-----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, IUvAF5qgGFykVlXtrnrQF8e/XCsSSg2sSsmArM9ONcl1gzJfwNb/Eg6UUffB2TEU YJEABOqdb7goO93wI4ZEYw== /in/edgar/work/20000814/0000711642-00-000255/0000711642-00-000255.txt : 20000921 0000711642-00-000255.hdr.sgml : 20000921 ACCESSION NUMBER: 0000711642-00-000255 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL PROPERTIES IV CENTRAL INDEX KEY: 0000355804 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 942768742 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11002 FILM NUMBER: 699145 BUSINESS ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FL CITY: DENVER STATE: CO ZIP: 80222 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FL CITY: DENVER STATE: CO ZIP: 80222 10-Q 1 0001.txt SECOND QUARTER 10-Q FORM 10-Q-QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 U.S. 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 June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-11002 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.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Issuer's telephone number) Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 SHEETS (in thousands, except unit data)
June 30, December 31, 2000 1999 (Unaudited) (Note) Assets Cash and cash equivalents $ 4,793 $ 8,921 Receivables and deposits 1,649 2,162 Restricted escrows 1,689 1,402 Other assets 1,762 1,403 Investment properties: Land 12,094 12,094 Buildings and related personal property 123,917 122,539 136,011 134,633 Less accumulated depreciation (106,138) (104,057) 29,873 30,576 $ 39,766 $ 44,464 Liabilities and Partners' Deficit Liabilities Accounts payable $ 654 $ 960 Tenant security deposit liabilities 528 506 Accrued property taxes 1,113 1,284 Distribution payable 343 4,318 Other liabilities 975 1,287 Mortgage notes payable 74,476 70,997 78,089 79,352 Partners' Deficit General partners (6,783) (6,634) Limited partners (342,773 units issued and outstanding) (31,540) (28,254) (38,323) (34,888) $ 39,766 $ 44,464
Note: The balance sheet at December 31, 1999, 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 PROPERTIES IV CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
Three Months Ended Six Months Ended June 30, June 30, 2000 1999 2000 1999 Revenues: Rental income $ 6,905 $ 7,029 $13,784 $14,117 Other income 643 560 1,163 1,023 Total revenues 7,548 7,589 14,947 15,140 Expenses: Operating 2,857 2,833 5,615 5,551 General and administrative 347 263 803 1,024 Depreciation 1,052 1,049 2,081 2,101 Interest 1,444 1,419 2,885 2,840 Property taxes 475 487 971 950 Total expenses 6,175 6,051 12,355 12,466 Income before extraordinary item 1,373 1,538 2,592 2,674 Extraordinary loss on early extinguishment of debt (5) -- (64) -- Net income $ 1,368 $ 1,538 $ 2,528 $ 2,674 Net income allocated to general partner (4%) 55 62 101 107 Net income allocated to limited partners (96%) 1,313 1,476 2,427 2,567 $ 1,368 $ 1,538 $ 2,528 $ 2,674 Per limited partnership unit: Income before extraordinary item 3.84 4.31 7.26 7.49 Extraordinary loss on early extinguishment of debt (0.01) -- (0.18) -- Net income $ 3.83 $ 4.31 $ 7.08 $ 7.49 Distributions per limited partnership unit $ 5.12 $ -- $ 16.67 $ 25.61
See Accompanying Notes to Consolidated Financial Statements c) CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT (Unaudited) (in thousands, except unit data)
Limited Total Partnership General Limited Partners' Units Partners Partners Deficit Original capital contributions 343,106 $ 1 $171,553 $171,554 Partners' deficit at December 31, 1998 $342,773 $ (6,175) $(17,230) $(23,405) Distributions to partners -- (366) (8,778) (9,144) Net income for the six months ended June 30, 1999 -- 107 2,567 2,674 Partners' deficit at June 30, 1999 342,773 $ (6,434) $(23,441) $(29,875) Partners' deficit at December 31, 1999 342,773 $ (6,634) $(28,254) $(34,888) Distributions to partners -- (250) (5,713) (5,963) Net income for the six months ended June 30, 2000 -- 101 2,427 2,528 Partners' deficit at June 30, 2000 342,773 $ (6,783) $(31,540) $(38,323)
See Accompanying Notes to Consolidated Financial Statements d) CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 2000 1999 Cash flows from operating activities: Net income $ 2,528 $ 2,674 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 2,081 2,101 Amortization of loan costs 123 158 Extraordinary loss on early extinguishment of debt 64 -- Change in accounts: Receivables and deposits 300 411 Other assets (82) (173) Accounts payable (306) (46) Tenant security deposit liabilities 22 -- Accrued property taxes (171) (287) Other liabilities (312) 163 Net cash provided by operating activities 4,247 5,001 Cash flows from investing activities: Property improvements and replacements (1,378) (1,488) Net (deposits to) withdrawals from restricted escrows (287) 671 Insurance proceeds 213 -- Net cash used in investing activities (1,452) (817) Cash flows from financing activities: Payments on mortgage notes payable (227) (222) Repayment of mortgage notes payable (10,329) -- Proceeds from mortgage notes payable 14,035 -- Distribution to partners (9,938) (9,144) Prepayment penalties paid (30) -- Loan costs paid (434) -- Net cash used in financing activities (6,923) (9,366) Net decrease in cash and cash equivalents (4,128) (5,182) Cash and cash equivalents at beginning of period 8,921 13,241 Cash and cash equivalents at end of period $ 4,793 $ 8,059
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities: Cash paid for interest was approximately $2,708,000 and $2,684,000 for the six months ended June 30, 2000 and 1999, respectively. Distribution payable and distributions to partners were each adjusted by approximately $343,000 for non-cash activity for the six months ended June 30, 2000. Distributions to partners of approximately $4,318,000 were declared at December 31, 1999 and approximately $4,113,000 of this balance was paid during the six months ended June 30, 2000. The remaining balance is deferred per the Partnership Agreement. 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" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. ("CEI" or 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, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1999. 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, 1999. Consolidation The consolidated financial statements include the Partnership's majority interest in a joint venture which owns South Port Apartments. The Partnership has the ability to control the major operating and financial policies of the joint venture. No minority interest has been reflected for the joint venture 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. Should the losses reverse, the Partnership would be credited with the amount of minority interest losses previously absorbed. The Partnership's consolidated financial statements also include the accounts of the Partnership, its wholly-owned partnerships and its 99% limited partnership interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd., ConCap Rivers Edge Associates, Ltd., Foothill Chimney Associates, L.P., and ConCap Stratford Associates, Ltd. Because the Partnership may remove the general partner of its 99% owned partnerships, these partnerships are controlled and consolidated by the Partnership. All significant interpartnership balances have been eliminated. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all Partnership activities. The Partnership Agreement provides for certain payments to affiliates for services and reimbursements of certain expenses incurred by affiliates on behalf of the Partnership. The following transactions with the General Partner and/or its affiliates were incurred during the six months ended June 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $751 $765 Reimbursement for services of affiliates (included in investment properties and general and administrative and operating expenses) 326 286 Partnership management fee (included in general and administrative expenses) 279 555 Loan costs (included in other assets) 140 -- During the six months ended June 30, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all the Partnership's properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $751,000 and $765,000 for the six months ended June 30, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $326,000 and $286,000 for the six months ended June 30, 2000 and 1999, respectively. 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 provided by operations to be paid to the General Partner for executive and administrative management services. The Partnership paid approximately $279,000 and $555,000 under this provision of the Partnership Agreement to the General Partner during the six months ended June 30, 2000 and 1999, respectively. In addition to reimbursement for services of affiliates, the Partnership paid an affiliate of the General Partner approximately $140,000 for loan costs related to the refinancing of three of the Partnership's properties during the six months ended June 30, 2000. These costs were capitalized and are included in other assets on the consolidated balance sheet. AIMCO and its affiliates currently own 169,136 limited partnership units in the Partnership representing approximately 49.34% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of approximately 49.34% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note D - Contingencies The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of $500 per apartment unit owned by the Partnership, or approximately $2,004,000. 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. Reserves, including cash and cash equivalents, totaling approximately $4,793,000 at June 30, 2000, exceeded the Partnership's reserve requirements of approximately $2,004,000. Note E - Distributions During the six months ended June 30, 2000, the Partnership paid a cash distribution from operations of approximately $1,871,000, of which approximately $1,679,000 ($4.90 per limited partnership unit) was paid to the limited partners, and a distribution of financing proceeds representing funds from the financing of Point West Apartments of approximately $2,242,000 ($6.54 per limited partnership unit), all of which was paid to the limited partners. These distributions were declared and accrued at December 31, 1999. In addition, the Partnership declared and paid distributions of approximately $5,951,000 (approximately $5,713,000 to the limited partners or $16.67 per limited partnership unit) during the six months ended June 30, 2000 consisting of approximately $2,724,000 (approximately $2,615,000 to the limited partners or $7.63 per limited partnership unit) of refinance proceeds from The Apartments, Citadel Apartments, and Stratford Place Apartments and sale proceeds from Overlook Apartments which sold in December of 1999, and approximately $3,227,000 (approximately $3,098,000 to the limited partners or $9.04 per limited partnership unit) from operations. Approximately $343,000 of the distribution from operations was payable at June 30, 2000 to the General Partner and special limited partners. Approximately $31,000 of this balance was paid subsequent to June 30, 2000. The remaining balance is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus funds. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $15,000 was distributed to the general partner of the majority owned sub-tier limited partnerships. In January 1999, the General Partner declared and paid a distribution attributable to cash flow from operations of approximately $6,422,000 (approximately $6,165,000 to the limited partners or $17.99 per limited partnership unit) and approximately $2,722,000 (approximately $2,613,000 to the limited partners or $7.62 per limited partnership unit) representing a return of capital. Note F - Casualty Gains In January 2000, Stratford Place Apartments had a fire which damaged 12 apartment units and 30% of the roof. Insurance proceeds of approximately $214,000 were received during the six months ended June 30, 2000. The Managing General Partner is repairing the damage and the financial impact is still being determined. Note G - Extraordinary Loss on Early Extinguishment of Debt On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford Place. The refinancing replaced mortgage indebtedness of approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was refinanced at a rate of 8.48% compared to the prior rate of 8.65% and matures on June 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $124,000. The Partnership wrote off approximately $4,000 in unamortized loan costs and paid prepayment penalties of approximately $1,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $5,000. On February 2, 2000, the Partnership refinanced the mortgage encumbering The Apartments. The refinancing replaced mortgage indebtedness of approximately $3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $153,000. The Partnership wrote off approximately $11,000 in unamortized loan costs and paid prepayment penalties of approximately $22,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $33,000. On February 28, 2000, the Partnership refinanced the mortgage encumbering Citadel Apartments. The refinancing replaced mortgage indebtedness of approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $141,000. The Partnership wrote off approximately $19,000 in unamortized loan costs and paid prepayment penalties of approximately $7,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $26,000. On November 9, 1999, the Partnership obtained financing on Point West Apartments in the amount of $2,460,000. The mortgage was financed at a rate equal to 7.86% and matures on December 1, 2019. Capitalized loan costs incurred for the financing were approximately $47,000 during the year ended December 31, 1999. An additional $16,000 of loan costs were incurred during the six months ended June 30, 2000. Note H - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership has one reportable segment: residential properties. The Partnership's residential property segment consists of sixteen apartment complexes in ten states in the southeastern, western, and mid-western United States. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segment are the same as those described in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. Factors management used to identify the Partnership's reportable segments: The Partnership's reportable segments are investment properties that offer similar products and services. Although each of the investment properties are managed separately, they have been aggregated into one segment as they provide services with similar types of products and customers. Segment information for the three and six month periods ended June 30, 2000 and 1999, is shown in the tables below. The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segments.
For the Three Months Ended June 30, 2000 Residential Other Totals (in thousands) Rental income $ 6,905 $ -- $ 6,905 Other income 621 22 643 Interest expense 1,444 (3) 1,444 Depreciation 1,052 -- 1,052 General and administrative expenses -- 347 347 Extraordinary loss on early extinguishment of debt (5) -- (5) Segment profit (loss) 1,690 (322) 1,368 For the Six Months Ended June 30, 2000 Residential Other Totals (in thousands) Rental income $13,784 $ -- $13,784 Other income 1,106 57 1,163 Interest expense 2,885 -- 2,885 Depreciation 2,081 -- 2,081 General and administrative expenses -- 803 803 Extraordinary loss on early extinguishment of debt (64) -- (64) Segment profit (loss) 3,274 (746) 2,528 Total assets 32,329 7,436 39,765 Capital expenditures for investment properties 1,378 -- 1,378 For the Three Months Ended June 30, 1999 Residential Other Totals (in thousands) Rental income $ 7,029 $ -- $ 7,029 Other income 535 25 560 Interest expense 1,419 -- 1,419 Depreciation 1,049 -- 1,049 General and administrative expenses -- 263 263 Segment profit (loss) 1,776 (238) 1,538 For the Six Months Ended June 30, 1999 Residential Other Totals (in thousands) Rental income $14,117 $ -- $14,117 Other income 931 92 1,023 Interest expense 2,840 -- 2,840 Depreciation 2,101 -- 2,101 General and administrative expenses -- 1,024 1,024 Segment profit (loss) 3,606 (932) 2,674 Total assets 37,824 5,985 43,809 Capital expenditures for investment properties 1,488 -- 1,488
Note I - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action 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 of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-Q contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-Q and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Partnership's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Partnership's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties consist of sixteen apartment complexes. The following table sets forth the average occupancy of the properties for the six months ended June 30, 2000 and 1999: Average Occupancy Property 2000 1999 The Apartments 94% 93% Omaha, NE Arbours of Hermitage Apartments 95% 95% Nashville, TN Briar Bay Racquet Club Apartments 97% 97% Miami, FL Chimney Hill Apartments 94% 95% Marietta, GA Citadel Apartments 91% 94% El Paso, TX Citadel Village Apartments 96% 98% Colorado Springs, CO Foothill Place Apartments 95% 97% Salt Lake City, UT Knollwood Apartments 93% 96% Nashville, TN Lake Forest Apartments 92% 85% Omaha, NE Nob Hill Villa Apartments 97% 93% Nashville, TN Point West Apartments 98% 97% Charleston, SC Post Ridge Apartments 93% 96% Nashville, TN Rivers Edge Apartments 98% 96% Auburn, WA South Port Apartments 97% 95% Tulsa, OK Stratford Place Apartments 95% 93% Austin, TX Village East Apartments 97% 98% Cimarron Hills, CO The decrease in occupancy at Citadel Apartments, Knollwood Apartments, and Post Ridge Apartments is due to increased competition in the local market. The increase in occupancy at Lake Forest Apartments and Nob Hill Villa Apartments is due to increased marketing efforts and strong local markets. Results of Operations The Partnership's net income for the six months ended June 30, 2000, totaled approximately $2,528,000 as compared to a net income of approximately $2,674,000 for the corresponding period of 1999. The Partnership's net income for the three month period ended June 30, 2000 was approximately $1,368,000 as compared to approximately $1,538,000 for the corresponding period in 1999. The decrease in net income for the six months ended June 30, 2000, is due to a decrease in total revenues and an extraordinary loss on early extinguishment of debt partially offset by reduced total expenses. The decrease in net income for the three month period ended June 30, 2000 is due to decreased total revenues and an extraordinary loss on early extinguishment of debt as well as increased total expenses. Total revenues for both the three and six month periods as well as total expenses for the six months ended June 30, 2000 decreased largely due to the sale of Overlook Apartments in December 1999 as discussed below. Excluding Overlook Apartment's operations, total expenses and total revenues increased for the Partnership's remaining properties for the three and six months ended June 30, 2000. Total expenses on the remaining properties increased due to an increase in operating, depreciation, property tax and interest expenses partially offset by a decrease in general and administrative expenses. Operating expenses increased due primarily to increased utility expenses, increased salary expenses, increased hazard insurance expense, and reduced net insurance proceeds on casualties. In the six months ended June 30, 1999 there were several small insurance claims made and proceeds received. Fewer similar claims were made during the six months ended June 30, 2000. Depreciation expense on the remaining properties increased due to capital improvements completed during the past twelve months. Property tax expense increased due to increased assessed values at some of the Partnership's properties, as well as the timing of the receipt of 1999 tax bills affecting the accruals recorded at June 30, 2000 and 1999. The increase in interest expense is primarily due to the new financing at Point West Apartments late in 1999 and to increased debt balances at The Apartments and Citadel Apartments due to the refinancings in February 2000. The decrease in general and administrative expenses is due to the fact that a smaller special management fee of 9% on distributions from operations was paid during the six months ended June 30, 2000 as compared to the six months ended June 30, 1999. While there was a distribution from operations of approximately $6,422,000 during the six months ended June 30, 1999, the total distributions from operations during the six months ending June 30, 2000 was approximately $3,227,000, so the special management fee was lower. Total revenues for the Partnership's remaining properties increased due to an increase in rental income and an increase in other income. Rental income increased due to increased average rental rates partially offset by an increase in bad debt expenses at most of the Partnership's properties. Other income increased primarily due to increased utility income, telephone commissions, and cable TV income, partially offset by a decrease in laundry income and reduced security deposit forfeitures. 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. Liquidity and Capital Resources At June 30, 2000, the Partnership held cash and cash equivalents of approximately $4,793,000, compared to approximately $8,059,000 at June 30, 1999. Cash and cash equivalents decreased approximately $4,128,000 for the six months ended June 30, 2000 from the Partnership's year ended December 31, 1999. This net decrease was comprised of approximately $6,889,000 of net cash used in financing activities and approximately $1,452,000 of cash used in investing activities, partially offset by net cash provided by operating activities of approximately $4,213,000. Cash used in financing activities consisted of the repayment of the mortgages encumbering The Apartments, Citadel Apartments, and Stratford Place Apartments, distributions to the partners, loan costs and prepayment penalties paid and payments of principal made on the mortgages encumbering some of the Partnership's properties, partially offset by proceeds from the new loans on The Apartments, Citadel Apartments, and Stratford Place Apartments. Cash used in investing activities consisted primarily of property improvements and replacements and net deposits to restricted escrows, partially offset by net insurance proceeds received. The Partnership invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Partnership and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for each of the Partnership's properties are detailed below. The Apartments During the six months ended June 30, 2000, the Partnership expended approximately $25,000 on capital improvements at the property, consisting primarily of carpet and vinyl replacement and other building improvements. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $61,000 for 2000 at this property which consist primarily of carpet and vinyl replacement. Arbours of Hermitage Apartments During the six months ended June 30, 2000, the Partnership expended approximately $167,000 on capital improvements at the property, consisting primarily of appliance and carpet replacement, as well as structural improvements, lighting upgrades, air conditioning upgrades, and fencing upgrades. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $1,525,000 for 2000 at this property which consist primarily of structural improvements, floor covering replacement, countertop replacements, appliance replacement, air conditioning upgrades, equipment and fencing upgrades. Briar Bay Racquet Club Apartments During the six months ended June 30, 2000, the Partnership expended approximately $80,000 on budgeted and non-budgeted capital improvements at the property, consisting primarily of electrical upgrades, elevator upgrades, other building improvements, carpet and vinyl replacement, and plumbing upgrades. These improvements were funded from operating cash flow and Partnership reserves. The Partnership has budgeted, but is not limited to, capital improvements of approximately $81,000 for 2000 at this property which consist primarily of appliance replacements, carpet replacements, structural improvements, elevator upgrades, cabinet replacements, major landscaping, and air conditioning upgrades. Chimney Hill Apartments During the six months ended June 30, 2000, the Partnership expended approximately $208,000 on capital improvements at the property, consisting primarily of roof replacements, carpet and vinyl replacements, cabinet and countertop replacements, other building improvements, plumbing upgrades, and appliance replacements. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $216,000 for 2000 at this property which consist primarily of appliance replacements, plumbing upgrades, carpet and vinyl replacement, major landscaping, and air conditioning upgrades. Citadel Apartments During the six months ended June 30, 2000, the Partnership expended approximately $47,000 for capital improvements at the property, consisting primarily of roof replacements, carpet and vinyl replacements, other building improvements, and water heater upgrades. These improvements were funded from Partnership reserves and operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $78,000 for 2000 at this property which consist primarily of carpet and vinyl replacements, air conditioning upgrades, structural improvements, appliance replacements, window covering replacements, and roof replacements. Citadel Village Apartments During the six months ended June 30, 2000, the Partnership expended approximately $37,000 for capital improvements at the property, consisting primarily of carpet and vinyl replacements. These improvements were funded from Partnership reserves and operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $87,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, appliance replacements, plumbing upgrades, and other building improvements. Foothill Place Apartments During the six months ended June 30, 2000, the Partnership expended approximately $198,000 on capital improvements at the property, consisting primarily of carpet and vinyl replacements, appliance replacements, lighting upgrades, and water heater upgrades. These improvements were funded from Partnership reserves and operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $261,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, light fixture enhancements, appliance replacements, and structural improvements. Knollwood Apartments During the six months ended June 30, 2000, the Partnership expended approximately $120,000 for capital improvements at the property, consisting primarily of carpet replacement and appliance replacements. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $499,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, air conditioning upgrades, plumbing enhancements, and appliance replacements. Lake Forest Apartments During the six months ended June 30, 2000, the Partnership expended approximately $102,000 for budgeted and non-budgeted capital improvements at the property, consisting primarily of electrical upgrades, appliance replacements, equipment replacements, carpet and vinyl replacements, and water heater upgrades. These improvements were primarily funded from operating cash flow and Partnership reserves. The Partnership has budgeted, but is not limited to, capital improvements of approximately $94,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, and appliance replacements. Nob Hill Villa Apartments During the six months ended June 30, 2000, the Partnership expended approximately $62,000 for capital improvements at the property, consisting primarily of carpet replacement, appliance replacements, and water heater upgrades. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $234,000 for 2000 at this property which consist primarily of floor covering replacement, appliance replacements, structural improvements, cabinet replacements, water heater upgrades, and parking lot improvements. Point West Apartments During the six months ended June 30, 2000, the Partnership expended approximately $19,000 for capital improvements at the property, consisting primarily of carpet and vinyl replacement and appliance replacements. These improvements were funded from the Partnership's operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $100,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, interior decoration, appliance replacements, fencing upgrades, and other building improvements. Post Ridge Apartments During the six months ended June 30, 2000, the Partnership expended approximately $57,000 for capital improvements at the property, consisting primarily of appliance replacements, carpet replacements, plumbing upgrades, interior decorations, and structural improvements. These improvements were primarily funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $219,000 for 2000 at this property which consist primarily of carpet replacements, plumbing enhancements, appliance replacements, air conditioning upgrades, and interior decoration. Rivers Edge Apartments During the six months ended June 30, 2000, the Partnership expended approximately $24,000 for capital improvements at the property, consisting primarily of carpet replacements, and appliance replacements. These improvements were funded from Partnership's reserves and operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $94,000 for 2000 at this property which consist primarily of carpet and vinyl replacement, appliance replacements, and landscaping and plumbing enhancements. South Port Apartments During the six months ended June 30, 2000, the Partnership expended approximately $70,000 for capital improvements at the property, consisting primarily of floor covering replacement, appliance replacements, and plumbing upgrades. These improvements were funded from operating cash flow and Partnership reserves. The Partnership has budgeted, but is not limited to, capital improvements of approximately $221,000 for 2000 at this property which consist primarily of floor covering replacements, roof replacements, plumbing enhancements, and appliance replacements Stratford Place Apartments During the six months ended June 30, 2000, the Partnership expended approximately $120,000 for budgeted and non-budgeted capital improvements at the property, consisting primarily of floor covering replacement, appliance replacements, fencing upgrades, interior decoration, and maintenance equipment replacement. These improvements were funded from Partnership reserves. The Partnership has budgeted, but is not limited to, capital improvements of approximately $69,000 for 2000 at this property which consists primarily of floor covering replacements, roof replacements, air conditioning upgrades, maintenance equipment replacements, and other building improvements. Village East Apartments During the six months ended June 30, 2000, the Partnership expended approximately $42,000 for capital improvements at the property, consisting primarily of plumbing upgrades, electrical upgrades, and carpet replacements. These improvements were funded from operating cash flow. The Partnership has budgeted, but is not limited to, capital improvements of approximately $68,000 for 2000 at this property which consists of carpet and vinyl replacement and electrical and plumbing enhancements. The additional capital expenditures will be incurred only if cash is available from operations or from Partnership reserves. To the extent that such budgeted capital improvements are completed, the Partnership's distributable cash flow, if any, may be adversely affected at least in the short term. The Partnership's assets are currently thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Partnership. The mortgage indebtedness of approximately $74,476,000 matures at various dates between 2000 and 2020. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Partnership will risk losing such properties through foreclosure. On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford Place. The refinancing replaced mortgage indebtedness of approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was refinanced at a rate of 8.48% compared to the prior rate of 8.65% and matures on June 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $124,000. The Partnership wrote off approximately $4,000 in unamortized loan costs and paid prepayment penalties of approximately $1,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $5,000. On February 2, 2000, the Partnership refinanced the mortgage encumbering The Apartments. The refinancing replaced mortgage indebtedness of approximately $3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $153,000. The Partnership wrote off approximately $11,000 in unamortized loan costs and paid prepayment penalties of approximately $22,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $33,000. On February 28, 2000, the Partnership refinanced the mortgage encumbering Citadel Apartments. The refinancing replaced mortgage indebtedness of approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on March 1, 2020. Capitalized loan costs incurred for the refinancing were approximately $141,000. The Partnership wrote off approximately $19,000 in unamortized loan costs and paid prepayment penalties of approximately $7,000 resulting in an extraordinary loss on early extinguishment of debt of approximately $26,000. On November 9, 1999, the Partnership obtained financing on Point West Apartments in the amount of $2,460,000. The mortgage was financed at a rate equal to 7.86% and matures on December 1, 2019. Capitalized loan costs incurred for the financing were approximately $47,000 during the year ended December 31, 1999. An additional $16,000 of loan costs were incurred during the six months ended June 30, 2000. During the six months ended June 30, 2000, the Partnership paid a cash distribution from operations of approximately $1,871,000, of which approximately $1,679,000 ($4.90 per limited partnership unit) was paid to the limited partners, and a distribution of financing proceeds representing funds from the financing of Point West Apartments of approximately $2,242,000 ($6.54 per limited partnership unit), all of which was paid to the limited partners. These distributions were declared and accrued at December 31, 1999. In addition, the Partnership declared and paid distributions of approximately $5,951,000 (approximately $5,713,000 to the limited partners or $16.67 per limited partnership unit) during the six months ended June 30, 2000 consisting of approximately $2,724,000 (approximately $2,615,000 to the limited partners or $7.63 per limited partnership unit) of refinance proceeds from The Apartments, Citadel Apartments, and Stratford Place Apartments and sale proceeds from Overlook Apartments which sold in December of 1999, and approximately $3,227,000 (approximately $3,098,000 to the limited partners or $9.04 per limited partnership unit) from operations. Approximately $343,000 of the distribution from operations was payable at June 30, 2000 to the General Partner and special limited partners. Approximately $31,000 of this balance was paid subsequent to June 30, 2000. The remaining balance is subordinated and deferred per the Partnership Agreement until the limited partners receive 100% of their original capital contributions from surplus funds. In conjunction with the transfer of funds from certain majority-owned sub-tier limited partnerships to the Partnership, approximately $15,000 was distributed to the general partner of the majority owned sub-tier limited partnerships. In January 1999, the General Partner declared and paid a distribution attributable to cash flow from operations of approximately $6,422,000 (approximately $6,165,000 to the limited partners or $17.99 per limited partnership unit) and approximately $2,722,000 (approximately $2,613,000 to the limited partners or $7.62 per limited partnership unit) representing a return of capital. The Partnership's distribution policy is reviewed on a quarterly basis. Future cash distributions will depend on the levels of net cash generated from operations, the availability of cash reserves, and the timing of debt maturities, refinancings and/or property sales. There can be no assurance, however, that the Partnership will generate sufficient funds from operations, after planned capital improvement expenditures, to permit further distributions to its partners in 2000 or subsequent periods. The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of $500 per apartment unit owned by the Partnership, or approximately $2,004,000. 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. Reserves, including cash and cash equivalents, totaling approximately $4,793,000 at June 30, 2000, exceeded the Partnership's reserve requirements of approximately $2,004,000. Item 3. Quantitative and Qualitative Disclosures about Market Risk The Partnership is exposed to market risks from adverse changes in interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Partnership's cash and cash equivalents as well as interest paid on its indebtedness. As a policy, the Partnership does not engage in speculative or leveraged transactions, nor does it hold or issue financial instruments for trading purposes. The Partnership is exposed to changes in interest rates primarily as a result of its borrowing activities used to maintain liquidity and fund business operations. To mitigate the impact of fluctuations in U.S. interest rates, the Partnership maintains its debt as fixed rate in nature by borrowing on a long-term basis. Based on interest rates at June 30, 2000, a 1% increase or decrease in market interest rates would not have a material impact on the Partnership. The following table summarizes the Partnership's debt obligations at June 30, 2000. The interest rates represent the weighted-average rates. The fair value of the debt obligations approximated the recorded value as of June 30, 2000. Principal amount by expected maturity: Long Term Debt Fixed Rate Debt Average Interest Rate (in thousands) 2000 $ 2,158 7.57% 2001 548 7.51% 2002 596 7.53% 2003 9,398 7.53% 2004 4,819 7.57% Thereafter 56,957 7.57% Total $74,476 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action 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 of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 10.80, Multifamily Note dated May 31, 2000 between Concap Stratford Associates, Ltd., a Texas limited partnership and ARCS Commercial Mortgage Co., L.P., a California limited partnership. Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 2000. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES IV By: CONCAP EQUITIES, INC. General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: Exhibit 10.80 MULTIFAMILY NOTE (TEXAS) US $4,550,000.00 As of May 25, 2000 FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if more than one) promises to pay to the order of ARCS Commercial Mortgage Co., L.P., a California limited partnership, the principal sum of Four Million Five Hundred Fifty Thousand Dollars and no/100's (US $4,550,000.00), with interest on the unpaid principal balance at the annual rate of Eight and 480/1000's percent (8.480%). 1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder of this Note, and (ii) the term "Indebtedness" means the principal of, interest on, or any other amounts due at any time under, this Note, the Security Instrument or any other Loan Document, including prepayment premiums, late charges, default interest, and advances to protect the security of the Security Instrument under Section 12 of the Security Instrument. "Event of Default" and other capitalized terms used but not defined in this Note shall have the meanings given to such terms in the Security Instrument. 2. Address for Payment. All payments due under this Note shall be payable at 26901 Agoura Road, Suite 200, Calabasas Hills, CA 91301, or such other place as may be designated by written notice to Borrower from or on behalf of Lender. 3. Payment of Principal and Interest. Principal and interest shall be paid as follows: (a) Unless disbursement of principal is made by Lender to Borrower on the first day of the month, interest for the period beginning on the date of disbursement and ending on and including the last day of the month in which such disbursement is made shall be payable simultaneously with the execution of this Note. Interest under this Note shall be computed on the basis of a 360-day year consisting of twelve 30-day months. (b) Consecutive monthly installments of principal and interest, each in the amount of Thirty Nine Thousand Four Hundred Twenty Eight Dollars and 38/100's (US $39,428.38), shall be payable on the first day of each month beginning on July 1, 2000, until the entire unpaid principal balance evidenced by this Note is fully paid. Any accrued interest remaining past due for 30 days or more shall be added to and become part of the unpaid principal balance and shall bear interest at the rate or rates specified in this Note, and any reference below to "accrued interest" shall refer to accrued interest which has not become part of the unpaid principal balance. Any remaining principal and interest shall be due and payable on June 1, 2020 or on any earlier date on which the unpaid principal balance of this Note becomes due and payable, by acceleration or otherwise (the "Maturity Date"). The unpaid principal balance shall continue to bear interest after the Maturity Date at the Default Rate set forth in this Note until and including the date on which it is paid in full. (c) Any regularly scheduled monthly installment of principal and interest that is received by Lender before the date it is due shall be deemed to have been received on the due date solely for the purpose of calculating interest due. 4. Application of Payments. If at any time Lender receives, from Borrower or otherwise, any amount applicable to the Indebtedness which is less than all amounts due and payable at such time, Lender may apply that payment to amounts then due and payable in any manner and in any order determined by Lender, in Lender's discretion. Borrower agrees that neither Lender's acceptance of a payment from Borrower in an amount that is less than all amounts then due and payable nor Lender's application of such payment shall constitute or be deemed to constitute either a waiver of the unpaid amounts or an accord and satisfaction. 5. Security. The Indebtedness is secured, among other things, by a multifamily mortgage, deed to secure debt or deed of trust dated as of the date of this Note (the "Security Instrument"), and reference is made to the Security Instrument for other rights of Lender as to collateral for the Indebtedness. 6. Acceleration. If an Event of Default has occurred and is continuing, the entire unpaid principal balance, any accrued interest, the prepayment premium payable under Paragraph 10, if any, and all other amounts payable under this Note and any other Loan Document shall at once become due and payable, at the option of Lender, without any prior notice to Borrower. Lender may exercise this option to accelerate regardless of any prior forbearance. 7. Default Rate. So long as (a) any monthly installment under this Note remains past due for 30 days or more, or (b) any other Event of Default has occurred and is continuing, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at a rate (the "Default Rate") equal to the lesser of 4 percentage points above the rate stated in the first paragraph of this Note or the maximum interest rate which may be collected from Borrower under applicable law. If the unpaid principal balance and all accrued interest are not paid in full on the Maturity Date, the unpaid principal balance and all accrued interest shall bear interest from the Maturity Date at the Default Rate. Borrower also acknowledges that its failure to make timely payments will cause Lender to incur additional expenses in servicing and processing the loan evidenced by this Note (the "Loan"), that, during the time that any monthly installment under this Note is delinquent for more than 30 days, Lender will incur additional costs and expenses arising from its loss of the use of the money due and from the adverse impact on Lender's ability to meet its other obligations and to take advantage of other investment opportunities, and that it is extremely difficult and impractical to determine those additional costs and expenses. Borrower also acknowledges that, during the time that any monthly installment under this Note is delinquent for more than 30 days or any other Event of Default has occurred and is continuing, Lender's risk of nonpayment of this Note will be materially increased and Lender is entitled to be compensated for such increased risk. Borrower agrees that the increase in the rate of interest payable under this Note to the Default Rate represents a fair and reasonable estimate, taking into account all circumstances existing on the date of this Note, of the additional costs and expenses Lender will incur by reason of the Borrower's delinquent payment and the additional compensation Lender is entitled to receive for the increased risks of nonpayment associated with a delinquent loan. 8. Loan Charges. Borrower and Lender intend at all times to comply with the law of the State of Texas governing the maximum rate or amount of interest payable on or in connection with this Note and the Indebtedness (or applicable United States federal law to the extent that it permits Lender to contract for, charge, take, reserve or receive a greater amount of interest than under Texas law). If the applicable law is ever judicially interpreted so as to render usurious any amount payable under this Note or under any other Loan Document, or contracted for, charged, taken, reserved or received with respect to the Indebtedness, or of acceleration of the maturity of this Note, or if any prepayment by Borrower results in Borrower having paid any interest in excess of that permitted by any applicable law, then Borrower and Lender expressly intend that all excess amounts collected by Lender shall be applied to reduce the unpaid principal balance of this Note (or, if this Note has been or would thereby be paid in full, shall be refunded to Borrower), and the provisions of this Note, the Security Instrument and any other Loan Documents immediately shall be deemed reformed and the amounts thereafter collectible under this Note or any other Loan Document reduced, without the necessity of the execution of any new documents, so as to comply with any applicable law, but so as to permit the recovery of the fullest amount otherwise payable under this Note or any other Loan Document. The right to accelerate the maturity of this Note does not include the right to accelerate any interest which has not otherwise accrued on the date of such acceleration, and Lender does not intend to collect any unearned interest in the event of acceleration. All sums paid or agreed to be paid to Lender for the use, forbearance or detention of the Indebtedness shall, to the extent permitted by any applicable law, be amortized, prorated, allocated and spread throughout the full term of the Indebtedness until payment in full so that the rate or amount of interest on account of the Indebtedness does not exceed the applicable usury ceiling. Notwithstanding any provision contained in this Note, the Security Instrument or any other Loan Document that permits the compounding of interest, including any provision by which any accrued interest is added to the principal amount of this Note, the total amount of interest that Borrower is obligated to pay and Lender is entitled to receive with respect to the Indebtedness shall not exceed the amount calculated on a simple (i.e., noncompounded) interest basis at the maximum rate on principal amounts actually advanced to or for the account of Borrower, including all current and prior advances and any advances made pursuant to the Security Instrument or other Loan Documents (such as for the payment of taxes, insurance premiums and similar expenses or costs). 9. Limits on Personal Liability. (a) Except as otherwise provided in this Paragraph 9, Borrower shall have no personal liability under this Note, the Security Instrument or any other Loan Document for the repayment of the Indebtedness or for the performance of any other obligations of Borrower under the Loan Documents, and Lender's only recourse for the satisfaction of the Indebtedness and the performance of such obligations shall be Lender's exercise of its rights and remedies with respect to the Mortgaged Property and any other collateral held by Lender as security for the Indebtedness. This limitation on Borrower's liability shall not limit or impair Lender's enforcement of its rights against any guarantor of the Indebtedness or any guarantor of any obligations of Borrower. (b) Borrower shall be personally liable to Lender for the repayment of a portion of the Indebtedness equal to zero percent (0%) of the original principal balance of this Note, plus any other amounts for which Borrower has personal liability under this Paragraph 9. (c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower shall be personally liable to Lender for the repayment of a further portion of the Indebtedness equal to any loss or damage suffered by Lender as a result of (1) failure of Borrower to pay to Lender upon demand after an Event of Default all Rents to which Lender is entitled under Section 3(a) of the Security Instrument and the amount of all security deposits collected by Borrower from tenants then in residence; (2) failure of Borrower to apply all insurance proceeds and condemnation proceeds as required by the Security Instrument; or (3) failure of Borrower to comply with Section 14(d) or (e) of the Security Instrument relating to the delivery of books and records, statements, schedules and reports. (d) For purposes of determining Borrower's personal liability under Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this Note with respect to the Indebtedness and all amounts received by Lender from the enforcement of its rights under the Security Instrument shall be applied first to the portion of the Indebtedness for which Borrower has no personal liability. (e) Borrower shall become personally liable to Lender for the repayment of all of the Indebtedness upon the occurrence of any of the following Events of Default: (1) Borrower's acquisition of any property or operation of any business not permitted by Section 33 of the Security Instrument; (2) a Transfer (including, but not limited to, a lien or encumbrance) that is an Event of Default under Section 21 of the Security Instrument, other than a Transfer consisting solely of the involuntary removal or involuntary withdrawal of a general partner in a limited partnership or a manager in a limited liability company; or (3) fraud or written material misrepresentation by Borrower or any officer, director, partner, member or employee of Borrower in connection with the application for or creation of the Indebtedness or any request for any action or consent by Lender. (f) In addition to any personal liability for the Indebtedness, Borrower shall be personally liable to Lender for (1) the performance of all of Borrower's obligations under Section 18 of the Security Instrument (relating to environmental matters); (2) the costs of any audit under Section 14(d) of the Security Instrument; and (3) any costs and expenses incurred by Lender in connection with the collection of any amount for which Borrower is personally liable under this Paragraph 9, including fees and out of pocket expenses of attorneys and expert witnesses and the costs of conducting any independent audit of Borrower's books and records to determine the amount for which Borrower has personal liability. (g) To the extent that Borrower has personal liability under this Paragraph 9, Lender may exercise its rights against Borrower personally without regard to whether Lender has exercised any rights against the Mortgaged Property or any other security, or pursued any rights against any guarantor, or pursued any other rights available to Lender under this Note, the Security Instrument, any other Loan Document or applicable law. For purposes of this Paragraph 9, the term "Mortgaged Property" shall not include any funds that (1) have been applied by Borrower as required or permitted by the Security Instrument prior to the occurrence of an Event of Default or (2) Borrower was unable to apply as required or permitted by the Security Instrument because of a bankruptcy, receivership, or similar judicial proceeding. 10. Voluntary and Involuntary Prepayments. (a) A prepayment premium shall be payable in connection with any prepayment made under this Note as provided below: (1) Borrower may voluntarily prepay all of the unpaid principal balance of this Note on the last Business Day of a calendar month if Borrower has given Lender at least 30 days prior notice of its intention to make such prepayment. Such prepayment shall be made by paying (A) the amount of principal being prepaid, (B) all accrued interest, (C) all other sums due Lender at the time of such prepayment, and (D) the prepayment premium calculated pursuant to Schedule A. For all purposes including the accrual of interest, any prepayment received by Lender on any day other than the last calendar day of the month shall be deemed to have been received on the last calendar day of such month. For purposes of this Note, a "Business Day" means any day other than a Saturday, Sunday or any other day on which Lender is not open for business. Borrower shall not have the option to voluntarily prepay less than all of the unpaid principal balance. (2) Upon Lender's exercise of any right of acceleration under this Note, Borrower shall pay to Lender, in addition to the entire unpaid principal balance of this Note outstanding at the time of the acceleration, (A) all accrued interest and all other sums due Lender, and (B) the prepayment premium calculated pursuant to Schedule A. (3) Any application by Lender of any collateral or other security to the repayment of any portion of the unpaid principal balance of this Note prior to the Maturity Date and in the absence of acceleration shall be deemed to be a partial prepayment by Borrower, requiring the payment to Lender by Borrower of a prepayment premium. The amount of any such partial prepayment shall be computed so as to provide to Lender a prepayment premium computed pursuant to Schedule A without Borrower having to pay out-of-pocket any additional amounts. (b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium shall be payable with respect to (A) any prepayment made no more than 180 days before the Maturity Date, or (B) any prepayment occurring as a result of the application of any insurance proceeds or condemnation award under the Security Instrument. (c) Schedule A is hereby incorporated by reference into this Note. (d) Any permitted or required prepayment of less than the unpaid principal balance of this Note shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless Lender agrees otherwise in writing. (e) Borrower recognizes that any prepayment of the unpaid principal balance of this Note, whether voluntary or involuntary or resulting from a default by Borrower, will result in Lender's incurring loss, including reinvestment loss, additional expense and frustration or impairment of Lender's ability to meet its commitments to third parties. Borrower agrees to pay to Lender upon demand damages for the detriment caused by any prepayment, and agrees that it is extremely difficult and impractical to ascertain the extent of such damages. Borrower therefore acknowledges and agrees that the formula for calculating prepayment premiums set forth on Schedule A represents a reasonable estimate of the damages Lender will incur because of a prepayment. (f) Borrower further acknowledges that the prepayment premium provisions of this Note are a material part of the consideration for the Loan, and acknowledges that the terms of this Note are in other respects more favorable to Borrower as a result of the Borrower's voluntary agreement to the prepayment premium provisions. 11. Costs and Expenses. Borrower shall pay all expenses and costs, including fees and out-of-pocket expenses of attorneys and expert witnesses and costs of investigation, incurred by Lender as a result of any default under this Note or in connection with efforts to collect any amount due under this Note, or to enforce the provisions of any of the other Loan Documents, including those incurred in post-judgment collection efforts and in any bankruptcy proceeding (including any action for relief from the automatic stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure proceeding. 12. Forbearance. Any forbearance by Lender in exercising any right or remedy under this Note, the Security Instrument, or any other Loan Document or otherwise afforded by applicable law, shall not be a waiver of or preclude the exercise of that or any other right or remedy. The acceptance by Lender of any payment after the due date of such payment, or in an amount which is less than the required payment, shall not be a waiver of Lender's right to require prompt payment when due of all other payments or to exercise any right or remedy with respect to any failure to make prompt payment. Enforcement by Lender of any security for Borrower's obligations under this Note shall not constitute an election by Lender of remedies so as to preclude the exercise of any other right or remedy available to Lender. 13. Waivers. Presentment, demand, notice of dishonor, protest, notice of acceleration, notice of intent to demand or accelerate payment or maturity, presentment for payment, notice of nonpayment, grace, and diligence in collecting the Indebtedness are waived by Borrower and all endorsers and guarantors of this Note and all other third party obligors. 14. Commercial Purpose. Borrower represents that the Indebtedness is being incurred by Borrower solely for the purpose of carrying on a business or commercial enterprise, and not for personal, family or household purposes. 15. Counting of Days. Except where otherwise specifically provided, any reference in this Note to a period of "days" means calendar days, not Business Days. 16. Governing Law. This Note shall be governed by the law of the jurisdiction in which the Land is located. 17. Captions. The captions of the paragraphs of this Note are for convenience only and shall be disregarded in construing this Note. 18. Notices. All notices, demands and other communications required or permitted to be given by Lender to Borrower pursuant to this Note shall be given in accordance with Section 31 of the Security Instrument. 19. Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising under or in relation to this Note shall be litigated exclusively in the jurisdiction in which the Land is located (the "Property Jurisdiction"). The state and federal courts and authorities with jurisdiction in the Property Jurisdiction shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Note. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. 20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL. ATTACHED SCHEDULES. The following Schedules are attached to this Note: |X | Schedule A Prepayment Premium (required) |X | Schedule B Modifications to Multifamily Note IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or has caused this Instrument to be signed and delivered by its duly authorized representative. BORROWER: ConCap Stratford Associates, Ltd. a Texas limited partnership By: ConCap CCP/IV Stratford Place Properties, Inc. Its: General Partner By: ________________________ Patti K. Fielding Its: Vice President - -------------------------------------- Borrower's Social Security/Employer ID Number PAY TO THE ORDER OF WITHOUT RECOURSE ARCS Commercial Mortgage Co., L. P., a California limited partnership By: ACMC Realty, Inc., a California corporation Its: General Partner By: _________________________ Kathy Millhouse Its: Senior Vice President SCHEDULE A PREPAYMENT PREMIUM Any prepayment premium payable under Paragraph 10 of this Note shall be computed as follows: (a) If the prepayment is made between the date of this Note and the date that is 180 months after the first day of the first calendar month following the date of this Note (the "Yield Maintenance Period"), the prepayment premium shall be the greater of: (i) 1.0% of the unpaid principal balance of this Note; or (ii) the product obtained by multiplying: (A) the amount of principal being prepaid, by (B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment Rate, by (C) the Present Value Factor. For purposes of subparagraph (ii), the following definitions shall apply: Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note, expressed as a decimal calculated to five digits. Prepayment Date: in the case of a voluntary prepayment, the date on which the prepayment is made; in any other case, the date on which Lender accelerates the unpaid principal balance of the Note. Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5 Business Days before the Prepayment Date, on the 9.250% U.S. Treasury Security due February 1, 2016, as reported in The Wall Street Journal, expressed as a decimal calculated to five digits. In the event that no yield is published on the applicable date for the Treasury Security used to determine the Assumed Reinvestment Rate, Lender, in its discretion, shall select the non-callable Treasury Security maturing in the same year as the Treasury Security specified above with the lowest yield published in The Wall Street Journal as of the applicable date. If the publication of such yield rates in The Wall Street Journal is discontinued for any reason, Lender shall select a security with a comparable rate and term to the Treasury Security used to determine the Assumed Reinvestment Rate. The selection of an alternate security pursuant to this Paragraph shall be made in Lender's discretion. Present Value Factor: the factor that discounts to present value the costs resulting to Lender from the difference in interest rates during the months remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate as the discount rate, with monthly compounding, expressed numerically as follows: [OBJECT OMITTED] n = number of months remaining in Yield Maintenance Period ARR = Assumed Reinvestment Rate (b) If the prepayment is made after the expiration of the Yield Maintenance Period but more than 180 days before the Maturity Date, the prepayment premium shall be 1.0% of the unpaid principal balance of this Note. SCHEDULE B MODIFICATIONS TO MULTIFAMILY NOTE 1. The first sentence of Paragraph 7 of the Note ("Default Rate") is hereby deleted and replaced with the following: So long as (a) any monthly installment under this Note remains past due for more than thirty (30) days or (b) any other event of Default has occurred and is continuing, interest under this Note shall accrue on the unpaid principal balance from the earlier of the due date of the first unpaid monthly installment or the occurrence of such other Event of Default, as applicable, at a rate (the "Default Rate") equal to the lesser of (1) the maximum interest rate which may be collected from Borrower under applicable law or (2) the greater of (i) three percent (3%) above the Interest Rate or (ii) four percent (4.0%) above the then-prevailing Prime Rate. As used herein, the term "Prime Rate" shall mean the rate of interest announced by The Wall Street Journal from time to time as the "Prime Rate". 2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4): (4) failure by Borrower to pay the amount of the water and sewer charges, taxes, fire, hazard or other insurance premiums, ground rents in accordance with the terms of the Security Instrument. EX-27 2 0002.txt SECOND QUARTER 10-QSB
5 This schedule contains summary financial information extracted from Consolidated Capital Properties IV 2000 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000355804 CONSOLIDATED CAPITAL PROPERTIES IV 1,000 6-MOS DEC-31-2000 APR-01-2000 JUN-30-2000 4,793 0 1,649 0 0 0 136,011 106,138 39,766 0 74,476 0 0 0 (38,323) 39,766 0 14,947 0 0 12,355 0 2,885 0 0 2,592 0 (64) 0 2,528 7.08 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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