-----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, BJ6Zyxkn9a0Wl2Mc4ScTcIoQtuzdZH6X5skxbJVN+GIPhd/AunqdRn3Uu4L3pYGa TsxpZ0Al1paBbUSpIy1Q2w== 0000763049-97-000003.txt : 19970328 0000763049-97-000003.hdr.sgml : 19970328 ACCESSION NUMBER: 0000763049-97-000003 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970327 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-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11002 FILM NUMBER: 97565537 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-K 1 FORM 10-K--ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 34-31905, eff 10/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the fiscal year ended December 31, 1996 or [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [No Fee Required] For the transition period.........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.) 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 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Limited Partnership Units (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (SEC. 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] (Amended by Exch Act Rel No. 28869, eff. 5/1/91.) State the aggregate market value of the voting partnership interests held by non-affiliates computed by reference to the price at which the partnership interests were sold, or the average bid and asked prices of such partnership interests, as of a specified date within 60 days prior to the date of filing: Market value information for the Registrant's partnership interests is not available. Should a trading market develop for these interests, it is management's belief that such trading would not exceed $25,000,000. PART I ITEM 1. DESCRIPTION OF BUSINESS Consolidated Capital Properties IV (the "Partnership" or "Registrant") was organized on September 22, 1981, as a limited partnership under the California Uniform Limited Partnership Act. On December 18, 1981, the Partnership registered with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933 (File No. 2-74353) and commenced a public offering for sale of $100 million of Units with the general partners' right to increase the offering to $200 million. The Units represent equity interests in the Partnership and entitle the holders thereof to participate in certain allocations and distributions of the Partnership. The Partnership subsequently filed a Form 8-A Registration Statement with the SEC and registered under the Securities Exchange Act of 1934 (File No. 0-11002) on March 28, 1983. The sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each, or gross proceeds of $171.5 million to the Partnership. At the request of certain Limited Partners and in accordance with its Partnership Agreement, the Partnership has retired a total of 323 Units as of December 31, 1996. The Partnership gave no consideration for these Units. By the end of fiscal year 1985, approximately 73% of the proceeds raised had been invested in 48 properties. Of the remaining 27%, 11% was required for organizational and offering expenses, sales commissions and acquisition fees, and 16% was retained in Partnership reserves for project improvements and working capital as required by the Partnership Agreement. The General Partner of the Partnership is ConCap Equities, Inc., a Delaware corporation (the "General Partner" or "CEI"). The principal place of business for the Partnership and for the General Partner is One Insignia Financial Plaza, Greenville, South Carolina 29602. The Partnership's primary business and only industry segment is real estate related operations. The Partnership was formed to acquire, own, operate and ultimately dispose of income-producing real properties for the benefit of its Limited Partners (herein so called; and together with the General Partner shall be called the "Partners"). As of the close of fiscal year 1985, the Partnership had completed its property acquisition stage and had acquired 48 properties. At December 31, 1996, the Partnership owned 17 income-producing properties (or interests therein) and held one note receivable with respect to a sold property. Prior to 1996, the Partnership had disposed of 30 properties originally owned by the Partnership. In February of 1996, the Partnership lost an additional property through foreclosure, as discussed below. The real estate business is highly competitive. The Registrant's real property investments are subject to competition from similar types of properties in the localities in which they are located and the Partnership is not a significant factor in its industry. In addition, various limited partnerships have been formed by related parties to engage in businesses which may be competitive with the Registrant. The Registrant has no employees. Management and administrative services are performed by affiliates of Insignia Financial Group, Inc. ("Insignia"). The property manager is responsible for the day-to-day operations of each property. The Managing General Partner has also selected an affiliate of Insignia to provide real estate advisory and asset management services to the Partnership. As advisor, such affiliates provide all partnership accounting and administrative services, investment management, and supervisory services over property management and leasing. For a further discussion of property and partnership management, see "Item 12," which descriptions are herein incorporated by reference. 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 $2.2 million. During 1996, the Metro Centre Office Building was foreclosed on by the lender. Accordingly, the replacement reserve requirement at the remaining residential properties was reduced to 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. Reserves, including unrestricted cash and cash equivalents, tenant security deposits and investments, totaling approximately $10.4 million at December 31, 1996, exceeded the Partnership's reserve requirement of approximately $2.1 million. The Partnership currently owns and operates 17 apartment complexes, which range in age from 20 to 26 years old, principally located in the midwest, southeastern and southwestern United States. The Partnership also holds one note receivable on a sold property which is performing according to the note terms as of December 31, 1996. The Partnership has made significant capital investments in its real estate portfolio during the previous three years. These investments consisted of selected property improvement and rehabilitation programs and expenditures to cure deferred maintenance which existed at certain of the properties. Capital expenditures of approximately $3.4 million are budgeted for the Partnership's properties in 1997. Approximately $2.5 million of non-recourse mortgage debt secured by the Metro Centre Office Building, located in Southern California, matured July 1, 1995. The property historically had difficulty making its scheduled debt service payments and, since 1985, the property made quarterly cash flow payments pursuant to a modified and restructured loan agreement, however, no payments were made in 1995. Given existing economic conditions in Southern California, property operations were not expected to improve sufficiently to enable the Partnership to refinance the existing indebtedness under prevailing 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 action and the property was foreclosed upon on February 7, 1996. Prior to March 1995, the Nob Hill Villa Apartments ("Nob Hill") secured two non- recourse mortgage notes totalling approximately $5.8 million. One of the notes, a $3.8 million first-lien mortgage, was scheduled to mature in November 1995. In March 1995, the General Partner refinanced these mortgage notes by obtaining a new mortgage note of approximately $7.5 million secured by Nob Hill. Under the terms of the refinancing agreement, the new mortgage note bears interest at 9.2% and matures in April 2005. Approximately $14.3 million of non-recourse mortgage debt secured by the Foothill Place Apartments and the Chimney Hill Apartments originally matured in 1994. The Partnership exercised its option to extend the maturities until September 1995, by paying a 1%, or $143,000, loan extension fee to the current lender, as provided for in the loan agreement. In December 1995, these properties, along with five of the Partnership's other properties, were refinanced for 10 years with interest only payments due each month (See "Note C" in the Notes to Consolidated Financial Statements in "Item 8"). Prior to November 1996, Lake Forest Apartments ("Lake Forest") secured a mortgage note guaranteed by the U.S. Department of Housing and Urban Development ("HUD") totalling approximately $4.1 million. In November 1996, the Partnership refinanced this mortgage note by obtaining a new mortgage note of approximately $4.7 million secured by Lake Forest. Under the terms of the refinancing agreement, the new mortgage note bears interest at 7.33% and matures in November 2003. The Post Ridge Apartments ("Post Ridge") formerly secured a mortgage note totalling approximately $4.2 million, which was guaranteed by HUD. Operating cash flow from Post Ridge did not support its scheduled debt service payments. As a result, in January 1991, the Partnership suspended scheduled debt service for Post Ridge. From 1991 through March of 1995, the Partnership remitted excess cash flow from the properties' operations as debt service. 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. In September of 1996, the Partnership entered into an interim financing arrangement and refinanced the non-recourse mortgage note of approximately $4.2 million secured by Post Ridge. Under the terms of the interim financing arrangement, the new $4.1 million mortgage note bore interest at 8% through October 31, 1996, and from November 1, 1996, through the maturity date of November 15, 1996, the note bore interest at a rate equal to 2.5% plus the average one month LIBOR (totaling 7.875%). As a result of this refinancing, the Partnership realized a $16,000 gain on the forgiveness of accrued interest, a $61,000 gain on the forgiveness of advances from prior years, and a $158,000 loss on the write-off of loan costs which resulted in a net extraordinary loss on refinancing of $81,000. In November 1996, the General Partner obtained permanent financing by securing a new mortgage note of approximately $4.1 million collateralized by Post Ridge. Under the terms of the agreement this mortgage note bears interest at 7.33% and matures in November 2003. To facilitate the refinancing of the mortgage note secured by Post Ridge, effective August 7, 1996, the Post Ridge Associates, Ltd.'s Limited Partnership Agreement was amended to convert the general partnership interest held by Consolidated Capital Properties IV ("CCP IV") to a limited partnership interest, such that CCP IV shall be the sole Limited Partner owning a 99.0% limited partnership interest in Post Ridge Associates, Ltd. Concap Equities, Inc. was admitted as the new General Partner owning a 1.0% general partner interest and PRA, Inc. withdrew as the Limited Partner of Post Ridge Associates, Ltd. Upon the Partnership's formation in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired a controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of its reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the Limited Partners in the Partnership and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of this solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership, and the conversion of CCMC from a general partner to a limited partner, thereby leaving CEI as the sole general partner of the Partnership. All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As a part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and a subsidiary of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc. ITEM 2. DESCRIPTION OF PROPERTY The Partnership originally acquired 48 properties of which eleven (11) were sold, ten (10) were conveyed to lenders in lieu of foreclosure, and nine (9) were foreclosed upon by the lenders in fiscal years prior to 1996. In February of 1996, the Partnership lost an additional property through foreclosure. As of December 31, 1996, the Partnership owned seventeen (17) apartment complexes and held one (1) note receivable on sold property as noted below. Additional information about the properties is found in "Item 8 - Financial Statements and Supplementary Data." Date of Property Purchase Type of Ownership Use The Apartment 04/84 Fee ownership subject Residential Apartments Omaha, Nebraska to first mortgage 204 units Arbour East 09/83 Fee ownership subject Residential Apartments Nashville, Tennessee to first mortgage 350 units Briar Bay Racquet Club 09/82 Fee ownership subject Residential Apartments Miami, Florida to first mortgage 194 units Chimney Hill 08/82 Fee ownership subject Residential Apartments Marietta, Georgia to first mortgage 326 units Citadel 05/83 Fee ownership subject Residential Apartments El Paso, Texas to first mortgage 260 units Citadel Village 12/82 Fee ownership subject Residential Apartments Colorado Springs, Colorado to first mortgage 122 units Foothill Place 08/85 Fee ownership subject Residential Apartments Salt Lake City, Utah to first mortgage 450 units Knollwood 07/82 Fee ownership subject Residential Apartments Nashville, Tennessee to first mortgage 326 units Lake Forest 04/84 Fee ownership subject Residential Apartments Omaha, Nebraska to first mortgage 312 units Nob Hill Villa 04/83 Fee ownership subject Residential Apartments Nashville, Tennessee to first mortgage 472 units Overlook 11/85 Fee ownership subject Residential Apartments Memphis, Tennessee to first mortgage 252 units Point West 11/85 Fee ownership subject Residential Apartments Charleston, South Carolina to first mortgage 120 units Post Ridge 07/82 Fee ownership subject Residential Apartments Nashville, Tennessee to first mortgage 150 units Rivers Edge 04/83 Fee ownership subject Residential Apartments Auburn, Washington to first mortgage 120 units South Port 11/83 Fee ownership subject Residential Apartments Tulsa, Oklahoma to first mortgage 240 units Stratford Place 08/85 Fee ownership subject Residential Apartments Austin, Texas to first mortgage 223 units Village East 12/82 Fee ownership subject Residential Apartments Cimarron Hills, Colorado to first mortgage 137 units
SCHEDULE OF PROPERTIES: (dollar amounts in thousands)
Gross Carrying Accumulated Federal Property Value Depreciation Rate Method Tax Basis The Apartments $ 8,338 $5,424 5-18 yr S/L $ 2,767 Arbour East 11,877 9,126 5-18 yr S/L 2,997 Briar Bay Racquet Club 7,635 5,855 5-18 yr S/L 2,261 Chimney Hills 10,408 8,822 5-18 yr S/L 2,520 Citadel 7,393 5,806 5-18 yr S/L 1,488 Citadel Village 3,761 3,258 5-18 yr S/L 1,123 Foothill Place 14,829 7,616 5-18 yr S/L 8,505 Knollwood 10,203 8,555 5-18 yr S/L 2,025 Lake Forest 8,682 5,133 5-18 yr S/L 2,851 Nob Hill Villa 12,109 9,775 5-18 yr S/L 2,395 Overlook 4,370 2,959 5-15 yr S/L 1,876 Point West 2,883 2,021 5-40 yr S/L 1,503 Post Ridge 4,096 3,430 5-18 yr S/L 779 Rivers Edge 3,178 2,344 5-18 yr S/L 997 South Port 7,812 5,524 5-18 yr S/L 2,246 Stratford Place 7,285 3,568 5-20 yr S/L 2,902 Village East 3,269 2,718 5-18 yr S/L 545 Totals $128,128 $91,934 $39,780 See "Note A" in the Notes to Consolidated Financial Statements in "Item 8" for a description of the Partnership's depreciation policy.
SCHEDULE OF MORTGAGES:
Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 1996 Rate Amortized Date Maturity (dollar amounts in thousands) The Apartments $ 3,488 8.34% 7 years 9/00 $ 3,244 Arbour East Apartments 5,650 6.95% 10 years 12/05 5,650 Briar Bay Racquet Club 3,500 6.95% 10 years 12/05 3,500 Chimney Hills Apartments 5,400 6.95% 10 years 12/05 5,400 Citadel Apartments 4,830 8.38% 7 years 10/00 4,488 Citadel Village Apartments 2,450 6.95% 10 years 12/05 2,450 Foothill Place Apartments 10,100 6.95% 10 years 12/05 10,100 Knollwood Apartments 6,780 6.95% 10 years 12/05 6,780 Lake Forest Apartments 4,700 7.33% 7 years 11/03 4,700 Nob Hill Villa Apartments 7,361 9.20% 10 years 4/05 6,250 Overlook Apartments 1,878 10.50% 25 years 12/98 1,817 Post Ridge Apartments 4,050 7.33% 7 years 11/03 4,050 Rivers Edge Apartments 2,036 8.40% 7 years 9/00 1,895 South Port Apartments 3,464 10.85% 15 years 7/01 3,167 Stratford Place Apartments 2,657 8.65% 25 years 9/00 2,478 Village East Apartments 2,150 6.95% 10 years 12/05 2,150 $70,494 $68,119 The notes payable represent borrowings on the properties purchased by the Partnership. The notes are non-recourse, and are collateralized by deeds of trust on the investment properties. The notes mature between 1998 and 2005 bear interest at rates ranging from 6.95% to 10.85%.
Note Receivable on Sold Property: As of December 31, 1996 Underlying Note Mortgage Collateral Property Receivable Debt (in thousands) Denbigh Village Apartment complex - 138 units Newport News, Virginia $ 1,116 $ 1,268 When Denbigh Village Apartments was sold in August 1994, the Partnership accepted a 9% interest bearing promissory note which matured in March 1996. In March 1996, an extension, under the existing terms, was negotiated to extend the note until April 1997. See "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Item 8 - Financial Statements and Supplementary Data," for further discussion of the Denbigh Village Apartments sale and the note receivable by the Partnership. Denbigh Village Apartments secures two underlying mortgage notes. The balance of the first mortgage is approximately $542,000 at December 31, 1996, has a stated interest rate of 9.5% and matures in December 2002. The balance of the second mortgage is approximately $726,000, has a stated interest rate of 9.5% and matures in December of 1998. SCHEDULE OF RENTAL RATES AND OCCUPANCY: Average Annual Average Annual Rental Rates Occupancy Per Unit 1996 1995 1996 1995 The Apartments $5,821 $5,639 92% 95% Arbour East 6,784 6,220 95% 97% Briar Bay Racquet Club 8,207 8,055 97% 93% Chimney Hill 7,540 6,901 92% 96% Citadel 6,753 6,676 91% 92% Citadel Village 7,672 7,050 97% 98% Foothill Place 7,300 6,919 97% 98% Knollwood 7,194 6,649 97% 98% Lake Forest 6,073 5,662 94% 97% Nob Hill Villa 5,612 5,183 97% 98% Overlook 3,945 3,767 83% 88% Point West 5,121 5,046 90% 90% Post Ridge 8,689 8,143 96% 97% Rivers Edge 6,342 6,242 97% 93% South Port 5,333 5,282 96% 84% Stratford Place 6,494 6,321 92% 93% Village East 6,142 5,435 99% 99% As noted under "Item 1. Description of Business", the real estate industry is highly competitive. All of the properties of the Partnership are subject to competition from other residential apartment complexes and office buildings in the areas in which they operate. The General Partner believes that all of the properties are adequately insured. The average rental rate increases at Post Ridge Apartments, Knollwood, and Arbour East were due to rate increases able to be implemented due to the strength of the Nashville market throughout the year as leases were renewed. Rental rate increases also are responsible for the average rental rate increases at Village East Apartments, Citadel Village, and Chimney Hill. The Briar Bay Racquet Club Apartments occupancy increase is attributable to increased resident retention efforts at the property. The decrease in occupancy for Chimney Hill is due to increased competition in the Atlanta market. Occupancy at Rivers Edge Apartments has increased due to the continued strength of the Seattle market. The increase in occupancy at South Port is attributable to an increased effort by property management to retain and attract tenants by slightly decreasing rents and a tightening of the apartment supply in the Tulsa market. Occupancy for the Overlook Apartments decreased due to increased competition in the Memphis market resulting from the renovation of surrounding properties in the area. SCHEDULE OF REAL ESTATE TAXES AND RATES: (dollar amounts in thousands) Real estate taxes and rates in 1996 for each property were: 1996 1996 Billing Rate The Apartments *$147 2.9% Arbour East 105 3.5% Briar Bay Racquet Club 149 2.3% Chimney Hill 128 3.3% Citadel 164 2.8% Citadel Village 16 6.9% Foothill Place 163 1.5% Knollwood 114 3.5% Lake Forest *202 2.9% Nob Hill Villa 127 4.5% Overlook 63 3.2% Point West 33 34.4% Post Ridge 54 3.5% Rivers Edge 56 1.5% South Port 52 13.2% Stratford Place 125 2.4% Village East 14 7.0% * Represents an estimate for the 1996 taxes and rates. Actual billings have not been received as of the date of this filing. ITEM 3. LEGAL PROCEEDINGS The Registrant is unaware of any pending or outstanding litigation that is not of a routine nature. The Managing General Partner of the Registrant believes that all such pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial condition, or operations of the Partnership. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Unit holders of the Partnership did not vote on any matter during the fourth quarter of the fiscal year covered by this report. PART II ITEM 5. MARKET FOR THE REGISTRANT'S UNITS OF LIMITED PARTNERSHIP AND RELATED SECURITY HOLDER MATTERS (A) No established trading market for the Partnership's Units exists, nor is one expected to develop. (B) Title of Class Number of Unitholders of Record Limited Partnership Units 14,317 as of December 31, 1996 (C) During 1996, the Partnership paid distributions attributable to cash flow from operations of approximately $4,538,000 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 $36,000 was distributed to the general partners of the majority-owned sub-tier limited partnerships. Cumulative distributions to the Limited Partners since the inception of the Partnership totaled approximately $28 million at December 31, 1996. During 1995, the Partnership paid distributions attributable to cash flow from operations of approximately $921,000 to the Partners. No cash distributions were made to the Limited Partners during the year ended December 31, 1994. Also, see "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations". Subsequent to December 31, 1996, the Partnership declared distributions to the Partners of approximately $550,000 attributable to cash flow from operations and approximately $903,000 representing a return of capital. ITEM 6. SELECTED FINANCIAL DATA The following table sets forth a summary of certain financial data for the Partnership. This summary should be read in conjunction with the Partnership's consolidated financial statements and notes thereto appearing in "Item 8 - Financial Statements and Supplementary Data."
Years Ended December 31, Consolidated Statements 1996 1995 1994 1993 1992 of Operations (in thousands, except per unit data) Revenues $ 28,137 $ 27,468 $ 27,905 $ 27,263 $ 26,272 Expenses (29,010) (28,708) (32,325) (33,972) (33,931) Loss from operations (873) (1,240) (4,420) (6,709) (7,659) Gain on dispositions of real estate -- -- 9,523 -- 329 Reorganization expense -- -- -- (368) (261) Gain on sale of investments -- -- -- 75 -- Income (loss) before extraordinary items (873) (1,240) 5,103 (7,002) (7,591) Extraordinary items 2,909 43 6,614 (272) 5,677 Net income (loss) $ 2,036 $ (1,197) $ 11,717 $ (7,274) $ (1,914) Net income (loss) per weighted Limited Partnership Unit: Loss from operations $ (2.45) $ (3.47) $ (12.38) $ (18.78) $ (21.43) Gain on dispositions of real estate -- -- 26.67 -- .92 Reorganization expense -- -- -- (1.03) (.73) Gain on sale of securities available for sale -- -- -- .21 -- Income (loss) before extraordinary items (2.45) (3.47) 14.29 (19.60) (21.24) Extraordinary items 8.15 .12 18.52 (.76) 15.89 Net income (loss) $ 5.70 $ (3.35) $ 32.81 $ (20.36) $ (5.35) Distributions per Limited Unit $ 12.91 $ 2.58 $ -- $ -- $ -- Limited Partnership Units outstanding 342,783 342,783 342,819 342,951 343,097 Consolidated Balance Sheets Total assets $ 53,844 $ 61,146 $ 56,812 $ 67,683 $ 75,387 Notes and interest payable$ 72,233 $ 76,336 $ 70,825 $ 92,525 $ 93,557
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS INTRODUCTION The operations of the Partnership primarily include owning, operating and ultimately disposing of income-producing real properties for the benefit of its Partners. Therefore, the following discussion of operations, liquidity and capital resources will focus on these activities and should be read in conjunction with "Item 8 - Financial Statements and Supplementary Data" and the notes related thereto included elsewhere in this report. RESULTS OF OPERATIONS The Partnership's loss from operations totaled approximately $873,000 for the year ended December 31, 1996, compared to losses from operations of approximately $1,240,000 and $4,420,000 for 1995 and 1994, respectively. The decreased loss from operations is due primarily to an increase in rental rates at all of the Partnership's properties and the foreclosure of the Metro Centre Office Building in 1996. The decreased loss from operations is also due to the foreclosure of the Greenbriar and Westwood Apartments and the sale of the Denbigh Woods Apartments during the third quarter of 1994. Unless future sales and/or foreclosures of properties occur, it is expected that the Partnership will continue to generate losses from operations, primarily because certain noncash items are included in expenses. Depreciation of the Partnership's real estate investments and amortization of loan costs, mortgage discounts, and lease commissions, the primary noncash expenses, totaled approximately $7.3 million for the year ended December 31, 1996, and approximately $7 million and $7.9 million for each of the years ended December 31, 1995 and 1994, respectively. 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. 1996 Compared to 1995 Revenues: Rental income increased for the year ended December 31, 1996, compared to the corresponding period ended December 31, 1995, due primarily to an increase in rental rates at all of the Partnership's properties, partially offset by a decrease in occupancy at several of the Partnership's properties. Interest and other income decreased for 1996 compared to 1995, due primarily to the receipt in 1995 of a tax refund for Chimney Hill for the years of 1992, 1993 and 1994, and due to the receipt of a non-recurring dividend on the Southmark Preferred Stock. Expenses: Property operations expenses increased for 1996 compared to 1995, due primarily to increased maintenance expenses incurred in efforts to increase the curb appeal of several of the Partnership's properties and increased concession expense in efforts to increase occupancy. Depreciation and amortization expense increased for the year ended December 31, 1996, compared to the year ended December 31, 1995, due primarily to the addition of approximately $5 million in property improvements and replacements during 1996. Interest expense in 1996 decreased compared to 1995, due to the refinancing of seven of the Partnership's properties in December of 1995 and two properties in November of 1996 at lower interest rates, and due to the Point West Apartments' first-lien note being paid off as discussed below. Administrative expenses decreased for the year ended December 31, 1996, compared to the year ended December 31, 1995, due to decreased legal, printing and postage costs associated with the Partnership's required responses to various tender offers as well as increased expense reimbursements related to the combined efforts of the Dallas and Greenville partnership administration staffs during the transition period in the first and second quarters of 1995. The increased costs related to the transition efforts were incurred to minimize any disruption in the year-end reporting function including the financial reporting and K-1 preparation and distribution. Included in maintenance expense for the year ended December 31, 1996 is approximately $798,000 of major repairs and maintenance comprised primarily of major landscaping, exterior building improvements and parking lot repairs. 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. As a result of the note payoff, the Partnership paid approximately $5,000 in prepayment penalties which resulted in an extraordinary loss on refinancing. Prior to November 1996, Lake Forest Apartments ("Lake Forest") secured a mortgage note guaranteed by the U.S. Department of Housing and Urban Development ("HUD") totalling approximately $4.1 million. In November 1996, the Partnership refinanced this mortgage note by obtaining a new mortgage note of approximately $4.7 million secured by Lake Forest. Under the terms of the refinancing agreement, the new mortgage note bears interest at 7.33% and matures in November 2003. As a result of the refinancing, the Partnership paid approximately $4,000 in prepayment penalties which resulted in an extraordinary loss on refinancing. The Post Ridge Apartments ("Post Ridge") formerly secured a mortgage note totalling approximately $4.2 million, which was guaranteed by HUD. Operating cash flow from Post Ridge did not support its scheduled debt service payments. As a result, in January 1991, the Partnership suspended scheduled debt service for Post Ridge. From 1991 through March of 1995, the Partnership remitted excess cash flow from the properties' operations as debt service. 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. In September of 1996, the Partnership entered into an interim financing arrangement and refinanced the non-recourse mortgage note of approximately $4.2 million which was secured by Post Ridge Apartments. Under the terms of the interim financing arrangement, the new $4.1 million mortgage note bore interest at 8% through October 31, 1996, and from November 1, 1996, through the maturity date of November 15, 1996, the note bore interest at a rate equal to 2.5% plus the average one month LIBOR (7.875%). As a result of this refinancing, the Partnership realized a $16,000 gain on the forgiveness of accrued interest, a $61,000 gain on the forgiveness of advances from prior years, and a $158,000 loss on the write off of loan costs which resulted in a net extraordinary loss on refinancing of $81,000. In November 1996, the General Partner obtained permanent financing by securing a new mortgage note of approximately $4.1 million collateralized by Post Ridge. Under the terms of the agreement this mortgage note bears interest at 7.33% and matures in November 2003. Approximately $2.5 million of non-recourse mortgage debt secured by the Metro Centre Office Building, located in Southern California, matured July 1, 1995. The property historically had difficulty making its scheduled debt service payments and since 1985, the property made quarterly cash flow payments pursuant to a modified and restructured loan agreement, however, no payments were made in 1995. Given existing economic conditions in Southern California, property operations were not expected to improve sufficiently to enable the Partnership to refinance the existing indebtedness under prevailing 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 action and the property was foreclosed upon on February 7, 1996, resulting in an extraordinary gain on foreclosure of approximately $2,999,000 to the Partnership. 1995 Compared to 1994 Revenues: Rental income decreased for the year ended December 31, 1995, compared to the corresponding period ended December 31, 1994, due primarily to the sale and foreclosures noted in the Results of Operations section above. The rental income decreases were partially offset by increased occupancy at the Briar Bay Racquet Club Apartments and rental increases at several of the Partnership's apartment properties for the year ended December 31, 1995. Interest and other income increased for the year ended December 31, 1995, compared to the year ended December 31, 1994, due to higher cash balances being available for investment in 1995 and the $185,000 casualty gain discussed below. Also, dividends of $61,000 were received on the Partnership's investment in Southmark preferred stock during the year ended December 31, 1995, compared to $36,000 during the year ended December 31, 1994, and interest income of $97,000 was recognized in 1995 on the Denbigh Woods note receivable compared to $36,000 in 1994. In December of 1995, a fire occurred at the Overlook Apartments resulting in four units being destroyed and eight units incurring smoke and water damage. The total insurance proceeds received were approximately $260,000. These proceeds exceeded the total costs of replacing the units destroyed, resulting in a casualty gain of $106,000. In 1995, the Partnership also received insurance proceeds of $60,000 and $15,000 resulting from hail damage sustained in 1994 at the Citadel Village and Village East Apartments, respectively. In addition, the Partnership received an additional $4,000 insurance settlement from a fire at the Point West Apartments which occurred in 1991. These four events resulted in a total casualty gain of $185,000 in 1995. Expenses: Property operations, depreciation and amortization and interest expense decreased for the year ended December 31, 1995, compared to the year ended December 31, 1994, due primarily to the disposition of Greenbriar, Westwood and Denbigh Woods Apartments in the third quarter of 1994. Administrative expenses increased for the year ended December 31, 1995, compared to the year ended December 31, 1994, due to increased legal, printing and postage costs associated with the Partnership's required responses to various tender offers as well as increased expense reimbursements related to the combined efforts of the Dallas and Greenville partnership administration staffs during the transition period in the first and second quarters of 1995. The reimbursements for the Dallas and Greenville offices amount to $306,000 and $282,000, respectively, during the year ended December 31, 1995. The increased costs related to the transition efforts were incurred to minimize any disruption in the year-end reporting function including the financial reporting and K-1 preparation and distribution. The General Partner expects recurring administrative expenses to be reduced now that the management transition is complete. The extraordinary net gain from refinancing of $43,000 is the net of the following two items: A $250,000 gain on refinancing was realized during 1995, due 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 an extraordinary gain on refinancing (See "Note C" in the Notes to Consolidated Financial Statements in "Item 8"). A $207,000 extraordinary loss on refinancing was realized during 1995, due to the write-off of unamortized loan costs and prepayment penalties paid on seven refinanced properties (See "Note C" in the Notes to Consolidated Financial Statements in "Item 8"). In 1995, the Partnership recognized a $200,000 loss on the write-down of the carrying value of Metro Centre to its estimated net realizable value, due to the decline in the Southern California Market. LIQUIDITY AND CAPITAL RESOURCES A detailed discussion of the General Partner's current operating plan is described in "Item 1 - Description of Business". 1996 Compared to 1995 At December 31, 1996, the Partnership held unrestricted cash and cash equivalents of approximately $9.2 million compared to approximately $10.9 million at December 31, 1995. Net cash provided by operating activities increased primarily due to increased rental revenues, the receipt of an insurance refund of approximately $124,000, an escrow receipt in 1996 from the refinancing of the Knollwood Apartments debt in December of 1995, and the collection of insurance proceeds resulting from the fire at the Overlook Apartments in 1995, as discussed above. These items were partially offset by a decrease in accounts payable due to the timing of accounts payable payments. Net cash used in investing activities increased as the result of increased property improvements and replacements, partially offset by increased receipts from restricted escrows. Net cash used in financing activities increased due to significantly increased distributions to partners in 1996, as well as decreased proceeds from long-term borrowings. 1995 Compared to 1994 As of December 31, 1995, the Partnership held unrestricted cash and cash equivalents of approximately $10.9 million compared to approximately $4.3 million at December 31, 1994. Net cash provided by operating activities increased primarily due to the absence of negative cash flows from the properties disposed of in 1994, and an increase in accounts payable and accrued expenses at the remaining properties. Net cash used in investing activities increased primarily due to increased restricted escrow deposits and increased property improvements and replacements. Net cash provided by financing activities increased as a result of the refinancing of eight of the Partnership's properties (See "Note C" in the Notes to Consolidated Financial Statements in "Item 8"), partially offset by $921,000 of distributions to partners in 1995. Capital Resources 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. Cash distributions of approximately $4,645,000 and $921,000 were declared and paid during the years ended December 31, 1996 and 1995, respectively. 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. 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 $2.2 million. During 1996, the Metro Centre Office Building was foreclosed on by the lender. Accordingly, the replacement reserve requirement at the remaining residential properties is 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. Reserves, including unrestricted cash and cash equivalents, tenant security deposits and investments, totaling approximately $10.4 million at December 31, 1996, exceeded the Partnership's reserve requirements of approximately $2.1 million. Debt Maturities in 1995 Approximately $14.3 million of non-recourse mortgage debt secured by the Foothill Place Apartments and the Chimney Hill Apartments matured in 1994. The Partnership exercised its option to extend the debt maturities until September 1995, by paying a 1% loan extension fee of $143,000 to the current lender as provided for in the loan agreement. In September 1995, the Partnership signed an extension agreement extending the maturity date of the notes to June 1997. These properties and five of the Partnership's other properties were refinanced in December of 1995 (See "Note C" in the Notes to Consolidated Financial Statements in "Item 8"). Prior to March 1995, the Nob Hill Villa Apartments secured two non-recourse mortgage notes totaling approximately $5.8 million. One of the notes, a $3.8 million first lien mortgage, was scheduled to mature in November 1995. In March 1995, the General Partner refinanced these mortgage notes by obtaining a new mortgage note of approximately $7.5 million secured by Nob Hill Villa. Under the terms of the refinancing agreement, the new mortgage note bears interest at 9.2% and matures in April 2005. Sale and Disposition of Real Estate In August 1994, the Partnership sold the Denbigh Woods Apartments. In connection with the sale, the Partnership accepted a $1.2 million wrap note receivable and received net sales proceeds of approximately $900,000. The wrap note receivable bears interest at an annual rate of 9%, requires monthly payments of principal and interest totaling $11,814 and matures in March 1996. The Partnership has negotiated with the purchaser to extend the wrap note until April 1997. The Partnership remains obligated under two underlying first-liens totaling approximately $1.3 million which are secured by the Denbigh Woods Apartments. Pursuant to the sale contract the Partnership received from the purchaser, a capital improvement escrow totaling $150,000. Upon completion of certain repairs and capital improvements at the property, the Partnership will reimburse the purchaser from the escrow account. At December 31, 1996, the Partnership held a reserve balance of approximately $44,000. The Partnership recognized a gain of $884,000 on this sale during 1994. In January 1991, the Partnership suspended scheduled debt service on the HUD financed loan secured by the Westwood Apartments because cash flow from the property's operations did not support the scheduled payments, and because the property was leveraged in excess of its economic value. The Partnership submitted two workout proposals to HUD; however, HUD rejected both proposals. In 1993, HUD notified the Partnership that it intended to foreclose on the Westwood Apartments, and the General Partner informed HUD that it would cooperate with HUD's planned sale of the property. In September 1994, the property was foreclosed upon by HUD. The Partnership recognized a gain of approximately $5.4 million on the disposition of the real estate and an extraordinary gain of $426,000 on extinguishment of the related debt. Greenbriar Associates Chapter 11 Proceeding In December 1990, the Partnership ceased debt service on the note and interest payable of $12.5 million secured by Greenbriar Apartments because the property's operations did not support scheduled debt service payments. As a result of the Partnership's nonperformance under the terms of the mortgage note, the lien- holder moved to foreclose on the property in October 1991. In December 1991, Greenbriar Associates, a wholly-owned limited partnership that holds title to the Greenbriar Apartments, filed for Chapter 11 protection. In March 1994, the General Partner, on behalf of Greenbriar Associates, executed a deed-in-lieu of foreclosure after Greenbriar Associates was unable to obtain the debt concessions proposed in its reorganization plan. In July 1994, the property was transferred to the lienholder resulting in a net gain of approximately $9.5 million on the property disposition and extinguishment of debt. Other Income The Partnership (and simultaneously 15 affiliated partnerships) entered claims in Southmark Corporation's Chapter 11 bankruptcy proceeding in 1991. These claims related to Southmark Corporation's activities while it exercised control (directly, or indirectly through its affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and the affiliated partnerships' allowed claim at an aggregate $11 million. In March 1994, the Partnership received 3,143 shares of Southmark Corporation Redeemable Series A Preferred Stock and 22,985 shares of Southmark Corporation New Common Stock, with an aggregate market value on the date of receipt of $23,000, and $172,000 in cash, representing the Partnership's share of the recovery, based on its pro rata share of the claims filed. In July 1994, the Partnership was able to recover $199,000, representing the refund of a repair escrow relating to a property that was previously sold. The recovery has been recorded as other income in the accompanying statement of operations. Subsequent Event Subsequent to December 31, 1996, the Partnership declared distributions to the partners of approximately $550,000 attributable to cash flow from operations and approximately $903,000 representing a return of capital. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA CONSOLIDATED CAPITAL PROPERTIES IV LIST OF FINANCIAL STATEMENTS Reports of Independent Auditors Consolidated Balance Sheets - December 31, 1996 and 1995 Consolidated Statements of Operations - Years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Changes in Partners' Deficit - Years ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows - Years ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements Report of Ernst & Young LLP, Independent Auditors The Partners Consolidated Capital Properties IV We have audited the accompanying consolidated balance sheets of Consolidated Capital Properties IV as of December 31, 1996 and 1995, and the related consolidated statements of operations, partners' deficit and cash flows for the years then ended. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Partnership's management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Consolidated Capital Properties IV as of December 31, 1996 and 1995, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with generally accepted accounting principles. /s/ ERNST & YOUNG LLP Greenville, South Carolina February 3, 1997 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Partners of Consolidated Capital Properties IV: We have audited the accompanying consolidated statements of operations, partners deficit, and cash flows of Consolidated Capital Properties IV (a California limited partnership) for the year ended December 31, 1994. These financial statements are the responsibility of the Partnership's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations, changes in partners' deficit, and cash flows of Consolidated Capital Properties IV for the year ended December 31, 1994, in conformity with generally accepted accounting principles. /s/ Arthur Andersen, LLP Dallas, Texas March 23, 1995 CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED BALANCE SHEETS (in thousands, except unit data) Years Ended December 31, 1996 1995 Assets Cash and cash equivalents: Unrestricted $ 9,239 $ 10,865 Restricted-tenant security deposits 648 665 Investments 515 2,637 Prepaid expenses and other assets 6,124 6,900 Note and interest receivable 1,124 1,155 Investment properties: Land 12,491 12,868 Buildings and related personal property 115,637 112,350 128,128 125,218 Less accumulated depreciation (91,934) (86,294) 36,194 38,924 $ 53,844 $ 61,146 Liabilities and Partners' Deficit Liabilities Accounts payable and accrued expenses $ 2,853 $ 3,443 Notes and interest payable 72,233 76,336 75,086 79,779 Partners' Deficit General partners (6,089) (5,951) Limited partners (342,783 units outstanding in (1996 and 1995, respectively) (15,153) (12,682) (21,242) (18,633) $ 53,844 $ 61,146 See Accompanying Notes to Consolidated Financial Statements CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except unit data)
Years Ended December 31, 1996 1995 1994 Revenues: Rental income $27,413 $26,354 $27,087 Interest and other income 724 1,114 818 Total revenues 28,137 27,468 27,905 Expenses: Property operations 14,593 13,805 16,092 Depreciation and amortization 7,048 6,673 7,328 Interest 6,052 6,544 8,025 Administrative 1,317 1,486 880 Write down of investment property -- 200 -- Total expenses 29,010 28,708 32,325 Loss from operations (873) (1,240) (4,420) Gain on disposition of real estate -- -- 9,523 Income (loss) before extraordinary items (873) (1,240) 5,103 Extraordinary (losses) gains, net from refinancing of debt (90) 43 -- Extraordinary gains from extinguishment of debt -- -- 6,614 Extraordinary gain on foreclosure 2,999 -- -- Net income (loss) $ 2,036 $(1,197) $11,717 Net income (loss) per weighted average limited partnership unit: Income (loss) before extraordinary items $ (2.45) $ (3.47) $ 14.29 Extraordinary items 8.15 .12 18.52 Net income(loss) per weighted average limited partnership unit $ 5.70 $ (3.35) $ 32.81 See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF PARTNERS' DEFICIT (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, 1993 342,839 $(6,335) $(21,897) $(28,232) Abandonment of limited partnership units (56) -- -- -- Net income for the year ended December 31, 1994 -- 469 11,248 11,717 Partners' deficit at December 31, 1994 342,783 (5,866) (10,649) (16,515) Net loss for the year ended December 31, 1995 -- (48) (1,149) (1,197) Distributions paid -- (37) (884) (921) Partners' deficit at December 31, 1995 342,783 (5,951) (12,682) (18,633) Net income for the year ended December 31, 1996 -- 81 1,955 2,036 Distributions paid -- (219) (4,426) (4,645) Partners' deficit at December 31, 1996 342,783 $(6,089) $(15,153) $(21,242) See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Years Ended December 31, 1996 1995 1994 Cash flows from operating activities: Net income (loss) $ 2,036 $ (1,197) $11,717 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization of loan costs, mortgage discounts and lease commissions 7,327 6,952 7,920 Loss (gain) on disposition of investment property 101 -- (9,523) Write down of investment property -- 200 -- Casualty gains -- (185) -- Extraordinary losses (gains) on refinancing 90 (43) -- Extraordinary gains from extinguishment of debt -- -- (6,614) Extraordinary gains on foreclosure (2,999) -- -- Southmark stock receipt -- -- (23) Change in accounts: Restricted cash 5 (327) 147 Interest on note receivable (8) -- -- Prepaid expenses and other assets 757 (561) (196) Interest payable 6 85 -- Accounts payable and accrued expenses (505) 941 (93) Net cash provided by operating activities 6,810 5,865 3,335 Cash flows from investing activities: Property improvements and replacements (4,945) (3,325) (1,708) Purchase of investments -- (7,176) (1,705) Proceeds from sale of investments 2,122 8,882 250 Proceeds from sale of real estate -- -- 881 Receipt of capital improvement escrow on sold real estate -- -- 150 Collections on notes receivable 39 33 11 Deposits to restricted escrows (2,403) (2,323) -- Receipts from restricted escrows 2,259 1,138 -- Net insurance proceeds from casualty gain -- 185 -- Net cash used in investing activities (2,928) (2,586) (2,121) Cash flows from financing activities: Payments on notes payable (497) (749) (783) Repayment of notes payable (12,878) (37,106) -- Proceeds from long-term borrowings 12,800 43,530 -- Prepayment penalties (9) (179) -- Loan costs paid (279) (1,325) -- Distributions to Partners (4,645) (921) -- Net cash (used in) provided by financing activities (5,508) 3,250 (783) Net (decrease) increase in cash and cash equivalents (1,626) 6,529 431 Cash and cash equivalents at beginning of year 10,865 4,336 3,905 Cash and cash equivalents at end of year $ 9,239 $10,865 $ 4,336 Supplemental Disclosures of Cash Flow Information and Non-Cash Activities: Cash paid for interest was approximately $5,750,000, $6,154,000 and $6,651,000 for the years ended December 31, 1996, 1995, and 1994, respectively. Foreclosure In February of 1996, Metro Centre Office Building was foreclosed upon by the lender. In connection with this foreclosure, the following accounts were adjusted by the amounts noted below (in thousands). 1996 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 Extraordinary gain on foreclosure of investment property (2,999) The net book amount of the property approximated its fair value at the date of foreclosure. See Accompanying Notes to Consolidated Financial Statements
NOTE A - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Consolidated Capital Properties IV (the "Partnership" or "Registrant"), a California limited partnership, was formed on September 22, 1981, to acquire and operate commercial and residential properties. Partnership operations commenced February 16, 1982, the date on which impound requirements were met. As of December 31, 1996, the Partnership operates 17 residential properties located in or near major urban areas in the United States. Upon the Partnership's formation in 1981, Consolidated Capital Equities Corporation ("CCEC"), a Colorado corporation, was the corporate general partner and Consolidated Capital Management Company ("CCMC"), a California general partnership, was the non-corporate general partner. In 1988, through a series of transactions, Southmark Corporation ("Southmark") acquired controlling interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan, CEI acquired CCEC's general partner interests in the Partnership and in 15 other affiliated public limited partnerships (the "Affiliated Partnerships") and CEI replaced CCEC as managing general partner in all 16 partnerships. The selection of CEI as the sole managing general partner was approved by a majority of the limited partners in the Partnership and in each of the Affiliated Partnerships pursuant to a solicitation of the Limited Partners dated August 10, 1990. As part of this solicitation, the Limited Partners also approved an amendment to the Partnership Agreement to limit changes of control of the Partnership, and the conversion of CCMC from a general partner to a limited partner, thereby leaving CEI as the sole general partner of the Partnership. All of CEI's outstanding stock is owned by GII Realty, Inc. In December 1994, the parent of GII Realty, Inc., entered into a transaction (the "Insignia Transaction") in which an affiliate of Insignia acquired an option (exercisable in whole or in part from time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to a partial exercise of such option, acquired 50.5% of that stock. As a part of the Insignia Transaction, the Insignia affiliate also acquired all of the outstanding stock of Partnership Services, Inc., an asset management entity, and a subsidiary of Insignia acquired all of the outstanding stock of Coventry Properties, Inc., a property management entity. In addition, confidentiality, non-competition, and standstill arrangements were entered into between certain of the parties. Those arrangements, among other things, prohibit GII Realty's former sole shareholder from purchasing Partnership Units for a period of three years. On October 24, 1995, the Insignia affiliate exercised the remaining portion of its option to purchase all of the remaining outstanding capital stock of GII Realty, Inc. At December 31, 1996, Insignia and Affiliates own a total of 65,651 Units of the Partnership. The principal place of business for the Partnership and for the General Partner is One Insignia Financial Plaza, Greenville, South Carolina 29602. 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 certain majority-owned limited partnerships and the Partnership's majority interest in a joint venture partnership. All intercompany transactions have been eliminated. Cash and Cash Equivalents: Unrestricted Cash Unrestricted cash and cash equivalents include cash on hand and in banks, demand deposits, money market funds, and certificates of deposits with original maturities of less than ninety days. See "Notes C and I" for supplemental information with respect to noncash investing and financing activity. Restricted cash - tenant security deposits The Partnership requires security deposits from new lessees for the duration of the lease and such deposits are considered restricted cash. Deposits are refunded when the tenant vacates the apartment, provided the tenant has not damaged its space and is current on its rental payments. Restricted assets The Partnership maintained cash related to its U.S. Housing and Urban Development ("HUD") property in unrestricted cash of approximately $801,000 at December 31, 1995. Due to refinancing activities in 1996, as discussed in "Note C", there are no remaining properties secured by HUD loans at December 31, 1996. The Partnership maintained the following restricted cash balances in Prepaid expenses and other assets (amounts in thousands): As of December 31, 1996 1995 Tax and Insurance Escrows $1,017 $1,235 Repair and Maintenance Escrows 2,910 2,766 Investments in Real Estate Prior to 1996, investment properties were generally stated at the lower of cost or estimated fair value, which was determined using the net operating income of the investment property capitalized at a rate deemed reasonable for the type of property, adjusted for market conditions, physical condition of the property and other factors to assess whether any permanent impairment in value has occurred. During 1996, the Partnership adopted "FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," which requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. The effect of the adoption was not material. Depreciation Buildings, improvements and furniture and fixtures are depreciated using the straight-line method over the estimated useful lives of the assets, ranging from 4 to 40 years. Investments In 1994, the Partnership adopted "Statements of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities." Investments consisting primarily of U.S. Treasury Notes with original maturities of more than ninety days, are considered to be held-to-maturity securities. As the Investments' fair values approximate their cost, any unrealized gains or losses are immaterial and therefore, have not been recorded in the accompanying financial statements. The cost of Investments sold is determined using the specific identification method. The Investments mature as follows (dollar amounts in thousands): Description Cost Maturity U.S. Treasury Notes 492 January 1997 Equity Securities 23 N/A $ 515 Investments at December 31, 1995, consisted of approximately $2,614,000 in U.S. Treasury Notes and approximately $23,000 in Equity Securities. Rental Income The Partnership leases its residential properties under short-term operating leases. Lease terms are generally one year or less in duration. The Partnership owned one commercial office building (Metro Centre Office Building) which was foreclosed upon in 1996 (See "Note C"). Deferred Loan Fees Deferred loan fees are amortized using the straight-line method over the lives of the related mortgage notes. Unamortized deferred fees are included in prepaid expenses and other assets. Lease Commissions Lease commissions are capitalized and amortized using the straight-line method over the life of the applicable lease. Unamortized lease commissions are included in prepaid expenses and other assets. Income Taxes The Partnership is classified as a partnership for Federal income tax purposes. Accordingly, no provision for income taxes is made in the financial statements of the Partnership. Taxable income or loss of the Partnership is reported in the income tax returns of its partners. The tax basis of the Partnership's assets and liabilities is approximately $27.6 million greater than the assets and liabilities as reported in the financial statements at December 31, 1996. Fair Value In 1995, the Partnership implemented "Statements of Financial Accounting Standards No. 107, Disclosure about Fair Value of Financial Instruments," which requires disclosure of fair value information about financial instruments for which it is practicable to estimate that value. The carrying amount of the Partnership's cash and cash equivalents approximates fair value due to their short-term maturities. The Partnership estimates the fair value of its fixed rate mortgages by discounted cash flow analysis based on estimated borrowing rates currently available to the Partnership. Allocation of Net Income and Net Loss The Partnership Agreement provides for net losses and distributions of distributable cash from operations to be allocated, generally 96% to the Limited Partners and 4% to the general partner (inclusive of the special limited partners). Net Income (Loss) Per Weighted Average Limited Partnership Unit Net income (loss) per weighted average Limited Partnership Unit is computed by dividing net income (loss) allocated to the Limited Partners by the weighted average number of Units outstanding. Per Unit information has been computed based on weighted average Units outstanding of 342,783 for the years ended December 31, 1996 and 1995, respectively, and 342,819 for the year ended December 31, 1994. Reclassifications Certain reclassifications have been made to the 1995 and 1994 information to conform to the 1996 presentation. Advertising Costs Advertising costs of approximately $375,000, $321,000, and $375,000 in 1996, 1995 and 1994, respectively, are charged to expenses as incurred and are included in operating expenses. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. NOTE B - RELATED PARTY TRANSACTIONS The Partnership has no employees and is dependent on the General Partner and affiliates of Insignia for the management and administration of all of the partnership activities, as provided in the Partnership Agreement. The Partnership has paid the property management fees noted below based on collected gross rental revenues ("Rental Revenues") for property management services in each of the years ended December 31, 1996, 1995 and 1994, respectively. For the year ended December 31, 1994, a portion of such property management fees equal to 4% of Rental Revenues was paid to the property management companies performing day-to-day property management services and a portion equal to 1% of Rental Revenues was paid to Partnership Services, Inc. ("PSI") or its predecessor for advisory services related to day-to-day property operations. During 1994, Coventry Properties, Inc. ("Coventry"), an affiliate of the General Partner, provided day-to-day property management responsibilities for six of the Partnership's properties. In late December 1994, an affiliate of Insignia assumed day-to-day property management responsibilities for fifteen of the Partnership's eighteen properties. On February 15, 1995, an affiliate of Insignia assumed day-to-day property management responsibilities for Lake Forest and Post Ridge Apartments. On February 7, 1996, the Metro Centre Office Building was foreclosed upon by the lender and affiliates of Insignia ceased to manage the property. South Port Apartments is currently managed by an unaffiliated management company. Property management fees of approximately $1,316,000 and $1,223,000 were paid to affiliates of the General Partner for the years ended December 31, 1996, and 1995, respectively. Fees paid to PSI and Coventry for the year ended December 31, 1994, were approximately $570,000. These fees are included in operating expenses. 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 $392,000 and $80,000 under this provision of the Partnership Agreement to affiliates of the General Partner for the years ended December 31, 1996 and 1995, respectively. No such fees were paid or accrued in 1994. These fees are included in administration expenses. 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. Reimbursements for services of affiliates of approximately $605,000 and $645,000 were paid to the General Partner and affiliates for the years ended December 31, 1996, and 1995, respectively. These reimbursements are primarily included in administrative expenses. The General Partner and its affiliates, which includes Coventry for the year ended December 31, 1994, received approximately $505,000 of expense reimbursements. Included in reimbursements for services of affiliates is approximately $32,000 and $11,000 for 1996 and 1995, respectively, related to construction oversight costs incurred in conjunction with capital improvements at several of the Partnership's properties. During the year ended December 31, 1995, the Partnership incurred approximately $42,000 of expense reimbursements to an affiliate of the General Partner related to evaluating the feasibility of refinancing the debt on several of the Partnership's investment properties. The Partnership has also paid this affiliate approximately $22,000 and $123,000 in 1996 and 1995, respectively, for loan costs which were capitalized and included in "Prepaid expenses and other assets" on the Consolidated Balance Sheet. These loan costs related to the refinancing of two of the Partnership's properties in 1996 and eight properties in 1995 (See "Note C"). 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. 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 $60.00 per Unit to Limited Partners of record as of December 15, 1994. Approximately 3,370 Limited Partners holding 64,343 Units (18.77% 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. NOTE C - NOTES AND INTEREST PAYABLE AND RECEIVABLE Notes Payable
Principal Principal Balance At Stated Balance December 31, Interest Period Maturity Due At Property 1996 Rate Amortized Date Maturity (dollar amounts in thousands) The Apartments $ 3,488 8.34% 7 years 9/00 $ 3,244 Arbour East Apartments 5,650 6.95% 10 years 12/05 5,650 Briar Bay Racquet Club 3,500 6.95% 10 years 12/05 3,500 Chimney Hills Apartments 5,400 6.95% 10 years 12/05 5,400 Citadel Apartments 4,830 8.38% 7 years 10/00 4,488 Citadel Village Apartments 2,450 6.95% 10 years 12/05 2,450 Foothill Place Apartments 10,100 6.95% 10 years 12/05 10,100 Knollwood Apartments 6,780 6.95% 10 years 12/05 6,780 Lake Forest Apartments 4,700 7.33% 7 years 11/03 4,700 Nob Hill Villa Apartments 7,361 9.20% 10 years 4/05 6,250 Overlook Apartments 1,878 10.50% 25 years 12/98 1,817 Post Ridge Apartments 4,050 7.33% 7 years 11/03 4,050 Rivers Edge Apartments 2,036 8.40% 7 years 9/00 1,895 South Port Apartments 3,464 10.85% 15 years 7/01 3,167 Stratford Place Apartments 2,657 8.65% 25 years 9/00 2,478 Village East Apartments 2,150 6.95% 10 years 12/05 2,150 $70,494 $68,119
The notes payable represent borrowings on the properties purchased by the Partnership. The notes are non-recourse, and are collateralized by deeds of trust on the investment properties. The notes mature between 1998 and 2005 and bear interest at rates ranging from 6.95% to 10.85%. The estimated fair value of the Partnership's aggregate debt is approximately $72.5 million. This estimate represents a general approximation of possible value and is not necessarily indicative of the amounts the Partnership might pay in actual market transactions. Summary of Maturities Subsequent to December 31, 1996 Future annual principal payments required under the terms of mortgage notes payable are as follows (amounts in thousands): Years Ended December 31, 1997 $ 415 1998 2,974 1999 449 2000 12,509 2001 3,356 Thereafter 52,060 Total $71,763(a) (a) This table includes the underlying mortgage debt related to the Denbigh Village Apartments as discussed below. Approximately $2.5 million of non-recourse mortgage debt secured by the Metro Centre Office Building, located in Southern California, matured July 1, 1995. The property historically had difficulty making its scheduled debt service payments and, 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. Given existing economic conditions in Southern California, property operations were not expected to improve sufficiently to enable the Partnership to refinance the existing indebtedness under prevailing 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 action and the property was foreclosed upon on February 7, 1996, resulting in an extraordinary gain on foreclosure of approximately $2,999,000 to the Partnership. In March of 1995, the Partnership refinanced two non-recourse 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. Total capitalized loan costs incurred in 1995 for the refinancing totaled approximately $304,000 and are being amortized over the life of the loan. Restricted Escrows required under the Nob Hill Villa refinancing are as follows: CAPITAL IMPROVEMENT RESERVES - At the time of the refinancing of the mortgage note payable, $219,000 of the proceeds were designated for "Capital Improvement Escrows" for certain capital improvements. At December 31, 1996, the escrow balance is approximately $29,000. In December of 1995, the Partnership refinanced approximately $31.5 million of mortgage indebtedness which encumbers the Arbour East, Briar Bay, Chimney Hills, Citadel Village, Foothill Place, Knollwood and Village East Apartments. As a result of the refinancings, the Partnership paid approximately $179,000 in prepayment penalties and wrote-off approximately $28,000 in unamortized loan costs. As a result, the Partnership recorded an extraordinary loss from the refinancing of approximately $207,000. The new mortgage indebtedness of $36,030,000 carries a stated interest rate of 6.95%, with interest-only payments and a balloon payment due December 1, 2005. Total capitalized loan costs incurred in December 1995, for the seven refinancings totaled approximately $1,002,000 and are being amortized over the life of the respective loans. Restricted Escrows required under the December 1995, refinancings are as follows: CAPITAL IMPROVEMENT RESERVES - At the time of the refinancings of the mortgage notes payable, $1,047,000 of the proceeds were designated for "Capital Improvement Escrows" for certain capital improvements. At December 31, 1996, the balance of these reserves is approximately $479,000. In 1996, an additional $97,500 was designated for "Capital Improvement Escrows" for Knollwood. REPLACEMENT RESERVE ACCOUNT - In addition to the Capital Improvement Reserves, Replacement Reserve Accounts of $507,000, which ranged from $191 to $325 per unit, were established with the refinancing proceeds for the refinanced properties. These funds were established to cover necessary repairs and replacements of existing improvements. At December 31, 1996, the balance of these reserves is approximately $855,000. 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. As a result of the note payoff, the Partnership paid approximately $5,000 in prepayment penalties which resulted in an extraordinary loss on refinancing. Prior to November 1996, Lake Forest Apartments ("Lake Forest") secured a mortgage note guaranteed by the U.S. Department of Housing and Urban Development ("HUD") totalling approximately $4.1 million. In November 1996, the Partnership refinanced this mortgage note by obtaining a new mortgage note of approximately $4.7 million secured by Lake Forest. Under the terms of the refinancing agreement, the new mortgage note bears interest at 7.33% and matures in November 2003. As a result of the refinancing, the Partnership paid approximately $4,000 in prepayment penalties which resulted in an extraordinary loss on refinancing. Total capitalized loan costs incurred in 1996 for Lake Forest totaled approximately $133,000 and are being amortized over the life of the loan. Restricted escrows established at the Lake Forest refinancing are as follows: CAPITAL IMPROVEMENT RESERVES - At the time of the refinancing of the mortgage note payable, $555,000 of the proceeds were designated for "Capital Improvement Escrows" for certain capital improvements. The Post Ridge Apartments ("Post Ridge") formerly secured a mortgage note totalling approximately $4.2 million, which was guaranteed by HUD. Operating cash flow from Post Ridge did not support its scheduled debt service payments. As a result, in January 1991, the Partnership suspended scheduled debt service for Post Ridge. From 1991 through March of 1995, the Partnership remitted excess cash flow from the properties' operations as debt service. 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. In September of 1996, the Partnership entered into an interim financing arrangement and refinanced the non-recourse mortgage note of approximately $4.2 million which was secured by Post Ridge Apartments. Under the terms of the interim financing arrangement, the new $4.1 million mortgage note bore interest at 8% through October 31, 1996, and from November 1, 1996, through the maturity date of November 15, 1996, the note bore interest at a rate equal to 2.5% plus the average one month LIBOR (7.875%). As a result of this refinancing, the Partnership realized a $16,000 gain on the forgiveness of accrued interest, a $61,000 gain on the forgiveness of advances from prior years, and a $158,000 loss on the write-off of loan costs which resulted in a net extraordinary loss on refinancing of $81,000. In November 1996, the General Partner obtained permanent financing by securing a new mortgage note of approximately $4.1 million collateralized by Post Ridge. Under the terms of the agreement this mortgage note bears interest at 7.33% and matures in November 2003. Total capitalized loan costs incurred in 1996 for Post Ridge totaled approximately $122,000 and are being amortized over the life of the loan. Restricted escrows established at the Post Ridge refinancing are as follows: CAPITAL IMPROVEMENT RESERVES - At the time of the refinancing, approximately $384,000 of the proceeds were designated for "Capital Improvement Escrows" for certain capital improvements. Note Receivable on Sold Property: As of December 31, 1996 Underlying Note Mortgage Collateral Property Receivable Debt (in thousands) Denbigh Village Apartment complex - 138 units Newport News, Virginia $ 1,116 $ 1,268 When Denbigh Village Apartments was sold in August 1994, the Partnership accepted a promissory note which matured in March 1996. In March 1996, an extension, under the existing terms, was negotiated to extend the note until April 1997. The estimated value of the note receivable approximates its carrying value. Denbigh Village Apartments secures two underlying mortgage notes. The balance of the first mortgage is approximately $542,000 at December 31, 1996, has a stated interest rate of 9.5% and matures in December 2002. The balance of the second mortgage is approximately $726,000, has a stated interest rate of 9.5% and matures in December of 1998. The estimated fair value of the Partnership's underlying mortgage debt secured by the Denbigh Village Apartments is approximately $1.4 million. This estimate represents a general approximation of possible value and is not necessarily indicative of the amounts the Partnership might pay in actual market transactions. NOTE D - CHAPTER 11 PROCEEDING Greenbriar Associates In December 1990, the Partnership ceased debt service on the note and interest payable secured by Greenbriar Apartments because the property's operations did not support scheduled debt service payments. As a result of the Partnership's non-performance under the terms of the mortgage note, the lien-holder moved to foreclose on the property in October 1991. In December 1991, Greenbriar Associates, a wholly-owned limited partnership that holds title to the Greenbriar Apartments, filed for Chapter 11 protection. Property management services for the property were transferred to a management company employed by the lender in December 1991. In March 1994, the General Partner, on behalf of Greenbriar Associates, executed a deed-in-lieu of foreclosure after Greenbriar Associates was unable to obtain the debt concessions proposed in its reorganization plan. In July 1994, the property was transferred to the lienholder resulting in a net gain of approximately $9.5 million on the property disposition and extinguishment of debt. The 1994 results of operations for Greenbriar Associates are summarized in the following table (in thousands): For the Period From January 1 to July 15, 1994 Rental revenues $ 1,322 Costs and expenses: Property operations 1,278 Depreciation 364 Interest 538 Total costs and expenses 2,180 Net loss $ (858) NOTE E - 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 $2.2 million. During 1996, the Metro Centre Office Building was foreclosed on by the lender. Accordingly, the replacement reserve requirement at the remaining residential properties was reduced to 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. Reserves, including unrestricted cash and cash equivalents, tenant security deposits and investments, totaling approximately $10.4 million at December 31, 1996, exceeded the Partnership's reserve requirements of approximately $2.1 million. NOTE F - OTHER INCOME In 1991, the Partnership (and simultaneously other affiliated partnerships) entered claims in the Southmark Corporation's Chapter 11 bankruptcy proceeding. These claims related to the Southmark Corporation's activities while it exercised control (directly, or indirectly through its affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and the other affiliated partnerships' allowed claim at an aggregate $11 million. In March 1994, the Partnership received 3,143 shares of Southmark Corporation Redeemable Series A Preferred Stock and 22,985 shares of Southmark Corporation New Common Stock with an aggregate market value on the date of receipt of approximately $23,000 and $172,000 in cash, representing the Partnership's share of the recovery, based on its pro rata share of the claims filed. In July 1994, the Partnership was able to recover approximately $199,000, representing the refund of a repair escrow relating to a property that was previously sold. The recovery has been recorded as other income in the accompanying statement of operations. NOTE G - ABANDONED LIMITED PARTNERSHIP UNITS For the year ended December 31, 1994, the number of Limited Partnership Units decreased by 56 units, due to limited partners abandoning their units. In abandoning Limited Partnership Units, a limited partner relinquishes all right, title and interest in the Partnership as of the date of abandonment. The net loss per weighted average Limited Partnership Unit in the accompanying Statements of Operations is calculated based on weighted average Units outstanding during the period. NOTE H - SALE OF REAL ESTATE In August 1994, the Partnership sold the Denbigh Woods Apartments. In connection with the sale, the Partnership accepted a $1.2 million wrap-note receivable and received net sales proceeds of $881,000. The wrap-note receivable accrued interest at an annual rate of 9%, required monthly payments of principal and interest totalling $11,814, and matured in March 1996. The Partnership negotiated with the purchaser to extend the note, at the same interest rate, until April 1997. Since the wrap-around promissory note is subordinate and inferior to the first-lien mortgages, the Partnership remains obligated under two underlying first-lien mortgages totalling approximately $1.3 million which are secured by the Denbigh Woods Apartments. Pursuant to the sale contract, the Partnership received, from the purchaser, a capital improvement escrow totalling $150,000. Upon completion of certain repairs and capital improvements at the property, the Partnership will reimburse the purchaser from the escrow account. At December 31, 1996, the remaining capital improvement escrow held by the partnership was approximately $44,000. The Partnership recognized a gain of $884,000 on the sale during the third quarter of 1994. The sales transaction is summarized in the following table (in thousands): 1994 Sales Value: Cash proceeds received $ 881 Wrap-note receivable 1,200 Total sales value 2,081 Cost of sales: Net real estate (a) (1,188) Other liabilities, net of other assets (9) Total costs of sales (1,197) Gain on sale of real estate $ 884 (a)Real estate at cost, net of accumulated depreciation of approximately $1.7 million. The holder of the underlying first-lien mortgages did not pre-approve the sale and, as a result, since the sale in 1994 the Partnership has been in technical default on the two first-lien mortgages. Although the holder of the mortgages has the right to accelerate the notes at any time, no such intentions have been indicated by the holder of the mortgages. NOTE I - DISPOSITION OF REAL ESTATE In February 1996, Metro Centre Office Building was foreclosed upon by the lender. The 1996, 1995 and 1994 results of operations for Metro Centre Office Building are summarized in the following table (in thousands): For the Period From January 1 to February 7, 1996 1995 1994 (in thousands) Revenues $ 22 $ 294 $ 308 (Loss) from continuing operations (9) (160) (372) Net income (loss) 2,991 (160) (372) Income (loss) per limited Partnership Unit $ 8.38 $(0.46) $(1.04) In January 1991, the Partnership suspended the scheduled debt service on the HUD-financed loan secured by the Westwood Apartments because cash flow from the property's operations did not support the scheduled payments and because the property was leveraged in excess of its economic value. The Partnership submitted two workout proposals to HUD, however, HUD rejected both proposals. In 1993, HUD notified the Partnership that it intended to foreclose on the Westwood Apartments and in September 1994, the property was foreclosed upon, with the Partnership recognizing a gain of approximately $5.4 million on the disposition of the real estate and an extraordinary gain of $426,000 on extinguishment of the related debt. As more fully described in "Note D," the General Partner, on behalf of Greenbriar Associates, executed a deed-in-lieu of foreclosure on Greenbriar Apartments and in July 1994, the property was transferred to the lienholder. The Partnership recognized a gain of approximately $3.3 million on the disposition of the real estate and an extraordinary gain of approximately $6.2 million on extinguishment of the related debt. The transactions are summarized as follows (in thousands): 1994 Net real estate (a) $(5,866) Other assets, net of other liabilities 455 (5,411) Debt discharged (b) 20,664 Net gain on foreclosure 15,253 Gain on disposition of real estate (c) $ 8,639 Extraordinary gain on extinguishment of debt (d) 6,614 Net gain on foreclosure $15,253 (a)Real estate, at cost, net of accumulated depreciation of approximately $14.9 million. (b)Amount includes accrued interest. (c)The gain on disposition of real estate represents the difference between the carrying value of the real estate and the estimated fair value of the property at disposition. The gain is included in "Gain on disposition of real estate" in the accompanying consolidated statements of operations. (d)The gain on extinguishment of debt represents the difference between the estimated fair value of the property at foreclosure and the amount of debt, including accrued interest, extinguished. The gain is reflected as an extraordinary item in the accompanying consolidated statements of operations. NOTE J - 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 $36,000 was distributed to the general partners of the majority-owned sub-tier limited partnerships. In September 1996, the General Partner declared and paid distributions attributable to cash flow from operations totalling approximately $921,000. NOTE K - INVESTMENT PROPERTIES AND ACCUMULATED DEPRECIATION (amounts in thousands) Initial Cost To Partnership Cost Buildings Capitalized and Related (Written-Down) Personal Subsequent to Description Encumbrances Land Property Acquisition Knollwood $ 6,780 $ 345 $ 7,065 $ 2,793 Chimney Hills 5,400 659 7,188 2,561 Briar Bay Racquet Club 3,500 1,084 5,271 1,280 Citadel Village 2,450 337 3,334 90 Village East 2,150 184 2,236 849 Rivers Edge 2,036 512 2,160 506 Nob Hill Villa 7,361 490 8,922 2,697 Citadel 4,830 695 5,619 1,079 Post Ridge 4,050 143 2,498 1,455 Arbour East 5,650 547 8,574 2,756 South Port 3,464 1,175 6,496 141 The Apartments 3,488 438 6,218 1,682 Lake Forest 4,700 692 5,811 2,179 Foothill Place 10,100 3,492 9,435 1,902 Stratford Place 2,657 1,186 4,628 1,471 Overlook 1,878 397 3,573 400 Point West -- 285 2,919 (321) Totals $70,494 $12,661 $91,947 $23,520
Gross Amount At Which Carried At December 31, 1996 Buildings And Related Personal Accumulated Date of Date Depreciable Description Land Property Total Depreciation Construction Acquired Life-Years Knollwood $ 345 $ 9,858 $10,203 $8,555 1972 7/82 5-18 Chimney Hills 659 9,749 10,408 8,822 1973 8/82 5-18 Briar Bay Racquet Club 1,084 6,551 7,635 5,855 1975 9/82 5-18 Citadel Village 337 3,424 3,761 3,258 1974 12/82 5-18 Village East 184 3,085 3,269 2,718 1973 12/82 5-18 Rivers Edge 512 2,666 3,178 2,344 1976 4/83 5-18 Nob Hill Villa 490 11,619 12,109 9,775 1971 4/83 5-18 Citadel 695 6,698 7,393 5,806 1973 5/83 5-18 Post Ridge 143 3,953 4,096 3,430 1972 7/82 5-18 Arbour East 547 11,330 11,877 9,126 1973 9/83 5-18 South Port 1,175 6,637 7,812 5,524 -- 11/83 5-18 The Apartments 438 7,900 8,338 5,424 1973 4/84 5-18 Lake Forest 692 7,990 8,682 5,133 1971 4/84 5-18 Foothill Place 3,402 11,427 14,829 7,616 1973 8/85 5-18 Stratford Place 1,186 6,099 7,285 3,568 1975 8/85 5-20 Overlook 397 3,973 4,370 2,959 1970 11/85 5-15 Point West 205 2,678 2,883 2,021 1973 11/85 5-40 Totals $12,491 $115,637 $128,128 $91,934
Reconciliation of "Investment Properties and Accumulated Depreciation (in thousands):
For the Years Ended December 31, 1996 1995 1994 Investment Properties Balance at beginning of year $125,218 $122,218 $144,854 Additions 4,945 3,325 1,708 Dispositions through sale -- -- (3,533) Dispositions through foreclosures (1,605) -- (20,811) Property disposals (430) (325) -- Balance at End of Year $128,128 $125,218 $122,218 Accumulated Depreciation Balance at beginning of year $ 86,294 $ 79,720 $ 89,681 Depreciation of real estate 7,048 6,667 7,328 Accumulated depreciation on real estate sold -- -- (2,345) Accumulated depreciation on real estate foreclosed (1,079) -- (14,944) Accumulated depreciation on property disposals (329) (93) -- Balance at end of year $ 91,934 $ 86,294 $ 79,720
The aggregate cost of the real estate for Federal income tax purposes at December 31, 1996 and 1995, is approximately $146,091,000 and $145,189,000. The accumulated depreciation taken for Federal income tax purposes at December 31, 1996 and 1995, is approximately $106,311,000 and $101,945,000, respectively. NOTE L - SUBSEQUENT EVENTS Subsequent to December 31, 1996, the Partnership declared distributions to the partners of approximately $550,000 attributable to cash flow from operations and approximately $903,000 representing a return of capital. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE GENERAL PARTNER OF THE REGISTRANT The Registrant has no officers or directors. The General Partner manages and controls the Registrant and has general responsibility and authority in all matters affecting its business. The names of the directors and executive officers of ConCap Equities, Inc. ("CEI"), the Partnership's General Partner, as of December 31, 1996, their ages and the nature of all positions with CEI presently held by them are set forth below. Name Age Position William H. Jarrard, Jr. 50 President Ronald Uretta 41 Vice President/Treasurer Martha L. Long 37 Controller John K. Lines, Esq. 37 Vice President/Secretary Kelley M. Buechler 39 Assistant Secretary William H. Jarrard, Jr. has been President of CEI since December 1996 and Managing Director - Partnership Administration of Insignia since January 1991. Mr. Jarrard served as Managing Director - Partnership Administration and Asset Management from July 1994 until January 1996. Ronald Uretta has been Vice President/Treasurer of CEI since December 1996 and Insignia's Treasurer since January 1992. Since August 1996, he has also served as Insignia's Chief Operating Officer. He has also served as Insignia's Secretary from January 1992 to June 1996 and as Insignia's Chief Financial Officer from January 1992 to August 1994. Since September 1990, Mr. Uretta has also served as the Chief Financial Officer and Controller of Metropolitan Asset Group. Martha L. Long has been Controller of CEI since December 1996 and Senior Vice President - Finance and Controller of Insignia since January 1997. In June 1994, Ms. Long joined Insignia as its Controller, and was promoted to Senior Vice President - Finance in January 1997. Prior to that time, she was Senior Vice President and Controller of The First Savings Bank, FSB in Greenville, SC. John K. Lines, Esq. has been Secretary of CEI since December 1994 and General Counsel and Secretary of Insignia since July 1994. From May 1993 until June 1994, Mr. Lines was the Assistant General Counsel and Vice President of Ocwen Financial Corporation in West Palm Beach, Florida. From October 1991 until April 1993, Mr. Lines was a Senior Attorney with Banc One Corporation in Columbus, Ohio. From May 1984 until October 1991, Mr. Lines was employed as an associate with Squire Sanders & Dempsey in Columbus, Ohio. Kelley M. Buechler has been Assistant Secretary of CEI since December 1994 and Assistant Secretary of Insignia since 1991. During the five years prior to joining Insignia in 1991, she served in a similar capacity for U.S. Shelter. CEI is the general partner of the Partnership and 15 other Affiliated Partner- ships as of December 31, 1996. No family relationship exists between any of the directors and officers of CEI. Market Ventures, L.L.C. ("Ventures"), Liquidity Assistance, L.L.C. ("Liquidity") and Insignia CCP IV Acquisition L.L.C. ("Acquisition") delinquently reported 31 transactions (17, 5 and 9 transactions, respectively) as of December 31, 1996 on a Form 5 filed in January 1997, with respect to the entities' purchases of Units of Limited Partner Interest of the Partnership. Each of Insignia Financial Group, Inc., Insignia Commercial Group, Inc. and Andrew L. Farkas also delinquently reported the same transactions on a Form 5 by virtue of their status as affiliates of Ventures, Liquidity and Acquisition, through which they may be deemed to be beneficial owners of the securities owned by such entities. ITEM 11. EXECUTIVE COMPENSATION No direct compensation was paid or payable by the Partnership to directors or officers for the years ended December 31, 1996 or 1995, nor was any direct compensation paid or payable by the Partnership to directors or officers of the General Partner for the years ended December 31, 1996 or 1995. The Partnership has no plans to pay any such remuneration to any directors or officers of the General Partner in the future. See "Item 8" - Financial Statements and Supplementary Data, "Note B" - Related Party Transactions, for amounts of compensation and reimbursement of salaries paid by the Partnership to the General Partner and its affiliates and the former general partner and former affiliates. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (a) Security Ownership of Certain Beneficial Owners Except as provided below, as of March 1997, no person or group was known to CEI to own of record or beneficially own more than five percent of the Units of the Partnership: Number of Percent Group and Address Units Of Total Insignia affiliates 65,816.50 19.20% One Insignia Financial Plaza Greenville, SC 29602 The units above are held by Insignia Properties, L.P. who holds 65,755.50 units (19.18% of outstanding units) and other affiliated entities who hold nominal amounts of units. As of March 1997, no other person was known to CEI to own of record or beneficially own more than 5 percent (5%) of the Units of the Partnership. (b) Beneficial Owners of Management Except as provided below, neither CEI nor any of the directors or officers or associates of CEI own any Units of the Partnership of record or beneficially. (c) Changes in Control Beneficial Owners of CEI As of March 1997, the following persons were known to CEI to be the beneficial owners of more than 5 percent (5%) of its common stock: Number of Percent Name and Address CEI Shares Of Total GII Realty, Inc. 100,000 100% One Insignia Financial Plaza Greenville, SC 29602 GII Realty, Inc. is owned by an affiliate of Insignia. (See "Item 1") ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transactions with Current Management and Others Except for the transactions described below, neither CEI nor any of its directors, officers or associates, or any associates of any of them, has had any interest in any other transaction to which the Partnership is a party. Please refer to "Item 8 - Financial Statements and Supplementary Data," "Note B - Related Party Transactions," for the amounts and items of permissible compensation and fees paid to the General Partner and its affiliates and other related parties for the last three years. The Partnership has paid property management fees equal to 5% of collected gross rental revenues ("Rental Revenues") for property management services for each of the three years in the period ended December 31, 1996. For the year ended December 31, 1994, a portion of such property management fees equal to 4% of Rental Revenues has been paid to the management companies performing day-to-day property management services and the portion equal to 1% of Rental Revenues has been paid to Partnership Services, Inc. ("PSI") for advisory services related to day-to-day property operations. During 1994, Coventry Properties, Inc. ("Coventry"), an affiliate of the General Partner, provided day-to-day property management responsibilities for six of the Partnership's properties. In late December 1994, an affiliate of Insignia assumed day-to-day property management responsibilities for fifteen of the Partnerships' eighteen properties. On February 15, 1995, an affiliate of Insignia assumed day to day property management responsibilities for Lake Forest and Post Ridge Apartments. On February 7, 1996, the Metro Centre Office Building was foreclosed upon by the lender and affiliates of Insignia ceased to manage the property. South Port Apartments is currently managed by an unaffiliated management company. All of the above-referenced agreements with affiliates of CEI and related parties of the Partnership are subject to the conditions and limitations imposed by the Partnership Agreement. Litigation with Former Related Parties Please refer to "Item 8 - Financial Statements and Supplementary Data," "Note B - - Related Party Transactions," for the amounts and items of compensation and fees paid to former affiliates. In 1991, the Partnership (and simultaneously each of the Affiliated Partnerships) entered claims in Southmark's Chapter 11 bankruptcy proceeding. These claims related to Southmark's activities while it exercised control (directly, or indirectly through its affiliates) over the Partnership. The Bankruptcy Court set the Partnership's and the Affiliated Partnership's allowed claim at $11 million, in aggregate. In March 1994, the Partnership received 3,143 shares of Southmark Corporation Redeemable Series A Preferred Stock and 22,985 shares of Southmark Corporation New Common Stock with an aggregate market value on the date of receipt of $23,000 and $172,000 in cash, representing the Partnership's share of the recovery, based on its pro rata share of the claims filed. ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this report: 1. Financial Statements Consolidated Balance Sheets - December 31, 1996 and 1995 Consolidated Statements of Operations - Years Ended December 31, 1996, 1995 and 1994 Consolidated Statements of Partners' Deficit - Years Ended December 31, 1996, 1995 and 1994 Consolidated Statements of Cash Flows - Years Ended December 31, 1996, 1995 and 1994 Notes to Consolidated Financial Statements 2. Schedules All schedules are omitted because either they are not required, are not applicable or the financial information is included in the financial statements or notes thereto. 3. Exhibits S-K REFERENCE NUMBER DOCUMENT DESCRIPTION 3 Certificate of Limited Partnership, as amended to date. 10.1 Property Management Agreement No. 105 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.2 Property Management Agreement No. 106 dated October 23, 1990, by and between the LeTourneau Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.3 Property Management Agreement No. 107 dated October 23, 1990, by and between Overlook Associates, Ltd. and CCEC (Incor- porated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.4 Property Management Agreement No. 108 dated October 23, 1990, by and between Park 77 Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.5 Property Management Agreement No. 205 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.6 Property Management Agreement No. 306 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.7 Property Management Agreement No. 307 dated October 23, 1990, by and between Point West Associates, Ltd. and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.8 Property Management Agreement No. 403 dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quar- terly Report on Form 10-Q for the quarter ended September 30, 1990). 10.9 Property Management Agreement No. 404 dated October 23, 1990, by and between Denbigh Village Associates, Ltd. and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.10 Property Management Agreement No. 405 dated October 23, 1990, by and between Stratford Place Associates, Ltd. and CCEC (Incorporated by refer- ence to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.11 Bill of Sale and Assignment dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Quar- terly Report on Form 10-Q for the quarter ended September 30, 1990). 10.12 Assignment and Assumption Agreement dated October 23, 1990, by and between CCEC and ConCap Management Limited Partnership ("CCMLP") (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.13 Assignment and Assumption Agreement as to Certain Property Management Services dated October 23, 1990, by and between CCMLP and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.14 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and The Hayman Company (100 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.15 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Horn-Barlow Companies (200 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.16 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and Metro ConCap, Inc. (300 Series of Property Management Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.17 Assignment and Assumption Agreement dated October 23, 1990, by and between CCMLP and R&B Realty Group (400 Series of Property Manage- ment Contracts) (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.18 Assignment and Assumption Agreement dated February 21, 1991, by and between the Partnership and Greenbriar Apartments Associates Limited Partnership (Property Management Agreement No. 403). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.19 Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and ConCap Village East Apartments Associates, L.P. (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.20 Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and Nob Hill Villa Apartments Associates, L.P. (Property Management Agreement No. 306). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.21 Assignment and Assumption Agreement dated April 1, 1991, by and between the Partnership and Barnett Regency Tower Associates Limited Partnership (Property Management Agreement No. 105). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.22 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Denbigh Village Associates, Ltd.) (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.23 Assignment and Assumption of Property Management Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Greenbriar Apart- ments Associates Limited Partnership). (Incor- porated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.24 Assignment and Assumption of Property Manage- ment Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apart- ment Management Company, Inc. (Property Management Agreement with the Partnership concerning Briar Bay Racquet Club). (Incorpora- ted by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.25 Assignment and Assumption of Property Manage- ment Agreement dated August 1, 1991, by and between R & B Realty Group and R & B Apartment Management Company, Inc. (Property Management Agreement with Stratford Place Associates, Ltd.). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.26 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Property Management Agreement No. 306). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.27 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.28 Assignment and Assumption Agreement dated September 1, 1991, by and between ConCap Village East Apartments Associates, L.P. and CCP IV Associates, Ltd. (Property Management Agreement No. 205). (Incor- porated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.29 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Property Management Agreement No. 105). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.30 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partner- ship and Foothill Chimney Associates Limited Partnership (Property Management Agreement No. 205). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.31 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Horn-Barlow Companies (the "Horn-Barlow Construction Management Agree- ment"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.33 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Horn-Barlow Construction Management Agreement Concerning Chimney Hill Apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.34 Assignment and Assumption Agreement dated September 1, 1991, by and between ConCap Village East Apartments Associates, L.P. and CCP IV Associates, Ltd. (Village East Construc- tion Agreement). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.35 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and Metro ConCap, Inc. (the "Metro Construction Management Agreement"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.36 Assignment and Assumption Agreement dated September 1, 1991, by and between the Partnership and CCP IV Associates, Ltd. (Metro Construction Management Agreement concerning Arbour East and Knollwood apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.37 Construction Management Cost Reimburse- ment Agreement dated January 1, 1991, by and between the Partnership and The Hayman Company (the "Hayman Construction Manage- ment Agreement"). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.38 Assignment and Assumption Agreement dated September 15, 1991, by and between the Partnership and Foothill Chimney Associates Limited Partnership (Hayman Construction Management Agreement concerning Chimney Hill Apartments). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.39 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between the Partnership and R & B Apartment Management Company, Inc. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.40 Construction Management Cost Reimbursement Agreement dated January 1, 1991, by and between ConCap Metro Centre Associates, L.P. and R & B Commercial Management Company, Inc. (Incor- porated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.41 Investor Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.42 Assignment and Assumption Agreement (Investor Services Agreement) dated October 23, 1990, by and between CCEC and ConCap Services Company (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1990). 10.43 Letter of Notice dated December 20, 1991, from Partnership Services, Inc. ("PSI") to the Partnership regarding the change in ownership and dissolution of ConCap Services Company whereby PSI assumed the Investor Services Agreement. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.44 Financial Services Agreement dated October 23, 1990, by and between the Partnership and CCEC (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.45 Assignment and Assumption Agreement (Financial Service Agreement) dated October 23, 1990, by and between CCEC and ConCap Capital Company (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1990). 10.46 Letter of Notice dated December 20, 1991, from PSI to the Partnership regarding the change in ownership and dissolution of ConCap Capital Company whereby PSI (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1991). 10.47 Property Management Agreement No. 419 dated May 13, 1993, by and between the Partnership and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.48 Assignment and Assumption Agreement (Property Management Agreement No. 419) dated May 13, 1993, by and between Coventry Properties, Inc., R&B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.49 Assignment and Agreement as to Certain Property Management Services dated May 13, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.50 Property Management Agreement No. 419A dated October 11, 1993, by and between ConCap Stratford Associates, Ltd. and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.51 Assignment and Assumption Agreement (Property Management Agreement No. 491A) dated October 11, 1993, by and between Coventry Properties, Inc., R&B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.52 Assignment and Agreement as to Certain Property Management Services dated October 11, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.53 Property Management Agreement No. 427A dated October 11, 1993, by and between ConCap River's Edge Associates, Ltd. and Coventry Properties, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.54 Assignment and Assumption Agreement (Property Management Agreement No. 427A) dated October 11, 1993, by and between Coventry Properties, Inc., R&B Apartment Management Company, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.55 Assignment and Agreement as to Certain Property Management Services dated October 11, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. (Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended September 30, 1993). 10.56 Property Management Agreement No. 513A dated August 18, 1993, by and between ConCap Citadel Associates, Ltd. and Coventry Properties, Inc. 10.57 Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.58 Property Management Agreement No. 514 dated June 1, 1993, by and between the Partnership and Coventry Properties, Inc. 10.59 Assignment and Agreement as to Certain Property Management Services dated November 17, 1993, by and between Coventry Properties, Inc. and Partnership Services, Inc. 10.60 Stock and Asset Purchase Agreement, dated December 8, 1994 (the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"), Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and certain other parties. (Incorporated by reference to form 8-K dated December 8, 1994) 10.61 Exercise of the Option (as defined in the Gordon Agreement), dated December 8, 1994, between MAE- ICC and Gordon. (Incorporated by reference to Form 8-K dated December 8, 1994) 10.62 Contracts related to refinancing of debt (a) Deed of Trust and Security Agreement dated March 27, 1995 between Nob Hill Villa Apartment Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina Corporation. (b) Promissory Note dated March 27, 1995 between Nob Hill Villa Apartments Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina corporation. (c) Assignment of leases and Rents dated March 27, 1995 between Nob Hill Villa Apartments Associates, L.P., a Tennessee limited partnership, and First Union National Bank of North Carolina, a North Carolina Corporation. 10.63 Multifamily Note dated November 30, 1995 between Briar Bay Apartments Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.64 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.65 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.66 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.67 Multifamily Note dated November 30, 1995 between CCP IV Associates, LTD., a Texas limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.68 Multifamily Note dated November 30, 1995 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.69 Multifamily Note dated November 30, 1995 between Foothill Chimney Associates Limited Partnership, a Georgia limited partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc.. 10.70 Multifamily note dated September 30, 1996, between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee Limited Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capitol, a division of Lehman Brothers Holdings, Inc. 10.71 Exercise of the remaining portion of the option (as defined in the Gordon Agreement), dated December 8, 1994 between MAE-ICC and Gordon. (Incorporated by reference to Form 8-K dated October 24, 1995). 10.72 Multifamily note dated November 1, 1996, between Post Ridge Associates, Ltd., Limited Partnership, a Tennessee Limited Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capitol, a division of Lehman Brothers Holdings, Inc. 10.73 Amended and Restated Multifamily note dated November 1, 1996, between Post Ridge Associates, Ltd., Limited Partnership , a Tennessee Limited Partnership and Lehman Brothers Holding, Inc. d/b/a Lehman Capitol, a division of Lehman Brothers Holdings, Inc. 10.74 Multifamily note dated November 1, 1996, between Consolidated Capital Properties IV, a California Limited Partnership and Lehman Brothers Holdings, Inc. d/b/a Lehman Capitol, a division of Lehman Brothers Holdings, Inc. 11 Statement regarding computation of Net Income per Limited Partnership Unit (Incorporated by reference to Note 1 of Item 8 - Financial Statements of this Form 10-K). 16.1 Letter, dated August 12, 1992, from Ernst & Young to the Securities and Exchange Commission regard- ing change in certifying accountant. (Incorporated by reference to Form 8-K dated August 6, 1992). 16.2 Letter dated May 9, 1995 from the Registrant's former independent accountant regarding its concurrence with the statements made by the Registrant regarding a change in the certifying accountant. (Incorporated by reference to Form 8-K dated May 3, 1995) 19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to incorporate first amended Chapter 11 Plan filed October 27, 1992 and second amend- ments to Chapter 11 Plan of CCP/IV Associates, Ltd. filed December 14, 1992) dated December 14, 1992, and filed December 14, 1992, in the United States Bankruptcy Court for the Middle District of Tennessee. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 19.2 First amended disclosure statement to accompany Chapter 11 Plan, dated February 21, 1992, and amended October 27, 1992 filed by CCP/IV Associates, Ltd. filed October 27, 1992, in the United States Bankruptcy Court for the Middle District of Tennessee. (Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 1992). 27 Financial Data Schedule (b) Reports on Form 8-K filed during the fourth quarter of 1996: None. SIGNATURES In accordance with Section 13 or 15(d) 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/William H. Jarrard, Jr. William H. Jarrard, Jr. President By: /s/Ronald Uretta Ronald Uretta Vice President/Treasurer Date: March 27, 1997 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. /s/William H. Jarrard, Jr. President William H. Jarrard, Jr. /s/Ronald Uretta Vice President/Treasurer Ronald Uretta EX-27 2
5 This schedule contains summary financial information extracted from Consolidated Capital Properties IV 1996 Year-End 10-K and is qualified in its entirety by reference to such 10-K filing. 0000355804 CONSOLIDATED CAPITAL PROPERTIES IV 1,000 12-MOS DEC-31-1996 DEC-31-1996 9,239 515 0 0 0 0 128,128 91,934 53,844 0 71,763 0 0 0 (21,242) 53,844 0 28,137 0 0 29,010 0 6,052 0 0 0 0 2,909 0 2,036 5.70 0 Registrant has an unclassified balance sheet. Multiplier is 1.
EX-10.72 3 Exhibit 10.72 Loan No. 734079796 Post Ridge MULTIFAMILY NOTE US $4,050,000.00 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of Four Million Fifty Thousand and 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Twenty-Four Thousand Seven Hundred Thirty-Eight and 75/100 Dollars (US $28,738.75) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located. The undersigned shall pay any installment of interest due hereunder within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other installment due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. CONSOLIDATED CAPITAL PROPERTIES, a California limited partnership By: ConCap Equities, Inc., a Delaware corporation, its general partner By: /s/ William H. Jarrard, Jr. Name: William H. Jarrard, Jr. Title: Vice President PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This __1st___ day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Vice President EX-10.73 4 Exhibit 10.73 Loan No. 734079796 Post Ridge AMENDED AND RESTATED MULTIFAMILY NOTE This AMENDED AND RESTATED MULTIFAMILY NOTE (together with all extensions, renewals, modification, substitutions and amendments thereof and all instruments from time to time issued in exchange therefor collectively referred to herein as the "Note") in the principal sum of FOUR MILLION FIFTY THOUSAND AND 00/100 DOLLARS ($4,050,000) in lawful money of the United States of America is made this 1st day of November, 1996, between the Maker, POST RIDGE ASSOCIATES, LTD., LIMITED PARTNERSHIP, a Tennessee limited partnership, whose address is c/o Insignia Financial Group, Inc., 1 Insignia Financial Plaza, Greenville, South Carolina 29602 (herein "Borrower"), and the Payee, LEHMAN BROTHERS HOLDING INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc. a corporation, organized and existing under the laws of Delaware, whose address is Three World Financial Center, New York, New York 10285 (herein "Lender"). WHEREAS, Borrower has executed and delivered that certain Multifamily Note dated as of September 30, 1996 in the original principal amount of FOUR MILLION FIFTY THOUSAND AND 00/100 DOLLARS ($4,050,000) (the "Existing Note"), to Lender. WHEREAS, the Existing Note is secured by that certain Multifamily Deed of Trust, Assignment of Rents and Security Agreement dated as of September 30, 1996 (the "Existing Mortgage") and recorded on October 1, 1996 in Book 10210, page 726 in the land records of Davidson County. WHEREAS, on the date hereof, Borrower and Lender desire to amend and restate the Existing Note as set forth below. From and after the date hereof, the terms, covenants and provisions of the Existing Note are hereby modified, amended and restated in their entirety as provided on Rider A attached hereto and incorporated herein, and the Existing Note, as so modified, amended and restated is hereby ratified and confirmed in all respects by Borrower. Neither this Instrument nor anything contained herein shall be construed as a substitution or novation of Borrower's indebtedness to Lender or of the Existing Note, which shall remain in full force and effect, as hereby confirmed, modified, restated and superseded. EX-10.74 5 Exhibit 10.74 Loan No. 734105851 Lake Forest MULTIFAMILY NOTE US $4,700,000.00 New York, New York As of November 1, 1996 FOR VALUE RECEIVED, the undersigned promise to pay LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285, or order, the principal sum of Four Million Seven Hundred Thousand and 00/100 Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate of 7.33 percent per annum. Interest only shall be payable at 3 World Financial Center, New York, New York 10285, or such other place as the holder hereof may designate in writing, in consecutive monthly installments of Twenty-Eight Thousand Seven Hundred Nine and 17/100 Dollars (US $28,709.17) on the first day of each month beginning December 1, 1996, until the entire indebtedness evidenced hereby is fully paid, except that any remaining indebtedness, if not sooner paid, shall be due and payable on November 1, 2003. If any installment under this Note is not paid when due, the entire principal amount outstanding hereunder and accrued interest thereon shall at once become due and payable, at the option of the holder hereof. The holder hereof may exercise this option to accelerate during any default by the undersigned regardless of any prior forbearance. In the event of any default in the payment of this Note, and if the same is referred to an attorney at law for collection or any action at law or in equity is brought with respect hereto, the undersigned shall pay the holder hereof all expenses and costs, including, but not limited to, attorney's fees. Prepayments shall be applied against the outstanding principal balance of this Note and shall not extend or postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the holder hereof shall agree otherwise in writing. The holder hereof may require that any partial prepayments be made on the date monthly installments are due and be in the amount of that part of one or more monthly installments which would be applicable to principal. From time to time, without affecting the obligation of the undersigned or the successors or assigns of the undersigned to pay the outstanding principal balance of this Note and observe the covenants of the undersigned contained herein, without affecting the guaranty of any person, corporation, partnership or other entity for payment of the outstanding principal balance of this Note, without giving notice to or obtaining the consent of the undersigned, the successors or assigns of the undersigned or guarantors, and without liability on the part of the holder hereof, the holder hereof may, at the option of the holder hereof, extend the time for payment of said outstanding principal balance or any part thereof, reduce the payments thereon, release anyone liable on any of said outstanding principal balance, accept a renewal of this Note, modify the terms and time of payment of said outstanding principal balance, join in any extension or subordination agreement, release any security given herefor, take or release other or additional security, and agree in writing with the undersigned to modify the rate of interest or period of amortization of this Note or change the amount of the monthly installments payable hereunder. Presentment, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers hereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. The indebtedness evidenced by this Note is secured by a Mortgage or Deed of Trust dated as of the date hereof, and reference is made thereto for rights as to acceleration of the indebtedness evidenced by this Note. This Note shall be governed by the law of the jurisdiction in which the Property subject to the Mortgage or Deed of Trust is located. The undersigned shall pay any installment of interest due hereunder within ten (10) calendar days after such installment of interest is due. The undersigned shall pay any other installment due hereunder or due in accordance with the terms of the Mortgage or Deed of Trust securing this Note, within thirty (30) calendar days of the date such installment is due. IN WITNESS WHEREOF, Borrower has executed this Note or has caused the same to be executed by its representatives thereunto duly authorized. CONSOLODATED CAPITAL PROPERTIES, a California limited partnership By: ConCap Equities, Inc., a Delaware corporation, its general partner By: /s/ William H. Jarrard, Jr. Name: William H. Jarrard, Jr. Title: Vice President PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION WITHOUT RECOURSE. This __1st___ day of November, 1996. LEHMAN BROTHERS HOLDINGS INC. d/b/a Lehman Capital, A Division of Lehman Brothers Holdings Inc., a Delaware corporation By: /s/ Larry J. Kravetz Name: Larry J. Kravetz Title: Vice President -----END PRIVACY-ENHANCED MESSAGE-----