-----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, HPMOHSxjg9ULxmojpSSf/dCBRUy+Zs2YfwFMc3YAlPZnp+uADxp6mFjtTCukMnDt fitXAVPUvFUo7tGTEvx/iw== 0000789282-98-000006.txt : 19980512 0000789282-98-000006.hdr.sgml : 19980512 ACCESSION NUMBER: 0000789282-98-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980511 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: JOHNSTOWN CONSOLIDATED INCOME PARTNERS CENTRAL INDEX KEY: 0000787621 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 943004963 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16010 FILM NUMBER: 98615666 BUSINESS ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 BUSINESS PHONE: 8032391513 MAIL ADDRESS: STREET 1: ONE INSIGNIA FINANCIAL PLAZA STREET 2: PO BOX 1089 CITY: GREENVILLE STATE: SC ZIP: 29602 FORMER COMPANY: FORMER CONFORMED NAME: CONSOLIDATED CAPITAL INCOME GROWTH PARTNERS DATE OF NAME CHANGE: 19860401 10QSB 1 FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 QUARTERLY OR TRANSITIONAL REPORT 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 March 31, 1998 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from.........to......... Commission file number 0-16010 JOHNSTOWN/CONSOLIDATED INCOME PARTNERS (Exact name of small business issuer as specified in its charter) California 94-3004963 (State or other jurisdiction of (IRS Employer incorporation or organization) (Identification No.) One Insignia Financial Plaza, P.O. Box 1089 Greenville, South Carolina 29602 (Address of principal executive offices) (864) 239-1000 Issuer'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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS a) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS BALANCE SHEET (Unaudited) (in thousands, except unit data) March 31, 1998
Assets Cash and cash equivalents $ 1,787 Receivables and deposits, net of allowance of $130 124 Restricted escrows 278 Other assets 333 Investment properties: Land $ 1,571 Buildings and related personal property 11,547 13,118 Less accumulated depreciation (6,231) 6,887 $ 9,409 Liabilities and Partners' (Deficit) Capital Accounts payable $ 196 Tenant security deposit liabilities 53 Accrued property taxes 43 Other liabilities 54 Notes payable 2,325 Partners' (Deficit) Capital General partner $ (179) Corporate limited partner on behalf of the Unitholders - (128,810 Units issued and outstanding) 6,917 6,738 $ 9,409 See Accompanying Notes to Financial Statements
b) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENTS OF OPERATIONS (Unaudited) (in thousands, except unit data) Three Months Ended March 31, 1998 1997 Revenues: Rental income $ 571 $ 551 Casualty gain 108 -- Other income 64 38 Total revenues 743 589 Expenses: Operating 233 223 General and administrative 65 52 Depreciation 129 122 Interest 46 46 Property taxes 43 41 Bad debt (recovery) expense (15) 10 Total expenses 501 494 Net income $ 242 $ 95 Net income allocated to general partner (1%) $ 2 $ 1 Net income allocated to limited partners (99%) 240 94 $ 242 $ 95 Net income per Unit of Depositary Receipt $1.86 $ .73 See Accompanying Notes to Financial Statements c) JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL (Unaudited) (in thousands, except unit data) Unitholders Units of Units of Depositary Depositary General Receipt Receipt Partner (Note A) Total <> Original capital contributions 129,266 $ 1 $32,317 $32,318 Partners' (deficit) capital at December 31, 1997 128,810 $ (171) $ 7,667 $ 7,496 Net income for the three months ended March 31, 1998 -- 2 240 242 Distributions to partners -- (10) (990) (1,000) Partners' (deficit) capital at March 31, 1998 128,810 $ (179) $ 6,917 $ 6,738 See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31, 1998 1997 Cash flows from operating activities: Net income $ 242 $ 95 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 129 122 Amortization of lease commissions, discounts and loan costs 16 12 Bad debt (recovery) expense (15) 10 Casualty gain (108) -- Change in accounts: Receivables and deposits (22) (32) Other assets (38) (24) Accounts payable (25) (1) Tenant security deposit liabilities (1) -- Accrued property taxes 43 (5) Other liabilities (4) (22) Net cash provided by operating activities 217 155 Cash flows from investing activities: Property improvements and replacements (358) (17) Net deposits to restricted escrows (17) (18) Proceeds from insurance on casualty 175 -- Net cash used in investing activities (200) (35) Cash flows from financing activities: Loan costs paid -- (11) Distributions to partners (1,000) -- Net cash used in financing activities (1,000) (11) Net (decrease) increase in cash and cash equivalents (983) 109 Cash and cash equivalents at beginning of period 2,770 1,583 Cash and cash equivalents at end of period $ 1,787 $ 1,692 Supplemental disclosure of cash flow information: Cash paid for interest $ 43 $ 43 See Accompanying Notes to Financial Statements
JOHNSTOWN/CONSOLIDATED INCOME PARTNERS NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE A - BASIS OF PRESENTATION The accompanying unaudited financial statements of Johnstown/Consolidated Income Partners, (the "Partnership") 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 month period ended March 31, 1998, are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 1998. For further information, refer to the financial statements and footnotes thereto included in the Partnership's annual report on Form 10-KSB for the fiscal year ended December 31, 1997. Certain reclassifications have been made to the 1997 balances to conform to the 1998 presentation. Units of Depositary Receipt Johnstown/Consolidated Depositary Corporation (the "Corporate Limited Partner"), an affiliate of the General Partner, serves as a depositary of certain Units of Depositary Receipt ("Units"). The Units represent economic rights attributable to the limited partnership interests in the Partnership and entitle the Unitholders thereof ("Unitholders") to certain economic benefits, allocations and distributions of the Partnership. For this reason, Partners' (deficit) capital is herein represented as an interest of the Unitholder. NOTE B - TRANSACTIONS WITH AFFILIATED PARTIES The Partnership has no employees and is dependent on the General Partner and its affiliates for the management and administration of all of the Partnership activities. The General Partner is wholly-owned by Insignia Properties Trust ("IPT"), an affiliate of Insignia Financial Group, Inc. ("Insignia"). The Partnership Agreement provides for certain payments to affiliates for services and as reimbursement of certain expenses incurred on behalf of the Partnership. The following transactions with affiliates of the General Partner were incurred for the three months ended March 31, 1998 and 1997: 1998 1997 (in thousands) Property management fees (included in operating expenses) $ 29 $ 28 Leasing commissions (included in other assets) 31 6 Reimbursement for services of affiliates including $6,000 and $16,000 in construction services reimbursements in 1998 and 1997, respectively (included in investment property and general and administrative and operating expenses) 30 41 The Partnership Agreement provides that the Partnership shall pay in monthly installments to the General Partner, or an affiliate, a yearly asset management fee equal to: (i) 3/8 of 1% of the original principal balance of mortgage loans outstanding at the end of the month preceding the installment payment; (ii) 1/8 of 1% of the market value of guaranteed mortgage-backed securities as of the end of the Partnership quarter immediately preceding the installment payment; and (iii) 5/8 of 1% of the purchase price of the properties plus improvements for managing the Partnership's assets. In the event the property was not owned at the beginning or end of the year, such fee shall be pro rated for the short-year period of ownership. Under this provision, fees of approximately $24,000 were paid to the General Partner and its affiliates for each of the three months ended March 31, 1998 and 1997, respectively, and are included in general and administrative expenses. For the period January 1, 1997 to August 31, 1997, the Partnership insured its properties under a master policy through an agency affiliated with the General Partner with an 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 master policy. The agent assumed the financial obligations to the affiliate of the General Partner which received 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 was not significant. On December 19, 1997, Insignia affiliates (the "Purchaser") commenced tender offers for limited partnership interests in ten real estate limited partnerships (including the Partnership) in which various Insignia affiliates act as general partner. The Purchaser offered to purchase up to 39,000 units of the outstanding units of limited partnership interest in the Partnership, at $68.00 per Unit, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated December 19, 1997, (the "Offer to Purchase") and the related Assignment of Partnership Interest attached as Exhibits (a)(1) and (a)(2), respectively, to the Tender Offer Statement on Schedule 14D-1 originally filed with the Securities and Exchange Commission on December 19, 1997. Because of the existing and potential future conflicts of interest (described in the Partnership's Statements on Schedule 14D-9 filed with the Securities and Exchange Commission), neither the Partnership nor the General Partner expressed any opinion as to the Offer to Purchase and made no recommendation as to whether unit holders should tender their units in response to the Offer to Purchase. During February 1998, the tender offers were completed and an affiliate of Insignia purchased 13,985.5 units of limited partnership interest in the Partnership. On March 17, 1998, Insignia entered into an agreement to merge its national residential property management operations, and its controlling interest in IPT, with Apartment Investment and Management Company ("AIMCO"), a publicly traded real estate investment trust. The closing, which is anticipated to happen in the third quarter of 1998, is subject to customary conditions, including government approvals and the approval of Insignia's shareholders. If the closing occurs, AIMCO will then control the General Partner of the Partnership. NOTE C - COMMITMENT The Partnership is required by the Partnership Agreement to maintain working capital for contingencies of not less than 5% of Net Invested Capital as defined in the Partnership Agreement. In the event expenditures are made from these reserves, operating revenues shall be allocated to such reserves to the extent necessary to maintain the foregoing level. Reserves, including cash and cash equivalents and tenant security deposits totaling approximately $1,841,000 at March 31, 1998, exceeded the Partnership's reserve requirement of approximately $1,385,000. NOTE D - DISTRIBUTIONS In March of 1998, the Partnership paid distributions attributable to cash flow from operations of approximately $1,000,000. During the three months ended March 31, 1997, no distributions were declared or paid. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS The Partnership's investment properties consist of one apartment complex and two commercial properties. The following table sets forth the average occupancy of the properties for the three months ended March 31, 1998 and 1997: Average Occupancy 1998 1997 Cedar Brooke Apartments Independence, Missouri 96% 97% Florida #11 Mini-Warehouse Davie, Florida 97% 99% Phoenix Business Campus College Park, Georgia 75% 70% The increase in occupancy at Phoenix Business Campus is due to the lease of 3,261 square feet, which was vacant until mid-November, 1997. Also, another tenant increased its square footage by 5,592 square feet. The Partnership realized net income of approximately $242,000 for the three months ended March 31, 1998, compared to net income of approximately of $95,000 for the three months ended March 31, 1997. The increase in net income is primarily due to an increase in revenues. Rental income increased as a result of the increase in occupancy at Phoenix Business Campus and the increase in rental rates at all of the investment properties. Additionally, there was an increase in other income attributable to an increase in interest earned due to higher cash balances held for the three months ended March 31, 1998 as compared to the three months ended March 31, 1997. Also, for the three months ended March 31, 1998, there was a casualty gain related to a fire at Cedar Brooke Apartments (see discussion below). Total expenses remained consistent for the three months ended March 31, 1998 and 1997. General and administrative expenses increased slightly due to an increase in reimbursements for services of affiliates. This increase was partially offset by a recovery on bad debt at Phoenix Business Campus. In the fourth quarter of 1997, there was a fire at Cedar Brooke Apartments that caused extensive damage to the clubhouse. Insurance proceeds of approximately $175,000 were received and replacement efforts began during the three months ended March 31, 1998. The Partnership recorded a casualty gain of approximately $108,000 as a result of combining the proceeds received less the write off of the undepreciated balance of the assets destroyed in the fire. There were no significant expenditures for major repairs and maintenance during the three months ended March 31, 1998. For the three months ended March 31, 1997, approximately $19,000 of major repairs and maintenance, comprised primarily of construction oversight costs related to the ongoing repair projects at Cedar Brooke Apartments, is included in operating expenses. 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. At March 31, 1998, the Partnership held cash and cash equivalents of approximately $1,787,000 compared to approximately $1,692,000 at March 31, 1997. Cash and cash equivalents had a net decrease of approximately $983,000 for the three months ended March 31, 1998 as compared to a net increase of approximately $109,000 for the same period in 1997. Net cash provided by operating activities increased primarily due to the increase in net income, as discussed above, partially offset by a decrease in accounts payable caused by the timing of payments. Net cash used in investing activities increased as a result of increased property improvements and replacements due primarily to tenant improvements at Phoenix Business Campus and also to the commencement of reconstruction of the clubhouse at Cedar Brooke Apartments. The increase in property improvements and replacements was partially offset by insurance proceeds received. The increase in net cash used in financing activities is attributed to the cash distribution to partners during the three months ended March 31, 1998. 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 investment properties to adequately maintain the physical assets and other operating needs of the Partnership. Such assets are currently thought to be sufficient for any near-term needs of the Partnership. The mortgage indebtedness of $2,325,000, which carries a stated interest rate of 7.33% (interest only) matures in November 2003, at which time the debt will either be refinanced or the related property (Cedar Brooke Apartments) sold. The Partnership made a distribution to the partners of $1,000,000 in March 1998. No cash distributions were declared or paid during the three months ended March 31, 1997. 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. Year 2000 The Partnership is dependent upon the General Partner and Insignia for management and administrative services. Insignia has completed an assessment and will have to modify or replace portions of its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter (the "Year 2000 Issue"). The project is estimated to be completed not later than December 31, 1998, which is prior to any anticipated impact on its operating systems. The General Partner believes that with modifications to existing software and conversions to new software, the Year 2000 Issue will not pose significant operational problems for its computer systems. However, if such modifications and conversions are not made, or are not completed timely, the Year 2000 Issue could have a material impact on the operations of the Partnership. Other Certain items discussed in this quarterly report may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Reform Act") and as such may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Partnership to be materially different from any future results, performance or achievements expressed or implied by such forward- looking statements. Such forward-looking statements speak only as of the date of this quarterly report. The Partnership expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Partnership's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. 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, the General Partner and several of their affiliated partnerships and corporate entities. The complaint 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 by Insignia and its affiliates of interests in certain general partner entities, past tender offers by Insignia affiliates to acquire limited partnership units, the management of partnerships by Insignia affiliates as well as a recently announced agreement between Insignia and Apartment Investment and Management Company. The complaint seeks monetary damages and equitable relief, including judicial dissolution of the Partnership. The General Partner was only recently served with the complaint which it believes to be without merit, and intends to vigorously defend the action. In March 1998, the Partnership and its General Partner were named as defendants in a lawsuit brought by a limited partner of the Partnership alleging that the General Partner has failed to perform its contractual obligations under the Partnership Agreement. The General Partner believes that there is no merit to the suit and intends to vigorously defend it. The Partnership is unaware of any other pending or outstanding litigation that is not of a routine nature. The General Partner believes that all such other pending or outstanding litigation will be resolved without a material adverse effect upon the business, financial conditions, or operations of the Partnership. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: Exhibit 27, Financial Data Schedule, is filed as an exhibit to this report. (b) Reports on Form 8-K None. SIGNATURES In accordance with the requirements of the Exchange Act, the Partnership caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. JOHNSTOWN/CONSOLIDATED INCOME PARTNERS 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: May 11, 1998 EX-27 2
5 This schedule contains summary financial information extracted from Johnstown Consolidated Income Partners 1998 First Quarter 10-QSB and is qualified in its entirety by reference to such 10-QSB filing. 0000787621 JOHNSTOWN CONSOLIDATED INCOME PARTNERS 1,000 3-MOS DEC-31-1998 MAR-31-1998 1,787 0 0 0 0 0 13,118 (6,231) 9,409 0 2,325 0 0 0 6,738 9,409 0 743 0 0 501 0 46 0 0 0 0 0 0 242 1.86 0 Registrant has an unclassified balance sheet. Multiplier is 1.
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