-----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, N/KKu+pndXXPuS0I4cmqlUmuwifJD+SI8/fnJQ6Wc1PWBoWdiPkzOiL/sentTpKn uQwbocbn6x0iT6H71Mskiw== 0000711642-98-000008.txt : 19980512 0000711642-98-000008.hdr.sgml : 19980512 ACCESSION NUMBER: 0000711642-98-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CENTRAL INDEX KEY: 0000352983 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 942744492 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10831 FILM NUMBER: 98614837 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10-Q 1 FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 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 March 31, 1998 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.........to......... (Amended by Exch. Act Rel. No. 312905, eff. 4/26/93.) Commission file number 0-10831 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES (Exact name of registrant as specified in its charter) California 94-2744492 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (Zip Code) Registrant's telephone number (864) 239-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) March 31, December 31, 1998 1997 (Unaudited) (Note) Assets Cash and cash equivalents $ 7,279 $ 8,691 Receivables and deposits 514 984 Restricted escrows 126 66 Other assets 761 383 Interest receivable on Master Loan 1,640 604 Investment in Master Loan 90,890 91,265 Less: allowance for impairment loss (40,686) (40,686) 50,204 50,579 Investment properties: Land 3,620 3,620 Building and related personal property 32,871 31,715 36,491 35,335 Less: accumulated depreciation (5,550) (5,014) 30,941 30,321 $ 91,465 $ 91,628 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 113 $ 164 Tenant security deposits 417 356 Accrued taxes 17 -- Other liabilities 429 504 Mortgage note payable 4,435 4,448 5,411 5,472 Partners' (Deficit) Capital General Partner (365) (364) Limited Partners (199,052 units issued and outstanding at March 31, 1998, and December 31, 1997) 86,419 86,520 86,054 86,156 $ 91,465 $ 91,628 Note: The balance sheet at December 31, 1997, has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Consolidated Financial Statements b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 2,181 $ 1,826 Interest income on investment in Master Loan to affiliate 1,640 862 Interest income 89 127 Other income 128 153 Total revenues 4,038 2,968 Expenses: Operating 1,400 1,378 Depreciation 544 395 General and administrative 131 88 Property taxes 187 140 Interest 80 81 Total expenses 2,342 2,082 Net income $ 1,696 $ 886 Net income allocated to general partner (1%) $ 17 $ 9 Net income allocated to limited partners (99%) 1,679 877 $ 1,696 $ 886 Net income per Limited Partnership Unit $ 8.43 $ 4.41 Distributions per Limited Partnership Unit $ 8.94 $ 9.94 See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data) Limited Partnership General Limited Units Partner Partners Total Original capital contributions 200,342 $ 1 $200,342 $200,343 Partners' (deficit) capital at December 31, 1996 199,052 $ (380) $ 84,968 $ 84,588 Distributions -- (20) (1,979) (1,999) Net income for the three months ended March 31, 1997 -- 9 877 886 Partners' (deficit) capital at March 31, 1997 199,052 $ (391) $ 83,866 $ 83,475 Partners' (deficit) capital at December 31, 1997 199,052 $ (364) $ 86,520 $ 86,156 Distributions -- (18) (1,780) (1,798) Net income for the three months ended March 31, 1998 -- 17 1,679 1,696 Partners' (deficit) capital at March 31, 1998 199,052 $ (365) $ 86,419 $ 86,054 See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands) Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 1,696 $ 886 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 554 400 Casualty loss 14 -- Change in accounts: Receivables and deposits 470 392 Other assets (388) (397) Interest receivable on Master Loan (1,036) (862) Accounts payable (51) (1,610) Tenant security deposit liabilities 61 8 Accrued taxes 17 16 Other liabilities (75) (15) Net cash provided by (used in) operating activities 1,262 (1,182) Cash flows from investing activities: Property improvements and replacements (1,178) (2,163) Principal receipts on Master Loan 375 1,430 Net deposits to restricted escrows (60) (1) Net cash used in investing activities (863) (734) Cash flows from financing activities: Distributions to partners (1,798) (1,999) Payments on notes payable (13) (12) Net cash used in financing activities (1,811) (2,011) Net decrease in cash and cash equivalents (1,412) (3,927) Cash and cash equivalents at beginning of period 8,691 12,348 Cash and cash equivalents at end of period $ 7,279 $ 8,421 Supplemental disclosure of cash flow information: Cash paid for interest $ 77 $ 78 See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Consolidated Capital Institutional Properties (the "Partnership") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the annual report on Form 10-K for the year ended December 31, 1997, for the Partnership. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. NOTE B - RELATED PARTY TRANSACTIONS The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. The General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership paid property management fees based upon collected gross rental revenues for property management services as noted below for the three month periods ended March 31, 1998 and 1997. The partnership agreement ("Agreement") also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of partnership activities. The General Partner and its affiliates received reimbursements as reflected in the following table: Three Months Ended March 31, 1998 1997 (in thousands) Property management fees (included in operating expenses) $117 $102 Reimbursement for services of affiliates (included in operating, general and administrative expenses, other assets and investment properties) (1) 101 109 (1) Included in "Reimbursements for services of affiliates" for the three months ended March 31, 1998 and 1997 is approximately $31,000 and $41,000, respectively, in reimbursements for construction oversight costs. In addition, approximately $4,000 and $9,000 of lease commissions are included for the three months ended March 31, 1998 and 1997, respectively. For the period of January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the General Partner which receives payments on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. On October 30, 1997, an affiliate of Insignia commenced tender offers for limited partnership interests in two real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 45,000 of the outstanding units of limited partnership interest in the Partnership, at $400 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated October 30, 1997 (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on October 30, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. In addition, because of these conflicts of interest, as a result of the Purchaser's affiliation with various Insignia affiliates, the manner in which the Purchaser votes its limited partner interests in the Partnership may not always be consistent with the best interests of the other limited partners. During December 1997 an affiliate of Insignia tendered 27,330 units related to the tender offer mentioned above. In February 1998 an affiliate of Insignia tendered an additional 1570.5 units as a result of this tender offer. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. NOTE C - NET INVESTMENT IN MASTER LOAN The Partnership was formed for the benefit of its limited partners to lend funds to Consolidated Capital Equity Partners ("CCEP"), a California general partnership. The Partnership loaned funds to CCEP subject to a nonrecourse note with a participation interest (the "Master Loan"). At March 31, 1998, the recorded investment in the Master Loan was considered to be impaired under Statement of Financial Accounting Standard No. 114 ("SFAS 114"), Accounting by Creditors for Impairment of a Loan. The Partnership measures the impairment of the loan based upon the fair value of the collateral due to the fact that repayment of the loan is expected to be provided solely by the collateral. For the three months ended March 31, 1998 and 1997, the Partnership recorded approximately $1,640,000 and $862,000, respectively, of interest income based upon cash generated as a result of improved operations at the properties which secure the loan. Interest, calculated on the accrual basis, due to the Partnership pursuant to the terms of the Master Loan Agreement, but not recognized in the income statements due to the impairment of the loan, totaled approximately $9,181,000 and $8,266,000 for the three months ended March 31, 1998 and 1997, respectively. Interest income is recognized on the cash basis as allowed under SFAS 114. At March 31, 1998, and December 31, 1997, such cumulative unrecognized interest totaling approximately $205,341,000 and $197,800,000 was not included in the balance of the investment in Master Loan. In addition, six of the properties are collateralized by first mortgages totaling approximately $23,065,000 which are superior to the Master Loan. Accordingly, this fact has been taken into consideration in determining the fair value of the Master Loan. During the three months ended March 31, 1998, the Partnership made no advances to CCEP as an advance on the Master Loan. During the three months ended March 31, 1998, the Partnership received approximately $375,000 as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $79,000. Approximately $296,000 received was due to an excess cash flow payment received from CCEP as stipulated by the Master Loan Agreement. Approximately $604,000 of interest payments were also made during the three months ended March 31, 1998. NOTE D - COMMITMENT The Partnership is required by the Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined in the Agreement. In the event expenditures are made from this reserve, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, including cash and cash equivalents and securities available for sale (at market), totaling approximately $7,696,000, were greater than the reserve requirement of approximately $7,261,000 at March 31, 1998. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Partnership's investment properties consist of two properties, The Loft and The Sterling Apartment Homes and Commerce Center ("The Sterling"). The Sterling is a multiple-use facility which consists of an apartment complex and commercial space. The following table sets forth the average occupancies of the properties for the three months ended March 31, 1998 and 1997: Average Occupancy 1998 1997 Property The Loft Apartments 91% 94% Raleigh, North Carolina The Sterling Apartment Homes 92% 84% The Sterling Commerce Center 75% 68% Philadelphia, Pennsylvania The General Partner attributes the increase in occupancy at The Sterling Apartment Homes to recent renovations completed over the past year and to changes in demographics. The increase in occupancy at The Sterling Commerce Center is attributable to recent major capital improvements including exterior renovations, elevator rehabilitation, and common area renovations. The decrease in occupancy at The Loft Apartments is due to a declining market and increased competition in the area. Results of Operations The Partnership's net income for the three months ended March 31, 1998, was approximately $1,696,000 compared to net income of approximately $886,000 for the corresponding period ended March 31, 1997. The increase in net income is due to an increase in revenues, partially offset by an increase in expenses. Revenues increased due to increases in rental income and interest income recorded on the investment in Master Loan to affiliate. Rental income increased due to an increase in occupancy at The Sterling despite a decrease in occupancy at The Loft Apartments, as discussed above. The increase in interest income recorded on the investment in Master Loan to affiliate resulted from an increase in the fair value of the underlying collateral properties due to an increase in operations of such properties. Contributing to the increase in expenses was an increase in depreciation expense, general and administrative expense, and property tax expense. The increase in depreciation is due to the major capital improvements and renovations to The Sterling over the past year. The increase in general and administrative expense is due to an increase in expense reimbursements and professional fees. In addition, general and administrative expense increased due to the timing of the year-end mailings. The copying and mailing costs related to the 1998 10-K's were incurred during the three months ended March 31, 1998. The costs for the 1997 10-K's were not incurred until the second quarter of 1997. Property tax expense increased at The Sterling for the three months ended March 31, 1998, compared to the three months ended March 31, 1997, due to a reassessment of the property. In the first quarter of 1998, there was a fire at The Lofts Apartments that was contained to one unit. The upstairs was completely destroyed and the downstairs endured water damage. A loss of approximately $14,000 related to this casualty has been included in operating expense for the three months ended March 31, 1998. Included in operating expense for the quarter ended March 31, 1998, is approximately $239,000 of major repairs and maintenance comprised primarily of expenses related to window coverings and interior building improvements. Included in operating expense for the quarter ended March 31, 1997, is approximately $141,000 of major repairs and maintenance comprised primarily of window coverings and exterior and interior building improvements. As part of the ongoing business plan of the Partnership, the General Partner monitors the rental market environment of its investment properties to assess the feasibility of increasing rents, maintaining or increasing occupancy levels and protecting the Partnership from increases in expense. As part of this plan, the General Partner attempts to protect the Partnership from the burden of inflation-related increases in expenses by increasing rents and maintaining a high overall occupancy level. However, due to changing market conditions, which can result in the use of rental concessions and rental reductions to offset softening market conditions, there is no guarantee that the General Partner will be able to sustain such a plan. Liquidity and Capital Resources At March 31, 1998, the Partnership had cash and cash equivalents of approximately $7,279,000 versus approximately $8,421,000 at March 31, 1997. The net decrease in cash and cash equivalents for the three months ended March 31, 1998, is approximately $1,412,000 compared to approximately $3,927,000 for the three months ended March 31, 1997. Net cash provided by operating activities for the three months ended March 31, 1998, increased as a result of an increase in net income from operations, as discussed above along with a decrease in cash used to pay accounts payable. The decrease in accounts payable for the three months ended March 31, 1997, resulted from the payment of invoices relating to the renovations at The Sterling. The decrease in accounts payable for the three months ended March 31, 1998, results from the timing of the payment of invoices. Net cash used in investing activities increased due to a decrease in principal receipts received on the Master Loan. Offsetting this increase is a reduction in property improvements and replacements. Net cash used in financing activities decreased due to a decrease in distributions to partners. 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. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of approximately $4,435,000 requires monthly principal and interest payments and requires a balloon payment on December 1, 2005, at which time the property will either be refinanced or sold. Distributions of approximately $1,780,000 were made to the limited partners during the three months ended March 31, 1998. A matching distribution of approximately $18,000 was made to the General Partner. Included in these amounts are payments to the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment property located in that state. Distributions of approximately $1,979,000 were made to the limited partners during the three months ended March 31, 1997. A matching distribution of approximately $20,000 was made to the General Partner. Included in these amounts are payments to the North Carolina Department of Revenue for withholding taxes related to income generated by the Partnership's investment property located in that state. The General Partner is planning on making a distribution from cash flow from operations in the fourth quarter of 1998. The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined by the Partnership Agreement. Reserves, including cash and cash equivalents and securities available for sale totaling approximately $7,696,000, were greater than the reserve requirement of approximately $7,261,000 at March 31, 1998. CCEP Property Operations For the three months ended March 31, 1998, CCEP's net loss totaled approximately $8,506,000 on total revenues of approximately $5,328,000. CCEP recognizes interest expense on the New Master Loan Agreement obligation according to the note terms, although payments to the Partnership are required only to the extent of Excess Cash Flow, as defined therein. During the three months ended March 31, 1998, CCEP's statement of operations includes total interest expense attributable to the Master Loan of approximately $9,181,000, all but $604,000 of which represents interest accrued in excess of required payments. CCEP is expected to continue to generate operating losses as a result of such interest accruals and noncash charges for depreciation. During the three months ended March 31, 1998, the Partnership received approximately $375,000 as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to the Partnership per the Master Loan Agreement, accounted for approximately $79,000. Approximately $296,000 received was due to an "Excess Cash Flow" payment from CCEP as described above. Year 2000 The Partnership is dependent upon the General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates of revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In January 1998, a limited partner of the Partnership commenced an arbitration proceeding against the General Partner claiming that the General Partner had breached certain contractual and fiduciary duties allegedly owed to the claimant. The General Partner believes the claim to be without merit and intends to vigorously defend the claim. 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. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, the General Partner and several of their affiliated partnerships and corporate entities. The complaint purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and AIMCO. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The General Partner was only recently served with the complaint which it believes to be without merit, and intends to vigorously defend the action. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner of the Registrant believes that all such other pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, results of operations, or liquidity of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: S-K Reference Number Description 27 Financial Data Schedule is filed as an exhibit to this report. 99.1 Consolidated Capital Equity Partners, L.P., unaudited financial statements for the three months ended March 31, 1998 and 1997. (b) Reports on Form 8-K: None filed during the quarter ended March 31, 1998. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES By: CONCAP EQUITIES, INC. General Partner By: /s/ William H. Jarrard, Jr. William H. Jarrard, Jr. President/Director By: /s/ Ronald Uretta Ronald Uretta Vice President/Treasurer Date: May 11, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Institutional Properties 1998 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000352983 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 1,000 3-MOS DEC-31-1998 MAR-31-1998 7,279 0 514 0 0 0 36,491 (5,550) 91,465 0 4,435 0 0 0 86,054 91,465 0 4,038 0 0 2,342 0 80 0 0 0 0 0 0 1,696 8.43 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-99.1 3 EXHIBIT 99.1 CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (in thousands)
March 31, December 31, 1998 1997 (Unaudited) (Note) Assets Cash and cash equivalents $ 2,146 $ 1,439 Receivables and deposits 1,406 1,241 Restricted escrows 644 798 Other assets 1,490 1,550 Investment properties: Land 10,217 10,217 Buildings and related personal property 97,881 97,598 108,098 107,815 Less accumulated depreciation (77,075) (75,746) 31,023 32,069 $ 36,709 $ 37,097 Liabilities and Partners' Deficit Liabilities Accounts payable $ 232 $ 426 Tenant security deposit liabilities 614 620 Accrued property taxes 384 116 Other liabilities 428 513 Mortgage notes and interest payable 23,065 23,133 Master loan and interest payable 297,986 289,783 322,709 314,591 Partners' Deficit General partner (2,860) (2,775) Limited partners (283,140) (274,719) (286,000) (277,494) $ 36,709 $ 37,097 Note: The balance sheet at December 31, 1997, has been derived from the audited financial statements at that date, but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands)
Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 4,939 $ 4,678 Interest income 35 35 Other income 354 302 Total revenues 5,328 5,015 Expenses: Operating 2,385 2,391 General and administrative 167 252 Depreciation 1,329 1,265 Property taxes 330 325 Interest 9,602 8,692 Bad debt expense, net 21 -- Total expenses 13,834 12,925 Net loss $ (8,506) $ (7,910) Net loss allocated to general partner (1%) $ (85) $ (79) Net loss allocated to limited partners (99%) (8,421) (7,831) $ (8,506) $ (7,910) See Accompanying Notes to Consolidated Financial Statements
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (Unaudited) For the Three Months Ended March 31, 1998 and 1997 (in thousands)
General Limited Partner Partners Total Partners' deficit at December 31, 1996 $ (2,449) $(242,488) $(244,937) Net loss for the three months ended March 31, 1997 (79) (7,831) (7,910) Partners' deficit at March 31, 1997 $ (2,528) $(250,319) $(252,847) Partners' deficit at December 31, 1997 $ (2,775) $(274,719) $(277,494) Net loss for the three months ended March 31, 1998 (85) (8,421) (8,506) Partners' deficit at March 31, 1998 $ (2,860) $(283,140) $(286,000) See Accompanying Notes to Consolidated Financial Statements
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net loss $ (8,506) $ (7,910) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,388 1,318 Bad debt expense, net 21 -- Change in accounts: Receivables and deposits (186) 97 Other assets 1 (246) Accounts payable (194) (548) Tenant security deposit liabilities (6) (6) Accrued property taxes 268 60 Other liabilities (85) 61 Accrued interest on Master Loan 8,578 8,266 Net cash provided by operating activities 1,279 1,092 Cash flows from investing activities: Property improvements and replacements (283) (417) Net receipts from restricted escrows 154 786 Distributions from investments in limited partnerships -- 336 Net cash (used in) provided by investing activities (129) 705 Cash flows from financing activities: Principal payments on Master Loan (375) (1,430) Principal payments on notes payable (68) (63) Net cash used in financing activities (443) (1,493) Net increase in cash and cash equivalents 707 304 Cash and cash equivalents at beginning of period 1,439 1,961 Cash and cash equivalents at end of period $ 2,146 $ 2,265 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,006 $ 406 See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Consolidated Capital Equity Partners, L.P. ("CCEP") have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Holdings, Inc. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. Certain reclassifications have been made to the 1997 information to conform to the 1998 presentation. Consolidation CCEP owns a 75% interest in a limited partnership ("Western Can, Ltd.") which owns 444 De Haro, an office building in San Francisco, California. CCEP's investment in Western Can, Ltd. is consolidated in CCEP's financial statements. No minority interest liability has been reflected for the 25% minority interest because Western Can, Ltd. has a net capital deficit and no minority liability exists with respect to CCEP. NOTE B - RELATED PARTY TRANSACTIONS CCEP has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. CCEP paid property management fees based upon collected gross rental revenues for property management services in each of the three month periods ended March 31, 1998 and 1997. The Partnership Agreement ("Agreement") also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of CCEP activities. Also, CCEP is subject to an Investment Advisory Agreement between CCEP and an affiliate of the General Partner. This agreement provides for an annual fee, payable in monthly installments, to an affiliate of the General Partner for advising and consulting services for CCEP's properties. The following amounts were paid or accrued to the General Partner and affiliates: For the Three Months Ended March 31, 1998 1997 (in thousands) Property management fees $266 $253 Investment advisory fees 44 45 Lease commissions 2 35 Reimbursement for services of affiliates (1) 100 117 (1)Included in "reimbursements for services of affiliates" for the three months ended March 31, 1998 and 1997, is approximately $15,000 and $20,000, respectively, in reimbursements for construction oversight costs. In addition to the compensation and reimbursements described above, interest payments are made to and loan advances are received from Consolidated Capital Institutional Properties ("CCIP") pursuant to the Master Loan Agreement (the "Master Loan"), which is described more fully in the 1997 Annual Report. Approximately $604,000 in interest payments were made during the three month period ended March 31, 1998. No advances were received under the Master Loan during the three months ended March 31, 1998. Principal payments of approximately $375,000 were made on the Master Loan during the three months ended March 31, 1998. For the period January 1, 1997 to August 31, 1997, CCEP insured its properties under a master policy through an agency affiliated with the General Partner with an insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the master policy. The agent assumed the financial obligations to the affiliate of the General Partner which receives payments on these obligations from the agent. The amount of CCEP's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. NOTE C - MASTER LOAN AND ACCRUED INTEREST PAYABLE The Master Loan principal and accrued interest payable balances at March 31, 1998, and December 31, 1997, are approximately $297,986,000 and approximately $289,783,000, respectively. Terms of Master Loan Agreement Under the terms of the Master Loan, interest accrues at a fluctuating rate per annum adjusted annually on July 15 by the percentage change in the U.S. Department of Commerce Implicit Price Deflator for the Gross National Product subject to an interest rate ceiling of 12.5%. The interest rates for each of the three month periods ended March 31, 1998 and 1997, were 12.5%. Payments are currently payable quarterly in an amount equal to "Excess Cash Flow", generally defined in the Master Loan as net cash flow from operations after third-party debt service and capital expenditures. Any unpaid interest is added to principal, compounded annually, and is payable at the loan's maturity. Any net proceeds from sale or refinancing of any of CCEP's properties are paid to CCIP under the terms of the Master Loan Agreement. The Master Loan Agreement matures in November 2000. During the three months ended March 31, 1998, CCEP paid approximately $375,000 to CCIP as principal payments on the Master Loan. Cash received on certain investments by CCEP, which are required to be transferred to CCIP per the Master Loan Agreement, accounted for approximately $79,000. Approximately $296,000 was due to an excess cash flow payment paid to CCIP as stipulated by the Master Loan. -----END PRIVACY-ENHANCED MESSAGE-----