769,000 for the corresponding periods in 2004. The increase in income from continuing operations for the three and nine months ended September 30, 2005 as compared to the three and nine months ended September 30, 2004 is due to an increase in total revenues and a decrease in total expenses. The increase in total revenues during the three and nine months ended September 30, 2005 is primarily due to an increase in rental income and casualty gain (as discussed below). The increase in total revenues during the nine months ended September 30, 2005 was partially offset by a decrease in other income. The increase in rental income during the nine months ended September 30, 2005 is primarily due to an increase in average rental rates at seven of the Partnership's properties and occupancy at seven of the Partnership's properties and a decrease in bad debt expense at all of the Partnership's apartment properties, partially offset by a decrease in rental rates at The Sterling Commerce Center and Indian Creek Village Apartments and a decrease in occupancy at The Knolls Apartments. The increase in rental income during the three months ended September 30, 2005 is primarily due to an increase in average rental rates at all of the Partnership's apartment properties and occupancy at four of the Partnership's investment properties, partially offset by a decrease in rental rates at The Sterling Commerce Center and a decrease in occupancy at three of the Partnership's investment properties. The decrease in other income during the nine months ended September 30, 2005 is primarily due to a decrease in lease cancellation fees at The Knolls, Regency Oaks and Plantation Gardens Apartments. Total expenses decreased during the three and nine months ended September 30, 2005 primarily due to decreases in operating, general and administrative, depreciation and interest expenses and casualty loss, as discussed below, partially offset by an increase in property tax expense. Operating expense decreased primarily due to decreases in property and maintenance expenses. The decrease in property expenses during the nine months ended September 30, 2005 is primarily due to reduced utility expenses at The Sterling Commerce Center and the Sterling Apartment Homes. The decrease in property expense during the nine months ended September 30, 2005 was partially offset by increased salary and related benefit expenses at Plantation Gardens Apartments. The decrease in property expenses during the three months ended September 30, 2005 is primarily due to reduced utility expenses at The Sterling Commerce Center, salary and related benefit expenses at The Knolls Apartments and contract courtesy patrol expenses at The Sterling Commerce Center. Maintenance expense decreased primarily due to a decrease in contract services at most of the Partnership's properties, construction period expenses at The Knolls Apartments that were capitalized as part of the redevelopment project and a decrease in clean up costs incurred during the nine months ended September 30, 2005 from hurricanes in 2004 at Regency Oaks Apartments partially offset by an increase in clean up costs incurred during the nine months ended September 30, 2005 from the 2004 hurricanes at The Dunes Apartments, estimated clean up costs incurred due to hurricane Katrina at Plantation Gardens and casualty cleanup costs incurred at Indian Creek Village Apartments related to a fire that occurred in 2004. Depreciation expense decreased primarily due to capital improvements and replacements becoming fully depreciated at The Sterling Apartment Homes during 2004. Interest expense decreased primarily due to the capitalization of construction period interest at the Knolls Apartments due to the redevelopment project as discussed below. This decrease was partially offset by an increase in interest incurred on advances from affiliates. There were no advances during the nine months ended September 30, 2004. Property tax expense increased due to increases in the assessed values of The Sterling Apartment Homes and Commerce Center and due to a refund received during 2004 at Palm Lake Apartments of prior year taxes. No similar refund was received during the nine months ended September 30, 2005. The increase in property tax expense is also due to additional taxes being recorded during the three months ended September 30, 2005 at Plantation Gardens Apartments as a result of the settlement of an appeal of the appraised value of the property. The appeal was settled during the three months ended September 30, 2005 and the settled appraised value was higher than the amount anticipated. During the nine months ended September 30, 2004, the Partnership's investment property, Regency Oaks Apartments, sustained damages from Hurricanes Charlie, Frances and Jeanne. The damages incurred totaled approximately $329,000, which will not be covered by insurance proceeds. There was a casualty loss of approximately $204,000 recorded at Regency Oaks Apartments related to the damages to the property caused by the hurricanes during 2004 of which $142,000 was recorded during the nine months ended September 30, 2004. During the nine months ended September 30, 2005 the Partnership recognized an additional casualty loss of approximately $105,000 as a result of the write-off of additional undepreciated damaged assets. In 2004, the Partnership estimated total clean up costs from the hurricanes would be approximately $73,000. During the nine months ended September 30, 2005, the Partnership revised downward the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $24,000. This income is included in operating expenses and these costs are not covered by insurance proceeds. During the nine months ended September 30, 2004, the Partnership's investment property, The Dunes Apartments, sustained damages from Hurricanes Frances and Jeanne. The damages incurred totaled approximately $62,000, which will not be covered by insurance proceeds. There was a casualty loss of approximately $38,000 recorded at The Dunes Apartments during 2004 related to the damages to the property caused by the hurricanes of which approximately $34,000 was recorded during the nine months ended September 30, 2004. During the nine months ended September 30, 2005 the Partnership recognized an additional casualty loss of approximately $20,000 as a result of the write off of additional undepreciated damaged assets. During 2004, the Partnership estimated total clean up costs from the hurricanes would be approximately $16,000. During the nine months ended September 30, 2005, the property incurred approximately $35,000 in additional clean up costs which were not covered by insurance proceeds. These costs are included in operating expenses. During the nine months ended September 30, 2004, the Partnership's investment property, Palm Lake Apartments, sustained damages from Hurricane Frances. There was a casualty loss of approximately $51,000 recorded at Palm Lake Apartments during the nine months ended September 30, 2004. During the fourth quarter of 2004, the casualty loss was reversed and recorded as clean up costs. During the nine months ended September 30, 2005, the Partnership revised downward the total estimated clean up costs related to hurricane damage and reduced the estimate by approximately $30,000. This income is included in operating expenses and these costs are not covered by insurance proceeds. In July 2004 there was a fire at Indian Creek Village Apartments that damaged nine units. The property suffered damages of approximately $482,000. During the nine months ended September 30, 2004 a casualty loss of approximately $200,000 was recorded as the result of the write off of net fixed assets of approximately $442,000, net of the receipt of insurance proceeds of approximately $242,000. This loss was reversed during the fourth quarter of 2004 due to a revision in the estimated insurance proceeds to be received. During the nine months ended September 30, 2005, there was a casualty gain of approximately $51,000 recorded as a result of the receipt of additional insurance proceeds of approximately $232,000 related to this fire, net of the write off of net fixed assets of approximately $181,000. During the nine months ended September 30, 2004, there was a casualty loss of approximately $26,000 recorded at Regency Oaks Apartments related to a fire that damaged four apartment units. The loss was the result of the write off of net fixed assets of approximately $79,000, net of the receipt of insurance proceeds of approximately $42,000 and a receivable for an additional $11,000 of insurance proceeds, which was received subsequent to September 30, 2004. General and administrative expenses decreased primarily due to a decrease in the costs of services included in the management reimbursements to the General Partner as allowed under the Partnership Agreement, costs associated with the annual audit required by the Partnership Agreement and reduced legal fees related to the foreclosures of the properties held by CCEP during 2003 partially offset by an increase in business privilege taxes paid to the city of Philadelphia. Also included in general and administrative expenses are costs associated with the quarterly and annual communications with investors and regulatory agencies. Liquidity and Capital Resources At September 30, 2005, the Partnership had cash and cash equivalents of approximately $1,456,000 compared to approximately $752,000 at September 30, 2004. Cash and cash equivalents increased approximately $501,000 since December 31, 2004 due to approximately $5,350,000 and $3,559,000 of cash provided by operating and financing activities, respectively partially offset by approximately $8,408,000 of cash used in investing activities. Cash provided by financing activities consisted of proceeds from the refinancing of The Loft Apartments and advances from affiliates partially offset by repayment of mortgage notes payable, principal payments made on the mortgages encumbering the Partnership's properties, repayments of advances from affiliates, lease commissions paid and the payment of loan costs. Cash used in investing activities consisted of property improvements and replacements partially offset by net receipts from restricted escrow accounts maintained by the mortgage lenders and insurance proceeds received. The Partnership invests its working capital reserves in interest bearing accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. The General Partner monitors developments in the area of legal and regulatory compliance. For example, the Sarbanes-Oxley Act of 2002 mandates or suggests additional compliance measures with regard to governance, disclosure, audit and other areas. In light of these changes, the Partnership expects that it will incur higher expenses related to compliance. The Partnership regularly evaluates the capital improvements needs of all its properties for the upcoming year. Certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the properties as well as replacement reserves and anticipated cash flow generated by the properties. In addition, the Partnership has material commitments to complete rehabilitation projects at The Sterling Apartment Homes and The Knolls Apartments. The budget for these two projects for 2005 is approximately $10,566,000. It is anticipated that a substantial portion of the costs associated with the rehabilitation projects will be funded from advances from affiliates of the General Partner. Other capital expenditures will be incurred only if cash is available from operations and Partnership reserves. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Loft Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $412,000 of capital improvements at The Loft Apartments consisting primarily of floor covering replacements, insulation upgrades, asphalt replacement, plumbing upgrades, roof replacement and interior lighting. These improvements were funded from operating cash flow and advances from the General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. The Sterling Apartment Homes and Commerce Center During the nine months ended September 30, 2005, the Partnership completed approximately $1,023,000 of capital improvements at The Sterling Apartment Homes and Commerce Center arising from the redevelopment of the property. Additional capital improvements of approximately $195,000 were completed during the nine months ended September 30, 2005 consisting primarily of floor covering replacements, air conditioning upgrades, tenant improvements, and structural improvements. These improvements were funded from operating cash flow, advances from the General Partner and replacement reserves. The redevelopment project, which began in 2004 is scheduled to be completed during 2007. The project budget is approximately $24,201,000. Approximately $2,272,000 of redevelopment costs were incurred in 2004 and approximately $4,329,000 are budgeted for 2005. The Partnership plans to fund these redevelopment expenditures from operating cash flow, partnership reserves and advances from the General Partner. Approximately $300,000 was advanced during the nine months ended September 30, 2005 to pay for redevelopment project costs at this property. The Partnership regularly evaluates the capital improvement needs of the property. Certain routine capital expenditures are anticipated during 2005. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The Knolls Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $3,767,000 of capital improvements at The Knolls Apartments arising from the redevelopment of the property, which includes capitalized construction period interest of approximately $304,000, real estate taxes of approximately $11,000 and other construction period expenses of approximately $19,000. Additional capital improvements of approximately $75,000 were completed during the nine months ended September 30, 2005 consisting primarily of interior and exterior building improvements. These improvements were funded from operating cash flow, advances from the General Partner and capital reserves. The redevelopment project, which began in 2004 is scheduled to be completed during 2005. The project budget is approximately $8,341,000. Approximately $2,104,000 of redevelopment costs were incurred in 2004 and approximately $6,237,000 are budgeted for 2005. The Partnership plans to fund these redevelopment expenditures from operating cash flow, partnership reserves and advances from the General Partner. Approximately $3,340,000 was advanced during the nine months ended September 30, 2005 to pay for redevelopment project costs. The Partnership regularly evaluates the capital improvement needs of the property. Certain routine capital expenditures are anticipated during 2005. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Indian Creek Village Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $1,126,000 of capital improvements at Indian Creek Village Apartments consisting primarily of floor covering and appliance replacements, roof replacement, wood siding and other wood replacement, termite prevention, exterior painting and reconstruction of damages to the property caused by a fire in 2004. These improvements were funded from operating cash flow, advances from the General Partner and insurance proceeds. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Plantation Gardens Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $450,000 of capital improvements at Plantation Gardens Apartments consisting primarily of floor covering and appliance replacements, structural improvements, roof replacement, wood replacement and exterior painting. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Palm Lake Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $339,000 of capital improvements at Palm Lake Apartments consisting primarily of floor covering replacements, roof replacement, exterior painting and wood replacement. These improvements were funded from operating cash flow and advances from the General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. The Dunes Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $126,000 of capital improvements at The Dunes Apartments consisting primarily of floor covering replacements, swimming pool decking replacement, air conditioning unit replacements, furniture and fixtures and reconstruction of damages to the property caused by Hurricane Jeanne. These improvements were funded from operating cash flow. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Regency Oaks Apartments During the nine months ended September 30, 2005, the Partnership completed approximately $433,000 of capital improvements at Regency Oaks Apartments consisting primarily of floor covering, air conditioning unit and appliance replacements, roof replacement, major landscaping, structural improvements and reconstruction of damages to the property caused by Hurricanes Charlie, Frances and Jeanne. These improvements were funded from operating cash flow and advances from the General Partner. The Partnership regularly evaluates the capital improvement needs of the property. While the Partnership has no material commitments for property improvements and replacements, certain routine capital expenditures are anticipated during 2005. Such capital expenditures will depend on the physical condition of the property as well as anticipated cash flow generated by the property. Capital improvements at the Partnership's properties will be made only to the extent of cash available from operations, Partnership reserves or advances from affiliates. To the extent that capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness encumbering the Partnership's properties of approximately $64,945,000 requires monthly payments of principal and interest and balloon payments of approximately $19,975,000, $31,040,000 and $4,076,000 during 2008, 2010, and 2012, respectively. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership may risk losing such properties through foreclosure. The Partnership distributed the following amounts during the nine months ended September 30, 2005 and 2004 (in thousands, except per unit data):
Nine Months Per Limited Nine Months Per Limited Ended September 30, Partnership Ended September 30, Partnership 2005 Unit 2004 Unit Operations $ -- $ -- $ 39 $ 0.20 Sale (1) -- -- 4,093 20.56 Total $ -- $ -- $4,132 $20.76
(1) From the sale of Silverado Apartments in March 2004 and the sale of Tates Creek Village in June 2004. Future cash distributions will depend on the levels of cash generated from operations, the timing of debt maturities, refinancings, and/or property sales. The Partnership's cash available for distribution is reviewed on a monthly basis. Given the balance of outstanding loans to the General Partner, it is not expected that the Partnership will generate sufficient funds from operations, after planned capital improvement expenditures, to permit any distributions to its partners during 2005 or for the foreseeable future. Other In addition to its indirect ownership of the general partner interests in the Partnership, AIMCO and its affiliates owned 146,260.10 limited partnership units (the "Units") in the Partnership representing 73.48% of the outstanding Units at September 30, 2005. A number of these Units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will acquire additional Units in exchange for cash or a combination of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO, either through private purchases or tender offers. Pursuant to the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters that would include, but are not limited to, voting on certain amendments to the Partnership Agreement and voting to remove the General Partner. As a result of its ownership of 73.48% of the outstanding Units, AIMCO and its affiliates are in a position to control all such voting decisions with respect to the Partnership. Although the General Partner owes fiduciary duties to the limited partners of the Partnership, the General Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of the General Partner, as general partner, to the Partnership and its limited partners may come into conflict with the duties of the General Partner to AIMCO as its sole stockholder. Critical Accounting Policies and Estimates The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States which require the Partnership to make estimates and assumptions. The Partnership believes that of its significant accounting policies, the following may involve a higher degree of judgment and complexity. Impairment of Long-Lived Assets Investment properties are recorded at cost less accumulated depreciation, unless considered impaired. The investment properties foreclosed upon in the third quarter of 2002 and fourth quarter of 2003 were recorded at fair market value at the time of the foreclosure. If events or circumstances indicate that the carrying amount of a property may be impaired, the Partnership will make an assessment of its recoverability by estimating the undiscounted future cash flows, excluding interest charges, of the property. If the carrying amount exceeds the aggregate future cash flows, the Partnership would recognize an impairment loss to the extent the carrying amount exceeds the fair value of the property. Real property investments are subject to varying degrees of risk. Several factors may adversely affect the economic performance and value of the Partnership's investment properties. These factors include, but are not limited to, changes in national, regional and local economic climate; local conditions, such as an oversupply of multifamily properties; competition from other available multifamily property owners and changes in market rental rates. Any adverse changes in these factors could cause impairment of the Partnership's assets. Revenue Recognition The Partnership generally leases apartment units for twelve-month terms or less. The Partnership will offer rental concessions during particularly slow months or in response to heavy competition from other similar complexes in the area. Rental income attributable to leases, net of any concessions, is recognized on a straight-line basis over the term of the lease. The Partnership evaluates all accounts receivable from residents and establishes an allowance, after the application of security deposits, for accounts greater than 30 days past due on current tenants and all receivables due from former tenants. The Partnership leases certain commercial space to tenants under various lease terms. The leases are accounted for as operating leases in accordance with SFAS No. 13, "Accounting for Leases". Some of the leases contain stated rental increases during their term. For leases with fixed rental increases, rents are recognized on a straight-line basis over the terms of the leases. For all other leases, minimum rents are recognized over the terms of the leases. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership is exposed to market risks from adverse changes in interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Partnership's cash and cash equivalents as well as interest paid on its indebtedness. As a policy, the Partnership does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for its borrowing activities used to maintain liquidity and fund business operations. To mitigate the impact of fluctuations in U.S. interest rates, the Partnership maintains its debt as fixed rate in nature by borrowing on a long-term basis. Based on interest rates at September 30, 2005, a 100 point increase or decrease in market interest rates would not have a material impact on the Partnership. The following table summarizes the Partnership's debt obligations at September 30, 2005. The interest rates represent the weighted-average rates. The fair value of the debt obligations approximated the recorded value as of September 30, 2005. Principal Amount by Expected Maturity Fixed Rate Debt Long-term Average Interest Debt Rate 7.25% (in thousands) 2005 $ 385 2006 1,814 2007 1,956 2008 21,971 2009 1,829 Thereafter 35,535 Total $ 63,490 ITEM 4. Controls and Procedures (a) Disclosure Controls and Procedures. The Partnership's management, with the participation of the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, has evaluated the effectiveness of the Partnership's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer of the General Partner, who are the equivalent of the Partnership's principal executive officer and principal financial officer, respectively, have concluded that, as of the end of such period, the Partnership's disclosure controls and procedures are effective. (b) Internal Control Over Financial Reporting. There have not been any changes in the Partnership's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Partnership's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purported to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) that are named as nominal defendants, challenging, among other things, the acquisition of interests in certain General Partner entities by Insignia Financial Group, Inc. ("Insignia") and entities that were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; management of the partnerships by the Insignia affiliates; and the series of transactions which closed on October 1, 1998 and February 26, 1999 whereby Insignia and Insignia Properties Trust, respectively, were merged into AIMCO. The plaintiffs sought monetary damages and equitable relief, including judicial dissolution of the Partnership. In addition, during the third quarter of 2001, a complaint captioned Heller v. Insignia Financial Group (the "Heller action") was filed against the same defendants that are named in the Nuanes action. On or about August 6, 2001, plaintiffs filed a first amended complaint. The Heller action was brought as a purported derivative action, and asserted claims for, among other things, breach of fiduciary duty, unfair competition, conversion, unjust enrichment, and judicial dissolution. On January 28, 2002, the trial court granted defendants motion to strike the complaint. Plaintiffs took an appeal from this order. On January 8, 2003, the parties filed a Stipulation of Settlement in proposed settlement of the Nuanes action and the Heller action. On June 13, 2003, the court granted final approval of the settlement and entered judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector ("Objector") filed an appeal (the "Appeal") seeking to vacate and/or reverse the order approving the settlement and entering judgment thereto. On May 4, 2004, the Objector filed a second appeal challenging the court's use of a referee and its order requiring Objector to pay those fees. On March 21, 2005, the Court of Appeals issued opinions in both pending appeals. With regard to the settlement and judgment entered thereto, the Court of Appeals vacated the trial court's order and remanded to the trial court for further findings on the basis that the "state of the record is insufficient to permit meaningful appellate review". With regard to the second appeal, the Court of Appeals reversed the order requiring the Objector to pay referee fees. On April 26, 2005, the Court of Appeals lifted the stay of a pending appeal related to the Heller action and the trial court's order striking the complaint. On April 28, 2005, the Objector filed a Petition for Review with the California Supreme Court in connection with the opinion vacating the order approving settlement and remanding for further findings. On June 10, 2005, the California Supreme Court denied Objector's Petition for Review and the Court of Appeals sent the matter back to the trial court on June 21, 2005. The parties intend to ask the trial court to make further findings in connection with settlement consistent with the Court of Appeal's remand order. With respect to the related Heller appeal, on July 28, 2005, the Court of Appeals reversed the trial court's order striking the first amended complaint. On August 18, 2005, Objector and his counsel filed a motion to disqualify the trial court based on a peremptory challenge and filed a motion to disqualify for cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion to intervene and on or about October 19, 2005 filed both a motion to take discovery relating to the adequacy of plaintiffs as derivative representatives and a motion to dissolve the anti-suit injunction in connection with settlement. On October 27, 2005, the Court denied Objector's peremptory challenge and struck Objector's motion to disqualify for cause. No hearing has been set on Objector's remaining motions. On November 3, 2005, Objector and his counsel filed a writ of mandate to the Court of Appeals challenging the court's October 27, 2005 order. The General Partner does not anticipate that any costs to the Partnership, whether legal or settlement costs, associated with these cases will be material to the Partnership's overall operations. AIMCO Properties L.P. and NHP Management Company, both affiliates of the General Partner, are defendants in a lawsuit alleging that they willfully violated the Fair Labor Standards Act ("FLSA") by failing to pay maintenance workers overtime for all hours worked in excess of forty per week. The complaint, filed in the United States District Court for the District of Columbia, attempts to bring a collective action under the FLSA and seeks to certify state subclasses in California, Maryland, and the District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties L.P. and NHP Management Company failed to compensate maintenance workers for time that they were required to be "on-call". Additionally, the complaint alleges AIMCO Properties L.P. and NHP Management Company failed to comply with the FLSA in compensating maintenance workers for time that they worked in excess of 40 hours in a week. In June 2005 the Court conditionally certified the collective action on both the on-call and overtime issues, which allows the plaintiffs to provide notice of the collective action to all non-exempt maintenance workers from August 7, 2000 through the present. Those employees will have the opportunity to opt-in to the collective action, and AIMCO Properties, L.P. and NHP Management Company will have the opportunity to move to decertify the collective action. Because the court denied plaintiffs' motion to certify state subclasses, on September 26, 2005, the plaintiffs filed a class action with the same allegations in the Superior Court of California (Contra Costa County). Although the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not believe that the ultimate outcome will have a material adverse effect on its consolidated financial condition or results of operations. Similarly, the General Partner does not believe that the ultimate outcome will have a material adverse effect on the Partnership's consolidated financial condition or results of operations. ITEM 5. Other Information None. ITEM 6. Exhibits See Exhibit Index Attached. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly 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/Martha L. Long Martha L. Long Senior Vice President By: /s/Stephen B. Waters Stephen B. Waters Vice President Date: November 14, 2005 EXHIBIT INDEX S-K Reference Number Description 3 Certificates of Limited Partnership, as amended to date. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991 ("1991 Annual Report")). 10.20 Mortgage and Security Agreement between Kennedy Boulevard Associates I, L.P., and Lehman Brothers Holdings, Inc., dated August 25, 1998, securing The Sterling Apartment Home and Commerce Center filed in Form 10-Q for the quarter ended September 30, 1998. 10.21 Repair Escrow Agreement between Kennedy Boulevard Associates I, L.P., and Lehman Brothers Holdings, Inc., dated August 25, 1998, securing The Sterling Apartment Home and Commerce Center filed in Form 10-Q for the quarter ended September 30, 1998. 10.22 Replacement Reserve and Security Agreement between Kennedy Boulevard Associates I, L.P., and Lehman Brothers Holdings, Inc., dated August 25, 1998, securing The Sterling Apartment Home and Commerce Center filed in Form 10-Q for the quarter ended September 30, 1998. 10.23 Third Amendment to the Limited Partnership Agreement filed as Exhibit 10.23 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference. 10.24 Fourth Amendment to the Limited Partnership Agreement filed as Exhibit 10.24 to the Registrant's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference. 10.28 Form of Amended Order Setting Foreclosure Sale Date pursuant to amending the foreclosure date filed on September 25, 2003 (Schedules and supplemental materials to this exhibit filed herewith have been omitted but will be provided to the Securities and Exchange Commission upon request).* 10.29 Form of Certificate of Sale as to Property "1" pursuant to sale of Palm Lake Apartments to CCIP Palm Lake, L.L.C. filed October 28, 2003.* 10.30 Form of Certificate of Sale as to Property "2" pursuant to sale of Regency Oaks Apartments to CCIP Regency Oaks, L.L.C. filed October 28, 2003.* 10.31 Form of Certificate of Sale as to Property "3" pursuant to sale of The Dunes Apartments (formerly known as Society Park East Apartments) to CCIP Society Park East, L.L.C. filed October 28, 2003.* 10.32 Form of Certificate of Sale as to Property "4" pursuant to sale of Plantation Gardens Apartments to CCIP Plantation Gardens, L.L.C. filed October 28, 2003.* 10.33 Purchase and Sale contract between Consolidated Capital Equity Partner, LP, a California limited partnership and Cash Investments of El Paso, LLC, a Texas limited liability company dated December 8, 2003 filed as exhibit 10.33 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference. 10.34 Assignment of purchase and sale contract between Consolidated Capital Equity Partners, LP, a California limited partnership and CCIP Silverado, LP, a Delaware limited partnership dated December 8, 2003 filed as exhibit 10.34 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference. 10.35 Reinstatement and first amendment to purchase and sale contract by and between CCIP Silverado, LP, a Delaware limited partnership, assignee of Consolidated Capital Equity Partners, LP, a California limited liability partnership, and Cash Investments of El Paso, LLC, a Texas limited liability company and EPT San Mateo Apartments, LP, a Texas limited liability partnership, assignee of original purchaser dated February 6, 2004 filed as exhibit 10.35 to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and incorporated herein by reference. 10.36 Purchase and Sale contract between CCIP Tates Creek Village, LLC, a Delaware limited liability company and Tates Creek Investments, LLC, a Michigan limited liability company dated April 13, 2004 for the sale of Tates Creek Village Apartments filed as exhibit 10.36 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference. 10.37 Amendment of purchase and sale contract between CCIP Tates Creek Village, LLC and Tates Creek Investments, LLC, dated May 27, 2004 filed as exhibit 10.37 to the Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 and incorporated herein by reference. 10.38 Deed of Trust, Assignment of Leases and Rents and Security Agreement dated August 31, 2005 between CCIP Loft, LLC, a Delaware limited liability company and New York Life Insurance Company, filed as exhibit 10.38, to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.** 10.39 Promissory Note dated August 31, 2005 between CCIP Loft, LLC, a Delaware limited liability company and New York Life Insurance Company, filed as exhibit 10.39 to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.** 10.40 Guaranty dated August 31, 2005 between AIMCO Properties, L.P., for the benefit of New York Life Insurance Company, filed as exhibit 10.40 to the Current Report on Form 8-K filed on September 7, 2005 and incorporated herein by reference.** 31.1 Certification of equivalent of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of equivalent of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of the equivalent of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *Filed as exhibits 10.28 through 10.32 in the Registrant's Quarterly Form 10-Q for the quarter ended September 30, 2003 incorporated herein by reference. **Schedules and supplemental materials to the exhibits have been omitted but will be provided to the Securities and Exchange Commission upon request. Exhibit 31.1 CERTIFICATION I, Martha L. Long, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Institutional Properties; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 14, 2005 /s/Martha L. Long Martha L. Long Senior Vice President of ConCap Equities, Inc., equivalent of the chief executive officer of the Partnership Exhibit 31.2 CERTIFICATION I, Stephen B. Waters, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital Institutional Properties; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 14, 2005 /s/Stephen B. Waters Stephen B. Waters Vice President of ConCap Equities, Inc., equivalent of the chief financial officer of the Partnership Exhibit 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the Quarterly Report on Form 10-Q of Consolidated Capital Institutional Properties (the "Partnership"), for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Martha L. Long, as the equivalent of the chief executive officer of the Partnership, and Stephen B. Waters, as the equivalent of the chief financial officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Partnership. /s/Martha L. Long Name: Martha L. Long Date: November 14, 2005 /s/Stephen B. Waters Name: Stephen B. Waters Date: November 14, 2005 This certification is furnished with this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. -----END PRIVACY-ENHANCED MESSAGE-----