0000950168-95-000597.txt : 19950810
0000950168-95-000597.hdr.sgml : 19950810
ACCESSION NUMBER: 0000950168-95-000597
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950809
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CENTRAL INDEX KEY: 0000352983
STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500]
IRS NUMBER: 942744492
STATE OF INCORPORATION: CA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-10831
FILM NUMBER: 95559970
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
INSIGNIA CCIP 82019 10-Q
FORM 10-Q--QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
(As last amended in Rel. No. 312905, eff. 04/26/93.)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period.........to.........
Commission file number 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact name of registrant as specified in its charter)
California 94-2744492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Insignia Financial Plaza, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices) (Zip Code)
Registrant's telephone number (803) 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
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
June 30, December 31,
1995 1994
Assets
Cash $ 3,863 $ 1,554
Securities available for sale 5,767 8,329
Prepaid expenses and other assets 186 276
Due from affiliates -- 935
Net investment in master loan 93,322 91,786
Investment properties:
Land 1,053 1,053
Building and related personal property 5,218 5,202
6,271 6,255
Less accumulated depreciation (1,715) (1,505)
4,556 4,750
$107,694 $107,630
Liabilities and Partners' Capital (Deficit)
Accounts payable and accrued expenses $ 128 $ 55
Tenant security deposits 33 47
Distributions payable 324 324
485 426
Partners' Capital (Deficit)
General partner (294) (294)
Limited partners (199,052 and 199,045 units
outstanding at June 30, 1995, and
December 31, 1994, respectively) 107,503 107,498
107,209 107,204
$107,694 $107,630
See Accompanying Notes to Financial Statements
1
b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $ 434 $ 327 $ 757 $ 641
Interest income on
investment in master
loan to affiliate -- 435 1,536 909
Interest and dividend
income on investments 99 168 218 335
Total revenues 533 930 2,511 1,885
Expenses:
Property operations 154 140 330 284
Depreciation 105 103 210 207
Administrative 243 121 439 259
Total expenses 502 364 979 750
Other income -- -- -- 56
Casualty gain -- -- 9 --
Net income $ 31 $ 566 $ 1,541 $ 1,191
Net income allocated
to general partner (1%) $ -- $ 6 $ 15 $ 11
Net income allocated
to limited partners (99%) 31 560 1,526 1,180
$ 31 $ 566 $ 1,541 $ 1,191
Net income per limited
partnership unit $ .16 $ 2.81 $ 7.67 $ 5.93
See Accompanying Notes to Financial Statements
2
c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENT OF CHANGES IN PARTNERS' CAPITAL (DEFICIT)
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 200,342 $ 1 $200,342 $200,343
Partners' capital (deficit) at
December 31, 1993 199,046 $ (287) $108,220 $107,933
Distributions -- (24) (2,339) (2,363)
Net income for the six months
ended June 30, 1994 -- 11 1,180 1,191
Partners' capital (deficit) at
June 30, 1994 199,046 $ (300) $107,061 $106,761
Partners' capital (deficit) at
December 31, 1994 199,045 $ (294) $107,498 $107,204
Distributions -- (15) (1,521) (1,536)
Net income for the six months
ended June 30, 1995 7 15 1,526 1,541
Partners' capital (deficit) at
June 30, 1995 199,052 $ (294) $107,503 $107,209
See Accompanying Notes to Financial Statements
3
d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net income $ 1,541 $ 1,191
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 210 207
Casualty gain (9) --
Change in accounts:
Prepaid expenses and other assets 90 50
Interest receivable on master loan (1,536) 579
Due from affiliates 935 --
Accounts payable and accrued expenses 82 (63)
Tenant security deposits (14) (6)
Net cash provided by
operating activities 1,299 1,958
Cash flows from investing activities:
Property improvements and replacements (15) (28)
Purchase of securities available for sale (2,115) (2,320)
Proceeds from sale of securities available
for sale 4,676 4,720
Advances on master loan -- (40)
Net cash provided by
investing activities 2,546 2,332
Cash flows used in financing activities:
Distributions (1,536) (2,363)
Net increase in cash 2,309 1,927
Cash at beginning of period 1,554 222
Cash at end of period $ 3,863 $ 2,149
See Accompanying Notes to Financial Statements
4
e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements 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 the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995. For further
information, refer to the financial statements and footnotes thereto
included in the Partnership's annual report on Form 10-K for the year
ended December 31, 1994.
Investment in Master Loan
The Master Loan and the New Master Loan agreements are considered
investments in acquisition, development, and construction ("ADC") loans,
primarily because the Partnership is entitled to receive, according to
the provisions of the Master Loan and New Master Loan agreements, in
excess of 50% of the residual profits from the sale or refinancing of
the properties securing the agreements. The investment in Master Loan
is accounted for by the cost method, whereby income from the investment
is recognized as interest income to the extent of payments received and
losses in the estimated net realizable value of the investment are
recognized in the period they are identified. Interest income
contractually due according to the terms of the Master Loan and New
Master Loan agreements in excess of payments received is deferred. As
of June 30, 1995, and December 31, 1994, such cumulative deferred
interest, which is not included in the balance of the net investment in
Master Loan, totaled $124.4 million and $110.8 million, respectively.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Note B - Related Party Transactions
Consolidated Capital Institutional Properties ("Partnership") paid
property management fees based upon collected gross rental revenues for
property management services as noted below for the six month periods
ended June 30, 1995 and 1994. For the six months ended June 30, 1994, a
portion of such property management fees were paid to Coventry
Properties, Inc. ("Coventry"), an affiliate of the General Partner, for
day-to-day property management services and a portion was paid to
Partnership Services, Inc. ("PSI") for advisory services related to day-
to-day property operations. In late December 1994, an affiliate of
Insignia assumed day-to-day property management responsibilities for
all of the Partnership's properties. Fees paid to affiliates of
Insignia during the six months ended June 30, 1995, and fees paid to
Coventry and PSI for the six months ended June 30, 1994, are reflected
in the following table:
5
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Property management fees $34 $32
The Partnership Agreement ("Agreement") also provides for
reimbursement to the General Partner and its affiliates for costs
incurred in connection with the administration of Partnership
activities. The General Partner and its current and former affiliates,
which includes Coventry for the six months ended June 30, 1994, received
reimbursements as reflected in the following table:
For the Six Months Ended
June 30,
1995 1994
Reimbursement for services of affiliates $212 $124
Note C - Net Investment in Master Loan
Interest due to the Partnership according to the terms of the New
Master Loan Agreement, but not recognized in the income statements,
totaled approximately $13.6 and $12.5 million for the six months ended
June 30, 1995 and 1994, respectively. At June 30, 1995, and December
31, 1994, such cumulative unrecognized interest totalling approximately
$124.4 million and $110.8 million was not included in the balance of the
investment in Master Loan.
In February 1994, the Partnership advanced $40,000 to CCEP as an
advance on the Master Loan. CCEP then advanced $40,000 to New Carlton
House Partners as an advance on the note receivable secured by the
Carlton House Apartment and Office Building ("Carlton House") to pay the
remaining balance of 1993 property taxes.
Note D - Other Income
In 1991, the Partnership (and simultaneously other affiliated
partnerships) entered claims in Southmark Corporation's Chapter 11
bankruptcy proceeding. These claims related to Southmark Corporation's
activities while it exercised control (directly, or indirectly through
its affiliates) over the Partnership. The Bankruptcy Court set the
Partnership's and the affiliated partnerships'
6
Note D - Other Income - continued
allowed claim at $11 million, in aggregate. In March 1994, the
Partnership received 909 shares of Southmark Corporation Redeemable
Series A Preferred Stock and 6,651 shares of Southmark Corporation New
Common Stock with an aggregate market value on the date of receipt of
$6,690 and $49,847 in cash representing the Partnership's share of the
recovery, based on its pro rata share of the claims filed.
Note E - 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,
totalling approximately $9.6 million, were greater than the reserve
requirement of approximately $8.0 million at June 30, 1995.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Partnership's investment properties consist of one apartment
complex. The following table sets forth the average occupancy of this
property for the six months ended June 30, 1995 and 1994:
Average
Occupancy
Property 1995 1994
The Loft Apartments
Raleigh, North Carolina 91% 96%
The General Partner attributes the decrease in occupancy to increased
rental rates.
The Partnership's net income for the six months ended June 30, 1995,
was approximately $1,541,000 as compared to approximately $1,191,000 for
the six months ended June 30, 1994. The Partnership realized net income
of approximately $31,000 for the three months ended June 30, 1995, as
compared to net income of approximately $566,000 for the three months
ended June 30, 1994. The increase in net income for the six months
ended June 30, 1995, is due primarily to an increase in interest income
on the master loan due to increased cash flows at the affiliated
properties (income is recorded based on the cash flow of the properties
collateralized by the master loan). The decrease in net income for the
three months ended June 30, 1995, is primarily due to a decrease in
interest income on the master loan due to decreased cash flows at the
affiliated properties for the three months ended June 30, 1995, as
compared to the three months ended June 30, 1994. Rental income for the
three and six month periods has increased due to higher rental rates
which have more than offset the increase in vacancy loss. Also, the
increase in net income for the six months ended June 30, 1995, is
attributable to $9,000 in casualty income related to insurance proceeds
from damages occurred in the prior year. Offsetting these increases in
net income is a decrease in interest and dividend income on investments
due to lower investment balances for the three and six month periods
ended June 30, 1995, as compared to prior year. Also, property
operations for the three and six month periods ended June 30, 1995,
increased due to higher maintenance expenses. The increase in
maintenance expense is the result of increased interior and exterior
painting and other miscellaneous maintenance work being done at the
property. Administrative expense increased primarily due to increased
expense related to the combined efforts of the Dallas and Greenville
offices during the transition period for the six months ended June 30,
1995. These increased costs related to the transition efforts were
incurred to minimize any disruption in the year-end reporting function
including the financial reporting and K-1 preparation and distribution.
The General Partner expects administrative expenses to be reduced
beginning in the third quarter of 1995 as the transition efforts are now
complete.
Other income realized in the six months ended June 30, 1994, is due
to the receipt of its pro rata share of the claims filed in Southmark's
Chapter 11 bankruptcy proceedings. (See Note D).
8
As part of the ongoing business plan of the Partnership, the General
Partner monitors the rental market environment of each of its investment
properties to assess the feasibility of increasing rents, maintaining or
increasing occupancy levels and protecting the Partnership from
increases in 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.
At June 30, 1995, the Partnership reported cash of approximately
$3,863,000 versus approximately $2,149,000 for the corresponding period
of 1994. Net cash provided from operations decreased primarily due to
an increase in interest receivable on the master loan which was
partially offset by a decrease in due from affiliates. The decrease in
due from affiliates is the result of the master loan interest payment
received from Consolidated Capital Equity Partners, L.P. during the six
months ended June 30, 1995. Net cash provided by investing activities
remained consistent with the prior year amount. Net cash used in
financing activities decreased due to a decrease in distributions paid.
The sufficiency of existing liquid assets to meet future liquidity
and capital expenditure requirements is directly related to the level of
capital expenditures required at the property to adequately maintain the
physical assets and other operating needs of the Partnership. Such
assets are currently thought to be sufficient for any near-term needs of
the Partnership. A distribution of approximately $1,485,000 or $4.46 per
Unit was made to the limited partners in March 1995. A matching
distribution of approximately $15,000 was made to the General Partner.
In June 1995, a distribution of approximately $36,000 was accrued to pay
the limited partners' income taxes due to the State of North Carolina
for income generated by the Partnership's investment property located in
North Carolina. Future cash distributions will depend on the levels of
cash generated from operations, master loan interest income, capital
expenditure requirements, property sales, and the availability of cash
reserves.
9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
S-K Reference
Number Description
27 Financial Data Schedule is filed as
an exhibit to this report.
28.1 Consolidated Capital Equity Partners,
L.P., unaudited financial statements
for the six months ended June 30,
1995 and 1994.
(b) Reports on Form 8-K:
A Form 8-K dated May 3, 1995, was filed reporting a change
in the Registrant's Certifying Accountant.
10
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES
By: CONCAP EQUITIES, INC.
General Partner
By:/s/ Carroll D. Vinson
Carroll D. Vinson
President
By:/s/ Robert D. Long, Jr.
Robert D. Long, Jr.
Controller and Principal
Accounting Officer
Date: August 8, 1995
11
EX-27
2
EXHIBIT 27
5
1,000
6-MOS
DEC-31-1995
JUN-30-1995
3,863
5,767
93,322
0
0
0
6,271
(1,715)
107,694
128
0
0
0
0
107,209
107,694
0
2,511
0
0
979
0
0
0
0
0
0
0
0
1,541
7.67
0
EX-28
3
EXHIBIT 28.1
EXHIBIT 28.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 1995 AND 1994
1
EXHIBIT 28.1 (Continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
BALANCE SHEET
(Unaudited)
(in thousands)
June 30, December 31,
1995 1994
Assets
Cash $ 4,638 $ 3,393
Securities available for sale -- 195
Prepaid expenses and other assets 2,246 1,254
Investments in limited partnerships 2,508 2,508
Investment properties:
Land 10,831 10,831
Building and related personal
equipment 94,622 93,660
105,453 104,491
Less accumulated depreciation (65,842) (63,288)
39,611 41,203
Real estate assets of property
in-substance foreclosed 21,081 20,722
Less accumulated depreciation (1,638) (1,122)
19,443 19,600
$ 68,446 $ 68,153
Liabilities and Partners' Deficit
Accounts payable and accrued expenses $ 3,029 $ 2,038
Mortgage notes and interest payable 4,414 4,700
Master loan and interest payable 253,599 238,486
Due to affiliates 51 969
261,093 246,193
Partners' Deficit
General partner (1,926) (1,780)
Limited partners (190,721) (176,260)
(192,647) (178,040)
$ 68,446 $ 68,153
See Accompanying Notes to Financial Statements
2
EXHIBIT 28.1 (Continued)
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
Revenues:
Rental income $ 6,075 $ 5,606 $ 12,129 $ 11,198
Interest and distribution
income on investments 43 9 58 16
Total revenues 6,118 5,615 12,187 11,214
Expenses:
Property operations 3,768 3,686 7,619 7,537
Depreciation and
amortization 1,630 1,504 3,207 2,979
Interest 6,523 6,875 15,330 13,684
Administrative 458 147 674 389
Total expenses 12,379 12,212 26,830 24,589
Loss on disposition (2) -- (9) --
Casualty gain -- -- 45 --
Net loss $(6,263) $(6,597) $(14,607) $(13,375)
Net loss allocated
to general partner (1%) $ (63) $ (66) $ (146) $ (133)
Net loss allocated
to limited partners (99%) (6,200) (6,531) (14,461) (13,242)
$(6,263) $(6,597) $(14,607) $(13,375)
See Accompanying Notes to Financial Statements
3
EXHIBIT 28.1 (Continued)
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Six Months Ended June 30, 1995 and 1994
(in thousands)
General Limited
Partners Partners Total
Partners' deficit at
December 31, 1993 $ (1,507) $(149,178) $(150,685)
Net loss for the six months
ended June 30, 1994 (133) (13,242) (13,375)
Partners' deficit at
June 30, 1994 $ (1,640) $(162,420) $(164,060)
Partners' deficit at
December 31, 1994 $ (1,780) $(176,260) $(178,040)
Net loss for the six months
ended June 30, 1995 (146) (14,461) (14,607)
Partners' deficit at
June 30, 1995 $ (1,926) $(190,721) $(192,647)
See Accompanying Notes to Financial Statements
4
EXHIBIT 28.1 (Continued)
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
1995 1994
Cash flows from operating activities:
Net loss $(14,607) $(13,375)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,210 2,982
Loss on disposal of property 9 --
Casualty gain (45) --
Change in accounts:
Prepaid expenses and other assets (1,047) (170)
Accounts payable and accrued expenses 1,049 229
Interest on master loan 15,113 12,528
Due to affiliates (918) (586)
Interest payable 11 --
Net cash provided by operating
activities 2,775 1,608
Cash flows from investing activities:
Property improvements and replacements (1,429) (938)
Proceeds from sale of securities available
for sale 195 --
Net cash used in investing
activities (1,234) (938)
Cash flows used in financing activities:
Payments on notes payable (296) (320)
Net increase in cash 1,245 350
Cash at beginning of period 3,393 2,429
Cash at end of period $ 4,638 $ 2,779
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 1,121 $ 1,722
See Accompanying Notes to Financial Statements
5
EXHIBIT 28.1 (Continued)
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements 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 the
General Partner, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended
June 30, 1995, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1995.
Certain reclassifications have been made to the 1994 information to
conform to the 1995 presentation.
Consolidation
Consolidated Capital Equity Partners, L.P. ("Partnership") owns a 75%
interest in a limited partnership ("Western Can, Ltd.") which owns 444
De Haro, an office building in San Francisco, California. The
Partnership's investment in Western Can, Ltd. is consolidated in the
Partnership'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 the Partnership.
The assets and liabilities at June 30, 1995, and December 31, 1994,
and operations for the six months ended June 30, 1995 and 1994, of
Carlton House are consolidated in the Partnership's financial statements
pursuant to accounting guidelines regarding notes receivable in-
substance foreclosed.
Investments in Limited Partnerships
The investments in limited partnerships represent certain interest in
four affiliated limited partnerships that were contributed by EP's
general partners to the Partnership. These investments are stated at
the lower of estimated fair value of the interests at the time of
contribution to the Partnership or the current estimated fair value of
the interests.
Note B - Related Party Transactions
The Partnership paid property management fees based upon collected
gross rental revenues for property management services in each of the
six month periods ended June 30, 1995 and 1994. For the six months
ended June 30, 1994, a portion of such property management fees were
paid to the property management companies performing day-to-day property
management services and the portion was paid to Partnership Services,
Inc. ("PSI") for advisory services related to day-to-day property
operations. Coventry Properties, Inc. ("Coventry"), an affiliate of the
General Partner, provided day-to-day
6
EXHIBIT 28.1 (Continued)
Note B - Related Party Transactions (continued)
property management responsibilities for four of the Partnership's
properties under the same management fee arrangement as the unaffiliated
management companies. In late December 1994, an affiliate of Insignia
assumed day-to-day property management responsibilities for all of the
Partnership's properties. Fees paid to affiliates of Insignia during
the six months ended June 30, 1995, and fees paid to Coventry and PSI
for the six months ended June 30, 1994, are reflected in the following
table.
Also, the Partnership is subject to an Investment Advisory Agreement
between the Partnership and an affiliate of ConCap Holdings, Inc.
("CHI"). This agreement provides for an annual fee, payable in monthly
installments, to an affiliate of CHI for advising and consulting
services for the Partnership's properties. Advisory fees paid pursuant
to this agreement are reflected in the following table:
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Property management fees $615 $329
Investment advisory fees 129 129
Property management fees increased for the six months ended June 30,
1995, compared to the six months ended June 30, 1994, due to the fact
that all but four of the Partnership's investment properties were
managed by unaffiliated management companies during the six months ended
June 30, 1994. All of the Partnership's investment properties were
managed by an affiliate of Insignia during the six months ended June 30,
1995.
The Partnership Agreement ("Agreement") also provides for
reimbursement to the General Partner and its affiliates for costs
incurred in connection with the administration of Partnership
activities. The General Partner and its current and former affiliates,
which includes Coventry, received reimbursements for the six months
ended June 30, 1995 and 1994, as reflected in the following table:
For the Six Months Ended
June 30,
1995 1994
(in thousands)
Reimbursement for services of affiliates $300 $142
7
EXHIBIT 28.1 (Continued)
Note B - Related Party Transactions (continued)
Reimbursements for services of affiliates increased during the six
months ended June 30, 1995, compared to the six months ended June 30,
1994, due to increased expense reimbursements related to the combined
efforts of the Dallas and Greenville offices during the transition
period for the six months ended June 30, 1995. These increased costs
related to the transition efforts which were incurred to minimize any
disruption in the year-end reporting function including the financial
reporting and K-1 preparation and distribution. The General Partner
expects administrative expenses to be reduced beginning in the third
quarter of 1995 as the transition efforts are now complete.
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
New Master Loan Agreement, which is described more fully in the 1994
Annual Report. Such interest payments totalled approximately $918,000
and approximately $1.5 million for the six months ended June 30, 1995
and 1994, respectively. The Partnership received advances under the New
Master Loan Agreement totalling $40,000 in February 1994. (See further
discussion in Note C). No advances under the new Master Loan Agreement
were made during the six months ended June 30, 1995.
Note C - Master Loan and Accrued Interest Payable
The Master Loan and accrued interest payable balances at June 30,
1995, and December 31, 1994, are $253.6 million and $238.5 million,
respectively.
Terms of Master Loan Agreement
Under the terms of the New Master Loan Agreement, interest accrues at
a fluctuating rate per annum adjusted annually on July 15 by the
percentage change in the U.S. Department of Commerce Implicit Price
Delator for the Gross National Product subject to an interest rate
ceiling of 12.5%. The interest rates for each of the three and six
month periods ended June 30, 1995 and 1994 was 12.5%. Interest payments
are currently payable quarterly in an amount equal to "Excess Cash
Flow", generally defined in the New Master Loan Agreement as net cash
flow from operations after third-party debt service. If such Excess
Cash Flow payments are less than the current accrued interest during the
quarterly period, the unpaid interest is added to principal, compounded
annually, and is payable at the loan's maturity. If such Excess Cash
Flow payments are greater than the currently payable interest, the
excess amount is applied to the principal balance of the loan. Any net
proceeds from sale or refinancing of any of the Partnership's properties
are paid to CCIP under the terms of the New Master Loan Agreement. The
New Master Loan Agreement matures in November 2000.
Effective January 1, 1993, the Partnership and CCIP amended the New
Master Loan Agreement to stipulate that Excess Cash Flow would be
computed net of capital improvements. Such expenditures were formerly
funded from advances on the Master Loan from CCIP to the Partnership.
This amendment and change in the definition of Excess Cash Flow will
have the effect of reducing Master Loan payments to CCIP by the amount
of the Partnership's capital expenditures since such amounts were
previously excluded from Excess Cash Flow. The amendment will have no
effect on the computation of interest expense on the Master Loan for
the Partnership.
8
EXHIBIT 28.1 (Continued)
Note C - Master Loan and Accrued Interest Payable - continued
In February 1994, the Partnership advanced approximately $589,000 to
New Carlton House Partners ("NCHP"), as an advance on the note
receivable ("Carlton House Note") secured by a deed of trust on the
Carlton House Apartment and Office Building ("Carlton House"), to pay
Carlton House's 1994 property taxes. In February 1994, CCIP advanced
$40,000 to the Partnership as an advance on the Master Loan. CCEP then
advanced $40,000 to NCHP as an advance on the Carlton House Note to pay
the remaining balance of 1993 property taxes. The notes payable are all
nonrecourse, collateralized by deeds of trust on the real property. The
notes payable bear interest at rates ranging from 8.0% to 10.5% per
annum and mature between 1998 and 2007.
Note D - Note Receivable Deemed In-Substance Foreclosed
The Partnership holds the Carlton House Note which is secured by a
deed of trust on Carlton House with a scheduled maturity in 1995.
According to the note terms, interest accrues at 10% and compounds
monthly on principal plus accrued but unpaid interest. The note
receivable has been in default since 1991. As described more fully in
the 1994 Annual Report, the required debt service payments were reduced
to only the amount of net cash flow from the Carlton House. In 1995 and
1994 no interest income was recognized as no cash related to the note
receivable was received by the Partnership.
As more fully described in the 1994 Annual Report, the Carlton House
Note is deemed in-substance foreclosed. Summarized below are the
assets, liabilities, partner's equity and the results of operations of
the Carlton House that are included in the Partnership's financial
statements for the six months ended June 30, 1995 and 1994, prepared on
the same basis as the Partnership's financial statements. Any
intercompany balances between the Partnership and the Carlton House have
been eliminated in the Partnership's consolidated financial statements
and the summarized financial statements set forth below:
June 30, December 31,
1995 1994
Assets
Cash $ 1,577 $ 1,519
Securities available for sale -- 195
Prepaid expenses and other assets 616 103
Real estate:
Land 3,805 3,805
Building and improvements 17,276 16,917
21,081 20,722
Less accumulated depreciation (1,638) (1,122)
19,443 19,600
Total assets $ 21,636 $ 21,417
9
EXHIBIT 28.1 (Continued)
Note D - Note Receivable Deemed In-Substance Foreclosed - continued
June 30, December 31,
1995 1994
Liabilities and Partners' Deficit
Master loan and interest payable $ 17 $ 16
Due to affiliates 763 763
Other liabilities 591 467
Total liabilities 1,371 1,246
Partners' equity 20,265 20,171
Total liabilities and partners' equity $ 21,636 $ 21,417
For the Six Months ended
June 30,
1995 1994
Revenues:
Rental revenue $ 2,908 $ 2,253
Interest income on investments 14 --
Total revenues 2,922 2,253
Expenses:
Property operations 2,217 2,013
Depreciation and amortization 517 434
Interest 1 2
Administrative 93 22
Total expenses 2,828 2,471
Net income (loss) $ 94 $ (218)
10