FORM 10-K--ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[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, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[No Fee Required]
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Name of small business issuer in its charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(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 is not contained herein, and will not be contained, to
the best of the 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]
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 December 31, 2001. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
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 commenced
a public offering for the sale of 200,000 Units with the general partner's right
to increase the offering to 400,000 Units. The Units represent equity interests
in the Partnership and entitle the holders thereof to participate in certain
allocations and distributions of the Partnership. The sale of Units closed on
December 14, 1983, with 343,106 Units sold at $500 each, or gross proceeds of
$171,553,000 to the Partnership. Since its initial offering, the Partnership has
not received, nor are limited partners required to make, additional capital
contributions.
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 General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust. The directors and officers of the General
Partner also serve as executive officers of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2011 unless
terminated prior to that date.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership is engaged in the business of operating and
holding real estate properties for investment. As of the close of fiscal year
1985, the Partnership had completed its property acquisition stage and had
acquired 48 properties. At December 31, 2001, the Partnership owned 15
income-producing properties (or interests therein), which range in age from 25
to 30 years old, principally located in the midwest, southeastern and
southwestern United States. Prior to 2001, the Partnership had disposed of 33
properties originally owned by the Partnership. See "Item 2. Description of
Properties" for further information about the Partnership's remaining
properties.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Registrant's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for the apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
The Registrant has no employees. Property management and administrative services
are provided by the General Partner and by agents of the General Partner. The
General Partner has also selected an affiliate to provide real estate advisory
and asset management services to the Partnership. As advisor, such affiliate
provides all Partnership accounting and administrative services, investment
management, and supervisory services over property management and leasing.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in "Item 7" of this Form 10-K.
Transfers of Control
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 special
limited partner, thereby leaving CEI as the sole general partner of the
Partnership. On November 14, 1990, CCMC was dissolved and its special limited
partnership interest was divided among its former partners. All of CEI's
outstanding stock was owned by Insignia Properties Trust ("IPT") (See below).
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into 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.
Item 2. Description of Properties
The Partnership originally acquired 48 properties of which thirteen (13) were
sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10)
were foreclosed upon by the lenders. As of December 31, 2001, the Partnership
owned fifteen (15) apartment complexes. Additional information about the
properties is found in "Item 8. Financial Statements and Supplementary Data".
Date of
Property Purchase Type of Ownership Use
The Apartments (1) 04/84 Fee ownership, subject to Apartment
Omaha, Nebraska a first mortgage 204 units
Arbours of Hermitage Apts. (1) 09/83 Fee ownership subject to Apartment
Nashville, Tennessee a first mortgage 350 units
Briar Bay Racquet Club Apts. (2) 09/82 Fee ownership subject to Apartment
Miami, Florida a first mortgage 194 units
Chimney Hill Apts. (2) 08/82 Fee ownership subject to Apartment
Marietta, Georgia a first mortgage 326 units
Citadel Apts. (1) 05/83 Fee ownership subject Apartment
El Paso, Texas to a first mortgage 261 units
Citadel Village Apts. (1) 12/82 Fee ownership subject Apartment
Colorado Springs, Colorado to a first mortgage 122 units
Foothill Place Apts. (2) 08/85 Fee ownership subject Apartment
Salt Lake City, Utah to a first mortgage 450 units
Knollwood Apts. (1) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 326 units
Lake Forest Apts. 04/84 Fee ownership subject Apartment
Omaha, Nebraska to a first mortgage 312 units
Nob Hill Villa Apts. (1) 04/83 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 472 units
Point West Apts. (1) 11/85 Fee ownership subject Apartment
Charleston, South Carolina a first mortgage 120 units
Post Ridge Apts. (2) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 150 units
Rivers Edge Apts. (2) 04/83 Fee ownership subject Apartment
Auburn, Washington to a first mortgage 120 units
South Port Apts. (3) 11/83 Fee ownership subject Apartment
Tulsa, Oklahoma to a first mortgage 240 units
Village East Apts. (1) 12/82 Fee ownership subject Apartment
Cimarron Hills, Colorado to a first mortgage 137 units
(1) Property is held by a limited partnership and/or limited liability
corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Registrant owns a
99% interest.
(3) Property is held by a limited partnership in which the Partnership owns a
50% interest.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Depreciable Federal
Property Value Depreciation Life Method Tax Basis
(in thousands) (in thousands)
The Apartments $ 9,302 $ 7,860 5-18 yrs S/L $ 1,731
Arbours of Hermitage
Apartments 14,880 11,601 5-18 yrs S/L 3,653
Briar Bay Racquet Club
Apartments 8,166 6,645 5-18 yrs S/L 2,132
Chimney Hill Apartments 11,887 10,121 5-18 yrs S/L 2,627
Citadel Apartments 8,056 6,816 5-18 yrs S/L 1,100
Citadel Village
Apartments 4,580 3,672 5-18 yrs S/L 1,436
Foothill Place
Apartments 16,519 10,958 5-18 yrs S/L 6,974
Knollwood Apartments 12,466 10,160 5-18 yrs S/L 2,774
Lake Forest Apartments 9,978 7,910 5-18 yrs S/L 2,082
Nob Hill Villa
Apartments 14,054 11,816 5-18 yrs S/L 2,205
Point West Apartments 3,313 2,561 5-40 yrs S/L 1,040
Post Ridge Apartments 5,466 4,215 5-18 yrs S/L 1,441
Rivers Edge Apartments 3,598 2,763 5-18 yrs S/L 1,012
South Port Apartments 8,968 6,881 5-18 yrs S/L 1,817
Village East Apartments 3,975 3,236 5-18 yrs S/L 881
Total $135,208 $107,215 $32,905
See "Note A" to the consolidated financial statements included in "Item 8.
Financial Statements and Supplementary Data" for a description of the
Partnership's depreciation policy.
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
Principal Principal Principal
Balance At Balance At Stated Balance
December 31, December 31, Interest Period Maturity Due At
Property 2001 2000 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
The Apartments $ 4,601 $ 4,703 8.37% 20 yrs 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 6.95% (1) 12/05 5,650
Briar Bay Racquet Club
Apartments 3,500 3,500 6.95% (1) 12/05 3,500
Chimney Hill Apartments 5,400 5,400 6.95% (1) 12/05 5,400
Citadel Apartments 4,536 4,638 8.25% 20 yrs 03/20 --
Citadel Village Apartments 2,450 2,450 6.95% (1) 12/05 2,450
Foothill Place Apartments 10,100 10,100 6.95% (1) 12/05 10,100
Knollwood Apartments 6,780 6,780 6.95% (1) 12/05 6,780
Lake Forest Apartments 6,475 4,700 7.13% 20 yrs 10/21 --
Nob Hill Villa Apartments 6,789 6,926 9.20% 25 yrs 04/05 6,250
Point West Apartments 2,350 2,407 7.86% 20 yrs 12/19 --
Post Ridge Apartments 4,500 4,050 6.63% 20 yrs 01/22 --
Rivers Edge Apartments 3,891 3,979 7.82% 20 yrs 09/20 --
South Port Apartments 4,303 4,358 7.19% 30 yrs 12/04 4,119
Village East Apartments 2,150 2,150 6.95% (1) 12/05 2,150
Totals $73,475 $71,791 $46,399
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Item 8. Financial Statements and Supplementary Date - Note D" for
information with respect to the Registrant's ability to repay these loans
and other specific details about the loans.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the financing at Point West
Apartments in the fourth quarter of 1999, the refinancing of the mortgages
encumbering The Apartments and Citadel Apartments in February 2000, the
refinancing of the mortgage encumbering Stratford Place Apartments in May 2000,
the refinancing of the mortgage encumbering River's Edge Apartments in August
2000, the refinancing of the mortgage encumbering Lake Forest Apartments in
September 2001, and the refinancing of the mortgage encumbering Post Ridge
Apartments in December 2001.
Rental Rate and Occupancy
The following table sets forth the average annual rental rates and occupancy for
2001 and 2000 for each property.
Average Annual Average
Rental Rates Occupancy
(per unit)
Property 2001 2000 2001 2000
The Apartments $ 7,344 $ 7,088 91% 94%
Arbours of Hermitage Apartments 7,926 7,697 92% 94%
Briar Bay Racquet Club Apartments 9,781 9,204 96% 97%
Chimney Hill Apartments 8,934 8,553 94% 94%
Citadel Apartments 6,908 6,892 93% 92%
Citadel Village Apartments 9,549 9,098 95% 96%
Foothill Place Apartments 8,257 8,043 96% 96%
Knollwood Apartments 8,434 8,197 93% 94%
Lake Forest Apartments 7,409 7,530 92% 89%
Nob Hill Villa Apartments 6,408 6,277 92% 94%
Point West Apartments 6,897 6,450 96% 97%
Post Ridge Apartments 9,924 9,763 91% 92%
Rivers Edge Apartments 8,232 7,795 96% 98%
South Port Apartments 6,851 6,641 95% 96%
Village East Apartments 8,331 7,756 93% 97%
The decrease in occupancy at The Apartments and Village East Apartments is due
to increased competition and changing economic conditions in their respective
local markets. The increase in occupancy at Lake Forest Apartments is
attributable to capital improvements incurred at the investment property to
improve the curb appeal to potential tenants.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
all of the properties are adequately insured. Each property is an apartment
complex which leases units for lease terms of one year or less. No residential
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, subject to normal depreciation and deterioration
as is typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 2001 and 2000 for each property were:
2001 2001 2000 2000
Billing Rate Billing Rate
(in thousands) (in thousands)
The Apartments $147 2.0% $135 1.9%
Arbours of Hermitage Apartments 192 3.8% 149 3.4%
Briar Bay Racquet Club Apartments 167 2.2% 169 2.2%
Chimney Hill Apartments 139 3.0% 135 2.9%
Citadel Apartments 205 3.0% 147 2.9%
Citadel Village Apartments 21 5.5% 23 5.8%
Foothill Place Apartments 169 1.4% 180 0.8%
Knollwood Apartments 206 3.8% 163 3.4%
Lake Forest Apartments 193 2.0% 190 1.9%
Nob Hill Villa Apartments 238 4.6% 205 4.2%
Point West Apartments 62 28.0% 35 36.4%
Post Ridge Apartments 108 3.8% 92 3.4%
Rivers Edge Apartments 53 1.4% 55 1.5%
South Port Apartments 66 1.4% 62 1.4%
Village East Apartments 24 5.7% 21 5.9%
Capital Improvements
The Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$232,000 of capital improvements at the property consisting primarily of
structural upgrades, brick replacement, floor covering replacements, and
perimeter fencing upgrades. These improvements were funded from operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $61,200. Additional improvements may be
considered and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property.
Arbours of Hermitage Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$413,000 of capital improvements at the property, consisting primarily of
structural enhancements, a vinyl siding project, floor covering replacements and
perimeter fencing upgrades. These improvements were funded from Partnership
reserves, insurance proceeds and operating cash flow. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $105,000. 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. In April 2001, The Arbours of
Hermitage had a fire, which damaged one apartment building. Insurance proceeds
of approximately $83,000 were received during the year ended December 31, 2001.
The Partnership recognized a casualty gain of approximately $83,000 for the year
ended December 31, 2001. The damaged assets were fully depreciated at the time
of the fire.
Briar Bay Racquet Club Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$160,000 of capital improvements at the property consisting primarily of
plumbing enhancements, floor covering replacements and elevator upgrades. These
improvements were funded from operating cash flow and Partnership reserves. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $58,200. 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.
Chimney Hill Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$263,000 of capital improvements at the property consisting primarily of floor
covering replacements, structural upgrades, interior decorating and cabinet and
countertop replacements. These improvements were funded from operating cash flow
and Partnership reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $97,800. 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.
Citadel Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$97,000 of capital improvements at the property consisting primarily of HVAC,
floor covering and appliance replacements and replacement of swimming pool
decking. These improvements were funded from operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $78,300. Additional improvements may be considered and will
depend on the physical condition of the property as well as Partnership reserves
and anticipated cash flow generated by the property.
Citadel Village Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$142,000 of capital improvements at the property, consisting primarily of floor
covering replacements, structural improvements and swimming pool upgrades. These
improvements were funded from Partnership reserves and operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $36,600. 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.
Foothill Place Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$502,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements, interior decorating, structural
improvements, plumbing replacements, lighting replacements, and water heater
replacements. These improvements were funded from Partnership reserves and
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $135,000. 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.
Knollwood Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$452,000 of capital improvements at the property, consisting primarily of a
water submetering project and floor covering and appliance replacements. These
improvements were funded from Partnership reserves and operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $97,800. 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.
Lake Forest Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$217,000 of capital improvements at the property, consisting primarily of floor
covering and water heater replacements, window coverings and appliance
replacements. These improvements were funded from Partnership reserves and
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $93,600. 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.
Nob Hill Villa Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$454,000 of capital improvements at the property consisting primarily of floor
covering replacements, a water submetering project, appliance replacements,
other building improvements and water heater replacements. These improvements
were funded from Partnership reserves, insurance proceeds, and operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $141,600. Additional improvements may be
considered and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property. In May
2000, Nob Hill Villa Apartments had a fire, which damaged two apartment units.
Insurance proceeds of approximately $33,000 were received during the year ended
December 31, 2001. The Partnership recognized a casualty gain of approximately
$25,000 for the year ended December 31, 2001 which represents the excess of the
proceeds received as of December 31, 2001 over the write-off of the
undepreciated damaged assets.
Point West Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$97,000 of capital improvements at the property consisting primarily of floor
covering replacements, a water submetering project and appliance replacements.
These improvements were funded from operating cash flow. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $36,000. Additional improvements may be considered and will depend on the
physical condition of the property as well as Partnership reserves and
anticipated cash flow generated by the property.
Post Ridge Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$239,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements, structural improvements, plumbing
enhancements, major landscaping, lighting and electrical upgrades. These
improvements were funded from operating cash flow and Partnership reserves. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $45,000. Additional improvements may be considered and will
depend on the physical condition of the property as well as Partnership reserves
and anticipated cash flow generated by the property.
Rivers Edge Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$91,000 of capital improvements at the property consisting primarily of floor
covering and appliance replacements and plumbing enhancements. These
improvements were funded from operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $36,000.
Additional improvements may be considered and will depend on the physical
condition of the property as well as Partnership reserves and anticipated cash
flow generated by the property.
South Port Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$305,000 of capital improvements at the property, consisting primarily of
building upgrades, land improvements, floor covering and appliance replacements
and plumbing fixture replacements. These improvements were funded from operating
cash flow, insurance proceeds and Partnership reserves. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $72,000. 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. In March 2000, South Port
Apartments had hail and wind damage, which affected all 240 units and damaged
100% of the roof, which was replaced. Insurance proceeds of approximately
$182,000 were received during the year ended December 31, 2001. The Partnership
recognized a casualty gain of approximately $128,000 for the year ended December
31, 2001 which represents the excess of the proceeds received as of December 31,
2001 over the write-off of the undepreciated damaged assets.
Village East Apartments
During the year ended December 31, 2001, the Partnership completed approximately
$231,000 of capital improvements at the property, consisting primarily of
plumbing and sewer upgrades and floor covering and appliance replacements. These
improvements were funded from Partnership reserves and operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $41,100. 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.
Item 3. 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. (the "Nuanes action") 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, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
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 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 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 and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants intend to oppose the motion and are
scheduled to file their opposition brief on March 26, 2002. A hearing on the
motion has been scheduled for April 29, 2002. The Court has set the matter for
trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases 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 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 2001.
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 8,070 as of December 31, 2001
There were 342,773 Units outstanding at December 31, 2001, of which affiliates
of the General Partner owned 186,758.50 Units or approximately 54.48%.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 1999, 2000 and 2001 (see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
more details):
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/99 - 12/31/99 $17,601 (1) $49.29
01/01/00 - 12/31/00 11,239 (2) 31.32
01/01/01 - 12/31/01 9,205 (3) 25.59
(1) Consists of approximately $12,544,000 of cash from operations and
approximately $5,057,000 of surplus funds. The surplus funds were from
the financing at Point West Apartments and previously undistributed
refinance proceeds from 1996 and 1997. Of these amounts, $4,318,000 was
accrued at December 31, 2000. In January 2000, approximately $4,113,000
of this distribution was paid and the remainder was accrued at December
31, 2001.
(2) Consists of approximately $6,250,000 of cash from operations and
approximately $4,989,000 of surplus cash. The surplus funds were from the
refinancing of The Apartments, Citadel Apartments, Stratford Place
Apartments, and River's Edge Apartments and sales proceeds from Overlook
Apartments sold in December 1999. Approximately $197,000 of this
distribution from surplus cash was accrued at December 31, 2001.
(3) Consists of approximately $5,047,000 of cash from operations and
approximately $4,158,000 of surplus cash. Surplus funds were from the
refinancing of Lake Forest Apartments and sales proceeds from Stratford
Place Apartments sold in December of 2000. Approximately $166,000 of this
distribution from surplus cash was accrued at December 31, 2001.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturities, refinancings and/or property sales. The Partnership's cash available
for distribution is reviewed on a monthly basis. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit distributions to its partners in
the year 2002 or subsequent periods. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" for information
relating to anticipated capital expenditures at the properties.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 186,758.50 limited partnership units
in the Partnership representing 54.48% of the outstanding units at December 31,
2001. 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 either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 54.48% of the
outstanding units, AIMCO is in a position to control all such 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 its affiliation with the General Partner.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the
Partnership. Certain reclassifications have been made to the 1997 information to
conform to the 1998, 1999, 2000 and 2001 presentation. 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,
(in thousands, except per unit data)
Consolidated Statements
of Operations 2001 2000 1999 1998 1997
Total revenues $ 29,079 $ 33,687 $ 31,189 $ 30,093 $ 28,710
Total expenses (24,739) (25,006) (25,071) (26,164) (28,296)
Income before
extraordinary items 4,340 8,681 6,118 3,929 414
Extraordinary items (182) (207) -- (5) (47)
Net income $ 4,158 $ 8,474 $ 6,118 $ 3,924 $ 367
Per Limited Partnership Unit:
Income before
extraordinary items $ 12.16 $ 24.31 $ 17.13 $ 11.00 $ 1.15
Extraordinary items (.51) (0.58) -- (0.01) (0.12)
Net income $ 11.65 $ 23.73 $ 17.13 $ 10.99 $ 1.03
Distributions per Limited
Partnership Unit $ 25.59 $ 31.32 $ 49.29 $ 11.07 $ 7.01
Limited Partnership Units
outstanding 342,773 342,773 342,773 342,773 342,773
Consolidated Balance Sheets
Total assets $ 34,180 $ 38,870 $ 44,464 $ 50,671 $ 52,381
Mortgage notes payable $ 73,475 $ 71,791 $ 70,997 $ 70,775 $ 72,439
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-K 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 operation. 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 operations of the Partnership primarily include operating and holding
income-producing real estate 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 income before extraordinary items totaled approximately
$4,340,000 for the year ended December 31, 2001, as compared to approximately
$8,681,000 for the year ended December 31, 2000 and income before extraordinary
items of approximately $6,118,000 for the year ended December 31, 1999. For the
year ended December 31, 2001, a decrease in total revenues and a decrease in
total expenses resulted in a decrease in income before extraordinary items as
compared to 2000.
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.
2001 Compared to 2000
The decrease in total revenues is primarily attributable to a decrease in the
gain on sale of investment properties and a decrease in rental income which was
partially offset by an increase in casualty gain for the year ended December 31,
2001, as compared to the year ended December 31, 2000. During the year ended
December 31, 2001, the Partnership did not sell an investment property while
Stratford Place was sold during the year ended December 31, 2000. Excluding the
results of operations and gain on sale of investment property relating to
Stratford Place Apartments, total revenues increased due to an increase in
rental income, casualty gain income and other income. The increase in rental
income is due to increased average rental rates at fourteen of the Partnership's
fifteen properties partially offset by a decrease in occupancy levels at eleven
of the investment properties. The increase in casualty gain was the result of
fires and wind and hail damage at three of the properties as discussed below.
The increase in other income is primarily attributable to an increase in utility
reimbursements partially offset by a decrease in interest income due to lower
average cash balances being maintained in interest bearing accounts.
Excluding the operations of Stratford Place Apartments, total expenses increased
due to increases in operating, general and administrative, depreciation,
property tax, and interest expenses, partially offset by a decrease in
extraordinary loss on early extinguishment of debt. Operating expense increased
due to increases in property, insurance, and maintenance expenses. Property
expense increased due to an increase in employee salaries and related benefits
and an increase in utility expense relating to vacant apartments. Insurance
expense increased due to an increase in insurance premiums at fourteen of the
Partnership's investment properties. Maintenance expense increased due to
contract labor and materials and supplies used by the investment properties.
General and administrative expenses increased primarily due to a new tax imposed
by the State of Tennessee on the Partnership's properties in that state during
the year ended December 31, 2001 and in an increase in the cost of services
included in management reimbursements to the General Partner as allowed under
the Partnership Agreement partially offset by a decrease in the 9% management
fee on distributions from operating cash flows. Depreciation expense on the
remaining properties increased due to capital improvements completed and placed
into service during the past twelve months. The increase in property tax expense
is due to an increase in the assessed value of five of the Partnership's
properties. The increase in interest expense is primarily attributable to new
financing at River's Edge Apartments in September 2000 and Lake Forest
Apartments in September 2001 which increased the debt balances. For 2001,
extraordinary losses on early extinguishment of debt arose from the refinancings
of Lake Forest Apartments and Post Ridge Apartments, while the extraordinary
losses on early extinguishment of debt for 2000 arose from the refinancings at
The Apartments, Stratford Place Apartments, Rivers Edge Apartments, and Citadel
Apartments in 2000.
2000 Compared to 1999
The increase in total revenues is attributable to increased gain on the sale of
investment properties, casualty gain, and other income for the year ended
December 31, 2000, as compared to the year ended December 31, 1999. The
Partnership recognized a gain on the sale of Stratford Place Apartments of
approximately $3,440,000 versus a gain on the sale of Overlook Apartments of
approximately $638,000 recognized in 1999. Excluding the results of Stratford
Place Apartments and Overlook Apartments, total revenues increased due to an
increase in rental and other income. The increase in rental income is due to
increased rental rates at the Partnership's investment properties accompanied by
increased occupancy levels at five of the properties, which more than offset
occupancy decreases at eight properties. The increase in rental income is also
due to increases in tenant reimbursements primarily at Arbor East Apartments. An
increase in bad debt expense at most of the Partnership's properties partially
offset the increase in rental income. A casualty gain of approximately $154,000
at Stratford Place Apartments due to a fire which damaged 12 apartment units
also contributed to the increase in total revenues for the year ended December
31, 2000. The increase in other income is primarily attributable to an increase
in interest income due to higher average balances being maintained in interest
bearing accounts.
Excluding the results of Stratford Place Apartments and Overlook Apartments,
total expenses increased due to increases in operating and interest expenses
partially offset by a decrease in general and administrative expenses. Operating
expenses increased due to reduced net insurance proceeds on casualties,
increased utility charges, and increased salary expenses; partially offset by
decreased interior building expenses and decreased snow removal charges. During
the twelve months ended December 31, 1999, there were several small insurance
claims made and proceeds received, primarily at Nob Hill Villa Apartments. Fewer
similar claims were made during the twelve months ended December 31, 2000 at
various Partnership properties. The increase in interest expense is primarily
attributable to the new financing at Point West Apartments late in 1999 and due
to increased debt balances at The Apartments, Stratford Place Apartments, Rivers
Edge, and Citadel Apartments due to refinancings in 2000. General and
administrative expenses decreased due to a decrease in the 9% management fee on
distributions from operating cash flows partially offset by increases in the
cost of services included in the management reimbursements to the Managing
General Partner as allowed under the Partnership Agreement and in professional
fees. Extraordinary loss on early extinguishment of debt increased primarily due
to the refinancings at Stratford Place Apartments, The Apartments, and Citadel
Apartments (see discussions below).
On December 28, 2000, ConCap Stratford Associates, Ltd. sold Stratford Place
Apartments to an unaffiliated third party for $7,600,000. After payment of
closing costs of approximately $587,000, the net proceeds received by the
Partnership were approximately $2,508,000. The purchaser assumed the mortgage
encumbering the property of approximately $4,505,000. The gain on the sale
recognized during the fourth quarter of 2000 was approximately $3,440,000.
On December 14, 1999, Overlook Associates, Ltd. sold Overlook to an unaffiliated
third party for $1,975,000. After payment of closing costs of approximately
$84,000 the net proceeds received by the Partnership were approximately
$1,891,000. The Partnership used most of the proceeds to pay off the mortgage
encumbering the property of approximately $1,780,000. The remaining net proceeds
were used to establish additional cash reserves for the Partnership. The
Partnership's gain on the sale during the fourth quarter of 1999 was
approximately $638,000.
LIQUIDITY AND CAPITAL RESOURCES
2001 Compared to 2000
At December 31, 2001, the Partnership held cash and cash equivalents of
approximately $2,729,000 as compared to approximately $6,377,000 at December 31,
2000. The decrease in cash and cash equivalents of approximately $3,648,000
since the Partnership's year ended December 31, 2000 is due to approximately
$7,936,000 and $3,341,000 of cash used in financing and investing activities,
respectively, partially offset by approximately $7,629,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
distributions to partners, repayment of mortgages at Lake Forest Apartments and
Post Ridge Apartments due to refinancing, payments of principal on the mortgages
encumbering the Partnership's properties, payment of new loan costs, and
prepayment penalties associated with the repaid mortgage at Post Ridge
Apartments, partially offset by proceeds from the refinancing of Lake Forest
Apartments and Post Ridge Apartments. Cash used in investing activities
consisted primarily of property improvements and replacements partially offset
by net insurance proceeds received for casualties (see discussion below) and net
withdrawals from restricted escrows. The Partnership invests its working capital
in interest bearing accounts.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $182,000 were received during the year ended December
31, 2001. The Partnership recognized a casualty gain of approximately $128,000
for the year ended December 31, 2001, which represents the excess of the
proceeds received as of December 31, 2001 over the write-off of undepreciated
damaged assets.
In January 2000, Stratford Place Apartments had a fire which damaged 12
apartment units and 30% of the roof. Insurance proceeds of approximately
$354,000 were received during the year ended December 31, 2000. The Managing
General Partner successfully completed the repairs prior to the sale of the
property on December 28, 2000. The Partnership recognized a casualty gain of
approximately $154,000 for the year ended December 31, 2000.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$1,135,200. Additional improvements may be considered and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. The additional capital
expenditures will be incurred only if cash is available from operations or from
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The Partnership's
remaining mortgage indebtedness of approximately $49,472,000 is amortized over
various periods with required balloon payments ranging from 2004 and 2005. The
General Partner will attempt to refinance such indebtedness and/or sell the
properties prior to such maturity dates. If a property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure.
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000. The Partnership wrote off approximately $32,000 in
unamortized loan costs and paid prepayment penalties of approximately $110,000
resulting in an extraordinary loss on early extinguishment of debt of
approximately $142,000.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,00 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in an extraordinary loss on early extinguishment of debt of
approximately $40,000. The Partnership was required to establish a repair escrow
of approximately $36,000 at the date of the refinancing. The Partnership is also
required to establish a replacement reserve escrow by making monthly deposits
until the mortgage is paid in full.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers
Edge Apartments. The refinancing replaced mortgage indebtedness of approximately
$1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a
rate of 7.82% compared to a prior rate of 8.40% and matures on September 1,
2020. Capitalized loan costs incurred for the refinancing were approximately
$90,000. There was no extraordinary loss recognized due to the refinancing
occurring at the maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford
Place Apartments. The refinancing replaced mortgage indebtedness of
approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was
refinanced at a rate of 8.48% compared to the prior rate of 8.65%. Capitalized
loan costs incurred for the refinancing were approximately $149,000. The
Partnership wrote off approximately $4,000 in unamortized loan costs and paid
prepayment penalties of approximately $1,000 resulting in an extraordinary loss
on early extinguishment of debt of approximately $5,000. On December 28, 2000,
the Partnership sold Stratford Place Apartments to an unaffiliated third party
whom assumed the mortgage encumbering the property. The Partnership wrote off
the unamortized loan costs resulting in an additional extraordinary loss on
early extinguishment of debt of approximately $143,000.
On February 28, 2000, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on
March 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $142,000. The Partnership wrote off approximately $19,000 in
unamortized loan costs and paid prepayment penalties of approximately $7,000
resulting in an extraordinary loss on early extinguishment of debt of
approximately $26,000.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately $129,000.
The Partnership wrote off approximately $11,000 in unamortized loan costs and
paid prepayment penalties of approximately $22,000 resulting in an extraordinary
loss on early extinguishment of debt of approximately $33,000.
On November 9, 1999, the Partnership obtained financing on Point West Apartments
in the amount of $2,460,000. The mortgage was financed at a rate of 7.86% and
matures on December 1, 2019. Capitalized loan costs incurred for the financing
were approximately $47,000 during the year ended December 31, 1999. An
additional $20,000 of loan costs were incurred during the year ended December
31, 2000.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The Partnership's
remaining mortgage indebtedness of approximately $49,472,000 is amortized over
various periods with required balloon payments ranging from 2004 and 2005. The
General Partner will attempt to refinance such indebtedness and/or sell the
properties prior to such maturity dates. If a property cannot be refinanced or
sold for a sufficient amount, the Partnership will risk losing such property
through foreclosure.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2011. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership. If the Partnership is unable to extend its term, the ultimate sale
price of the investment properties may be adversely affected.
During 2001, the Partnership declared and paid distributions of approximately
$9,139,000 (approximately $8,773,000 to the limited partners or $25.59 per
limited partnership unit) consisting of approximately $4,981,000 (approximately
$4,782,000 to the limited partners or $13.95 per limited partnership unit) from
operations and approximately $4,158,000 (approximately $3,991,000 to the limited
partners or $11.64 per limited partnership unit) of refinance proceeds for Lake
Forest Apartments and sale proceeds of Stratford Place Apartments, which sold in
December of 2000. Approximately $166,000 of these distributions from proceeds is
payable to the General Partner and special limited partners as this portion is
subordinated and deferred per the Partnership Agreement until the limited
partners receive 100% of their original capital contributions from surplus cash.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $66,000 was
distributed to the general partner of the majority owned sub-tier limited
partnerships.
During 2000, the Partnership declared distributions of approximately $11,183,000
(approximately $10,736,000 to the limited partners or $31.32 per limited
partnership unit) consisting of approximately $6,194,000 (approximately
$5,947,000 to the limited partners or $17.35 per limited partnership unit) from
operations and approximately $4,989,000 (approximately $4,789,000 to the limited
partners or $13.97 per limited partnership unit) of refinancing proceeds from
The Apartments, Citadel Apartments, Rivers Edge Apartments, and Stratford Place
Apartments and sale proceeds from Overlook Apartments which sold December 1999.
Approximately $197,000 of the distribution from proceeds was payable at December
31, 2000 to the General Partner and special limited partners as this
distribution is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus funds. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$56,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 1999, the Partnership paid distributions of approximately $13,283,000
(approximately $12,730,000 to the limited partners or $37.14 per limited
partnership unit) consisting of cash flow from operations totaling approximately
$10,670,000 (approximately $10,117,000 to the limited partners or $29.52 per
limited partnership unit) and approximately $2,613,000 (all to the limited
partners or $7.62 per limited partnership unit) representing funds from
previously undistributed refinance proceeds from 1996 and 1997. As of December
31, 1999, the Partnership had a distribution payable of approximately $4,318,000
(approximately $3,921,000 to the limited partners or $11.44 per limited
partnership unit) consisting of cash from operations of approximately $1,874,000
(approximately $1,679,000 to the limited partners or $4.90 per limited
partnership unit) and a distribution of refinance proceeds representing funds
from the financing of Point West Apartments of approximately $2,444,000
(approximately $2,242,000 to the limited partners or $6.54 per limited
partnership unit). In January 2000, approximately $4,113,000 of this
distribution was paid and the remainder was accrued at December 31, 2000.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves, and the timing of debt
maturities, refinancings, and/or property sales. The Partnership's cash
available for distribution is reviewed on a monthly basis. There can be no
assurance, however, that the Partnership will generate sufficient funds from
operations after required capital expenditures to permit distributions to its
partners in the year 2002 or subsequent periods.
On September 16, 2000, the Partnership sought the vote of the limited partners
to amend the Partnership Agreement to eliminate the requirement for the
Partnership to maintain reserves equal to at least 5% of the limited partners'
capital contributions less distributions as reserve requirements of the
Partnership. The vote, sought pursuant to a Consent Solicitation, expired on
October 16, 2000 at which time the amendment was approved by the requisite
percent of limited partnership units.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 186,758.50 limited partnership units
in the Partnership representing 54.48% of the outstanding units at December 31,
2001. 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 either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 54.48% of the
outstanding units, AIMCO is in a position to control all such 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 its affiliation with the General Partner.
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No.
144 provides accounting guidance for financial accounting and reporting for
the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. The General Partner does not
anticipate that its adoption will have a material effect on the financial
position or results of operations of the Partnership.
Item 7a. Market Risk Factors
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 2001, a
100 basis point increase or decrease in market interest rates would have an
annual impact of approximately $735,000 on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 2001. The interest rates represent the weighted-average rates. The fair
value of the the debt obligations approximated the recorded value as of December
31, 2001.
Long-term Debt
Principal amount by expected maturity: Fixed Rate Debt Average Interest Rate
(in thousands)
2002 $ 845 7.81%
2003 923 7.81%
2004 5,112 7.81%
2005 43,138 7.42%
2006 875 7.68%
Thereafter 22,582 7.68%
Total $73,475
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 2001 and 2000
Consolidated Statements of Operations - Years ended December 31, 2001,
2000 and 1999
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 2001, 2000, and 1999
Consolidated Statements of Cash Flows - Years ended December 31, 2001,
2000 and 1999
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, 2001 and 2000, and the related
consolidated statements of operations, changes in partners' deficit, and cash
flows for each of the three years in the period ended December 31, 2001. 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 auditing standards generally accepted
in the United States. 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties IV at December 31, 2001 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 15, 2002
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
2001 2000
Assets
Cash and cash equivalents $ 2,729 $ 6,377
Receivables and deposits 1,186 1,854
Restricted escrows 644 900
Other assets 1,628 1,497
Investment properties (Notes D, G and H):
Land 10,907 10,907
Buildings and related personal property 124,301 120,607
135,208 131,514
Less accumulated depreciation (107,215) (103,272)
27,993 28,242
$ 34,180 $ 38,870
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 204 $ 1,021
Tenant security deposit liabilities 497 488
Accrued property taxes 1,189 1,311
Other liabilities 947 1,510
Distribution payable (Note F) 568 402
Mortgage notes payable (Note D) 73,475 71,791
76,880 76,523
Partners' Deficit
General partners (Note F) (7,064) (6,798)
Limited partners (342,773 units issued and
outstanding) (35,636) (30,855)
(42,700) (37,653)
$ 34,180 $ 38,870
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
2001 2000 1999
Revenues:
Rental income $26,609 $27,859 $28,533
Other income 2,234 2,234 2,018
Gain on sale of investment property (Note E) -- 3,440 638
Casualty gains (Note H) 236 154 --
Total revenues 29,079 33,687 31,189
Expenses:
Operating 11,267 11,242 11,146
General and administrative 1,929 1,844 1,942
Depreciation 4,082 4,161 4,398
Interest 5,615 5,851 5,661
Property taxes 1,846 1,908 1,924
Total expenses 24,739 25,006 25,071
Income before extraordinary item 4,340 8,681 6,118
Extraordinary loss on early extinguishment of
debt (Note D) (182) (207) --
Net income (Note I) $ 4,158 $ 8,474 $ 6,118
Net income allocated to general partners (4%) $ 166 $ 339 $ 245
Net income allocated to limited partners (96%) 3,992 8,135 5,873
Net income $ 4,158 $ 8,474 $ 6,118
Per limited partnership unit:
Income before extraordinary item $ 12.16 $ 24.31 $ 17.13
Extraordinary loss on early extinguishment
of debt (.51) (0.58) --
Net income $ 11.65 $ 23.73 $ 17.13
Distributions per limited partnership unit $ 25.59 $ 31.32 $ 49.29
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 1998 342,773 $ (6,175) $(17,230) $(23,405)
Net income for the year ended
December 31, 1999 -- 245 5,873 6,118
Distributions to partners -- (704) (16,897) (17,601)
Partners' deficit at
December 31, 1999 342,773 (6,634) (28,254) (34,888)
Net income for the year ended
December 31, 2000 -- 339 8,135 8,474
Distributions to partners -- (503) (10,736) (11,239)
Partners' deficit at
December 31, 2000 342,773 (6,798) (30,855) (37,653)
Net income for the year ended
December 31, 2001 -- 166 3,992 4,158
Distributions to partners -- (432) (8,773) (9,205)
Partners' deficit at
December 31, 2001 342,773 $ (7,064) $(35,636) $(42,700)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 4,158 $ 8,474 $ 6,118
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,082 4,161 4,398
Amortization of loan costs 221 281 315
Gain on sale of investment property -- (3,440) (638)
Casualty gain (236) (154) --
Extraordinary loss on early extinguishment of
debt 182 207 --
Change in accounts:
Receivables and deposits 668 327 32
Other assets 47 (22) (203)
Accounts payable (817) 61 581
Tenant security deposit liabilities 9 (18) (62)
Accrued property taxes (122) 27 (25)
Other liabilities (563) 228 247
Net cash provided by operating activities 7,629 10,132 10,763
Cash flows from investing activities:
Property improvements and replacements (3,895) (5,624) (5,207)
Net proceeds from sale of investment property -- 2,508 1,891
Net withdrawals from restricted escrows 256 502 1,341
Net insurance proceeds from casualties 298 354 --
Net cash used in investing activities (3,341) (2,260) (1,975)
Cash flows from financing activities:
Payments on mortgage notes payable (566) (512) (458)
Repayment of mortgage notes payable (8,750) (12,224) (1,780)
Proceeds from mortgage notes payable 11,000 18,035 2,460
Prepayment penalties (110) (30) --
Loan costs paid (471) (530) (47)
Distributions to partners (9,039) (15,155) (13,283)
Net cash used in financing activities (7,936) (10,416) (13,108)
Net decrease in cash and cash equivalents (3,648) (2,544) (4,320)
Cash and cash equivalents at beginning of the year 6,377 8,921 13,241
Cash and cash equivalents at end of year $ 2,729 $ 6,377 $ 8,921
Supplemental disclosure of noncash activity:
Extinguishment of debt in connection with sale of
investment property $ -- $ 4,505 $ --
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 2001 and 2000, distributions payable to partners were each
adjusted by approximately $166,000 and $197,000 for non-cash activity,
respectively.
At December 31, 1999, distributions to partners of approximately $4,318,000 were
declared and approximately $4,113,000 of this balance was paid during the year
ended December 31, 2000. The remaining balance is deferred per the Partnership
Agreement.
Cash paid for interest was approximately $5,408,000, $5,552,000 and $5,372,000
for the years ended December 31, 2001, 2000 and 1999, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties IV (the "Partnership" or
"Registrant"), a California limited partnership, was formed on September 22,
1981, to operate and hold real estate properties. The general partner of the
Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a
Delaware corporation. Additionally, the General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The directors and officers of the General Partner also
serve as executive officers of AIMCO. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2011 unless terminated prior to
that date. As of December 31, 2001, the Partnership operates 15 residential
properties 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 the 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 Special Limited Partner, thereby
leaving CEI as the sole general partner of the Partnership. On November 14,
1990, CCMC was dissolved and its Special Limited Partnership interest was
divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"),
which is an affiliate of AIMCO. 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 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.
Consolidation: The consolidated financial statements include the Partnership's
majority interest in a joint venture which owns South Port Apartments. The
Partnership has the ability to control the major operating and financial
policies of the joint venture. No minority interest has been reflected for the
joint venture because minority interests are limited to the extent of their
equity capital, and losses in excess of the minority interest equity capital are
charged against the Partnership's interest. Should the losses reverse, the
Partnership would be credited with the amount of minority interest losses
previously absorbed. The other partner of this joint venture is AIMCO
Properties, LP, an affiliate of the General Partner.
The Partnership's consolidated financial statements also include the accounts
of the Partnership, its wholly-owned partnerships, and its 99% limited
partnership interest in Briar Bay Apartments Associates, Ltd., Post Ridge
Associates, Ltd., Concap River's Edge Associates, Ltd., Foothill Chimney
Associates, L.P., and ConCap Stratford Associates, Ltd. The Partnership may
remove the general partner of its 99% owned partnerships; therefore, the
partnerships are deemed controlled and therefore consolidated by the
Partnership. All significant interpartnership balances have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks. At certain times, the amount of cash deposited at a bank may exceed the
limit on insured deposits. Cash balances include approximately $2,504,000 and
$2,899,000 at December 31, 2001 and 2000, respectively, that are maintained by
the affiliated management company on behalf of affiliated entities in a cash
concentration account.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserves - At the time of the refinancings of the
mortgage notes payable encumbering Nob Hill Villa, the Arbours of
Hermitage, Briar Bay, Chimney Hill, Citadel Village, Foothill Place,
Knollwood, Village East, Lake Forest and South Port, approximately
$1,638,000 was designated for certain capital improvements. At December
31, 2001, the total remaining escrow balance is approximately $36,000 and
$213,000 for Lake Forest and South Port Apartments, respectively. The
capital improvement reserves for Nob Hill Villa, Arbours of Hermitage,
Briar Bay, Chimney Hill, Citadel Village, Foothill Place, Knollwood and
Village East had been fully utilized as of December 31, 2001.
Replacement Reserve Account - At the time of the refinancing of the
mortgage notes payable encumbering the Arbours of Hermitage, Briar Bay,
Chimney Hill, Citadel Village, Foothill Place, Knollwood, and Village
East, $507,000 of the proceeds, ranging from $191 to $325 per unit, were
designated for replacement reserves. These funds were established to cover
necessary repairs and replacements of existing improvements. At December
31, 2001, the total remaining reserve balance was approximately $418,000.
Investments in Real Estate: Investment properties consist of fifteen apartment
complexes, which are stated at cost. Acquisition fees are capitalized as a cost
of real estate. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of", the Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
The impairment loss is measured by comparing the fair value of the assets to its
carrying amount. Costs of apartment properties that have been permanently
impaired have been written down to appraised value. No adjustments for
impairment of value were recorded in any of the years ended December 31, 2001,
2000 or 1999. See "Recent Accounting Pronouncements" below.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the modified accelerated cost recovery method is used for depreciation
of (1) real property over 27 1/2 years and (2) personal property additions over
5 years.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.
Loan Costs: Loan costs, net of accumulated amortization, of approximately
$1,146,000 and $1,180,000 at December 31, 2001 and 2000, respectively, are
amortized using the straight-line method over the lives of the related mortgage
notes. Unamortized loan costs are included in other assets. Amortization of loan
costs is included in interest expense.
Fair Value of Financial Statements: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for
net income (losses) and distributions of distributable cash from operations to
be allocated generally 96% to the Limited Partners and 4% to the General
Partner.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per Limited
Partnership Unit is computed by dividing net income (loss) allocated to the
Limited Partners by the number of Units outstanding. Per Unit information has
been computed based on the number of Units outstanding at the beginning of each
year.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also established standards
for related disclosures about products and services, geographic areas, and major
customers. As defined in SFAS No. 131, the Partnership has only one reportable
segment. The General Partner believes that segment-based disclosures will not
result in a more meaningful presentation than the consolidated financial
statements as currently presented.
Advertising Costs: Advertising costs of approximately $469,000, $543,000 and
$549,000 in 2001, 2000 and 1999, respectively, are charged to operating
expense as incurred.
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.
Commitments: On September 16, 2000, the Partnership sought the vote of the
limited partners to amend the Partnership Agreement to eliminate the requirement
for the Partnership to maintain reserves equal to at least 5% of the limited
partners' capital contributions less distributions as reserve requirements of
the Partnership. The vote, sought pursuant to a Consent Solicitation, expired on
October 16, 2000 at which time the amendment was approved by the requisite
percent of limited partnership units.
Reclassification: Certain reclassifications have been made to the 1999
balances to conform to the 2000 and 2001 presentations.
Recent Accounting Pronouncements
In August 2001, the Financial Accounting Standards Board issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets". SFAS No.
144 provides accounting guidance for financial accounting and reporting for
the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". SFAS No. 144 is effective for fiscal
years beginning after December 15, 2001. The General Partner does not
anticipate that its adoption will have a material effect on the financial
position or results of operations of the Partnership.
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 IPT merged into 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 - 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 Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were incurred during the years ended
December 31, 2001, 2000 and 1999:
2001 2000 1999
(in thousands)
Property management fees (included in
operating expense) $1,569 $1,515 $1,547
Reimbursements for services of affiliates
(included in investment properties,
general and administrative expense
and operating expense) 2,172 1,103 565
Partnership management fee (included in
general and administrative expense) 430 535 1,084
Loan costs (included in other assets) 110 180 25
Real estate commission -- 268 --
During the years ended December 31, 2001, 2000 and 1999, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,569,000,
$1,515,000 and $1,547,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $2,172,000, $1,103,000 and $565,000, for the years
ended December 31, 2001, 2000 and 1999, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $1,208,000, $159,000 and $31,000 for the
years ended December 31, 2001, 2000 and 1999, respectively. The construction
management service fees are calculated based on a percentage of current and
certain prior period additions to investment properties and are being
depreciated over 15 years.
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. Affiliates of the
General Partner paid approximately $430,000, $535,000 and $1,084,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2001, 2000 and 1999, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000, $180,000 and $25,000 in
2001, 2000 and 1999, respectively, for loan costs which are capitalized and
included with other assets on the consolidated balance sheets. These loan costs
were associated with the refinancing of two of the Partnership's properties in
2001, four of the Partnership's properties in 2000 and one of the Partnership's
properties in 1999 (see "Note D").
For acting as real estate broker in connection with the sale of Stratford Place
Apartments, a real estate commission of approximately $228,000 was accrued as of
December 31, 2000 and was paid to the General Partner during the year ended
December 31, 2001. For acting as real estate broker in connection with the sale
of Overlook Apartments in December 1999, the General Partner was paid a real
estate commission of approximately $40,000 during the year ended December 31,
2000. When the Partnership terminates, the General Partner will have to return
these commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the year ended December 31, 2001,
the Partnership paid AIMCO and its affiliates approximately $250,000 for
insurance coverage and fees associated with policy claims administration.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 186,758.50 limited partnership units
in the Partnership representing 54.48% of the outstanding units at December 31,
2001. 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 either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 54.48% of the
outstanding units, AIMCO is in a position to control all such 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 its affiliation with the General Partner.
Note D - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
Principal Principal Monthly Principal
Balance At Balance At Payment Stated Balance
December 31, December 31, Including Interest Maturity Due At
Property 2001 2000 Interest Rate Date Maturity
The Apartments $ 4,601 $ 4,703 $ 41 (b) 8.37% 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 33 (a) 6.95% 12/05 5,650
Briar Bay Racquet Club
Apartments 3,500 3,500 20 (a) 6.95% 12/05 3,500
Chimney Hill Apartments 5,400 5,400 31 (a) 6.95% 12/05 5,400
Citadel Apartments 4,536 4,638 40 (c) 8.25% 03/20 --
Citadel Village Apartments 2,450 2,450 14 (a) 6.95% 12/05 2,450
Foothill Place Apartments 10,100 10,100 58 (a) 6.95% 12/05 10,100
Knollwood Apartments 6,780 6,780 39 (a) 6.95% 12/05 6,780
Lake Forest Apartments 6,475 4,700 51 (e) 7.13% 10/21 --
Nob Hill Villa Apartments 6,789 6,926 64 9.20% 04/05 6,250
Point West Apartments 2,350 2,407 20 7.86% 12/19 --
Post Ridge Apartments 4,500 4,050 34 (f) 6.63% 01/22 --
Rivers Edge Apartments 3,891 3,979 33 (d) 7.82% 09/20 --
South Port Apartments 4,303 4,358 31 7.19% 12/04 4,119
Village East Apartments 2,150 2,150 12 (a) 6.95% 12/05 2,150
Total $73,475 $71,791 $ 521 $46,399
(a) Monthly payments of interest only at the stated rate until maturity.
(b) Debt was obtained effective February 2, 2000 (see below for further
explanation).
(c) Debt was obtained effective February 28, 2000 (see below for further
explanation).
(d) Debt was obtained effective August 31, 2000 (see below for further
explanation).
(e) Debt was obtained effective September 28, 2001 (see below for further
explanation).
(f) Debt was obtained effective December 21, 2001 (see below for further
explanation).
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000.
The Partnership wrote off approximately $32,000 in unamortized loan costs and
paid prepayment penalties of approximately $110,000 resulting in an
extraordinary loss on early extinguishment of debt of approximately $142,000.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,000 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in an extraordinary loss on early extinguishment of debt of
approximately $40,000.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers
Edge Apartments. The refinancing replaced mortgage indebtedness of approximately
$1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a
rate of 7.82% compared to a prior rate of 8.40% and matures on September 1,
2020. Capitalized loan costs incurred for the refinancing were approximately
$90,000. There was no extraordinary loss recognized due to the refinancing
occurring at the maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford
Place Apartments. The refinancing replaced mortgage indebtedness of
approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was
refinanced at a rate of 8.48% compared to the prior rate of 8.65% and matures on
June 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $149,000. The Partnership wrote off approximately $4,000 in
unamortized loan costs and paid prepayment penalties of approximately $1,000
resulting in an extraordinary loss on early extinguishment of debt of
approximately $5,000. On December 28, 2000, the Partnership sold Stratford Place
Apartments to an unaffiliated third party whom assumed the mortgage encumbering
the property. The Partnership wrote off the unamortized loan costs resulting in
an additional extraordinary loss on early extinguishment of debt of
approximately $143,000.
On February 28, 2000, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on
March 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $142,000. The Partnership wrote off approximately $19,000 in
unamortized loan costs and paid prepayment penalties of approximately $7,000
resulting in an extraordinary loss on early extinguishment of debt of
approximately $26,000.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately $129,000.
The Partnership wrote off approximately $11,000 in unamortized loan costs and
paid prepayment penalties of approximately $22,000 resulting in an extraordinary
loss on early extinguishment of debt of approximately $33,000.
On November 9, 1999, the Partnership obtained financing on Point West Apartments
in the amount of $2,460,000. The mortgage was financed at a rate of 7.86% and
matures on December 1, 2019. Capitalized loan costs incurred for the financing
were approximately $47,000 during the year ended December 31, 1999. An
additional $20,000 of loan costs were incurred during the year ended December
31, 2000.
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 2004 and 2022 and
bear interest at rates ranging from 6.63% to 9.20%. Various mortgages require
prepayment penalties if repaid prior to maturity. Further, the properties may
not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes
payable subsequent to December 31, 2001, are as follows (in thousands):
2002 $ 845
2003 923
2004 5,112
2005 43,138
2006 875
Thereafter 22,582
Total $73,475
Note E - Disposition of Real Estate
On December 28, 2000, ConCap Stratford Associated, Ltd. sold Stratford Place
Apartments to an unaffiliated third party for $7,600,000. After payment of
closing costs of approximately $587,000, the net proceeds received by the
Partnership were approximately $2,508,000. The purchaser assumed the mortgage
encumbering the property of approximately $4,505,000. The gain on the sale of
Stratford Place Apartments during the fourth quarter of 2000 was approximately
$3,440,000.
The sales transactions are summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 7,013
Less: Net real estate (1) (3,574)
Net other assets 1
Gain on sale of real estate $ 3,440
(1) Net of accumulated depreciation of approximately $4,851,000.
On December 14, 1999, Overlook Associates, Ltd. sold Overlook Apartments to an
unaffiliated third party for $1,975,000. After payment of closing costs of
approximately $84,000 the net proceeds received by the Partnership were
approximately $1,891,000. The Partnership used most of the proceeds to pay off
the mortgage encumbering the property of approximately $1,780,000. The remaining
net proceeds were used to establish additional cash reserves for the
Partnership. The Partnership's gain on the sale during the fourth quarter of
1999 was approximately $638,000.
Note F - Distributions
During 2001, the Partnership declared and paid distributions of approximately
$9,139,000 (approximately $8,773,000 to the limited partners or $25.59 per
limited partnership unit) consisting of approximately $4,981,000 (approximately
$4,782,000 to the limited partners or $13.95 per limited partnership unit) from
operations and approximately $4,158,000 (approximately $3,991,000 to the limited
partners or $11.64 per limited partnership unit) of refinance proceeds for Lake
Forest Apartments and sale proceeds of Stratford Place Apartments, which sold in
December of 2000. Approximately $166,000 of these distributions from proceeds is
payable to the General Partner and special limited partners as this portion is
subordinated and deferred per the Partnership Agreement until the limited
partners receive 100% of their original capital contributions from surplus cash.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $66,000 was
distributed to the general partner of the majority owned sub-tier limited
partnerships.
During 2000, the Partnership declared distributions of approximately $11,183,000
(approximately $10,736,000 to the limited partners or $31.32 per limited
partnership unit) consisting of approximately $6,194,000 (approximately
$5,947,000 to the limited partners or $17.35 per limited partnership unit) from
operations and approximately $4,989,000 (approximately $4,789,000 to the limited
partners or $13.97 per limited partnership unit) of refinancing proceeds from
The Apartments, Citadel Apartments, Rivers Edge Apartments, and Stratford Place
Apartments and sale proceeds from Overlook Apartments which sold December 1999.
Approximately $197,000 of the distribution from proceeds was payable at December
31, 2000 to the General Partner and special limited partners as this
distribution is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus funds. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$56,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 1999, the Partnership paid distributions of approximately $13,283,000
(approximately $12,730,000 to the limited partners or $37.14 per limited
partnership unit) consisting of cash flow from operations totaling approximately
$10,670,000 (approximately $10,117,000 to the limited partners or $29.52 per
limited partnership unit) and approximately $2,613,000 (all to the limited
partners or $7.62 per limited partnership unit) representing funds from
previously undistributed refinance proceeds from 1996 and 1997. As of December
31, 1999, the Partnership had a distribution payable of approximately $4,318,000
(approximately $3,921,000 to the limited partners or $11.44 per limited
partnership unit) consisting of cash from operations of approximately $1,874,000
(approximately $1,679,000 to the limited partners or $4.90 per limited
partnership unit) and a distribution of refinance proceeds representing funds
from the financing of Point West Apartments of approximately $2,444,000
(approximately $2,242,000 to the limited partners or $6.54 per limited
partnership unit). In January 2000, approximately $4,113,000 of this
distribution was paid and the remainder was accrued at December 31, 2000.
Note G - Real Estate and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Net Cost
and Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Apartments $ 4,601 $ 438 $ 6,218 $ 2,646
Arbours of Hermitage
Apartments 5,650 547 8,574 5,759
Briar Bay Racquet Club
Apartments 3,500 1,084 5,271 1,811
Chimney Hill Apartments 5,400 659 7,188 4,040
Citadel Apartments 4,536 695 5,619 1,742
Citadel Village Apartments 2,450 337 3,334 909
Foothill Place Apartments 10,100 3,492 9,435 3,592
Knollwood Apartments 6,780 345 7,065 5,056
Lake Forest Apartments 6,475 692 5,811 3,475
Nob Hill Villa Apartments 6,789 490 8,922 4,642
Point West Apartments 2,350 285 2,919 109
Post Ridge Apartments 4,500 143 2,498 2,825
Rivers Edge Apartments 3,891 512 2,160 926
South Port Apartments 4,303 1,175 6,496 1,297
Village East Apartments 2,150 184 2,236 1,555
Totals $73,475 $11,078 $83,746 $40,384
Gross Amount At Which
Carried
At December 31, 2001
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
The Apartments $ 438 $ 8,864 $ 9,302 $ 7,860 1973 04/84 5-18
Arbours of Hermitage
Apartments 547 14,333 14,880 11,601 1973 09/83 5-18
Briar Bay Racquet Club
Apartments 1,084 7,082 8,166 6,645 1975 09/82 5-18
Chimney Hill Apartments 659 11,228 11,887 10,121 1973 08/82 5-18
Citadel Apartments 694 7,362 8,056 6,816 1973 05/83 5-18
Citadel Village Apartments 337 4,243 4,580 3,672 1974 12/82 5-18
Foothill Place Apartments 3,402 13,117 16,519 10,958 1973 08/85 5-18
Knollwood Apartments 345 12,121 12,466 10,160 1972 07/82 5-18
Lake Forest Apartments 692 9,286 9,978 7,910 1971 04/84 5-18
Nob Hill Villa Apartments 490 13,564 14,054 11,816 1971 04/83 5-18
Point West Apartments 206 3,107 3,313 2,561 1973 11/85 5-40
Post Ridge Apartments 143 5,323 5,466 4,215 1972 07/82 5-18
Rivers Edge Apartments 512 3,086 3,598 2,763 1976 04/83 5-18
South Port Apartments 1,175 7,793 8,968 6,881 -- 11/83 5-18
Village East Apartments 183 3,792 3,975 3,236 1973 12/82 5-18
Totals $10,907 $124,301 $135,208 $107,215
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
2001 2000 1999
(in thousands)
Real Estate
Balance at beginning of year $131,514 $134,633 $134,232
Additions 3,895 5,624 5,207
Property dispositions - other (201) (8,743) (4,806)
Balance at end of year $135,208 $131,514 $134,633
Accumulated Depreciation
Balance at beginning of year $103,272 $104,057 $103,250
Additions charged to expense 4,082 4,161 4,398
Property dispositions - other (139) (4,946) (3,591)
Balance at end of year $107,215 $103,272 $104,057
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 2001, 2000 and 1999, is approximately $153,587,000, $149,980,000
and $152,079,000, respectively. The accumulated depreciation taken for Federal
income tax purposes at December 31, 2001, 2000 and 1999, is approximately
$120,682,000, $116,415,000 and $116,541,000, respectively.
Note H - Casualties
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001 as the damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001 which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $182,000 were received during the year ended December
31, 2001. The Partnership recognized a casualty gain of approximately $128,000
for the year ended December 31, 2001 which represents the excess of the proceeds
received as of December 31, 2001 over the write-off of the undepreciated damaged
assets.
In January 2000, Stratford Place Apartments had a fire which damaged 12
apartment units and 30% of the roof. Insurance proceeds of approximately
$354,000 were received during the year ended December 31, 2000. The General
Partner successfully completed the repairs prior to the sale of the property on
December 20, 2000. The Partnership recognized a casualty gain of approximately
$154,000 for the year ended December 31, 2000.
Note I - Income Taxes
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 2001, 2000 and 1999 (in thousands, except per unit data):
2001 2000 1999
Net income as reported $ 4,158 $ 8,474 $ 6,118
(Deduct) add:
Deferred revenue and other
liabilities (89) (151) (393)
Depreciation differences (185) 15 473
Accrued expenses 20 30 39
Minority interest (255) (302) (220)
Other (22) 41 (29)
Gain (loss) on casualty/
disposition/foreclosure (343) 412 (514)
Federal taxable income $ 3,284 $ 8,519 $ 5,474
Federal taxable income per
Limited Partnership unit $ 9.20 $ 23.86 $ 15.33
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities (in thousands):
Net liabilities as reported $(42,700)
Land and Buildings 18,379
Accumulated depreciation (13,467)
Syndication fees 18,871
Other 5,041
Net liabilities - Federal tax basis $(13,876)
Note J - 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. (the "Nuanes action") 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, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
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 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 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 and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants intend to oppose the motion and are
scheduled to file their opposition brief on March 26, 2002. A hearing on the
motion has been scheduled for April 29, 2002. The Court has set the matter for
trial in January 2003.
During the third quarter of 2001, a complaint (the "Heller action") was filed
against the same defendants that are named in the Nuanes action, captioned
Heller v. Insignia Financial Group. On or about August 6, 2001, plaintiffs filed
a first amended complaint. The first amended complaint in the Heller action is
brought as a purported derivative action, and asserts claims for among other
things breach of fiduciary duty; unfair competition; conversion, unjust
enrichment; and judicial dissolution. Plaintiffs in the Nuanes action filed a
motion to consolidate the Heller action with the Nuanes action and stated that
the Heller action was filed in order to preserve the derivative claims that were
dismissed without leave to amend in the Nuanes action by the Court order dated
July 10, 2001. On October 5, 2001, the General Partner and affiliated defendants
moved to strike the first amended complaint in its entirety for violating the
Court's July 10, 2001 order granting in part and denying in part defendants'
demurrer in the Nuanes action, or alternatively, to strike certain portions of
the complaint based on the statute of limitations. Other defendants in the
action demurred to the fourth amended complaint, and, alternatively, moved to
strike the complaint. On December 11, 2001, the court heard argument on the
motions and took the matters under submission. On February 4, 2002, the Court
served notice of its order granting defendants' motion to strike the Heller
complaint as a violation of its July 10, 2001 order in the Nuanes action.
The General Partner does not anticipate that any costs, whether legal or
settlement costs, associated with these cases 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.
Note K - Selected Quarterly Financial Data (unaudited)
The following is a summary of the unaudited quarterly results of operations for
the Partnership (in thousands, except per unit data):
2001 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 7,125 $ 7,224 $ 7,366 $ 7,364 $ 29,079
Total expenses (5,974) (6,467) (6,221) (6,077) (24,739)
Income before extraordinary
item 1,151 757 1,145 1,287 4,340
Extraordinary loss on early
extinguishment of debt -- -- (40) (142) (182)
Net income $ 1,151 $ 757 $ 1,105 $ 1,145 $ 4,158
Per limited partnership unit:
Income before extraordinary
item $ 3.22 $ 2.12 $ 3.21 $ 3.61 $ 12.16
Extraordinary loss on early
extinguishment of debt -- -- (.11) (0.40) (0.51)
Net income $ 3.22 $ 2.12 $ 3.10 $ 3.21 $ 11.65
2000 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 7,399 $ 7,548 $ 7,539 $ 11,201 $ 33,687
Total expenses (6,180) (6,175) (6,284) (6,367) (25,006)
Income before extraordinary
item 1,219 1,373 1,255 4,834 8,681
Extraordinary loss on early
extinguishment of debt (59) (5) -- (143) (207)
Net income $ 1,160 $ 1,368 $ 1,255 $ 4,691 $ 8,474
Per limited partnership unit:
Income before extraordinary
item $ 3.41 $ 3.84 $ 3.52 $ 13.54 $ 24.31
Extraordinary loss on early
extinguishment of debt (0.16) (0.01) -- (0.41) (0.58)
Net income $ 3.25 $ 3.83 $ 3.52 $ 13.13 $ 23.73
The increase in net income for the fourth quarter of 2000 is due to the sale of
Stratford Place Apartments which resulted in a gain on the sale of approximately
$3,440,000.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no
officers or directors. ConCap Equities, Inc. ("CEI" or the "General Partner")
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business.
The names of the directors, and executive officers of the General Partner, their
ages and the nature of all positions presently held by them are set forth below.
Name Age Position
Patrick J. Foye 44 Executive Vice President and Director
Martha L. Long 42 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice
President of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a
partner in the law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989
to 1998 and was Managing Partner of the firm's Brussels, Budapest and Moscow
offices from 1992 through 1994. Mr. Foye is also Deputy Chairman of the Long
Island Power Authority and serves as a member of the New York State
Privatization Council. He received a B.A. from Fordham College and a J.D.
from Fordham University Law School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner since October 1998 as a result of the acquisition of Insignia Financial
Group, Inc. As of February 2001, Ms. Long was also appointed head of the service
business for AIMCO. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1998, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited partnerships which
either have a class of securities registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section 15(d) of such Act. Further, one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general partner of AIMCO Properties, L.P., entities that have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting requirements of Section 15 (d) of such
Act.
The executive officers and director of the General Partner fulfill the
obligations of the Audit Committee and oversee the Partnership's financial
reporting process on behalf of the General Partner. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
the executive officers and director of the General Partner reviewed the audited
financial statements with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The executive officers and director of the General Partner reviewed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with accounting principles
generally accepted in the United States, their judgments as to the quality, not
just the acceptability, of the Partnership's accounting principles and such
other matters as are required to be discussed with the Audit Committee or its
equivalent under auditing standards generally accepted in the United States. In
addition, the Partnership has discussed with the independent auditors the
auditors' independence from management and the Partnership including the matters
in the written disclosures required by the Independence Standards Board and
considered the compatibility of non-audit services with the auditors'
independence.
The executive officers and director of the General Partner discussed with the
Partnership's independent auditors the overall scope and plans for their audit.
In reliance on the reviews and discussions referred to above, the executive
officers and director of the General Partner have approved the inclusion of the
audited financial statements in the Form 10-K for the year ended December 31,
2001 for filing with the Securities and Exchange Commission.
The General Partner has reappointed Ernst & Young LLP as independent auditors to
audit the financial statements of the Partnership for the current fiscal year.
Fees for the last fiscal year were audit services of approximately $150,000 and
non-audit services (principally tax-related) of approximately $84,000.
Item 11. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant during the year ended December 31, 2001.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 2001, no person or group was known
to CEI to own of record or beneficially more than five percent of the Units of
the Partnership:
Entity Number of Units Percentage
Insignia Properties, LP 67,033.50 19.55%
(an affiliate of AIMCO)
IPLP Acquisition I, LLC 29,612.50 8.64%
(an affiliate of AIMCO)
AIMCO Properties, LP 90,112.50 26.29%
(an affiliate of AIMCO)
Insignia Properties, LP and IPLP Acquisition I, LLC are indirectly, ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC
29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Blvd., Denver, CO 80222.
(b) Beneficial Owners of Management
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 December 31, 2001, the following persons were known to CEI to be the
beneficial owners of more than five percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100%
55 Beattie Place, Greenville, SC 29602
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December
31, 2001, AIMCO owns 51% of the outstanding common shares of beneficial interest
of IPT.
Item 13. Certain Relationships and Related Transactions
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 Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were incurred during the years ended
December 31, 2001, 2000 and 1999:
2001 2000 1999
(in thousands)
Property management fees $1,569 $1,515 $1,547
Reimbursements for services of affiliates 2,172 1,103 565
Partnership management fee 430 535 1,084
Loan costs 110 180 25
Real estate commission -- 268 --
During the years ended December 31, 2001, 2000 and 1999, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,569,000,
$1,515,000 and $1,547,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $2,172,000, $1,103,000 and $565,000, for the years
ended December 31, 2001, 2000 and 1999, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $1,208,000, $159,000 and $31,000 for the
years ended December 31, 2001, 2000 and 1999, respectively. The construction
management service fees are calculated based on a percentage of current and
certain prior period additions to investment properties and are being
depreciated over 15 years.
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. Affiliates of the
General Partner paid approximately $430,000, $535,000 and $1,084,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2001, 2000 and 1999, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000, $180,000 and $25,000 in
2001, 2000 and 1999, respectively, for loan costs which are capitalized and
included with other assets on the consolidated balance sheets. These loan costs
were associated with the refinancing of two of the Partnership's properties in
2001, four of the Partnership's properties in 2000 and one of the Partnership's
properties in 1999 (see "Note D").
For acting as real estate broker in connection with the sale of Stratford Place
Apartments, a real estate commission of approximately $228,000 was accrued as of
December 31, 2000 and was paid to the General Partner during the year ended
December 31, 2001. For acting as real estate broker in connection with the sale
of Overlook Apartments in December 1999, the General Partner was paid a real
estate commission of approximately $40,000 during the year ended December 31,
2000. When the Partnership terminates, the General Partner will have to return
these commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the year ended December 31, 2001,
the Partnership paid AIMCO and its affiliates approximately $250,000 for
insurance coverage and fees associated with policy claims administration.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 186,758.50 limited partnership units
in the Partnership representing 54.48% of the outstanding units at December 31,
2001. 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 either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 54.48% of the
outstanding units, AIMCO is in a position to control all such 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 its affiliation with the General Partner.
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, 2001 and 2000
Consolidated Statements of Operations - Years Ended December 31,
2001, 2000 and 1999
Consolidated Statements of Changes in Partners' Deficit - Years
Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows - Years Ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, or
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
S-K Reference
Number Document Description
2.1 Agreement and Plan of Merger, dated as of October 1, 1999 by
and between AIMCO and IPT; incorporated by reference to
Registrant's Current Report on Form 8-K dated October 1, 1999.
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 reference 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
(Incorporated 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 reference 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 reference 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 Quarterly 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 reference 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 reference 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 Quarterly 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
Management 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). CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (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 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 Associates Limited Partnership).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.24 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 the Partnership concerning Briar Bay Racquet
Club). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.25 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 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). (Incorporated 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 Partnership 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 Agreement") (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
Construction 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 Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The Hayman
Company (the "Hayman Construction Management 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.
(Incorporated 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 Assumption 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. 419A) 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 Apartment 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 Apartment 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, 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 Foothill
Post Ridge Associates, Ltd. Limited Partnership, a
Tennessee Limited Partnership and Lehman Brothers Holdings
Inc. d/b/a Lehman Capital, 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
Capital, 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 Capital, 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
Capital, A Division of Lehman Brothers Holdings, Inc.
10.75 Mortgage and Security Agreement dated November 18, 1997,
between Southport CCP IV, L.L.C., a South Carolina limited
liability company and Lehman Brothers Holdings, Inc. d/b/a
Lehman Capital, a division of Lehman Brothers Holdings,
Inc., a Delaware Corporation.
10.76 Multifamily Note dated November 9, 1999 between Point West
Associates Limited Partnership, a Georgia limited partnership
and GMAC Commercial Mortgage Corporation, a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.77 Purchase and Sale Contract between Registrant and Overlook
Associates, Ltd, a Georgia limited partnership dated December
13, 1999, documenting sale of Overlook Apartments located in
Memphis, Tennessee. (Incorporated by reference to Annual
Report on Form 10-K ended December 31, 1999).
10.78 Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS
Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.79 Multifamily Note dated February 28, 2000 between ConCap
Citadel Associated, Ltd., a Texas limited partnership and
ARCs Commercial Mortgage Cl., L.P., a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.80 Multifamily Note dated May 31, 2000 between Concap
Stratford Associates, Ltd., a Texas limited partnership and
ARCS Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended June 30, 2000.)
10.81 Multifamily Note dated August 29, 2000 between ConCap
Rivers Edge Associates, Ltd., a Texas Limited Partnership,
and GMAC Commercial Mortgage Corporation, a California
Corporation. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended September 30, 2000.)
10.82 Purchase and Sale Contract dated September 26, 2000 between
ConCap Stratford Associates, Ltd., a Texas Limited
Partnership, and First Worthing Company Limited, a Texas
Limited Partnership.
10.83 First Amendment to Purchase and Sale Contract dated October
26, 2000 between ConCap Stratford Associates, Ltd., a Texas
Limited Partnership, and First Worthing Company Limited, a
Texas Limited Partnership.
10.84 Second Amendment to Purchase and Sale Contract dated
October 31, 2000 between ConCap Stratford Associates, Ltd.,
a Texas Limited Partnership, and First Worthing Company
Limited, a Texas Limited Partnership.
10.85 Multifamily Note dated September 27, 2001 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and AIMCO Properties, L.P., a Delaware
limited partnership, in favor of GMAC Commercial Mortgage
Corporation, a California corporation.
10.86 Multifamily Note dated December 20, 2001 between Post Ridge
Associates, Ltd., a Tennessee limited partnership, and GMAC
Commercial Mortgage Corporation, a California corporation.
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note A 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 regarding 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 amendments 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).
(b) Reports on Form 8-K filed during the fourth quarter of calendar year 2001:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: ConCap Equities, Inc.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date:
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities on the date indicated.
/s/Patrick J. Foye Date:
Patrick J. Foye
Executive Vice President and Director
/s/Martha L. Long Date:
Martha L. Long
Senior Vice President and Controller
Exhibit 10.86
FHLMC Loan No. 002694271
Post Ridge Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $4,500,000.00 As of December 20, 2001
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Four Million Five
Hundred Thousand and 00/100 Dollars (US $4,500,000.00), with interest on the
unpaid principal balance at the annual rate of six and sixty-three hundredths
percent (6.63%).
Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, and any other amounts due at any time under, this Note, the
Security Instrument or any other Loan Document, including prepayment premiums,
late charges, default interest, and advances to protect the security of the
Security Instrument under Section 12 of the Security Instrument. "Event of
Default" and other capitalized terms used but not defined in this Note shall
have the meanings given to such terms in the Security Instrument.
Address for Payment. All payments due under this Note shall be payable at
200 Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn:
Servicing - Account Manager, or such other place as may be designated by written
notice to Borrower from or on behalf of Lender.
Payment of Principal and Interest. Principal and interest shall be
paid as follows:
Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Consecutive monthly installments of principal and interest, each in the
amount of Thirty Three Thousand Eight Hundred Ninety Six and 08/100 Dollars (US
$33,896.08), shall be payable on the first day of each month beginning on
February 1, 2002, until the entire unpaid principal balance evidenced by this
Note is fully paid.
Any accrued interest remaining past due for 30 days or more may, at
Lender's discretion, be added to and become part of the unpaid principal balance
and shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on January 1, 2022 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower (except if notice is
required by applicable law, then after such notice). Lender may exercise this
option to accelerate regardless of any prior forbearance.
Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due (unless applicable law requires a longer
period of time before a late charge may be imposed, in which event such longer
period shall be substituted), Borrower shall pay to Lender, immediately and
without demand by Lender, a late charge equal to five percent (5%) of such
amount (unless applicable law requires a lesser amount be charged, in which
event such lesser amount shall be substituted). Borrower acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), and
that it is extremely difficult and impractical to determine those additional
expenses. Borrower agrees that the late charge payable pursuant to this
Paragraph represents a fair and reasonable estimate, taking into account all
circumstances existing on the date of this Note, of the additional expenses
Lender will incur by reason of such late payment. The late charge is payable in
addition to, and not in lieu of, any interest payable at the Default Rate
pursuant to Paragraph 8.
Default Rate. So long as (a) any monthly installment under this Note
remains past due for thirty (30) days or more, or (b) any other Event of Default
has occurred and is continuing, interest under this Note shall accrue on the
unpaid principal balance from the earlier of the due date of the first unpaid
monthly installment or the occurrence of such other Event of Default, as
applicable, at a rate (the "Default Rate") equal to the lesser of four (4)
percentage points above the rate stated in the first paragraph of this Note and
the maximum interest rate which may be collected from Borrower under applicable
law. If the unpaid principal balance and all accrued interest are not paid in
full on the Maturity Date, the unpaid principal balance and all accrued interest
shall bear interest from the Maturity Date at the Default Rate. Borrower also
acknowledges that its failure to make timely payments will cause Lender to incur
additional expenses in servicing and processing the Loan, that, during the time
that any monthly installment under this Note is delinquent for more than thirty
(30) days, Lender will incur additional costs and expenses arising from its loss
of the use of the money due and from the adverse impact on Lender's ability to
meet its other obligations and to take advantage of other investment
opportunities, and that it is extremely difficult and impractical to determine
those additional costs and expenses. Borrower also acknowledges that, during the
time that any monthly installment under this Note is delinquent for more than
thirty (30) days or any other Event of Default has occurred and is continuing,
Lender's risk of nonpayment of this Note will be materially increased and Lender
is entitled to be compensated for such increased risk. Borrower agrees that the
increase in the rate of interest payable under this Note to the Default Rate
represents a fair and reasonable estimate, taking into account all circumstances
existing on the date of this Note, of the additional costs and expenses Lender
will incur by reason of the Borrower's delinquent payment and the additional
compensation Lender is entitled to receive for the increased risks of nonpayment
associated with a delinquent loan.
Limits on Personal Liability.
Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to zero percent (0%) of the original principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding. To the fullest extent permitted by
applicable law, in any action to enforce Borrower's personal liability under
this Paragraph 9, Borrower waives any right to set off the value of the
Mortgaged Property against such personal liability.
Voluntary and Involuntary Prepayments.
A prepayment premium shall be payable in connection with any prepayment
(any receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below:
Borrower may voluntarily prepay all of the unpaid principal balance
of this Note on a Business Day designated as the date for such prepayment in a
written notice from Borrower to Lender given at least 30 days prior to the date
of such prepayment. Such prepayment shall be made by paying (A) the amount of
principal being prepaid, (B) all accrued interest, (C) all other sums due Lender
at the time of such prepayment, and (D) the prepayment premium calculated
pursuant to Paragraph 10(c). For all purposes including the accrual of interest,
any prepayment received by Lender on any day other than the last calendar day of
the month shall be deemed to have been received on the last calendar day of such
month. For purposes of this Note, a "Business Day" means any day other than a
Saturday, Sunday or any other day on which Lender is not open for business.
Unless expressly provided for in the Loan Documents, Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
However, if a partial prepayment is provided for in the Loan Documents or is
accepted by Lender in Lender's discretion, a prepayment premium calculated
pursuant to Paragraph 10(c) shall be due and payable by Borrower.
Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Paragraph 10(c).
Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made during the period from
one hundred eighty (180) days before the scheduled Maturity Date to the
scheduled Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
Any prepayment premium payable under this Note shall be computed as
follows:
(1) If the prepayment is made between the date of this Note and the
date that is 180 months after the first day of the first calendar month
following the date of this Note (the "Yield Maintenance Period"), the prepayment
premium shall be whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate
of this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
Borrower further acknowledges that the prepayment premium provisions of
this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.
Costs and Expenses. To the fullest extent allowed by applicable law,
Borrower shall pay all expenses and costs, including fees and out-of-pocket
expenses of attorneys (including Lender's in-house attorneys) and expert
witnesses and costs of investigation, incurred by Lender as a result of any
default under this Note or in connection with efforts to collect any amount due
under this Note, or to enforce the provisions of any of the other Loan
Documents, including those incurred in post-judgment collection efforts and in
any bankruptcy proceeding (including any action for relief from the automatic
stay of any bankruptcy proceeding) or judicial or non-judicial foreclosure
proceeding.
Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
Loan Charges. Neither this Note nor any of the other Loan Documents shall
be construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family, household or agricultural
purposes.
Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
Notices; Written Modifications. All notices, demands and other
communications required or permitted to be given by Lender to Borrower pursuant
to this Note shall be given in accordance with Section 31 of the Security
Instrument. Any modification or amendment to this Note shall be ineffective
unless in writing signed by the party sought to be charged with such
modification or amendment; provided, however, that in the event of a Transfer
under the terms of the Security Instrument, any or some or all of the
Modifications to Multifamily Note may be modified or rendered void by Lender at
Lender's option by notice to Borrower/transferee.
Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT
A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
POST RIDGE ASSOCIATES, LTD., LIMITED
PARTNERSHIP, a Tennessee limited
partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By:
--------------------------------
Patti K. Fielding
Senior Vice President
58-1763207
Borrower's Social Security/Employer ID
Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS _____ DAY OF _______________, 20__.
GMAC COMMERCIAL MORTGAGE
CORPORATION, a California
corporation
By:_________________________________
Robert D. Falese, III
Vice President
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
The following modifications are made to the text of the Note that precedes this
Exhibit:
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph
(4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.