-----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, BAFGcEjbZd3Nyj9FoGyI9NB8IWtbPMQx7AiDGN1jbgG/aRD/821oOQvujgHj4uLn V1QjyjlYP6QTJiSpk0mDUQ== /in/edgar/work/20000802/0000711642-00-000194/0000711642-00-000194.txt : 20000921 0000711642-00-000194.hdr.sgml : 20000921 ACCESSION NUMBER: 0000711642-00-000194 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES 3 CENTRAL INDEX KEY: 0000768890 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 942940208 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-14187 FILM NUMBER: 684155 BUSINESS ADDRESS: STREET 1: 55 BEATTIE PLACE STREET 2: POST OFFICE BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 3037578101 MAIL ADDRESS: STREET 1: 1873 SOUTH BELLAIRE STREET STREET 2: 17TH FLOOR CITY: DENVER STATE: CO ZIP: 80222 10QSB 1 0001.txt SECOND QUARTER 10-QSB FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 U.S. Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2000 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________to _________ Commission file number 0-14187 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 (Exact name of small business issuer as specified in its charter) California 94-2940208 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 55 Beattie Place, PO Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 (Registrant's telephone number) Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No___ PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 BALANCE SHEET (Unaudited) (in thousands, except unit data) June 30, 2000
Assets Cash and cash equivalents $ 3,696 Receivables and deposits 905 Restricted escrows 641 Other assets 571 Investment properties: Land $ 8,641 Buildings and related personal property 45,369 54,010 Less accumulated depreciation (18,648) 35,362 $ 41,175 Liabilities and Partners' (Deficit) Capital Liabilities Accounts payable $ 215 Due to general partner 125 Tenant security deposit liabilities 315 Accrued property taxes 283 Other liabilities 422 Mortgage notes payable 27,925 Partners' (Deficit) Capital General partner $ (721) Limited partners (383,033 units outstanding) 12,611 11,890 $ 41,175
See Accompanying Notes to Financial Statements b) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data)
For the Three Months For the Six Months Ended June 30, Ended June 30, 2000 1999 2000 1999 Revenues: (Restated) (Restated) Rental income $ 3,174 $ 2,981 $ 6,315 $ 5,946 Other income 340 212 549 454 Total revenues 3,514 3,193 6,864 6,400 Expenses: Operating 1,019 1,085 2,244 2,329 General and administrative 166 178 319 323 Depreciation 723 650 1,439 1,276 Interest 524 524 1,047 1,048 Property taxes 186 179 365 336 Total expenses 2,618 2,616 5,414 5,312 Income from continuing operations 896 577 1,450 1,088 Income from discontinued operations -- 48 -- 165 Gain on sale of discontinued operations -- 2,300 -- 2,300 Net income $ 896 $ 2,925 $ 1,450 $ 3,553 Net income allocated to general partner (1%) $ 9 $ 29 $ 15 $ 36 Net income allocated to limited partners (99%) 887 2,896 1,435 3,517 $ 896 $ 2,925 $ 1,450 $ 3,553 Per limited partnership unit: Income from continuing operations $ 2.27 $ 1.49 $ 3.73 $ 2.81 Income from discontinued operations 0.05 0.13 0.02 0.43 Gain on sale of discontinued operations -- 5.94 -- 5.94 Net income $ 2.32 $ 7.56 $ 3.75 $ 9.18 Distributions per limited partnership unit $ 6.01 $ -- $ 9.88 $ 25.59
See Accompanying Notes to Financial Statements c) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data)
Limited Partnership General Limited Units Partner Partners Total Original capital contributions 383,033 $ 1 $95,758 $95,759 Partners' (deficit) capital at December 31, 1999 383,033 $ (698) $14,960 $14,262 Distributions to partners -- (38) (3,784) (3,822) Net income for the six months ended June 30, 2000 -- 15 1,435 1,450 Partners' (deficit) capital at June 30, 2000 383,033 $ (721) $12,611 $11,890
See Accompanying Notes to Financial Statements d) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Six Months Ended June 30, 2000 1999 Cash flows from operating activities: Net income $ 1,450 $ 3,553 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 1,439 1,429 Amortization of lease commissions and loan costs 44 68 Gain on sale of investment property -- (2,300) Change in accounts: Receivables and deposits (352) 129 Other assets (28) 15 Accounts payable (98) 95 Due to affiliate -- (256) Tenant security deposit liabilities 34 (109) Accrued property taxes 96 33 Other liabilities (28) 27 Net cash provided by operating activities 2,557 2,684 Cash flows from investing activities: Property improvements and replacements (717) (902) Net receipts from restricted escrows 227 38 Proceeds from sale of investment property -- 6,573 Net cash (used in) provided by investing activities (490) 5,709 Cash flows used in financing activities: Distributions to partners (3,822) (9,900) Net decrease in cash and cash equivalents (1,755) (1,507) Cash and cash equivalents at beginning of period 5,451 14,189 Cash and cash equivalents at end of period $ 3,696 $12,682 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,003 $ 1,003
At December 31, 1999 and June 30, 2000, accounts payable and property improvements and replacements were adjusted by approximately $91,000. See Accompanying Notes to Financial Statements e) CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 NOTES TO FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited financial statements of Consolidated Capital Institutional Properties/3 (the "Partnership" or "Registrant") have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended June 30, 2000, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2000. For further information, refer to the financial statements and footnotes thereto included in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. Certain reclassifications have been made to the 1999 information to conform to the 2000 presentation. Note B - Transfer of Control Pursuant to a series of transactions which closed on October 1, 1998 and February 26, 1999, Insignia Financial Group, Inc. and Insignia Properties Trust merged into Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust, with AIMCO being the surviving corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership interest in the General Partner. The General Partner does not believe that this transaction has had or will have a material effect on the affairs and operations of the Partnership. Note C - Related Party Transactions The Partnership has no employees and is dependent on the General Partner and/or its affiliates for the management and administration of all Partnership activities. The limited partnership agreement ("Partnership Agreement") provides for payments to affiliates for property management services based on a percentage of revenue. The Partnership Agreement also provides for reimbursement to the General Partner and its affiliates for costs incurred in connection with the administration of Partnership activities. The following amounts were paid or accrued to the General Partner and affiliates during each of the six month periods ended June 30, 2000 and 1999: 2000 1999 (in thousands) Property management fees (included in operating expenses) $335 $315 Reimbursements for services of affiliates (included in investment properties, general and administrative expenses, and operating expenses) 171 166 Real estate brokerage commissions (included in gain on sale of investment property) -- 209 During the six months ended June 30, 2000 and 1999, affiliates of the General Partner were entitled to receive 5% of gross receipts from all the Partnership's residential properties as compensation for providing property management services. The Partnership paid to such affiliates approximately $335,000 and $315,000 for management fees for the six months ended June 30, 2000 and 1999, respectively. An affiliate of the General Partner received reimbursement of accountable administrative expenses amounting to approximately $171,000 and $166,000 for the six month periods ended June 30, 2000 and 1999, respectively. For acting as real estate broker in connection with the sale of South City Business Center, the General Partner was paid a real estate commission of approximately $209,000 during the year ended December 31, 1999. For acting as real estate broker in connection with the sale of Corporate Center in October 1999, the General Partner earned a real estate commission of approximately $125,000. This amount is included in "Due to General Partner" on the accompanying balance sheet. For acting as real estate broker in connection with the sale of City Heights in November 1998, the General Partner earned a real estate commission of approximately $465,000. The commission was accrued at December 31, 1998, and was paid during the first quarter of 1999. AIMCO and its affiliates currently own 178,282.4 limited partnership units in the Partnership representing 46.55% of the outstanding units. A number of these units were acquired pursuant to tender offers made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make one or more additional offers to acquire additional limited partnership interests in the Partnership for cash or in exchange for units in the operating partnership of AIMCO. In this regard, on July 24, 2000, an affiliate of AIMCO commenced a tender offer to purchase any and all of the remaining partnership interests for a purchase price of $106.00. Under the Partnership Agreement, unitholders holding a majority of the Units are entitled to take action with respect to a variety of matters. As a result of its ownership of 46.55% of the outstanding units, AIMCO is in a position to significantly influence all voting decisions with respect to the Registrant. When voting on matters, AIMCO would in all likelihood vote the Units it acquired in a manner favorable to the interest of the General Partner because of their affiliation with the General Partner. Note D - Commitment The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital, as defined in the Partnership Agreement. In the event expenditures are made from this reserve, operating revenue shall be allocated to such reserve to the extent necessary to maintain the foregoing level. Reserves, including cash and securities available for sale, totaling approximately $4.2 million, were greater than the reserve requirement of approximately $2.6 million at June 30, 2000. Note E - Distributions The Partnership paid distributions of cash generated from operations of approximately $3,822,000 (approximately $3,784,000 to the limited partners or $9.88 per limited partnership unit) for the six months ended June 30, 2000. The Partnership distributed cash generated from operations of approximately $4,113,000 (approximately $4,072,000 to the limited partners or $10.63 per limited partnership unit) and approximately $5,787,000 (approximately $5,729,000 to the limited partners or $14.96 per limited partnership unit) of sales proceeds from City Heights for the six months ended June 30, 1999. Note F - Discontinued Operations In June 1999, South City Business Center, located in Chula Vista, California, was sold to an unaffiliated party for $6,962,000. After payment of closing expenses, the net sales proceeds received by the Partnership were approximately $6,573,000. For financial statement purposes, the sale resulted in a gain of approximately $2,300,000. South City Business Center and Corporate Center which was sold in October 1999 to an unaffiliated third party were the last commercial properties in the commercial segment of the Partnership. Due to the sale of the properties in June 1999 and October 1999, respectively, the income of both of the properties has been classified as "Income from discontinued operations" for the three and six month periods ended June 30, 1999. Revenues of these properties were approximately $785,000 for the six months ended June 30, 1999 and approximately $344,000 for the three months ended June 30, 1999. Income from operations of these properties was approximately $165,000 for the six months ended June 30, 1999 and approximately $48,000 for the three months ended June 30, 1999, respectively. Note G - Segment Reporting Description of the types of products and services from which the reportable segment derives its revenues: The Partnership had two reportable segments: residential properties and commercial properties. The Partnership's residential property segment consists of seven apartment complexes one each in Colorado, Florida, Michigan, North Carolina, and Utah and two in Washington. The Partnership rents apartment units to tenants for terms that are typically twelve months or less. The commercial property segment consisted of two business parks, one located in Florida and one in California. These properties leased space to a variety of businesses at terms ranging from month to month to ten years. On October 4, 1999, the final commercial property held by the Partnership was sold to an unrelated party. Therefore, the commerical segment is reflected as discontinued operations. Measurement of segment profit or loss: The Partnership evaluates performance based on segment profit (loss) before depreciation. The accounting policies of the reportable segments are the same as those described in the Partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. Factors management used to identify the enterprise's reportable segments: The Partnership's reportable segments are investment properties that offer different products and services. The reportable segments are each managed separately because they provide distinct services with different types of products and customers. Segment information for the three and six month periods ended June 30, 2000 and 1999 is shown in the tables below. The "Other" column includes Partnership administration related items and income and expense not allocated to the reportable segments (in thousands). Six months ended June 30, 2000 Residential Other Totals Rental income $ 6,315 $ -- $ 6,315 Other income 510 39 549 Interest expense 1,047 -- 1,047 Depreciation 1,439 -- 1,439 General and administrative expenses -- 319 319 Segment profit (loss) 1,730 (280) 1,450 Total assets 25,198 15,977 41,175 Capital expenditures for investment properties 626 -- 626 Three months ended June 30, 2000 Residential Other Totals Rental income $ 3,174 $ -- $ 3,174 Other income 319 21 340 Interest expense 524 -- 524 Depreciation 723 -- 723 General and administrative expenses -- 166 166 Segment profit (loss) 1,041 (145) 896
Six months ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 5,946 $ -- $ -- $ 5,946 Other income 331 -- 123 454 Interest expense 1,048 -- -- 1,048 Depreciation 1,276 -- -- 1,276 General and administrative expenses -- -- 323 323 Gain on sale of discontinued operations -- 2,300 -- 2,300 Income from discontinued operations -- 165 -- 165 Segment profit (loss) 1,288 2,465 (200) 3,553 Total assets 27,952 2,442 23,828 54,222 Capital expenditures for investment properties 826 76 -- 902
Three months ended June 30, 1999 Residential Commercial Other Totals (discontinued) Rental income $ 2,981 $ -- $ -- $ 2,981 Other income 173 -- 39 212 Interest expense 524 -- -- 524 Depreciation 650 -- -- 650 General and administrative expenses -- -- 178 178 Gain on sale of discontinued operations -- 2,300 -- 2,300 Income from discontinued operations -- 48 -- 48 Segment profit (loss) 716 2,348 (139) 2,925
Note H - Legal Proceedings In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature arising in the ordinary course of business. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The matters discussed in this Form 10-QSB contain certain forward-looking statements and involve risks and uncertainties (including changing market conditions, competitive and regulatory matters, etc.) detailed in the disclosures contained in this Form 10-QSB and the other filings with the Securities and Exchange Commission made by the Registrant from time to time. The discussion of the Registrant's business and results of operations, including forward-looking statements pertaining to such matters, does not take into account the effects of any changes to the Registrant's business and results of operations. Accordingly, actual results could differ materially from those projected in the forward-looking statements as a result of a number of factors, including those identified herein. The Partnership's investment properties at June 30, 2000 consist of seven apartment complexes. The following table sets forth the average occupancy of the properties for each of the six month periods ended June 30, 2000 and 1999: Average Occupancy Property 2000 1999 Cedar Rim 94% 92% New Castle, Washington Hidden Cove by the Lake 94% 87% Belleville, Michigan Lamplighter Park 97% 95% Bellevue, Washington Park Capital 95% 97% Salt Lake City, Utah Sandpiper I and II 97% 94% St. Petersburg, Florida Tamarac Village I, II, III, IV 97% 97% Denver, Colorado Williamsburg Manor 96% 97% Cary, North Carolina The General Partner attributes the occupancy increase at Hidden Cove by the Lake to the rental of the damaged units from the ice storm in January 1999 that are now repaired as well as increased marketing and advertising. The increase in occupancy at Sandpiper I and II is due to increased marketing and advertising and increased traffic in the area of the property. Results of Operations The Partnership had net income of approximately $1,450,000 for the six months ended June 30, 2000 compared to approximately $3,553,000 for the six months ended June 30, 1999. The Partnership had net income of approximately $896,000 for the three months ended June 30, 2000 compared to approximately $2,925,000 for the three months ended June 30, 1999. Net income decreased for the three and six month periods ended June 30, 2000 due to the gain on sale recognized from the sale of South City Business Center as well as a reduction in income from the property as well as Corporate Center which was sold during the fourth quarter of 1999. As the result of the sale of South City Business Center and Corporate Center in 1999, as discussed below, the results of operations of these two commercial properties were classified as "Income from discontinued operations" on the statements of operations. Excluding the results of the discontinued operations discussed above, the Partnership had income from continuing operations of approximately $1,450,000 for the six months ended June 30, 2000 compared to approximately $1,088,000 for the six months ended June 30, 1999. Excluding the results of the discontinued operations, the Partnership had income from continuing operations of approximately $896,000 for the three months ended June 30, 2000 compared to approximately $577,000 for the three months ended June 30, 1999. The increase in income from continuing operations for the three and six month periods ended June 30, 2000 is due to an increase in total revenues partially offset by an increase in total expenses. Total revenues increased for the comparable periods due to increases in both rental and other income. Rental income increased due to increased average rental rates at all of the Partnership's properties and decreased concession costs at Hidden Cove by the Lake and Sandpiper I and II. Decreased occupancy at Park Capital and Williamsburg Manor was offset by increased occupancy at Cedar Rim, Hidden Cove by the Lake, Lamplighter Park, and Sandpiper I and II. Other income increased due to increased utility income at Tamarac Village and increased interest income. Total expenses increased for the three and six month periods ended June 30, 2000 due primarily to increased depreciation and property tax expenses which were partially offset by decreased operating expenses. Depreciation expense increased due to capital improvements completed during the past twelve months which are now being depreciated. Property tax expense increased primarily due to an increase in assessed value at Cedar Rim and a refund received during 1999 at City Heights, which was sold in November 1998, of taxes paid in prior years. Operating expenses decreased primarily due to the decreased maintenance expenses at all the Partnership's properties during 2000. These decreases were partially offset by increased utility charges and manager salaries primarily at Tamarac Village. General and administrative expenses remained relatively constant. Included in general and administrative expenses at June 30, 2000 and 1999 are reimbursements to the General Partner allowed under the Partnership Agreement associated with its management of the Partnership. In addition, costs associated with the quarterly and annual communications with investors and regulatory agencies and the annual audit required by the Partnership Agreement are included. In June 1999, South City Business Center, located in Chula Vista, California, was sold to an unaffiliated party for $6,962,000. After payment of closing expenses, the net sales proceeds received by the Partnership were approximately $6,573,000. For financial statement purposes, the sale resulted in a gain of approximately $2,300,000. South City Business Center and Corporate Center which was sold in October 1999 to an unaffiliated third party were the last commercial properties in the commercial segment of the Partnership. Due to the sale of the properties in June 1999 and October 1999, respectively, the income of both of the properties has been classified as "Income from discontinued operations" for the three and six month periods ended June 30, 1999. Revenues of these properties were approximately $785,000 for the six months ended June 30, 1999 and approximately $344,000 for the three months ended June 30, 1999. Income from operations of these properties was approximately $165,000 for the six months ended June 30, 1999 and approximately $48,000 for the three months ended June 30, 1999, 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. Liquidity and Capital Resources At June 30, 2000, the Partnership held cash and cash equivalents of approximately $3,696,000 compared to approximately $12,682,000 at June 30, 1999. The decrease in cash and cash equivalents for the six months ended June 30, 2000, from the Partnership's year ended December 31, 1999 was approximately $1,755,000. This decrease is due to approximately $3,822,000 of cash used in financing activities and approximately $490,000 of cash used in investing activities which was partially offset by approximately $2,557,000 of cash provided by operating activities. Cash used in financing activities consisted of distributions to the partners. Cash used in investing activities consisted of property improvements and replacements which was partially offset by net receipts from restricted escrows. The Partnership invests its working capital reserves in money market accounts. The sufficiency of existing liquid assets to meet future liquidity and capital expenditure requirements is directly related to the level of capital expenditures required at the properties to adequately maintain the physical assets and other operating needs of the Registrant and to comply with Federal, state, and local legal and regulatory requirements. Capital improvements planned for each of the Registrant's properties are detailed below. Cedar Rim During the six months ended June 30, 2000, the Partnership completed approximately $31,000 of capital improvements at the property, consisting primarily of sewer replacement, carpet replacement, interior decorating, building structural improvements, and appliances. These improvements were funded primarily from the property's operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $56,000, consisting primarily of appliances, carpet and vinyl replacements, and plumbing upgrades. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Hidden Cove by the Lake During the six months ended June 30, 2000, the Partnership completed approximately $65,000 of budgeted and non-budgeted capital improvements, consisting primarily of building structural improvements, air conditioning unit replacement, landscaping, carpet replacement, heating upgrades, and appliances. These improvements were funded from the property's replacement reserves and operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $47,000, consisting primarily of swimming pool upgrades, air conditioning unit replacement, appliances, carpet replacement, and major landscaping. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Lamplighter Park During the six months ended June 30, 2000, the Partnership completed approximately $48,000 of capital improvements, consisting primarily of carpet and vinyl replacement, appliances, plumbing upgrades, and other building improvements. These improvements were funded from replacement reserves and operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $82,000, consisting primarily of plumbing upgrades, carpet and vinyl replacement, and heating improvements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Park Capital During the six months ended June 30, 2000, the Partnership completed approximately $63,000 of capital improvements, consisting primarily of carpet and vinyl replacement, parking lot enhancements, and appliances. These improvements were funded from replacement reserves and operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $89,000, consisting primarily of appliances, carpet and vinyl replacement, and parking lot enhancements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Tamarac Village During the six months ended June 30, 2000, the Partnership completed approximately $196,000 of capital improvements, consisting primarily of carpet and vinyl replacement, appliances, electrical upgrades, exterior painting, and plumbing upgrades. These improvements were funded from replacement reserves and operating cash flow. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $952,000, consisting primarily of carpet and vinyl replacement, structural improvements, and plumbing upgrades. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Williamsburg Manor During the six months ended June 30, 2000, the Partnership completed approximately $51,000 of capital improvements, consisting primarily of air conditioning unit replacement, cabinet replacements, carpet and vinyl replacement, landscaping, and appliances. These expenditures were funded from replacement reserves. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $60,000, consisting primarily of appliances, air conditioning unit replacement, and carpet and vinyl replacements. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. Sandpiper I and II During the six months ended June 30, 2000, the Partnership completed approximately $172,000 of capital improvements consisting primarily of sewer replacement, carpet and vinyl replacement, plumbing upgrades, structural improvements, roof replacement, and cabinet replacement. These improvements were funded from replacement reserves. The Partnership has evaluated the capital improvement needs of the property for the year. The amount budgeted is approximately $204,000, consisting primarily of air conditioning unit replacement, cabinet replacement, carpet and vinyl replacement, and plumbing upgrades. Additional improvements may be considered and will depend on the physical condition of the property as well as replacement reserves and anticipated cash flow generated by the property. The additional capital expenditures will be incurred only if cash is available form operations or from Partnership reserves. To the extent that such budgeted capital improvements are required, the Registrant's distributable cash flow, if any, may be adversely affected. The Partnership is required by the Partnership Agreement to maintain working capital reserves for contingencies of not less than 5% of Net Invested Capital as defined by the Partnership Agreement. In the event expenditures are made from this reserve, operating revenue shall be allocated to such reserve to the extent necessary to maintain the foregoing level. At June 30, 2000, reserves, including cash and securities available for sale, totaling approximately $4.2 million were greater than the reserve requirement of approximately $2.6 million. The Partnership's current assets are thought to be sufficient for any near-term needs (exclusive of capital improvements) of the Registrant. The mortgage indebtedness of $27,925,000 has maturity dates ranging from 2003 to 2005. The General Partner will attempt to refinance such indebtedness and/or sell the properties prior to such maturity dates. If the properties cannot be refinanced or sold for a sufficient amount, the Registrant may risk losing such properties through foreclosure. During the six months ended June 30, 2000, the Partnership declared and paid distributions in the amount of approximately $3,822,000 (approximately $3,784,000 to the limited partners or $9.88 per limited partnership unit) from operations. During the six months ended June 30, 1999, the Partnership made a distribution in the amount of approximately $4,113,000 (approximately $4,072,000 to the limited partners or $10.63 per limited partnership unit) from operations and approximately $5,787,000 (approximately $5,729,000 to the limited partners or $14.96 per limited partnership unit) of sales proceeds from City Heights. Future cash distributions will depend on the levels of cash generated from operations, timing of debt maturities, refinancings, and/or property sales, and the availability of cash reserves. The Partnership's distribution policy is reviewed on a quarterly basis. There can be no assurance, however, that the Partnership will generate sufficient funds from operations after required capital expenditures to permit further distributions to its partners during the remainder of 2000 or subsequent periods. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In March 1998, several putative unit holders of limited partnership units of the Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia Financial Group, Inc., et al. in the Superior Court of the State of California for the County of San Mateo. The plaintiffs named as defendants, among others, the Partnership, its General Partner and several of their affiliated partnerships and corporate entities. The action purports to assert claims on behalf of a class of limited partners and derivatively on behalf of a number of limited partnerships (including the Partnership) which are named as nominal defendants, challenging the acquisition of interests in certain general partner entities by Insignia Financial Group, Inc. and entities which were, at one time, affiliates of Insignia; past tender offers by the Insignia affiliates to acquire limited partnership units; the management of partnerships by the Insignia affiliates; and the Insignia Merger. The plaintiffs seek monetary damages and equitable relief, including judicial dissolution of the Partnership. On June 25, 1998, the General Partner filed a motion seeking dismissal of the action. In lieu of responding to the motion, the plaintiffs have filed an amended complaint. The General Partner filed demurrers to the amended complaint which were heard February 1999. Pending the ruling on such demurrers, settlement negotiations commenced. On November 2, 1999, the parties executed and filed a Stipulation of Settlement, settling claims, subject to final court approval, on behalf of the Partnership and all limited partners who owned units as of November 3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999 from the Court, at which time the Court set a final approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing, the Court received various objections to the settlement, including a challenge to the Court's preliminary approval based upon the alleged lack of authority of prior lead counsel to enter the settlement. On December 14, 1999, the General Partner and its affiliates terminated the proposed settlement. In February 2000, counsel for some of the named plaintiffs filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated the settlement. On June 27, 2000, the Court entered an order disqualifying them from the case. The Court will entertain applications for lead counsel which must be filed by August 4, 2000. The Court has scheduled a hearing on August 21, 2000 to address the issue of appointing lead counsel. The General Partner does not anticipate that costs associated with this case will be material to the Partnership's overall operations. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. b) Reports on Form 8-K: None filed during the quarter ended June 30, 2000. SIGNATURES Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 By: CONCAP EQUITIES, INC. Its General Partner By: /s/Patrick J. Foye Patrick J. Foye Executive Vice President By: /s/Martha L. Long Martha L. Long Senior Vice President and Controller Date: EX-27 2 0002.txt SECOND QUARTER 10-QSB
5 This schedule contains summary financial information extracted from CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 2000 Second Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000768890 CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3 1,000 6-MOS DEC-31-2000 APR-01-2000 JUN-30-2000 3,696 0 905 0 0 0 54,010 (18,648) 41,175 0 27,925 0 0 0 11,890 41,175 0 6,864 0 0 5,414 0 1,047 0 0 0 9 0 0 1,450 3.75 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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