-----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, IVc2hMtzN0eNe5jYQU3tpQ6kW1WxSK45sy8fKNSjiwwqL8nz+kv9PzUipfSY8ASA j/x+sS35xZeThMSnkQa0Xg== 0000355804-96-000006.txt : 19960514 0000355804-96-000006.hdr.sgml : 19960514 ACCESSION NUMBER: 0000355804-96-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES IV CENTRAL INDEX KEY: 0000355804 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 942768742 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-11002 FILM NUMBER: 96561862 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCLE PLZ STREET 2: P O BOX CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391000 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 10-Q 1 FORM 10-Q--Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 (As last amended in Rel. No. 312905, eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] Quarterly Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended March 31, 1996 or [ ] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period.........to......... (Amended by Exch Act Rel No. 312905. eff 4/26/93.) Commission file number 0-11002 CONSOLIDATED CAPITAL PROPERTIES IV (Exact name of registrant as specified in its charter) California 94-2768742 (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) Issuer'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 PROPERTIES IV CONSOLIDATED BALANCE SHEET (Unaudited) (in thousands, except unit data)
March 31, December 31, 1996 1995 Assets Cash and cash equivalents: Unrestricted $ 7,604 $ 10,865 Restricted - tenant security deposits 664 665 Investments 2,637 2,637 Prepaid expenses and other assets 5,650 6,900 Note and interest receivable 1,143 1,155 Investment Properties: Land 12,491 12,868 Buildings and personal property 111,799 112,350 124,290 125,218 Less accumulated depreciation (86,817) (86,294) 37,473 38,924 $ 55,171 $ 61,146 Liabilities and Partners' Deficit Liabilities Accounts payable and accrued expenses $ 2,560 $ 3,443 Notes and interest payable 72,246 76,336 74,806 79,779 Partners' Deficit General partner (6,024) (5,951) Limited partners (342,783 units outstanding in 1996 and 1995, (13,611) (12,682) (19,635) (18,633) $ 55,171 $ 61,146 See Accompanying Notes to Consolidated Financial Statements
b) CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1996 1995 Revenues: Rental income $6,648 $6,453 Interest and other income 213 118 Total revenues 6,861 6,571 Expenses: Property operations 3,368 3,099 Depreciation and amortization 1,717 1,716 Interest 1,527 1,635 Administrative 527 440 Total expenses 7,139 6,890 Loss before extraordinary items (278) (319) Extraordinary items: Gain on refinancing -- 250 Gain on foreclosure of investment property 2,999 -- Net income (loss) $2,721 $ (69) Net income (loss) allocated to general partner (4%) $ 109 $ (3) Net income (loss) allocated to limited partners (96%) 2,612 (66) $2,721 $ (69) Net income (loss) per weighted average partnership unit: Loss before extraordinary items $ (.78) $ (.89) Extraordinary items 8.40 .70 Net income (loss) per weighted average limited partnership unit $ 7.62 $ (.19) See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (Unaudited) For the Three Months Ended March 31, 1996 and 1995 (in thousands, except unit data)
Limited Total Partnership General Limited Partners' Units Partner Partners Deficit Original capital contributions 343,106 $ 1 $171,553 $171,554 Partners' deficit at December 31, 1994 342,783 $(5,866) $(10,649) $(16,515) Net loss for the three months ended March 31, 1995 -- (3) (66) (69) Partners' deficit at March 31, 1995 342,783 $(5,869) $(10,715) $(16,584) Partners' deficit at December 31, 1995 342,783 $(5,951) $(12,682) $(18,633) Net income for the three months ended March 31, 1996 -- 109 2,612 2,721 Distributions to Partners -- (182) (3,541) (3,723) Partners' deficit at March 31, 1996 342,783 (6,024) (13,611) (19,635) See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1996 1995 Cash flows from operating activities: Net income (loss) $ 2,721 $ (69) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,787 1,788 Loss on disposition of investment property 25 -- Extraordinary gains on foreclosure or (2,999) (250) Change in accounts: Tenant security deposits (11) -- Prepaid expenses and other assets 1,183 (791) Accounts payable and accrued expenses (859) 223 Accrued interest 46 131 Net cash provided by operating activities 1,893 1,032 Cash flows from investing activities: Property improvements and replacements (817) (177) Purchase of investments -- (697) Proceeds from sale of investments -- 1,656 Deposits to restricted escrows (419) (261) Receipts from restricted escrows 445 148 Collections of note receivable 13 6 Net cash (used in) provided by investing activities (778) 675 Cash flows from financing activities: Payments on notes payable (134) (161) Repayment of notes payable (484) (5,573) Proceeds on long-term borrowings -- 7,500 Distributions to partners (3,723) -- Loan costs (35) (201) Net cash (used in) provided by financing activities (4,376) 1,565 Net (decrease) increase in cash and cash equivalents (3,261) 3,272 Cash and cash equivalents at beginning of period 10,865 4,674 Cash and cash equivalents at end of period $ 7,604 $ 7,946 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Supplemental Disclosures of Cash Flow Information and Non-Cash Activities: Cash paid for interest was approximately $1,404,000 and $1,432,000 for the three months ended March 31, 1996 and 1995, respectively. Foreclosure During the three months ended March 31, 1996, Metro Centre Office Building was foreclosed upon by the lender. In connection with this foreclosure, the following balance sheet accounts were adjusted by the amounts noted below. March 31, 1996 (in thousands) Tenant security deposits remitted to the lender $ (12) Prepaid expenses and other assets (5) Buildings and personal property (1,605) Accumulated depreciation 1,079 Accounts payable and accrued expenses 24 Interest payable 1,021 Notes payable 2,497 Gain on foreclosure of investment property (2,999) See Accompanying Notes to Consolidated Financial Statements e) CONSOLIDATED CAPITAL PROPERTIES IV NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated Capital Properties IV (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 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, 1996, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1996. For further information, refer to the consolidated financial statements and footnotes thereto included in the Partnership's annual report on Form 10-K for the fiscal year ended December 31, 1995. Consolidation The consolidated financial statements include the Partnership's equity interest in a joint-venture partnership which owns South Port Apartments. No minority interest has been reflected for the joint venture partnership because minority interests are limited to the extent of their equity capital, and losses in excess of the minority interest equity capital are charged against the Partnership's interest. The Partnership's consolidated financial statements include the accounts of its wholly-owned limited partnerships, certain other majority-owned limited partnerships and the Partnership's majority interest in a joint venture partnership. All intercompany transactions have been eliminated. Presentation of Accounts Certain reclassifications have been made to the 1995 information to conform to the 1996 presentation. Investments Investments consisting primarily of U.S. Treasury Notes with original maturities of more than ninety days, are considered to be held-to-maturity securities. Note B - Transactions with Affiliated Parties The Partnership has paid the property management fees noted below based on collected gross rental revenues for property management services in each of the three months ended March 31, 1996 and 1995. In late December 1994, an affiliate of Insignia Financial Group, Inc., ("Insignia"), assumed day-to-day property management responsibilities for all of the Partnerships' properties except Lake Forest, Post Ridge and SouthPort Apartments. On February 15, 1995, an affiliate of Insignia assumed day-to-day property management responsibilities for Lake Forest and Post Ridge Apartments. Fees paid to Insignia and affiliates for the three months ended March 31, 1996 and 1995, are presented below. These expenses are included in operating expenses. Note B - Transactions with Affiliated Parties (continued) For the Three Months Ended March 31, 1996 1995 (in thousands) Property management fees $322 $284 The Limited Partnership Agreement ("Partnership Agreement") provides for a special management fee equal to 9% of the total distributions made to the limited partners from cash flow from operations to be paid to the General Partner for executive and administrative management services. The Partnership paid approximately $313,000 to affiliates of the General Partner during the three months ended March 31, 1996, under this provision of the Partnership Agreement. No such fees were paid or accrued during the three months ended March 31, 1995. The Partnership 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: For the Three Months Ended March 31, 1996 1995 (in thousands) Reimbursement for services of affiliates $157 $217 In July 1995, the Partnership began insuring its properties under a master policy through an agency and insurer unaffiliated with the General Partner. An affiliate of the General Partner acquired, in the acquisition of a business, certain financial obligations from an insurance agency which was later acquired by the agent who placed the current year's master policy. The current agent assumed the financial obligations to the affiliate of the General Partner, who receives payment on these obligations from the agent. The amount of the Partnership's insurance premiums accruing to the benefit of the affiliate of the General Partner by virtue of the agent's obligations is not significant. Note C - Commitment and Contingencies Commitments The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies. On September 25, 1995, the partners were proxied and approved a reduction of the capital reserve requirements to $500 per apartment unit and $1.00 per square foot of gross leasable commercial space owned by the Partnership, or approximately $2.1 million. In the event expenditures are made from these reserves, operating revenue shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Cash and cash equivalents, Note C - Commitments and Contingencies (continued) tenant security deposits and investments, totalling approximately $10.9 million at March 31, 1996, exceeded the Partnership's reserve requirements of approximately $2.1 million. Such reserves include approximately $532,000 of cash and cash equivalents restricted for use at the Partnership's U.S. Department of Housing and Urban Development ("HUD") financed property. Contingencies Approximately $2.5 million of nonrecourse mortgage debt secured by the Metro Centre Office Building, located in Southern California, matured July 1, 1995. The property had historically had difficulty making its scheduled debt service payments. Since 1985, the property had made quarterly cash flow payments pursuant to a modified and restructured loan agreement, however, no payments were made in 1995 or 1996. Given current economic conditions in Southern California, property operations were not expected to improve sufficiently to enable the Partnership to refinance the existing indebtedness under current market conditions. In September 1995, a "Notice of Default and Election to Sell Under Deed of Trust" was filed by the lender. The Partnership did not contest this foreclosure notice and the property was foreclosed on February 7, 1996, resulting in a gain on foreclosure of approximately $2,999,000 to the Partnership. Lake Forest Apartments secures a HUD-guaranteed mortgage note and accrued interest totalling approximately $4.2 million at March 31, 1996. Post Ridge Apartments secures a mortgage note and accrued interest totalling approximately $4.4 million at December 31, 1996, which was formerly guaranteed by HUD. Operating cash flow from the Post Ridge Apartments has not supported its scheduled debt service payments. As a result, in January 1991, the Partnership suspended scheduled debt service for Post Ridge Apartments and this debt is currently in default. Since 1991, the Partnership has remitted excess cash flow from the properties' operations as debt service. During 1995 and 1996, Post Ridge has made payments to reduce its accrued interest payable from $395,000 at December 31, 1994 to $125,000 at March 31, 1996. On March 28, 1995, this debt was sold to an unaffiliated third party. Accordingly, since the closing of the sale on May 8, 1995, this debt is no longer regulated by HUD. The General Partner is currently attempting to refinance the remaining debt on Post Ridge. Note D - Note Refinancing In March of 1995, the General Partner refinanced two nonrecourse mortgage notes totalling approximately $5.8 million which were secured by the Nob Hill Villa Apartments. Under the terms of the refinancing agreement, the new $7.5 million mortgage note bears interest at 9.2% and matures in April 2005. As a result of the refinancing, the Partnership realized a $250,000 discount on the second mortgage which resulted in an extraordinary gain on refinancing. Through the refinancing, a capital improvement reserve of approximately $219,000 was established and approximately $201,000 in loan costs were incurred. These loan costs will be amortized over the life of the loan. Note E - Distributions In March 1996, the General Partner declared and paid distributions attributable to cash flow from operations totalling approximately $3,617,000 and approximately $71,000 representing a return of capital. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $35,000 was distributed to the general partners of the majority-owned sub-tier limited partnerships. Note F - Note Payoff In February of 1996 the $484,000 balance of the first-lien note secured by the Point West Apartments, with an original maturity of May 2001, was paid off to retire debt with interest rates higher than the current market rate. Note G - Note and Interest Receivable When the Denbigh Village Apartments was sold in August 1994, the Partnership accepted a 9% interest-bearing promissory note which matured in March 1996. The Partnership has negotiated with the purchaser to extend the note until April 1997. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Partnership's investment properties consist of seventeen apartment complexes. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1996 and 1995: Average Occupancy 1996 1995 The Apartments Omaha, NE 90% 96% Arbor East Apartments Nashville, TN 94% 98% Briar Bay Racquet Club Apartments Miami, FL 96% 93% Chimney Hills Apartments Marietta, GA 96% 97% Citadel Apartments El Paso, TX 85% 96% Citadel Village Apartments Colorado Springs, CO 97% 95% Foothill Place Apartments Salt Lake City, UT 98% 98% Knollwood Apartments Nashville, TN 99% 98% Lake Forest Apartments Omaha, NE 96% 97% Nob Hill Villa Apartments Nashville, TN 95% 99% Overlook Apartments Memphis, TN 85% 89% Point West Apartments Charleston, SC 80% 89% Post Ridge Apartments Nashville, TN 98% 97% Average Occupancy 1996 1995 Rivers Edge Apartments Auburn, WA 96% 91% South Port Apartments Tulsa, OK 96% 79% Stratford Place Apartments Austin, TX 94% 95% Village East Apartments Cimarron Hills, CO 99% 98% Occupancy for The Apartments has decreased due to efforts to improve the tenant base by evicting tenants with large delinquent tenant receivables. The decrease in occupancy for Arbor East and Nob Hill Villa Apartments is due to a combination of an usually harsh winter, high unemployment and an outflow of tenants who left to buy homes based on the expectation of increasing interest rates. The decrease in occupancy at the Overlook Apartments is due to increased competition in the Memphis market resulting from the renovation of surrounding properties in the area. Occupancy for the Citadel Apartments decreased due to a decline in the El Paso market resulting from military spending cuts and the re-deployment of military personnel. The re-deployment has caused increased competition from similar properties in the area. Point West Apartments' occupancy decreased due to increased competition and rental rates being higher than the market would support. Currently rental rates have been lowered slightly to adjust to the market and to increase occupancy. Occupancy at Rivers Edge Apartments increased due to a strong market in the Auburn area. The increase in occupancy at South Port Apartments is a result of rental rates being lowered slightly as well as a decrease in the apartment supply in the Tulsa market. The Partnership realized a loss before extraordinary items of approximately $278,000 for the three months ended March 31, 1996, compared to a loss before extraordinary items of $319,000 for the three months ended March 31, 1995. The decreased loss is due primarily to increases in rental and interest and other income, partially offset by increases in property operations and administrative expenses. Rental income increased for the three months ended March 31, 1996, compared to the three months ended March 31, 1995, due primarily to an increase in rents, partially offset by a decrease in occupancy for the three months ended March 31, 1996, at several of the Partnership's properties, as discussed above. Interest and other income increased for the three months ended March 31, 1996, compared to the three months ended March 30, 1995, due to higher average cash balances being available for investment in 1996. Property operations expense increased for the three months ended March 31, 1996, compared to the three months ended March 31, 1995, due primarily to increased maintenance expenses in efforts to increase the curb appeal of several of the Partnership's properties. Administrative expenses increased for the three months ended March 31, 1996, compared to the three months ended March 31, 1995, due primarily to a $313,000 special management fee related to the first quarter distribution, partially offset by decreased expense reimbursements related primarily to the efforts of the Dallas partnership administration staff during the management transition period in 1995. In February of 1996, the $484,000 balance of the first-lien note secured by the Point West Apartments, with an original maturity of May 2001 was repaid so that the Partnership could retire debt with interest rates higher than the current market rate. The $2,999,000 extraordinary gain on disposition of investment property realized in the three months ended March 31, 1996, is due to the foreclosure of the Metro Centre Office Building in February of 1996. The $250,000 gain on refinancing realized during the quarter ended March 31, 1995, related to the refinancing of Nob Hill Villa Apartments. Through this refinancing, a new $7.5 million mortgage note which bears interest at 9.2% and matures in April 2005, was obtained. As a result of the refinancing, the Partnership realized a $250,000 discount on the second mortgage resulting in the extraordinary gain. When the Denbigh Village Apartments was sold in August 1994, the Partnership accepted a 9% interest-bearing promissory note which matured in March 1996. The Partnership has negotiated with the purchaser to extend the note until April 1997. 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 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, 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. As of March 31, 1996, the Partnership held cash and cash equivalents of approximately $7,604,000 compared to approximately $7,946,000 at March 31, 1995. Net cash provided by operating activities increased primarily due to increased rental revenues, the receipt of an insurance refund, an escrow receipt in 1996 from the refinancing of the debt secured by the Knollwood Apartments in December of 1995, and the collection of insurance proceeds resulting from a fire at the Overlook Apartments in December 1995, which was primarily covered by insurance and did not have a material effect on the Partnership. Net cash used in investing activities increased primarily due to increased property improvements and replacements, partially offset by the absence of proceeds from the sale of investments. The Partnership has primarily invested in short-term cash equivalents during 1996. Net cash used in financing activities increased as a result of the distribution to partners in 1996. 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 meet 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 $72 million matures at various times with balloon payments due at maturity, at which time the properties will either be refinanced or sold. Future cash distributions will depend on the levels of net cash generated from operations, capital expenditure requirements, property sales and the availability of cash reserves. During the three months ended March 31, 1996, cash distributions of approximately $3,723,000 were declared and paid. No cash distributions were made during the three months ended March 31, 1995. On January 20, 1995, an affiliate of the General Partner, Insignia CCP IV Acquisition, L.L.C., closed an offer to purchase Units (the "Tender Offer") for a cash price of $60 per Unit for Limited Partners of record as of December 15, 1994. Approximately 3,370 Limited Partners holding 64,175 Units (18.72% of total Units) accepted the Tender Offer and sold their Units to Insignia CCP IV Acquisition, L.L.C. effective January 20, 1995, for an aggregate sales price of approximately $3.9 million. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. (b) Reports on Form 8-K: None.
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 PROPERTIES IV By: CONCAP EQUITIES, INC. General Partner By: /s/ Carroll D. Vinson Carroll D. Vinson President By: /s/ Robert D. Long, Jr. Robert D. Long, Jr. Vice President/CAO Date: May 13, 1996 EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties IV 1996 First Quarter 10-Q and is qualified in its entirety by reference to such 10-Q filing. 0000355804 CONSOLIDATED CAPITAL PROPERTIES IV 1,000 3-MOS DEC-31-1996 MAR-31-1996 7,604 2,637 0 0 0 0 124,290 86,817 55,171 0 71,719 0 0 0 (19,635) 55,171 0 6,861 0 0 7,139 0 1,527 0 0 0 0 2,999 0 2,721 7.62 0 The Partnership has an unclassified balance sheet.
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