FORM 10-K-- ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
UNITED STATE SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [No Fee Required]
For the fiscal year ended December 31, 2001
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Name of registrant as specified in its charter)
California 94-2744492
(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)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No___
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will 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
General
Consolidated Capital Institutional Properties (the "Partnership" or
"Registrant") was organized on April 28, 1981, as a Limited Partnership under
the California Uniform Limited Partnership Act. On July 23, 1981, the
Partnership registered with the Securities and Exchange Commission under the
Securities Act of 1933 (File No. 2-72384) and commenced a public offering for
the sale of $200,000,000 of limited partnership units (the "Units"). The sale of
Units terminated on July 21, 1983, with 200,342 Units sold for $1,000 each, or
gross proceeds of $200,342,000 to the Partnership. In accordance with its
Partnership Agreement (the original partnership agreement of the Partnership
together with all amendments thereto shall be referred to as the "Agreement"),
the Partnership has repurchased and retired a total of 1,296.8 Units for a total
purchase price of $1,000,000. The Partnership may repurchase any Units, at its
absolute discretion, but is under no obligation to do so. Since its initial
offering, the Registrant has not received, nor are limited partners required to
make, additional capital contributions. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2011 unless terminated prior to
such date.
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC") was the 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, ConCap Equities, Inc. ("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 Agreement
to limit changes of control of the Partnership. All of CEI's outstanding stock
was owned by Insignia Properties Trust ("IPT"). Effective February 26, 1999, IPT
was merged into Apartment Investment and Management Company ("AIMCO"). Hence,
CEI is now a wholly-owned subsidiary of AIMCO, a publicly held real estate
investment trust (See "Transfer of Control" below).
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership was formed for the benefit of its Limited
Partners (herein so called and together with the General Partner shall be called
the "Partners"), to lend funds to Consolidated Capital Equity Partners ("EP"), a
California general partnership in which certain of the partners were former
shareholders and former management of CCEC, the former Corporate General Partner
of the Partnership. See "Status of the Master Loan" for a description of the
loan and settlement of EP's bankruptcy.
Through December 31, 2001, the Partnership had advanced a total of approximately
$180,500,000 to EP and its successor under the Master Loan (as defined in
"Status of the Master Loan"). As of December 31, 2001, the balance of the Master
Loan, net of the allowance for possible losses, was approximately $26,430,000.
EP used the proceeds from these loans to acquire 18 apartment complexes and four
office complexes, which served as collateral for the Master Loan. EP's successor
in bankruptcy (as more fully described in "Status of the Master Loan") currently
has 9 apartment complexes. The Partnership acquired The Loft Apartments through
foreclosure in November 1990. Prior to that time, The Loft Apartments had been
collateral on the Master Loan. The Partnership acquired a multiple-use building,
The Sterling Apartment Homes and Commerce Center ("The Sterling"), through a
deed-in-lieu of foreclosure transaction on November 30, 1995. The Sterling was
also collateral on the Master Loan. For a brief description of the properties
refer to "Item 2 - Description of Property".
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
Property management services are performed at the Partnership's properties by an
affiliate of the General Partner.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential and commercial properties within the
market area of the Registrant's properties. The number and quality of
competitive properties, including those residential properties 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 and the commercial space
at the Registrant's properties and the rents that may be charged for such
apartments and space. 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
an oversupply of similar properties resulting from overbuilding, increases in
unemployment or population shifts, reduced 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 and
commercial properties because such properties are susceptible to the impact of
economic and other conditions outside of the control of the Partnership.
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.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. ("Insignia") and IPT merged
into AIMCO, a publicly traded real estate investment trust, with AIMCO being the
surviving corporation. 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.
13
Segments
Segment data for the years ended December 31, 2001, 2000 and 1999 is included in
"Item 8. Financial Statements - Note J" and is an integral part of the Form
10-K.
Status of the Master Loan
Prior to 1989, the Partnership had loaned funds totaling $170,400,000 to EP
subject to a nonrecourse note with a participation interest (the "Master Loan"),
pursuant to the Master Loan Agreement dated July 22, 1981, between the
Partnership and EP. The Partnership secured the Master Loan with deeds of trust
or mortgages on real property purchased with the funds advanced, as well as by
the assignment and pledge of promissory notes from the partners of EP.
During 1989, EP defaulted on certain interest payments that were due under the
Master Loan. Before the Partnership could exercise its remedies for such
defaults, EP filed for bankruptcy protection in a Chapter 11 reorganization
proceeding. On October 18, 1990, the bankruptcy court approved EP's consensual
plan of reorganization (the "Plan"). In November 1990, EP and the Partnership
consummated a closing under the Plan pursuant to which, among other things, the
Partnership and EP executed an amended and restated loan agreement (the "New
Master Loan Agreement"), EP was converted from a California General Partnership
to a California Limited Partnership, Consolidated Capital Equity Partners, L.P.,
("CCEP"), and CCEP renewed the deeds of trust on all the collateral to secure
the New Master Loan Agreement.
ConCap Holdings, Inc. ("CHI"), a Texas corporation and wholly-owned subsidiary
of CEI, is the sole General Partner of CCEP and an affiliate of the Partnership.
The General Partners of EP became Limited Partners in CCEP. CHI has full
discretion with respect to conducting CCEP's business, including managing CCEP's
properties and initiating and approving capital expenditures and asset
dispositions and refinancings.
Under the terms of the New Master Loan Agreement (as adopted in November 1990),
interest accrues at a fluctuating rate per annum adjusted annually on July 15 by
the percentage change in the U.S. Department of Commerce Implicit Price Deflator
for the Gross National Product subject to an interest rate ceiling of 12.5%.
Interest payments are currently payable quarterly in an amount equal to "Excess
Cash Flow". If such Excess Cash Flow payments are less than the current accrued
interest during the quarterly period, the unpaid interest is added to principal,
compounded annually, and is payable at the loan's maturity. If such Excess Cash
Flow payments are greater than the current accrued interest, the excess amount
is applied to the principal balance of the loan. Any net proceeds from the sale
or refinancing of any of CCEP's properties are paid to the Partnership under the
terms of the New Master Loan Agreement. The New Master Loan Agreement matured in
November 2000. The General Partner had been negotiating with CCEP with respect
to its options which included foreclosing on the properties which collateralize
the Master Loan or extending the terms of the loan. The General Partner decided
to foreclose on the properties that collateralize the Master Loan. The General
Partner will begin the process of foreclosure or executing deeds in lieu of
foreclosure during the first quarter of 2002 on all the properties in CCEP. As
the deeds are executed, title in the properties owned by CCEP would be
transferred to the Partnership, subject to the existing liens on such
properties, including the first mortgage loans. As a result, the Partnership
would become responsible for the operations of such properties.
For 1992, Excess Cash Flow was generally defined in the New Master Loan
Agreement as net cash flow from operations after third-party debt service.
Effective January 1, 1993, the Partnership and CCEP amended the New Master Loan
Agreement to stipulate that Excess Cash Flow would be computed net of capital
improvements. Such expenditures were formerly funded from advances on the Master
Loan from the Partnership to CCEP. This amendment and change in the definition
of Excess Cash Flow has had the effect of reducing income on the investment in
the Master Loan by the amount of CCEP's capital expenditures since such amounts
were previously excluded from Excess Cash Flow.
Item 2. Description of Properties
The following table sets forth the Partnership's investment in real estate as of
December 31, 2001:
Date of
Property Acquisition Type of Ownership Use
The Loft Apartments 11/19/90 Fee ownership, subject to Apartment
Raleigh, NC a first mortgage 184 units
The Sterling Apartment Homes 12/01/95 Fee ownership subject to Apartment
and Commerce Center a first mortgage (1) 536 units
Philadelphia, PA Commercial
110,368 sq ft
(1) Property is held by a Limited Partnership in which the Registrant
ultimately owns a 100% 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 at December 31, 2001.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
The Loft Apartments $ 7,426 $ 3,878 5-20 yrs S/L $ 4,807
The Sterling Apartment
Homes and Commerce
Center 35,796 12,091 5-25 yrs S/L 26,182
$43,222 $15,969 $30,989
See "Note A" of 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 mortgages
encumbering the Registrant's properties at December 31, 2001.
Principal Principal
Balance At Balance
December 31, Interest Period Maturity Due At
Property 2001 Rate Amortized Date Maturity (1)
(in thousands) (in thousands)
The Loft Apartments
1st mortgage $ 4,210 6.95% 360 months 12/01/05 $ 3,903
The Sterling
Apartment
Homes and Commerce
Center
1st mortgage 22,247 6.77% 120 months 10/01/08 19,975
$ 26,457 $ 23,878
(1) See "Item 8. Financial Statements and Supplementary Data - Note E" for
information with respect to the Registrant's ability to prepay these
mortgages and other specific details about the mortgages.
Rental Rates and Occupancy:
Average annual rental rates and occupancy for 2001 and 2000 for each property:
Average Annual Average
Rental Rates Occupancy
Property 2001 2000 2001 2000
The Loft Apartments $ 8,985/unit $ 8,941/unit 92% 93%
The Sterling Apartment Homes
(residential) 16,476/unit 15,523/unit 95% 94%
The Sterling Commerce Center
(commercial) 16.73/s.f. 16.22/s.f. 86% 89%
The General Partner attributes the decrease in occupancy at The Sterling
Commerce Center to the loss of a major tenant in late December 2001. The
Partnership is actively seeking a tenant to lease the space formerly occupied by
this major tenant. See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations" for further details regarding the
loss of this tenant.
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 and commercial properties in the area. The
General Partner believes that all of the properties are adequately insured. Each
apartment complex leases properties for 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.
The following is a schedule of the lease expirations of the commercial space for
The Sterling Commerce Center for the years beginning 2002 through the maturities
of the current leases.
Number of % of Gross
Expirations Square Feet Annual Rent Annual Rent
2002 4 7,712 $115,239 12.44%
2003 9 20,341 309,181 33.37%
2004 4 9,611 146,124 15.77%
2005 3 4,268 89,852 9.70%
2006 1 3,838 70,440 7.60%
2007 2 7,147 195,816 21.13%
No commercial tenant leases 10% or more of the available rental space.
Real Estate Taxes and Rates:
Real estate taxes and rates in 2001 for each property were:
Billing Rate
(in thousands)
The Loft Apartments $ 88 0.99%
The Sterling Apartment Homes and
Commerce Center 740 8.81%
Capital Improvements:
The Loft
During the year ended December 31, 2001, the Partnership completed approximately
$284,000 of capital improvements, consisting primarily of exterior painting,
floor covering and appliance replacements and structural improvements. These
improvements were funded from operations and replacement 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 approximately $55,000. 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.
The Sterling
During the year ended December 31, 2001, the Partnership completed approximately
$114,000 of capital improvements at The Sterling Apartment Homes and Commerce
Center, consisting primarily of garage resurfacing, floor covering replacements,
tenant improvements, and interior decoration. These improvements were funded
from operating cash flow and replacement reserves. In addition, the Partnership
acquired approximately $498,000 of improvements from a former tenant in
satisfaction of unpaid rents due to the Partnership. The Partnership is
currently evaluating the capital improvements needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or approximately $161,000 for the apartments and $.54 per square foot or
approximately $60,000 for the Commerce Center. 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 unitholders 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 oppose the motion and a hearing 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
During the fiscal quarter ended December 31, 2001, no matter was submitted to a
vote of unitholders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for Partnership Equity and Related Partner Matters
The Partnership, a publicly-held limited partnership, offered and sold 200,342
limited partnership units (the "Units") aggregating $200,342,000. The
Partnership currently has 12,193 holders of record owning an aggregate of
199,045.2 Units. Affiliates of the General Partner owned 126,477 units or 63.54%
at December 31, 2001. No public trading market has developed for the Units, and
it is not anticipated that such a market will develop in the future.
The following table sets forth the distributions made 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.):
Distributions
Per Limited
Aggregate Partnership Unit
01/01/99 - 12/31/99 $22,621,000 (1) $113.65
01/01/00 - 12/31/00 47,880,000 (2) 240.55
01/01/01 - 12/31/01 15,757,000 (3) 78.83
(1) Distributions were made from surplus funds.
(2) Distributions were made from surplus funds, approximately $28,770,000 of
which was from the receipt of net financing and refinancing proceeds from
CCEP.
(3) Consists of approximately $6,646,000 of cash from operations and
approximately $9,111,000 of cash from surplus funds, of which
approximately $1,425,000 was from the receipt of previously undistributed
net financing and refinancing proceeds from CCEP and approximately
$6,019,000 was from the receipt of net sales proceeds from CCEP.
The Registrant's cash available for distribution is reviewed on a monthly basis.
Future distributions will depend on the levels of cash generated from
operations, the availability of cash reserves and the timing of debt maturities,
refinancings and/or property sales. Future distributions may also be affected by
the Partnership's decision regarding the Master Loan which matured in November
2000. The Partnership's options include foreclosing on the properties which
collateralize the Master Loan or extending the terms of the loan. If the
Partnership forecloses on the properties securing the new Master Loan, title in
the properties owned by CCEP would be transferred to the Partnership, subject to
the existing liens on such properties, including the first mortgage loans. As a
result, the Partnership would become responsible for the operations of such
properties. There can be no assurance that the Partnership will generate
sufficient funds from operations, after planned capital expenditures, to permit
any distributions to its partners in 2002 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates currently own 126,477 limited partnership
units (the "Units") in the Partnership representing 63.54% of the outstanding
Units. A number of these Units were acquired pursuant to tender offers made by
AIMCO or its affiliates. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Under the Partnership Agreement, unitholders holding a
majority of the Units are entitled to take action with respect to a variety of
matters 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 63.54% of the outstanding Units, AIMCO is in a position to control all voting
decisions with respect to the Registrant. When voting on matters, AIMCO would in
all likelihood vote the Units it acquired in a manner favorable to the interest
of the General Partner because of its affiliation with the General Partner.
Item 6. Selected Financial Data
The following table sets forth a summary of selected financial data for the
Partnership. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in "Item 8. Financial
Statements and Supplementary Data".
FOR THE YEARS ENDED DECEMBER 31,
2001 2000 1999 1998 1997
STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Total revenues $ 15,484 $ 14,193 $ 13,545 $ 14,394 $ 11,608
Total expenses (11,582) (10,823) (9,773) (9,087) (8,041)
Reduction in provision
for impairment loss 3,176 14,241 -- 23,269 --
Net income $ 7,078 $ 17,611 $ 3,772 $ 28,576 $ 3,567
Net income per Limited
Partnership Unit $ 35.20 $ 87.59 $ 18.76 $ 142.12 $ 17.74
Distributions per Limited
Partnership Unit $ 78.83 $ 240.55 $ 113.65 $ 143.58 $ 9.94
Limited Partnership Units
outstanding 199,045.2 199,045.2 199,045.2 199,045.2 199,052
AS OF DECEMBER 31,
BALANCE SHEETS 2001 2000 1999 1998 1997
(in thousands)
Total assets $ 56,089 $ 65,383 $ 95,668 $115,182 $ 91,628
Mortgage note payable $ 26,457 $ 26,762 $ 27,074 $ 27,360 $ 4,448
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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
disclosures 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.
This item should be read in conjunction with "Item 8. Financial Statements and
Supplementary Data" and other items contained elsewhere in this report.
Results of Operations
2001 Compared to 2000
The Partnership's net income for the year ended December 31, 2001 was
approximately $7,078,000 compared to net income of approximately $17,611,000 for
the year ended December 31, 2000. The decrease in net income for the year ended
December 31, 2001 as compared to the year ended December 31, 2000 was primarily
due to the decrease in the reduction of the provision for impairment loss on the
investment in the Master Loan recognized in 2001, partially offset by an
increase in interest payments received and therefore recognized as income
related to the Master Loan. Each of these factors was caused by improved
operations at the collateral properties due to major capital projects and the
concerted effort to complete deferred maintenance items that have been ongoing
over the past few years. This work was funded by cash flow from the collateral
properties themselves as no amounts have been borrowed on the Master Loan or
from other sources in order to fund such improvements.
Excluding the items related to the Master Loan, the Partnership's net income for
the year ended December 31, 2001 was approximately $622,000 compared to
approximately $1,370,000 for the year ended December 31, 2000. The decrease in
net income for the year ended December 31, 2001 is due to an increase in total
expenses offset by a slight increase in total revenues.
The increase in total expenses for the year ended December 31, 2001 was due to
an increase in operating and property tax expenses. Operating expenses increased
due to an increase in utility expense, primarily natural gas, at The Sterling
and to increases in salary and other related benefits at both investment
properties. Also, the Partnership experienced a significant increase in
amortization expense due to the write-off of unamortized lease commissions
relating to a tenant which moved out in December 2001 (See further discussion
below). Property tax expense increased due to an increase in the assessed value
of The Sterling.
The increase in total revenues for the year ended December 31, 2001 is due to an
increase in rental and other income offset by a decrease in interest income and
property tax refunds. The increase in rental income was due to an increase in
average rental rates at both of the Partnership's properties and an increase in
occupancy at The Sterling Apartment Homes, offset by a decrease in occupancy at
The Sterling Commerce Center and a slight decrease in occupancy at The Loft
Apartments. Other income increased due to an increase in lease cancellation fees
and cable television income at both investment properties and to utility
reimbursements and tenant deposit forfeitures at The Sterling Commerce Center
and Apartment Homes. The decrease in property tax refunds is due to The Sterling
receiving a refund of prior year tax bills which had been under appeal during
the year ending December 31, 2000. Interest income decreased due to the release
of the working capital reserve requirement (see Note G of the consolidated
financial statements) which resulted in lower average cash balances in interest
bearing accounts.
In December 2001, the Partnership's most significant commercial tenant at The
Sterling Commerce Center vacated its space which represented 30.58% of the
leaseable commercial space. The Partnership filed a lawsuit against such tenant
seeking monetary damages for unpaid rent, including rent which had been abated
in favor of the tenant completing significant improvements to its space. The
Partnership accepted a settlement whereby the tenant will pay $180,000 in
satisfaction of all unpaid rent amounts due and the Partnership will accept
possession of the improvements completed by the tenant which have been valued at
approximately $498,000. Beginning in 2002, these improvements will be
depreciated over their remaining estimated useful lives. As a result of the
tenant vacating the space, the Partnership expensed approximately $191,000 in
unamortized lease commissions.
The Partnership is actively pursuing a replacement tenant; however, if its
efforts are unsuccessful the Partnership may experience a significant decrease
in commercial rental income during 2002.
2000 compared to 1999
The Registrant's net income for the year ended December 31, 2000 was
approximately $17,611,000 compared to net income of approximately $3,772,000 for
the year ended December 31, 1999. The increase in net income for the year ended
December 31, 2000 was primarily due to the $14,241,000 reduction of the
provision for impairment loss on the investment in the Master Loan recognized in
2000 due to an increase in the net realizable value of the collateral
properties. There was no adjustment to the provision for impairment loss during
1999. The General Partner evaluates the net realizable value on a semi-annual
basis. The General Partner has seen a consistent increase in the net realizable
value of the collateral properties, taken as a whole, over the past two years.
The increase is deemed to be attributable to major capital improvement projects
and the concerted effort to complete deferred maintenance items that have been
ongoing over the past few years at the properties. This has enabled the
properties to increase their respective occupancy levels or, in some cases, to
maintain the properties' high occupancy levels. The vast majority of this work
was funded by cash flow from the collateral properties themselves as no amounts
have been borrowed on the Master Loan or from other sources in the past few
years in order to fund such improvements.
Excluding the reduction of provision for impairment loss, the Partnership's net
income for the year ended December 31, 2000 and 1999 was approximately
$3,370,000 and $3,772,000, respectively. The decrease in net income for the year
ended December 31, 2000 was primarily due to an increase in total expenses,
partially offset by an increase in total revenues.
The increase in total expenses for the year ended December 31, 2000 is primarily
due to an increase in depreciation, operating and general and administrative
expenses. The increase in operating expense is the result of an increase in
utilities expense and salaries and benefits at The Sterling, slightly offset by
a decrease in advertising expense. Advertising expense decreased at The Sterling
due to an increase in occupancy thus eliminating the need for extensive
advertising. Depreciation expense increased due to major capital improvements
and replacements at The Sterling during 2000 and 1999 which are now being
depreciated. General and administrative expenses increased for the year ended
December 31, 2000 due to an increase in the costs of services provided by the
General Partner.
The increase in total revenues for the year ended December 31, 2000 is
attributable to an increase in rental, interest and other income and a property
tax refund which more than offset the decrease in interest income recognized on
the Master Loan. The decrease in interest income related to the Master Loan is a
factor of the method used to recognize income. Income is only recognized to the
extent that actual cash is received. The receipt of cash is dependent on the
operating cash flow of the properties which secure the Master Loan. Operating
cash flow for these properties was lower for the year ended December 31, 2000 as
a result of capital expenditures at the properties. The increase in rental
income for the years ended December 31, 2000 as compared to the same period in
1999, was due to increases in average rental rates at the Registrant's
investment properties along with an increase in occupancy at the Sterling which
was offset slightly by a decrease in occupancy at The Loft Apartments. In
addition, there has been a decrease in concessions offered at The Sterling as a
result of the complex completing its renovation during 2000. The increase in
interest income is the result of higher average balances in interest bearing
accounts. The property tax refund was due to The Sterling receiving a refund on
prior year tax bills which were appealed.
Included in general and administrative expenses for the years ended December 31,
2001 and 2000 are costs of the services provided by the General Partner as
allowed under the Partnership Agreement associated with its management of the
Partnership. Also included are costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement.
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 expense. 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.
Capital Resources and Liquidity
At December 31, 2001, the Partnership had cash and cash equivalents of
approximately $922,000 compared to approximately $2,036,000 at December 31,
2000. Cash and cash equivalents decreased approximately $1,114,000 due to
approximately $16,062,000 of cash used in financing activities partially offset
by approximately $7,484,000 and $7,464,000 of cash provided by operating and
investing activities, respectively. Cash used in financing activities consisted
primarily of distributions to partners and, to a lesser extent, principal
payments made on the mortgages encumbering the Registrant's properties. Cash
provided by investing activities consisted of principal payments received on the
Master Loan and net receipts from escrow accounts maintained by the mortgage
lenders slightly offset by property improvements and replacements. The
Registrant invests its working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the various properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, and local legal and regulatory requirements. The Partnership is
currently evaluating the capital improvements needs of all the properties for
the upcoming year. The minimum amount to be budgeted for the Partnership is
expected to be $300 per unit or approximately $216,000 for all the apartment
complexes and $0.54 per square foot or approximately $60,000 for the Sterling
Commerce Center. 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 Registrant's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $26,457,000 requires monthly payments of principal
and interest and balloon payments of approximately $3,903,000 and $19,975,000 on
December 1, 2005 and October 1, 2008, respectively. The General Partner will
attempt to refinance such indebtedness and/or sell the properties prior to such
maturity dates. If the properties cannot be refinanced or sold for a sufficient
amount, the Registrant will risk losing such properties through foreclosure.
During the year ended December 31, 2001, distributions from surplus cash of
approximately $9,111,000 were paid to the limited partners ($45.77 per limited
partnership unit), of which approximately $1,425,000 was from the receipt of net
financings and refinancing proceeds from CCEP and approximately $6,019,000 was
from the receipt of net sales proceeds from CCEP. Distributions of approximately
$6,646,000 (approximately $6,580,000 paid to the limited partners or $33.06 per
limited partnership unit) were paid from operations. Distributions from surplus
cash of approximately $47,880,000 were paid to the limited partners ($240.55 per
limited partnership unit) during the year ended December 31, 2000 of which
approximately $28,770,000 was from the receipt of net financing and refinancing
proceeds from CCEP. Distributions from surplus cash of approximately $22,621,000
were paid to limited partners ($113.65 per limited partnership unit) during the
year ended December 31, 1999. The Registrant's cash available for distribution
is reviewed on a monthly basis. Future cash distributions will depend on the
levels of net cash generated from operations, the availability of cash reserves
and the timing of debt maturities, refinancings, and/or property sales. Future
distributions may also be affected by the Partnership's decision regarding the
Master Loan which matured in November 2000. The Partnership's options include
foreclosing on the properties which collateralize the Master Loan or extending
the terms of the loan. If the Partnership forecloses on the properties securing
the new Master Loan, title in the properties owned by CCEP would be transferred
to the Partnership, subject to the existing liens on such properties, including
the first mortgage loans. As a result, the Partnership would become responsible
for the operations of such properties. There can be no assurance that the
Partnership will generate sufficient funds from operations, after planned
capital improvement expenditures, to permit distributions to its partners in
2002 or subsequent periods.
On September 16, 2000, the Partnership sought the vote of 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 to limited partners and instead permit the
General Partner to determine reasonable reserve requirements of the Partnership.
The vote was sought pursuant to a Consent Solicitation that expired on October
16, 2000 at which time the amendment was approved by the requisite percent of
limited partnership interests. Upon expiration of the consent period, a total
number of 140,565.90 units had voted of which 136,767.20 units had voted in
favor of the amendment, 2,805.70 voted against the amendment and 993.00 units
abstained.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 126,477 limited partnership units
(the "Units") in the Partnership representing 63.54% 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. 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 63.54% of the outstanding Units, AIMCO is in a position to
control all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.
During the years ended December 31, 2001, 2000 and 1999, the Partnership
received approximately $7,801,000, $33,634,000 and $20,713,000, as principal
payments on the Master Loan from CCEP. For 2001, approximately $357,000 was
received on certain investments by CCEP, which are required to be transferred to
the Partnership per the Master Loan Agreement. Approximately $6,019,000 was
received representing net proceeds from the sale of Magnolia Trace and
approximately $1,425,000 was received representing additional proceeds received
for the refinancing of the mortgages encumbering nine of the investment
properties in 2000. For 2000, approximately $238,000 was received on certain
investments by CCEP, which are required to be transferred to the Partnership per
the Master Loan Agreement. Approximately $4,526,000 was received representing
net proceeds from the sale of Shirewood and approximately $28,870,000 was
received representing net proceeds received for the refinancing of the mortgages
encumbering nine of the investment properties. For 1999, approximately $163,000
was received on certain investments by CCEP. Approximately $20,550,000 was
received representing the net proceeds from the sale of 444 DeHaro.
CCEP Property Operations
For the years ended December 31, 2001, 2000 and 1999, CCEP's net loss totaled
approximately $36,890,000, $37,493,000, and $20,178,000, respectively, with
total revenues of approximately $22,941,000, $22,747,000, and $19,262,000,
respectively. CCEP recognizes interest expense on the Master Loan Agreement
obligation according to the note terms, although payments to the Partnership are
required only to the extent of Excess Cash Flow, as defined therein. During the
year ended December 31, 2001, 2000 and 1999, CCEP's statement of operations
includes total interest expense attributable to the Master Loan of approximately
$42,043,000, $41,287,000, and $39,609,000, respectively, all but $3,280,000,
$2,000,000, and $2,744,000, respectively, represents interest accrued in excess
of required payments. CCEP is expected to continue to generate operating losses
as a result of such interest accruals and noncash charges for depreciation.
The Master Loan Agreement matured in November 2000. The holder of the note has
two options which include foreclosing on the properties that collateralize the
Master Loan or extending the terms of the note. If CCIP were to foreclose on its
collateral, CCEP would no longer hold title to its properties and would be
dissolved.
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 associated with its Master Loan to
Affiliate ("Loan"). Receipts (interest income) on the Loan are based upon the
operations and cash flow of the underlying investment properties that
collateralize the Loan. Both the income and expenses of operating the investment
properties are subject to factors outside of the Partnership's control, such as
an oversupply of similar properties resulting from overbuilding, increases in
unemployment, population shifts, reduced availability of permanent mortgage
financing, changes in zoning laws or changes in the patterns or needs of users.
The investment properties are also susceptible to the impact of economic and
other conditions outside of the control of the Partnership as well as being
affected by current trends in the market area which they operate. In this
regard, the General Partner of the Partnership closely monitors the performance
of the properties collateralizing the loans. Based upon the fact that the loan
is considered impaired under Statement of Financial Accounting Standard No. 114,
"Accounting by Creditors for Impairment of a Loan", interest rate fluctuations
do not impact the recognition of income, as income is only recognized to the
extent of cash flow. Therefore, market risk factors do not impact the
Partnership's results of operations as it relates to the Loan. See "Item 8 -
Financial Statements and Supplementary Data - Note D" for further information.
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 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 impact Partnership income approximately
$265,000.
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 debt obligations approximates the carrying value as of December 31,
2001.
Principal Amount by Expected Maturity
Fixed Rate Debt
Long-term Average Interest
Debt Rate 6.80%
(in thousands)
2002 $ 346
2003 371
2004 393
2005 4,320
2006 362
Thereafter 20,665
Total $26,457
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Operationsfor the Years ended December 31,2001,
2000 and 1999
Consolidated Statements of Changes in Partners' (Deficit) Capital for the
Years ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years ended December 31,2001,
2000 and 1999
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Institutional Properties
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Institutional Properties as of December 31, 2001 and 2000, and the
related consolidated statements of operations, changes in partners' (deficit)
capital, 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 Institutional Properties 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
March 15, 2002
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
2001 2000
Assets
Cash and cash equivalents $ 922 $ 2,036
Receivables and deposits 488 886
Restricted escrows 392 453
Other assets 604 1,616
Investment in Master Loan (Note D) 26,430 34,231
Less allowance for impairment loss -- (3,176)
26,430 31,055
Investment properties (Notes E and H):
Land 3,564 3,564
Buildings and related personal property 39,658 38,762
43,222 42,326
Less accumulated depreciation (15,969) (12,989)
27,253 29,337
$ 56,089 $ 65,383
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 126 $ 189
Tenant security deposit liabilities 566 675
Other liabilities 603 741
Mortgage notes payable (Note E) 26,457 26,762
27,752 28,367
Partners' Capital
General partner 123 118
Limited partners (199,045.2 units issued and
outstanding) 28,214 36,898
28,337 37,016
$ 56,089 $ 65,383
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Years Ended December 31,
2001 2000 1999
Revenues:
Rental income $ 11,305 $ 10,826 $ 9,877
Interest income on investment in Master
Loan to affiliate (Note D) 3,280 2,000 2,744
Reduction of provision for impairment
loss (Note D) 3,176 14,241 --
Interest income 78 397 318
Other income 821 760 606
Property tax refund -- 210 --
Total revenues 18,660 28,434 13,545
Expenses:
Operating 5,168 4,570 4,150
General and administrative 720 711 531
Depreciation 2,980 3,036 2,655
Interest 1,889 1,909 1,926
Property taxes 825 597 511
Total expenses 11,582 10,823 9,773
Net income (Note C) $ 7,078 $ 17,611 $ 3,772
Net income allocated to general partner (1%) $ 71 $ 176 $ 38
Net income allocated to limited partners (99%) 7,007 17,435 3,734
$ 7,078 $ 17,611 $ 3,772
Net income per limited partnership unit $ 35.20 $ 87.59 $ 18.76
Distributions per limited partnership unit $ 78.83 $ 240.55 $ 113.65
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 200,342.0 $ 1 $200,342 $200,343
Partners' (deficit) capital at
December 31, 1998 199,045.2 $ (96) $ 86,230 $ 86,134
Distributions to partners -- -- (22,621) (22,621)
Net income for the year
ended December 31, 1999 -- 38 3,734 3,772
Partners' (deficit) capital
at December 31, 1999 199,045.2 (58) 67,343 67,285
Distributions to partners -- -- (47,880) (47,880)
Net income for the year ended
December 31, 2000 -- 176 17,435 17,611
Partners' capital at
December 31, 2000 199,045.2 118 36,898 37,016
Distributions to partners -- (66) (15,691) (15,757)
Net income for the year ended
December 31, 2001 -- 71 7,007 7,078
Partners' capital at
December 31, 2001 199,045.2 $ 123 $ 28,214 $ 28,337
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net income $ 7,078 $ 17,611 $ 3,772
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 3,296 3,169 2,778
Reduction of provision for impairment loss (3,176) (14,241) --
Change in accounts:
Receivables and deposits 518 192 (93)
Other assets 78 (22) (513)
Accounts payable (63) 81 (323)
Tenant security deposit liabilities (109) 101 70
Accrued property taxes -- -- (62)
Other liabilities (138) 114 (64)
Net cash provided by operating activities 7,484 7,005 5,565
Cash flows from investing activities:
Property improvements and replacements (398) (1,647) (2,183)
Lease commissions paid -- (74) --
Net receipts from restricted escrows 61 147 1,312
Principal receipts on Master Loan 7,801 33,634 20,713
Net cash provided by investing activities 7,464 32,060 19,842
Cash flows from financing activities:
Loan costs -- (12) (8)
Distributions to partners (15,757) (47,880) (22,621)
Payments on mortgage notes payable (305) (312) (286)
Net cash used in financing activities (16,062) (48,204) (22,915)
Net (decrease) increase in cash and cash
equivalents (1,114) (9,139) 2,492
Cash and cash equivalents at beginning of year 2,036 11,175 8,683
Cash and cash equivalents at end of year $ 922 $ 2,036 $ 11,175
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,702 $ 1,992 $ 1,869
Supplemental disclosure of non-cash transactions:
Property improvements and replacements
capitalized as part of a settlement with a
tenant that vacated its space $ 498 $ -- $ --
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2001
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Institutional Properties (the "Partnership"
or "Registrant"), a California Limited Partnership, was formed on April 28,
1981, to lend funds through nonrecourse notes with participation interests (the
"Master Loan"). The loans were made to, and the real properties that secure the
Master Loan were purchased and owned by, Consolidated Capital Equity Partners,
("EP"), a California general partnership in which certain of the partners were
former shareholders and former management of Consolidated Capital Equities
Corporation ("CCEC"), the former Corporate General Partner. Through December 31,
2001, the Partnership had advanced a total of approximately $180,500,000 to EP
and its successor under the Master Loan. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2011 unless terminated prior to
such date.
Upon the Partnership's formation in 1981, CCEC, a Colorado corporation, was the
Corporate General Partner. 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, ConCap Equities, Inc., a Delaware corporation (the "General
Partner" or "CEI"), acquired CCEC's General Partner interests in the Partnership
and in 15 other affiliated public Limited Partnerships (the "Affiliated
Partnerships") and replaced CCEC as Managing General Partner in all 16
partnerships.
During 1989, EP defaulted on certain interest payments that were due under the
Master Loan. Before the Partnership could exercise its remedies for such
defaults, EP filed for bankruptcy protection in a Chapter 11 reorganization
proceeding. On October 18, 1990, the Bankruptcy Court approved EP's consensual
plan of reorganization (the "Plan"). In November 1990, EP and the Partnership
consummated a closing under the Plan pursuant to which, among other things, the
Partnership and EP executed an amended and restated loan agreement (the "New
Master Loan Agreement"). EP was converted from a California General Partnership
to a California Limited Partnership, Consolidated Capital Equity Partners, L.P.
("CCEP"), and CCEP renewed the deeds of trust on all the collateral to secure
the New Master Loan Agreement.
ConCap Holdings, Inc. ("CHI"), a Texas corporation and wholly-owned subsidiary
of CEI, is the sole general partner of CCEP and an affiliate of the Partnership.
The General Partners of EP became Limited Partners in CCEP. CHI has full
discretion with respect to conducting CCEP's business, including managing CCEP's
properties and initiating and approving capital expenditures and asset
dispositions and refinancings. All of CEI's outstanding stock was owned by
Insignia Properties Trust ("IPT"). Effective February 26, 1999, IPT was merged
into Apartment Investment and Management Company ("AIMCO"). Hence, CEI is now a
wholly-owned subsidiary of AIMCO, a publicly held real estate investment trust.
The Partnership owns and operates one apartment property and one multiple-use
complex in North Carolina and Pennsylvania, respectively. Also, the Partnership
is the holder of the Master Loan which is collateralized by apartment properties
located throughout the United States.
Principles of Consolidation: The Partnership's consolidated financial statements
include the accounts of CCIP Sterling, L.P., a Pennsylvania Limited Partnership,
Kennedy Boulevard Associates II, L.P., Kennedy Boulevard Associates III, L.P.,
Kennedy Boulevard Associates IV, L.P., and Kennedy Boulevard GP I ("KBGP-I"), a
Pennsylvania Partnership. Each of the entities above except KBGP-I are
Pennsylvania limited partnerships, and the general partners of each of these
affiliated limited and general partnerships are limited liability corporations
of which the Partnership is the sole member. Therefore, the Partnership controls
these affiliated limited and general partnerships, and consolidation is
required. CCIP Sterling, L.P. holds title to The Sterling Apartment Home and
Commerce Center ("the Sterling"). All interpartnership transactions have been
eliminated.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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.
Allocation of Profits, Gains, and Losses: The Agreement provides for net income
and net losses for both financial and tax reporting purposes to be allocated 99%
to the Limited Partners and 1% to the General Partner.
Net Income Per Limited Partnership Unit: Net income per Limited Partnership Unit
("Unit") is computed by dividing net income allocated to the Limited Partners by
the number of Units outstanding at the beginning of the year. Per Unit
information has been computed based on 199,045.2 Units outstanding in 2001, 2000
and 1999.
Cash and Cash Equivalents: Includes 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 $840,000 and $1,861,000 at December 31, 2001
and 2000, respectively, that are maintained by an affiliated management company
on behalf of affiliated entities in cash concentration accounts.
Restricted Escrows: At the time of the 1995 refinancing of The Loft,
approximately $60,000 of the proceeds were designated for a Replacement Reserve
Fund for certain capital replacements at the property. Additionally, monthly
deposits are required pursuant to the mortgage agreement. At both December 31,
2001 and 2000, the balance in this reserve was approximately $121,000.
In conjunction with the financing of the Sterling in September 1998, the
Partnership is required to make monthly deposits of approximately $17,000 with
the mortgage company to establish and maintain a Replacement Reserve Fund
designated for repairs and replacements at the property. Additionally, monthly
deposits are required pursuant to the mortgage agreement. As of December 31,
2001 and 2000, the balance was approximately $271,000 and $332,000,
respectively.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment and commercial properties and related personal
property. For Federal income tax purposes, the accelerated cost recovery method
is used 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 additions over 27 1/2 years and (2) personal
property additions over 5 years.
Loan Costs: As of December 31, 2001 and 2000, loan costs of approximately
$569,000 and $584,000, respectively, less accumulated amortization of
approximately $219,000 and $160,000 respectively, are included in other assets.
These costs are amortized on a straight-line basis over the life of the loans.
Tenant 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 rental payments.
Investment Properties: Investment properties consist of one apartment complex
and one multiple-use building consisting of apartment units and commercial space
and 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.
Costs of properties that have been permanently impaired have been written down
to appraised value. No adjustments for impairment of value were recorded in the
years ended December 31, 2001, 2000 or 1999. See "Recent Accounting
Pronouncements" below.
Fair Value of Financial Instruments: 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 amounts of its financial instruments (except for long term
debt) approximate their fair values 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.
Investment in Master Loan: In accordance with SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan", the allowance for credit losses related to
loans that are identified for evaluation in accordance with the SFAS is based on
discounted cash flows using the loan's initial effective interest rate or the
fair value of the collateral for certain collateral dependent loans.
Leases: The Partnership leases certain commercial space to tenants under various
lease terms. The leases are accounted for as operating leases in accordance with
SFAS No. 13, "Accounting for Leases". Some of the leases contain stated rental
increases during their term. For leases with fixed rental increases, rents are
recognized on a straight-line basis over the terms of the leases. For all other
leases, minimum rents are recognized over the terms of the 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.
Lease Commissions: Lease commissions are capitalized and included in other
assets and are being amortized using the straight-line method over the life of
the applicable lease. At December 31, 2001 and 2000, lease commissions totaled
approximately $231,000 and $543,000, respectively, with accumulated amortization
of approximately $151,000 and $207,000, respectively. During the year ended
December 31, 2001, lease commissions of approximately $313,000 and accumulated
amortization of approximately $122,000 was written off as a result of the tenant
to which these lease commissions related vacating its space.
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. See "Note J" for detailed disclosure of the Partnership's segments.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs of approximately $67,000, $71,000 and $90,000 for the years
ended December 31, 2001, 2000 and 1999, respectively, were charged to operating
expense.
Reclassifications: Certain reclassifications have been made to the 1999
information to conform to the 2000 presentation.
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. 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 - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be 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 of reported net income and Federal taxable
income (in thousands, except per unit data):
2001 2000 1999
Net income as reported $ 7,078 $17,611 $ 3,772
Add (deduct):
Deferred revenue and other liabilities (157) 195 (915)
Depreciation differences 398 499 471
Accrued expenses 7 21 28
Interest income (3,280) (2,000) (2,744)
Differences in valuation allowances (3,176) (14,241) --
Other 90 14 --
Federal taxable income $ 960 $ 2,099 $ 612
Federal taxable income per
limited partnership unit $ 4.78 $ 10.44 $ 3.04
The following is reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
December 31,
2001 2000
Net assets as reported $28,337 $37,016
Land and buildings 433 931
Accumulated depreciation 3,303 2,905
Allowance for impairment loss -- 3,176
Interest receivable 44 3,324
Syndication fees 22,500 22,500
Other 233 (205)
Net assets - Federal tax basis $54,850 $69,647
Note D - Net Investment in Master Loan
The Partnership was formed for the benefit of its limited partners to lend funds
to Consolidated Capital Equity Partners ("CCEP"), a California general
partnership. The general partner of CCEP is an affiliate of the General Partner.
The Partnership loaned funds to CCEP subject to a nonrecourse note with a
participation interest (the "Master Loan"). At December 31, 2001, the recorded
investment in the Master Loan was considered to be impaired under SFAS 114
"Accounting by Creditors for Impairment of a Loan". The Partnership measures the
impairment of the loan based upon the fair value of the collateral, as repayment
of the loan is expected to be provided solely by the collateral. For the years
ended December 31, 2001, 2000 and 1999, the Partnership recorded approximately
$3,280,000, $2,000,000, and $2,744,000 respectively, of interest income based
upon "Excess Cash Flow" (as defined in the terms of the New Master Loan
Agreement) generated by CCEP and paid to the Partnership.
The fair value of all of the collateral properties which on a combined basis
secure the Master Loan, was determined using the net operating income of the
collateral properties capitalized at a rate deemed reasonable for the type of
property adjusted for market conditions, the physical condition of the property
and other factors, or by obtaining an appraisal by an independent third party.
This methodology has not changed from that used in prior calculations performed
by the General Partner in determining the fair value of the collateral
properties. The approximate reduction of $3,176,000 and $14,241,000 in the
provision for impairment loss recognized during the years ended December 31,
2001 and 2000, respectively, is attributed to an increase in the net realizable
value of the collateral properties and to the payment of principal on the Master
Loan from the sales proceeds of Magnolia Trace in January 2001 and the
refinancing and financing proceeds of the collateral properties in the third and
fourth quarter of 2000. The General Partner evaluates the net realizable value
on a semi-annual basis or as circumstances dictate that it should be analyzed.
Interest, calculated on the accrual basis, due to the Partnership pursuant to
the terms of the Master Loan Agreement, but not recognized in the income
statements due to the impairment of the loan, totaled approximately $38,763,000,
$39,287,000 and $36,865,000 for the years ended December 31, 2001, 2000 and
1999, respectively. Interest income is recognized on the cash basis as required
by SFAS 114. At December 31, 2001 and 2000, such cumulative unrecognized
interest totaling approximately $345,024,000 and $306,262,000 was not included
in the balance of the investment in Master Loan. All of the collateral
properties are encumbered by first mortgages totaling approximately $54,834,000
as of December 31, 2001, which are senior to the Master Loan. This has been
taken into consideration in determining the fair value of the Master Loan.
During the years ended December 31, 2001, 2000 and 1999, the Partnership made no
advances to CCEP on Master Loan.
During the years ended December 31, 2001, 2000 and 1999, the Partnership
received approximately $7,801,000, $33,634,000 and $20,713,000, as principal
payments on the Master Loan from CCEP. For 2001, approximately $357,000 was
received on certain investments by CCEP, which are required to be transferred to
the Partnership per the Master Loan Agreement. Approximately $6,019,000 was
received representing net proceeds from the sale of Magnolia Trace and
approximately $1,425,000 was received representing additional proceeds received
for the refinancing of the mortgages encumbering nine of the investment
properties in 2000. For 2000, approximately $238,000 was received on certain
investments by CCEP, which are required to be transferred to the Partnership per
the Master Loan Agreement. Approximately $4,526,000 was received representing
net proceeds from the sale of Shirewood and approximately $28,870,000 was
received representing net proceeds received for the refinancing of the mortgages
encumbering nine of the investment properties. For 1999, approximately $163,000
was received on certain investments by CCEP. Approximately $20,550,000 was
received representing the net proceeds from the sale of 444 DeHaro.
Terms of the Master Loan Agreement
The Master Loan matured in November 2000. The General Partner had been
negotiating with CCEP with respect to its options which included foreclosing on
the properties which collateralize the Master Loan or extending the terms of the
loan. The General Partner decided to foreclose on the properties that
collateralize the Master Loan. The General Partner will begin the process of
foreclosure or executing deeds in lieu of foreclosure during the first quarter
of 2002 on all the properties in CCEP. As the deeds are executed, title in the
properties owned by CCEP would be transferred to the Partnership, subject to the
existing liens on such properties, including the first mortgage loans. As a
result, the Partnership would become responsible for the operations of such
properties.
The investment in the Master Loan consists of the following:
As of December 31,
2001 2000
(in thousands)
Master Loan funds advanced
at beginning of year $ 34,231 $ 67,865
Principal receipts on Master Loan (7,801) (33,634)
Master Loan funds advanced
at end of year $ 26,430 $ 34,231
The allowance for impairment loss on Master Loan consists of the following:
As of December 31,
2001 2000
(in thousands)
Allowance for impairment loss on Master
Loan, beginning of year $ 3,176 $ 17,417
Reduction of impairment loss (3,176) (14,241)
Allowance for impairment loss on Master
Loan, end of year $ -- $ 3,176
Note E - Mortgage Notes Payable
The principal terms of mortgage notes payable are as follows:
Principal Monthly Principal
Balance At Payment Balance
December 31, (including Interest Maturity Due At
Property 2001 2000 interest) Rate Date Maturity
(in thousands) (in thousands) (in thousands)
The Loft Apartments
1st mortgage $ 4,210 $ 4,276 $ 30 6.95% 12/01/05 $ 3,903
The Sterling
Apartment
Homes and Commerce
Center
1st mortgage 22,247 22,486 149 6.77% 10/01/08 19,975
$ 26,457 $ 26,762 $179 $ 23,878
The mortgage notes payable are non-recourse and are secured by pledge of the
respective properties and by pledge of revenues from the respective properties.
The notes require prepayment penalties if repaid prior to maturity. Further, the
properties may not be sold subject to existing indebtedness.
Scheduled principal payments of the mortgage notes payable subsequent to
December 31, 2001, are as follows (in thousands):
2002 $ 346
2003 371
2004 393
2005 4,320
2006 362
Thereafter 20,665
$26,457
Note F - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made to the General
Partner and its affiliates during the years ended December 31, 2001, 2000, and
1999:
2001 2000 1999
(in thousands)
Property management fees (included in
operating expense) $640 $580 $525
Reimbursement for services of affiliates
(included in general and administrative
expenses, and investment properties) 332 510 259
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all of the Registrant's properties for providing property management
services. The Registrant paid to such affiliates approximately $640,000,
$580,000 and $525,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $332,000, $510,000 and
$259,000 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 $29,000 and
$38,000 for the years ended December 31, 2000 and 1999, respectively. The fees
for the year ended December 31, 2001 amounted to less than $1,000. The
construction management service fees are calculated based on a percentage of
current additions to investment properties and are being depreciated over 15
years.
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 $60,000 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 126,477 limited partnership units
(the "Units") in the Partnership representing 63.54% 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. 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 63.54% of the outstanding Units, AIMCO is in a position to
control all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.
Note G - Commitments
Until October 17, 2000, the Partnership was required by the Partnership
Agreement to maintain working capital reserves for contingencies of not less
than 5% of Net Invested Capital, as defined in the Partnership Agreement. In the
event expenditures were made from this reserve, operating revenues were to be
allocated to such reserve to the extent necessary to maintain the foregoing
level. On September 16, 2000, the Partnership sought the vote of 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 partner's
capital contributions less distributions to limited partners and instead permit
the General Partner to determine reasonable reserve requirements of the
Partnership. The vote was sought pursuant to a Consent Solicitation that expired
on October 16, 2000 at which time the amendment was approved by the requisite
percent of limited partnership interests. Upon expiration of the consent period,
a total number of 140,565.90 units had voted of which 136,767.20 units had voted
in favor of the amendment, 2,805.70 voted against the amendment and 993.00 units
abstained.
Note H - Real Estate and Accumulated Depreciation
Investment Properties Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Loft Apartments $ 4,210 $ 1,053 $ 4,147 $ 2,226
The Sterling Apt Homes
and Commerce Center 22,247 2,567 12,341 20,888
$26,457 $ 3,620 $16,488 $ 23,114
Gross Amount At Which Carried
At December 31, 2001
(in thousands)
Buildings
And Related
Personal Accumulated Date Depreciable
Description Land Property Total Depreciation Acquired Life-Years
(in thousands)
The Loft $ 997 $ 6,429 $ 7,426 $ 3,878 11/19/90 5-20
The Sterling 2,567 33,229 35,796 12,091 12/01/95 5-25
Totals $3,564 $39,658 $43,222 $15,969
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
2001 2000 1999
(in thousands)
Real Estate
Balance, real estate at beginning of year $42,326 $40,679 $38,496
Property improvements and
replacements 896 1,647 2,183
Balance, real estate at end of year $43,222 $42,326 $40,679
Accumulated Depreciation
Balance at beginning of year $12,989 $ 9,953 $ 7,298
Additions charged to expense 2,980 3,036 2,655
Balance at end of year $15,969 $12,989 $ 9,953
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 2001 and 2000, is approximately $43,655,000 and $43,257,000,
respectively. Accumulated depreciation for Federal income tax purposes at
December 31, 2001 and 2000 is approximately $12,666,000, and $10,084,000,
respectively.
Note I - Commercial Leases
In December 2001, the Partnership's most significant commercial tenant at The
Sterling Commerce Center vacated its space which represented 30.58% of the
leaseable commercial space. The Partnership filed a lawsuit against such tenant
seeking monetary damages for unpaid rent, including rent which had been abated
in favor of the tenant completing significant improvements to its space. The
Partnership accepted a settlement whereby the tenant will pay $180,000 in
satisfaction of all unpaid rent amounts due and the Partnership will accept
possession of the improvements completed by the tenant which have been valued at
approximately $498,000. Beginning in 2002, these improvements will be
depreciated over their remaining estimated useful lives. As a result of the
tenant vacating the space, the Partnership expensed approximately $191,000 in
unamortized lease commissions.
Rental income on the commercial property leases is recognized on the
straight-line basis over the life of the applicable leases. Minimum future
rental income for the commercial properties subject to noncancellable operating
leases is as follows (in thousands):
Year Ending
December 31,
2002 $ 821
2003 609
2004 413
2005 286
2006 246
Thereafter 138
$ 2,513
There is no assurance that this rental income will continue at the same level
when the current leases expire.
Note J - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has two reportable segments:
residential properties and commercial property. The Partnership's property
segments consist of one apartment complex in North Carolina and one multiple use
facility consisting of apartment units and commercial space in Pennsylvania. The
Partnership rents apartment units to tenants for terms that are typically less
than twelve months. The commercial property leases space to various medical
offices, career service facilities, and retail shops at terms ranging from two
months to fifteen years.
Measurement of segment profit and loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments are business units (investment properties)
that offer different products and services. The reportable segments are each
managed separately because they provide distinct services with different types
of products and customers.
Segment information for the years ending December 31, 2001, 2000 and 1999 is
shown in the tables below (in thousands). The "Other" Column includes
partnership administration related items and income and expense not allocated to
reportable segments.
2001 Residential Commercial Other Totals
Rental income $ 9,782 $ 1,523 $ -- $11,305
Interest income 58 8 12 78
Other income 539 282 -- 821
Interest expense 1,659 230 -- 1,889
Depreciation 2,890 90 -- 2,980
General and administrative expenses -- -- 720 720
Interest income on investment
in Master Loan -- -- 3,280 3,280
Reduction of provision for impairment
loss -- -- 3,176 3,176
Segment profit 1,285 49 5,744 7,078
Total assets 27,896 1,213 26,980 56,089
Capital expenditures for investment
properties 372 524 -- 896
2000 Residential Commercial Other Totals
Rental income $ 9,298 $ 1,528 $ -- $10,826
Interest income 98 24 275 397
Other income 520 239 1 760
Interest expense 1,673 236 -- 1,909
Depreciation 2,952 84 -- 3,036
General and administrative expenses -- -- 711 711
Interest Income on Investment in
Master Loan -- -- 2,000 2,000
Reduction of provision for
impairment loss -- -- 14,241 14,241
Segment profit 1,424 381 15,806 17,611
Total assets 32,276 1,853 31,254 65,383
Capital expenditures for investment
properties 1,596 51 -- 1,647
1999 Residential Commercial Other Totals
Rental income $ 8,452 $ 1,425 $ -- $ 9,877
Interest income 33 5 280 318
Other income 447 159 -- 606
Interest expense 1,691 235 -- 1,926
Depreciation 2,578 77 -- 2,655
General and administrative expenses -- -- 531 531
Interest Income on Investment
in Master Loan -- -- 2,744 2,744
Segment profit 772 507 2,493 3,772
Total assets 33,654 2,067 59,947 95,668
Capital expenditures for investment
properties 2,132 51 -- 2,183
Note K - Legal Proceedings
In March 1998, several putative unitholders 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 oppose the motion and a hearing 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 L - 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):
1st 2nd 3rd 4th
2001 Quarter Quarter Quarter Quarter Total
Revenues:
Rental, interest and
other income $ 3,075 $ 3,030 $ 3,044 $ 3,055 $ 12,204
Interest income on
investment in Master Loan 1,900 804 576 -- 3,280
Reduction of provision for
impairment loss 3,176 -- -- -- 3,176
Total revenues 8,151 3,834 3,620 3,055 18,660
Total expenses 2,945 3,126 2,725 2,786 11,582
Net income $ 5,206 $ 708 $ 895 $ 269 $ 7,078
Net income allocated
to General Partner (1%) $ 52 $ 7 $ 9 $ 3 $ 71
Net income allocated
to Limited Partners (99%) 5,154 701 886 266 7,007
$ 5,206 $ 708 $ 895 $ 269 $ 7,078
Net income per limited
partnership unit $ 25.89 $ 3.52 $ 4.45 $ 1.34 $ 35.20
Distributions per limited
partnership unit $ 39.02 $ 16.53 $ 18.65 $ 4.63 $ 78.83
1st 2nd 3rd 4th
2000 Quarter Quarter Quarter Quarter Total
Revenues:
Rental, interest and
other income $ 2,846 $ 2,963 $ 3,066 $ 3,108 $ 11,983
Interest income on
investment in Master Loan -- 1,000 1,000 -- 2,000
Reduction of provision for
impairment loss -- -- 14,241 -- 14,241
Property tax refund -- -- 210 -- 210
Total revenues 2,846 3,963 18,517 3,108 28,434
Total expenses 2,621 2,736 2,816 2,650 10,823
Net income $ 225 $ 1,227 $ 15,701 $ 458 $ 17,611
Net income allocated
to General Partner (1%) $ 2 $ 12 $ 157 $ 5 $ 176
Net income allocated
to Limited Partners (99%) 223 1,215 15,544 453 17,435
$ 225 $ 1,227 $ 15,701 $ 458 $ 17,611
Net income per limited
partnership unit $ 1.12 $ 6.10 $ 78.09 $ 2.28 $ 87.59
Distributions per limited
partnership unit $ 27.54 $ 5.97 $ 31.17 $ 175.87 $ 240.55
Note M - Distributions
During the year ended December 31, 2001, distributions from surplus cash of
approximately $9,111,000 were paid to the limited partners ($45.77 per limited
partnership unit) of which approximately $1,425,000 was from the receipt of net
financing and refinancing proceeds from CCEP and approximately $6,019,000 was
from the receipt of net sales proceeds from CCEP. Distributions of approximately
$6,646,000 (approximately $6,580,000 paid to the limited partners or $33.06 per
limited partnership unit) were paid from operations. Distributions from surplus
cash of approximately $47,880,000 were paid to the limited partners ($240.55 per
limited partnership unit) during the year ended December 31, 2000 of which
approximately $28,770,000 was from the receipt of net financing and refinancing
proceeds from CCEP. Distributions from surplus cash of approximately $22,621,000
were paid to limited partners ($113.65 per limited partnership unit) during the
year ended December 31, 1999.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors, Executive Officers of the General Partner of the Partnership
The names and ages of, as well as the positions and offices held by, the present
executive officers and directors of ConCap Equities, Inc. ("CEI") the
Partnership's General Partner as of December 31, 2001, their ages and the nature
of all positions with CEI presently held by them are as follows:
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 Managing
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 1997, 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 consolidated
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 annual audit services of approximately
$43,000 and non-audit services (principally tax-related) of approximately
$25,000.
Item 11. Executive Compensation
No remuneration was paid to the General Partner nor its director or officers.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as noted below, no persons or entity is known by the General Partner to
own beneficially more than 5% of the outstanding Units of the Partnership:
Name and Address Number of Units Percentage
Insignia Properties, L.P.
(an affiliate of AIMCO) 50,572.4 25.41%
Reedy River Properties, L.L.C.
(an affiliate of AIMCO) 28,832.5 14.48%
Cooper River Properties, L.L.C.
(an affiliate of AIMCO) 11,365.6 5.71%
AIMCO Properties, L.P.
(an affiliate of AIMCO) 35,706.5 17.94%
Reedy River Properties, Cooper River Properties LLC and Insignia Properties LP
are indirectly ultimately owned by AIMCO. Their business addresses are 55
Beattie Place, Greenville, SC 20602.
AIMCO Properties, LP is ultimately controlled by AIMCO. Its business address is
2000 South Colorado Blvd., Denver, Colorado 80222.
(b) Beneficial Owners of Management
Except as described in Item 12(a) above, neither CEI nor any of the directors,
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 entity was known to CEI to be the
beneficial owner of more than 5% of its common stock:
NUMBER OF PERCENT
NAME AND ADDRESS UNITS OF TOTAL
Insignia Properties Trust
55 Beattie Place
P.O. Box 1089
Greenville, SC 29602 100,000 100%
Effective February 26, 1999, Insignia Properties Trust merged into AIMCO with
AIMCO being the surviving corporation. As a result, AIMCO ultimately acquired a
100% interest in Insignia Properties Trust.
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 Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The following payments were made to the General
Partner and its affiliates during the years ended December 31, 2001, 2000 and
1999:
2001 2000 1999
(in thousands)
Property management fees $640 $580 $525
Reimbursement for services of affiliates 332 510 259
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all of the Registrant's properties for providing property management
services. The Registrant paid to such affiliates approximately $640,000,
$580,000 and $525,000 for the years ended December 31, 2001, 2000 and 1999,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $332,000, $510,000 and
$259,000 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 $29,000 and
$38,000 for the years ended December 31, 2000 and 1999, respectively. The fees
for the year ended December 31, 2001 amounted to less than $1,000. The
construction management service fees are calculated based on a percentage of
current additions to investment properties and are being depreciated over 15
years.
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 $60,000 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 126,477 limited partnership units
(the "Units") in the Partnership representing 63.54% 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. 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 63.54% of the outstanding Units, AIMCO is in a position to
control all voting decisions with respect to the Registrant. When voting on
matters, AIMCO would in all likelihood vote the Units it acquired in a manner
favorable to the interest of the General Partner because of its affiliation with
the General Partner.
PART IV
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 Capital Equity Partners,L.P.
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Operations for the Years Ended
December 31, 2001, 2000 and 1999
Consolidated Statements of Changes in Partners' Deficit for
the Years Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended
December 31, 2001, 2000 and 1999
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because they are not required, are
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
(a)10.23 Third Amendment to the Limited Partnership Agreement.
10.24 Fourth Amendment to the Limited Partnership
Agreement.
(b) Reports on Form 8-K filed during the fourth quarter of 2001:
None.
EXHIBIT INDEX
S-K Reference Document Description
3 Certificates of Limited Partnership, as amended to date. (Incorporated by
reference to the Annual Report on Form 19-K for the year ended December 31,
1991 ("1991 Annual Report")).
10.1 Amended Loan Agreement dated November 15, 1990 (the "Effective Date"), by
and between the Partnership and EP (Incorporated by reference to the Annual
Report of Form 10-K for the year ended December 31, 1990 ("1990 Annual
Report")).
10.2 Assumption Agreement as of the Effective Date, by and between EP and CCEP
(Incorporated by reference to the 1990 Annual Report).
10.3 Assignment of Claims as of the Effective Date, by and between the
Partnership and EP (Incorporated by reference to the 1990 Annual Report).
10.4 Assignment of Partnership Interests in Western Can, Ltd., by and between EP
and CCEP (Incorporated by reference to the 1990 Annual Report).
10.5 Bill of Sale and Assignment dated October 23, 1990, by and between CCEP and
ConCap Services Company (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).
10.6 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 1990 Annual Report).
10.7 Construction Management Cost Reimbursement Agreement dated January 1, 1991,
by and between the Partnership and Metro ConCap, Inc. (Incorporated by
reference to the 1991 Annual Report).
10.8 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).
10.9 Assignment and Assumption Agreement (Investor Services Agreement) dated
October 23, 1990 by and between CCEC and ConCap Services Company
(Incorporated by reference to the 1990 Annual Report).
10.10Letter 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 1991 Annual Report).
10.11Financial 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).
10.12Assignment and Assumption Agreement (Financial Services 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).
10.13Letter of Notice dated December 20, 1991, from PSI to the Partnership
regarding the change in ownership and dissolution of ConCap Capital Company
whereby PSI assumed the Financial Services Agreement. (Incorporated by
reference to the 1991 Annual Report).
10.14Property Management Agreement No. 503 dated February 16, 1993, by and
between the Partnership, New Carlton House Partners, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1992).
10.15Property Management Agreement No. 508 dated June 1, 1993, by and between
the Partnership and Coventry Properties, Inc.
10.16Assignment and Assumption Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry Properties, Inc.
and Partnership Services, Inc.
10.17Multifamily Note dated November 30, 1995 between Consolidated Capital
Institutional Properties, a California limited partnership, and Lehman
Brothers Holdings, Inc. d/b/a Lehman Capital, A Division of Lehman Brothers
Holding, Inc.
10.18Contract of Sale for Northlake Quadrangle, Tucker, Georgia, Consolidated
Capital Equity Partners, L.P, and SPIVLL Management and Investment Company
dated December 17, 1997, filed in Form 10-Q for the quarter ended September
30, 1998.
10.19First Amendment to Contract of Sale for Northlake Quadrangle, Tucker,
Georgia, between Consolidated Capital Equity Partners, L.P., and SPIVLL
Management and Investment Company dated April 16, 1998, filed in Form 10-Q
for the quarter ended September 30, 1998.
10.20Mortgage and Security Agreement between Kennedy Boulevard Associates I,
L.P., and Lehman Brothers Holdings, Inc., dated August 25, 1998, securing
The Sterling Apartment Home and Commerce Center filed in Form 10-Q for the
quarter ended September 30, 1998.
10.21Repair Escrow Agreement between Kennedy Boulevard Associates I, L.P., and
Lehman Brothers Holdings, Inc., dated August 25, 1998, securing The
Sterling Apartment Home and Commerce Center filed in Form 10-Q for the
quarter ended September 30, 1998.
10.22Replacement Reserve and Security Agreement between Kennedy Boulevard
Associates I, L.P., and Lehman Brothers Holdings, Inc., dated August 25,
1998, securing The Sterling Apartment Home and Commerce Center filed in
Form 10-Q for the quarter ended September 30, 1998.
10.23 Third Amendment to the Limited Partnership Agreement as filed herein.
10.24 Fourth Amendment to the Limited Partnership Agreement as filed herein.
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)
28.1 Fee Owner's Limited Partnership Agreement dated November 14, 1990
(Incorporated by reference to the 1990 Annual Report).
99.1 Audited Financial Statements of Consolidated Capital Equity Partners, L.P.
for the years ended December 31, 2001 and 2000.
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 INSTITUTIONAL PROPERTIES
By: ConCap Equities, Inc.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Senior Vice President and
Controller
Date: April 1, 2002
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: April 1, 2002
Patrick J. Foye
Executive Vice President and Director
/s/Martha L. Long Date: April 1, 2002
Martha L. Long
Senior Vice President and Controller
2
EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
Consolidated FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2001 AND 2000
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
TABLE OF CONTENTS
December 31, 2001
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets as of December 31, 2001 and 2000
Consolidated Statements of Operations for the Years Ended December 31,
2001, 2000 and 1999
Consolidated Statements of Changes in Partners' Deficit for the Years
Ended December 31, 2001, 2000 and 1999
Consolidated Statements of Cash Flows for the Years Ended December 31,
2001, 2000 and 1999
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Equity Partners, L.P.
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Equity Partners, L.P. 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 Equity Partners, L.P. 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.
The accompanying consolidated financial statements have been prepared assuming
that the Partnership will continue as a going concern. As discussed in Note A to
the consolidated financial statements, the Partnership has incurred operating
losses, suffers from inadequate liquidity, has an accumulated deficit and is
unable to repay the Master Loan balance, which matured in 2000. These conditions
raise substantial doubt about the Partnership's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note A. The consolidated financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
March 15, 2002
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
consolidated BALANCE SHEETS
(in thousands)
December 31,
2001 2000
Assets
Cash and cash equivalents $ 1,321 $ 5,894
Receivables and deposits 280 928
Restricted escrows 615 767
Other assets 1,514 1,634
Investment properties (Notes F and H):
Land 6,904 7,796
Buildings and related personal property 80,399 83,558
87,303 91,354
Less accumulated depreciation (68,315) (70,793)
18,988 20,561
$ 22,718 $ 29,784
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 527 $ 410
Tenant security deposit liabilities 440 485
Accrued property taxes 256 218
Other liabilities 564 586
Mortgage notes payable (Note F) 54,834 56,060
Master loan and interest payable 371,455 340,493
428,076 398,252
Partners' Deficit
General partner (4,054) (3,685)
Limited partners (401,304) (364,783)
(405,358) (368,468)
$ 22,718 $ 29,784
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
consolidated STATEMENTS OF OPERATIONS
(in thousands)
Years Ended December 31,
2001 2000 1999
Revenues:
Rental income $ 16,501 $ 17,825 $ 17,832
Other income 2,063 1,801 1,430
Gain on sale of investment property (Note J) 4,377 3,121 --
Total revenues 22,941 22,747 19,262
Expenses:
Operating 7,997 8,441 8,275
General and administrative 883 746 654
Depreciation 3,132 4,821 4,812
Interest 46,552 43,653 41,263
Property taxes 1,267 1,169 1,244
Total expenses 59,831 58,830 56,248
Loss from continuing operations (36,890) (36,083) (36,986)
Income from discontinued operations (Note D) -- -- 178
Gain on sale of discontinued operations (Note D) -- -- 16,630
Loss before extraordinary item (36,890) (36,083) (20,178)
Extraordinary loss on early extinguishment
of debt (Note I) -- (1,410) --
Net loss $(36,890) $(37,493) $(20,178)
Net loss allocated to general partner (1%) $ (369) $ (375) $ (202)
Net loss allocated to limited partners (99%) (36,521) (37,118) (19,976)
$(36,890) $(37,493) $(20,178)
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
consolidated STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands)
General Limited
Partners Partners Total
Partners' deficit at December 31, 1998 $ (3,108) $(307,679) $(310,787)
Distributions -- (10) (10)
Net loss for the year ended December 31, 1999 (202) (19,976) (20,178)
Partners' deficit at December 31, 1999 (3,310) (327,665) (330,975)
Net loss for the year ended December 31, 2000 (375) (37,118) (37,493)
Partners' deficit at December 31, 2000 (3,685) (364,783) (368,468)
Net loss for the year ended December 31, 2001 (369) (36,521) (36,890)
Partners' deficit at December 31, 2001 $ (4,054) $(401,304) $(405,358)
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
consolidated STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
2001 2000 1999
Cash flows from operating activities:
Net loss $(36,890) $(37,493) $(20,178)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 3,306 4,920 5,381
Gain on sale of discontinued operations -- -- (16,630)
Extraordinary loss on early extinguishment of debt -- 1,410 --
Gain on sale of investment property (4,377) (3,121) --
Change in accounts:
Receivables and deposits 648 431 (77)
Other assets 45 27 (199)
Accounts payable (132) (83) 140
Tenant security deposit liabilities (45) 19 (107)
Accrued property taxes 38 (217) 190
Other liabilities (22) 121 (35)
Accrued interest on Master Loan 38,763 39,287 36,865
Net cash provided by operating activities 1,334 5,301 5,350
Cash flows from investing activities:
Property improvements and replacements (2,952) (4,210) (3,902)
Lease commissions paid -- -- (144)
Proceeds from sale of investment property 6,019 4,526 20,550
Net withdrawals from (deposits to) restricted escrows 152 (49) 41
Net cash provided by investing activities 3,219 267 16,545
Cash flows from financing activities:
Principal payments on Master Loan (7,801) (33,634) (20,713)
Principal payments on mortgage notes payable (1,226) (385) (299)
Proceeds from financing/refinancing -- 56,200 --
Repayment of mortgage notes payable -- (22,311) --
Debt extinguishment costs -- (1,007) --
Loan costs paid (99) (1,402) --
Distributions to partners -- -- (10)
Net cash used in financing activities (9,126) (2,539) (21,022)
Net (decrease) increase in cash and cash equivalents (4,573) 3,029 873
Cash and cash equivalents at beginning of year 5,894 2,865 1,992
Cash and cash equivalents at end of year $ 1,321 $ 5,894 $ 2,865
Supplemental disclosure of cash flow information:
Cash paid for interest $ 7,617 $ 4,032 $ 4,348
Supplemental disclosure of non-cash activity:
Property improvements and replacements included in
accounts payable $ 249 $ -- $ --
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO consolidated FINANCIAL STATEMENTS
December 31, 2001
Note A - Going Concern
The Partnership's consolidated financial statements have been prepared assuming
that the Partnership will continue as a going concern. The Partnership continues
to incur operating losses, suffers from inadequate liquidity, has an accumulated
deficit and is unable to repay the Master Loan balance, which matured in
November 2000. The Partnership realized a net loss of approximately $36,890,000
for the year ended December 31, 2001. The net loss included the recognition of a
gain on the sale of Magnolia Trace of approximately $4,377,000. The General
Partner expects the Partnership to continue to incur losses from operations.
The Partnership's indebtedness to CCIP under the Master Loan of approximately
$371,455,000, including accrued interest, matured in November 2000. The General
Partner has been in negotiations with CCIP with respect to its options which
include CCIP foreclosing on the properties that collateralize the Master Loan or
extending the term of the note. CCIP has decided to foreclose on the properties
securing the Master Loan. CCIP will begin the process of foreclosure or
executing deeds in lieu of foreclosure during the first quarter of 2002 on all
the properties in the Partnership. As deeds are executed, title in the
properties currently owned by the Partnership will be transferred to CCIP,
subject to existing liens on such properties including the first mortgage loans.
When the Partnership no longer has title to its properties, it will be
dissolved.
The General Partner expects revenues from the nine investment properties will be
sufficient over the next twelve months to meet all property operating expenses,
mortgage debt service requirements and capital expenditure requirements.
However, these cash flows will be insufficient to repay the Master Loan balance,
including accrued interest.
As a result, there is substantial doubt about the Partnership's ability to
continue as a going concern. The financial statements do not include any
adjustments to reflect the possible future effects on the recoverability and
classification of assets or amounts and classifications of liabilities that may
result from these uncertainties.
Note B - Organization and Summary of Significant Accounting Policies
Organization: Consolidated Capital Equity Partners ("EP"), a California general
partnership, was formed on June 24, 1981, to engage in the business of
acquiring, operating and holding equity investments in income-producing real
estate properties. The operations of EP were financed substantially through
nonrecourse notes (the "Master Loan") from Consolidated Capital Institutional
Properties ("CCIP"), a California limited partnership. These notes are secured
by the real estate properties owned by EP. The General Partner of CCIP is ConCap
Equities, Inc. ("CEI"), a Delaware corporation. In November 1990, EP's general
partners executed a new partnership agreement (the "New Partnership Agreement")
in conjunction with the bankruptcy settlement discussed below whereby EP
converted from a general partnership to a California limited partnership,
Consolidated Capital Equity Partners, L.P. ("CCEP" or the "Partnership").
Pursuant to the New Partnership Agreement, ConCap Holding, Inc. ("CHI"), a Texas
corporation, a wholly-owned subsidiary of CEI, became the General Partner of
CCEP, and the former General Partners of EP became Limited Partners of CCEP. CHI
has full discretion with respect to conducting CCEP's business, including
managing CCEP's properties and initiating and approving capital expenditures and
asset dispositions and refinancings. All of CEI's outstanding stock was owned by
Insignia Properties Trust ("IPT"). Effective February 26, 1999, IPT was merged
into Apartment Investment and Management Company ("AIMCO"). Hence, CEI is now a
wholly-owned subsidiary of AIMCO, a publicly held real estate investment trust
(See "Note C" - Transfer of Control). The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2011, unless terminated prior to
such date.
Principles of Consolidation: As of December 31, 1998, CCEP owned a 75% interest
in a limited partnership ("Western Can, Ltd.") which owned 444 De Haro, an
office building in San Francisco, California. No minority interest liability was
reflected, as of December 31, 1998, for the 25% minority interest because
Western Can, Ltd. had a net capital deficit, and no minority liability existed
with respect to CCEP. In May 1999, a limited partner in Western Can, Ltd.
withdrew in connection with a settlement with CCEP pursuant to which the partner
was paid $1,350,000 by CCEP. This settlement effectively terminated Western Can
Ltd. as CCEP became the sole limited partner. In September 1999, 444 DeHaro was
sold (see "Note D - Discontinued Segment").
Allocation of Profits, Gains, and Losses: Pursuant to the New Partnership
Agreement, net income and net losses for both financial and tax reporting
purposes are allocated 99% to the Limited Partners and 1% to the General
Partner.
Cash and Cash Equivalents: Includes 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 included approximately $1,180,000 and $4,381,000 at December 31,
2001 and 2000, respectively, that are maintained by an affiliated management
company on behalf of affiliated entities in cash concentration accounts.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes. Actual results
could differ from those estimates.
Tenant 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 rental payments.
Replacement Reserve Account: At the time of the refinancing and financing of all
the investment properties, approximately $767,000 of the proceeds was designated
for a replacement reserve fund for certain capital replacements at The Knolls,
Palm Lake and Tates Creek Village. At December 31, 2001 and 2000, the balance in
the replacement reserve fund was approximately $615,000 and $767,000,
respectively.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the apartment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used 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
additions over 27 1/2 years and (2) personal property additions over 5 years.
Loan Costs: Loan costs totaled approximately $1,501,000 and $1,402,000 at
December 31, 2001 and 2000, respectively. Related accumulated amortization
totaled approximately $214,000 and $40,000, respectively. These balances are
included in other assets and are being amortized on a straight-line basis over
the life of the loans.
Advertising: The Partnership expenses the costs of advertising as incurred.
Advertising costs were approximately $333,000, $385,000 and $408,000 for the
years ended December 31, 2001, 2000 and 1999, respectively, and are included in
operating expense.
Investment Properties: Investment properties consist of nine apartment complexes
at December 31, 2001 and 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. Costs of properties that have been permanently impaired have been
written down to appraised value. No adjustments for impairment of value were
recorded during any of the years ended December 31, 2001, 2000 or 1999. See
"Recent Accounting Pronouncements" below.
Leases: The Partnership leased certain commercial space to tenants under various
lease terms. The leases were accounted for as operating leases in accordance
with SFAS No. 13 "Accounting for Leases". Some of the leases contain stated
rental increases during their term. For leases with fixed rental increases,
rents were recognized on a straight-line basis over the terms of the leases. For
all other leases, minimum rents are recognized over the terms of the leases. The
Partnership's only remaining commercial property was sold in September 1999 (see
Note D).
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.
Income Taxes: No provision has been made in the financial statements for Federal
income taxes because, under current law, no Federal income taxes are paid
directly by CCEP. The Partners are responsible for their respective shares of
CCEP's net income or loss. CCEP reports certain transactions differently for tax
than for financial statement purposes.
The tax basis of CCEP's assets and liabilities is approximately $354,253,000 and
$311,877,000 greater than the assets and liabilities as reported in the
financial statements at December 31, 2001 and 2000, respectively.
Fair Value of Financial Instruments: 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 amounts of its financial instruments (except for long term
debt) approximate their fair values 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.
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 C - 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. 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 D - Discontinued Segment
In September 1999, 444 DeHaro, located in San Francisco, California was sold to
an unaffiliated third party for approximately $23,250,000. In conjunction with
the sale, a fee of approximately $698,000 was paid to the General Partner in
accordance with the Partnership Agreement. After payment of closing expenses and
the fee to the General Partner, the net proceeds received by the Partnership
were approximately $20,550,000. The sale of the property resulted in a gain on
sale of discontinued operations of approximately $16,630,000 after writing off
the undepreciated value of the property and CCEP's investment in Western Can,
Ltd. (see "Note B. Principles of Consolidation). As required by the terms of the
Master Loan Agreement (see "Note E"), the Partnership remitted the net sale
proceeds to CCIP representing principal payments on the Master Loan.
444 DeHaro was the only remaining property in the commercial segment of the
Partnership. Due to the sale of this property, the results of operations of the
property have been classified as "Income from Discontinued Operations" for the
year ended December 31, 1999 and the gain on sale of the property is reported as
"Gain from sale of discontinued operations". Revenues from discontinued
operations were approximately $1,472,000 for the year ended December 31, 1999.
No revenues from 444 DeHaro were recorded for the years ended December 31, 2001
and 2000.
Note E - Master Loan and Accrued Interest Payable
The Master Loan principal and accrued interest payable balances at December 31,
2001 and 2000, are approximately $371,455,000 and $340,493,000, respectively.
Under the terms of the Master Loan, interest accrues at a fluctuating rate per
annum, adjusted annually on July 15 by the percentage change in the U.S.
Department of Commerce Implicit Price Deflator for the Gross National Product,
subject to an interest rate ceiling of 12.5%. Payments are currently payable
quarterly in an amount equal to "Excess Cash Flow", generally defined in the
Master Loan as net cash flow from operations after third-party debt service and
capital expenditures. Any unpaid interest is added to principal, compounded
annually, and was payable at the loan's maturity. Any net proceeds from the sale
or refinancing of any of CCEP's properties are paid to CCIP under the terms of
the Master Loan Agreement. The Master Loan Agreement matured in November 2000.
The General Partner has been in negotiations with CCIP with respect to its
options which included CCIP foreclosing on the properties in CCEP which
collateralize the Master Loan or extending the terms of the note. CCIP has
decided to foreclose on the properties that collateralize the Master Loan. CCIP
will begin the process of foreclosure or executing deeds in lieu of foreclosure
during the first quarter of 2002 on all the properties in the Partnership. As
deeds are executed, title in the properties currently owned by the Partnership
will be transferred to CCIP, subject to the existing items on the properties
including the first mortgage loans. When the Partnership no longer has title to
its properties, it will be dissolved.
During the years ended December 31, 2001, 2000 and 1999, CCEP paid approximately
$7,801,000, $33,634,000 and $20,713,000, respectively, as principal payments on
the Master Loan. There were no advances on the Master Loan during the years
ended December 31, 2001, 2000 or 1999. See Notes D, I and J for details
concerning the sales of 444 DeHaro and Magnolia Trace and the refinancings and
the sale of Shirewood Townhomes, respectively.
Note F - Mortgage Notes Payable
The principal 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
(in thousands) (in thousands)
Indian Creek Village
1st Mortgage $ 8,545 $ 8,735 $ 72 7.83% 01/01/10 $ 6,351
The Knolls
1st Mortgage 9,667 9,883 81 7.78% 03/01/10 7,105
Palm Lake
1st Mortgage 2,924 2,990 25 7.86% 02/01/10 2,158
Plantation Gardens
1st Mortgage 9,473 9,683 80 7.83% 03/01/10 6,972
Regency Oaks
1st Mortgage 7,456 7,623 63 7.80% 02/01/10 5,494
Silverado
1st Mortgage 3,443 3,519 29 7.87% 11/01/10 2,434
Society Park
1st Mortgage 5,194 5,311 44 7.80% 02/01/10 3,828
The Dunes
1st Mortgage 4,015 4,106 34 7.81% 02/01/10 2,960
Tates Creek Village
1st Mortgage 4,117 4,210 35 7.78% 04/01/10 3,017
Total $ 54,834 $ 56,060 $ 463 $40,319
The mortgage notes payable are non-recourse and are secured by pledge of the
respective apartment properties and by pledge of revenues from the respective
apartment properties. The mortgage notes are senior to the Master Loan.
Prepayment penalties are required if repaid prior to maturity. Further, the
properties may not be sold subject to existing indebtedness.
During 2000, the Partnership refinanced each of the existing mortgages and
financed each of the unencumbered investment properties except for Magnolia
Trace which was sold January 19, 2001. See notes I and J for further details
concerning these refinancings and financings and the sale of Magnolia Trace,
respectively.
Principal payments on mortgage notes payable are due as follows (in thousands):
Years Ending December 31,
2002 $ 1,325
2003 1,432
2004 1,548
2005 1,673
2006 1,809
Thereafter 47,047
$54,834
Note G - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The New Partnership Agreement provides for (i) certain payments to affiliates
for services and (ii) reimbursement of certain expenses incurred by affiliates
for services. The following payments were made or accrued to the General Partner
and its affiliates during the years ended December 31, 2001, 2000 and 1999:
2001 2000 1999
(in thousands)
Property management fees (included in
operating expense) $ 964 $ 985 $ 968
Investment advisory fees (included in
general and administrative expense) 214 179 179
Reimbursement for services of affiliates
(included in general and administrative
expenses and investment properties) 1,486 548 373
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all of the Partnership's residential properties for providing property
management services. The Partnership paid to such affiliates approximately
$964,000, $985,000 and $968,000 for the years ended December 31, 2001, 2000 and
1999, respectively.
The Partnership is also required to pay an investment advisory fee to an
affiliate of the General Partner. This agreement provides for an annual fee,
payable in monthly installments, to an affiliate of the General Partner for
advising and consulting services for CCEP's properties. The Partnership paid to
such affiliates approximately $214,000, $179,000 and $179,000 for the years
ended December 31, 2001, 2000 and 1999, respectively.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $1,486,000, $548,000 and
$373,000 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 $990,000,
$112,000 and $33,000 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 year additions to investment properties
and are being depreciated over 15 years.
In connection with the sale of Magnolia Trace in 2001, Shirewood Townhomes in
2000 and 444 DeHaro in 1999 the General Partner was paid a fee of $206,000,
$133,000 and $698,000, respectively, in compensation for its role in the sales.
In connection with the refinancing of each of its mortgages and the financing of
its unencumbered investment properties during 2000, the Partnership paid to the
General Partner fees totaling $560,000 for its role in the transactions. These
fees were capitalized as loan costs and are included in other assets in the
accompanying consolidated balance sheets.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from CCIP. Such interest
payments totaled approximately $3,280,000, $2,000,000 and $2,744,000 for the
years ended December 31, 2001, 2000 and 1999, respectively. There were no
advances during 2001, 2000 or 1999. Principal payments totaling $7,801,000,
$33,634,000 and $20,713,000 were made during the years ended December 31, 2001,
2000 and 1999, respectively.
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 $132,000 for
insurance coverage and fees associated with policy claims administration.
Note H - Real Estate and Accumulated Depreciation
The investment properties owned by the Partnership consist of the following
(dollar amounts in thousands):
Building
December 31, 2001 & Related
Personal Accumulated Depreciable
Description Land Property Total Depreciation Life-Years
Indian Creek Village $ 1,041 $ 9,454 $10,495 $ 8,202 5-18
The Knolls 647 8,700 9,347 6,832 5-18
Palm Lake 272 5,394 5,666 4,512 5-18
Plantation Gardens 1,958 14,949 16,907 13,315 5-18
Regency Oaks 521 12,254 12,775 10,333 5-18
Silverado 628 5,590 6,218 4,700 5-18
Society Park 966 9,691 10,657 8,561 5-18
The Dunes 489 6,090 6,579 4,992 5-18
Tates Creek Village 382 8,277 8,659 6,868 5-18
Total $ 6,904 $80,399 $87,303 $68,315
Building
December 31, 2000 & Related
Personal Accumulated Depreciable
Description Land Property Total Depreciation Life-Years
Indian Creek Village $ 1,041 $ 9,281 $10,322 $ 7,827 5-18
The Knolls 647 8,339 8,986 6,513 5-18
Palm Lake 272 5,152 5,424 4,280 5-18
Plantation Gardens 1,958 14,205 16,163 12,759 5-18
Regency Oaks 521 11,820 12,341 9,763 5-18
Magnolia Trace 892 6,340 7,232 5,578 5-18
Silverado 628 5,460 6,088 4,577 5-18
Society Park 966 9,167 10,133 8,211 5-18
The Dunes 489 5,951 6,440 4,681 5-18
Tates Creek Village 382 7,843 8,225 6,604 5-18
Total $ 7,796 $83,558 $91,354 $70,793
Note I - Refinancings/Financings and Extraordinary Loss
On September 29, 2000, the Partnership refinanced the mortgage encumbering The
Dunes Apartments. The refinancing replaced indebtedness of approximately
$1,945,000 with a new mortgage in the amount of $4,120,000. The new mortgage
carries a stated interest rate of 7.81%. Interest on the old mortgage was 6.95%.
Principal and interest payments are due monthly until the loan matures on
February 1, 2010 at which time a balloon payment of approximately $2,960,000 is
due. Total capitalized loan costs were approximately $111,000 during the year
ended December 31, 2000. Approximately $10,000 of additional loan costs were
capitalized during the year ended December 31, 2001. The Partnership recognized
an extraordinary loss on the early extinguishment of debt of approximately
$134,000 due to the write-off of unamortized loan costs and a prepayment
penalty.
On September 29, 2000, the Partnership refinanced the mortgage encumbering Palm
Lake Apartments. The refinancing replaced indebtedness of approximately
$1,653,000 with a new mortgage in the amount of $3,000,000. The new mortgage
carries a stated interest rate of 7.86%. Interest on the old mortgage was 6.95%.
Principal and interest payments are due monthly until the loan matures on
February 1, 2010 at which time a balloon payment of approximately $2,158,000 is
due. Total capitalized loan costs were approximately $93,000 during the year
ended December 31, 2000. Approximately $7,000 of additional loan costs were
capitalized during the year ended December 31, 2001. The Partnership recognized
an extraordinary loss on the early extinguishment of debt of approximately
$118,000 due to the write-off of unamortized loan costs and a prepayment
penalty.
On September 29, 2000, the Partnership refinanced the mortgage encumbering Tates
Creek Village Apartments. The refinancing replaced indebtedness of approximately
$2,455,000 with a new mortgage in the amount of $4,225,000. The new mortgage
carries a stated interest rate of 7.78%. Interest on the old mortgage was 6.95%.
Principal and interest payments are due monthly until the loan matures on April
1, 2010 at which time a balloon payment of approximately $3,017,000 is due.
Total capitalized loan costs were approximately $101,000 during the year ended
December 31, 2000. Approximately $13,000 of additional loan costs were
capitalized during the year ended December 31, 2001. The Partnership recognized
an extraordinary loss on the early extinguishment of debt of approximately
$155,000 due to the write-off of unamortized loan costs and a prepayment
penalty.
On September 29, 2000, the Partnership financed a mortgage encumbering Society
Park Apartments. The mortgage debt totaled $5,330,000. The mortgage carries a
stated interest rate of 7.80%. Principal and interest payments are due monthly
until the loan matures on February 1, 2010 at which time a balloon payment of
approximately $3,828,000 is due. Total capitalized loan costs were approximately
$154,000 during the year ended December 31, 2000. Approximately $8,000 of
additional loan costs were capitalized during the year ended December 31, 2001.
On September 29, 2000, the Partnership financed a mortgage encumbering Regency
Oaks Apartments. The mortgage debt totaled $7,650,000. The mortgage carries a
stated interest rate of 7.80%. Principal and interest payments are due monthly
until the loan matures on February 1, 2010 at which time a balloon payment of
approximately $5,494,000 is due. Total capitalized loan costs were approximately
$209,000 during the year ended December 31, 2000. Approximately $13,000 of
additional loan costs were capitalized during the year ended December 31, 2001.
On October 3, 2000, the Partnership refinanced the mortgage encumbering
Plantation Gardens Apartments. The refinancing replaced indebtedness of
approximately $6,704,000 with a new mortgage in the amount of $9,700,000. The
new mortgage carries a stated interest rate of 7.83%. Interest on the old
mortgage was 6.95%. Principal and interest payments are due monthly until the
loan matures on March 1, 2010 at which time a balloon payment of approximately
$6,972,000 is due. Total capitalized loan costs were approximately $219,000
during the year ended December 31, 2000. Approximately $13,000 of additional
loan costs were capitalized during the year ended December 31, 2001. The
Partnership recognized an extraordinary loss on the early extinguishment of debt
of approximately $428,000 due to the write-off of unamortized loan costs and a
prepayment penalty.
On October 3, 2000, the Partnership refinanced the mortgage encumbering Indian
Creek Apartments. The refinancing replaced indebtedness of approximately
$4,438,000 with a new mortgage in the amount of $8,750,000. The new mortgage
carries a stated interest rate of 7.83%. Interest on the old mortgage was 6.95%.
Principal and interest payments due monthly until the loan matures on January 1,
2010 at which time a balloon payment of $6,351,000 is due. Total capitalized
loan costs were approximately $190,000 during the year ended December 31, 2000.
Approximately $13,000 of additional loan costs were capitalized during the year
ended December 31, 2001. The Partnership recognized an extraordinary loss on the
early extinguishment of debt of approximately $260,000 due to the write-off of
unamortized loan costs and a prepayment penalty.
On October 3, 2000, the Partnership financed a mortgage encumbering Silverado
Apartments. The new mortgage is in the amount of $3,525,000. The new mortgage
carries a stated interest rate of 7.87%. Principal and interest payments are due
monthly until the loan matures on November 1, 2010 at which time a balloon
payment of approximately $2,434,000 is due. Total capitalized loan costs were
approximately $107,000 during the year ended December 31, 2000. Approximately
$9,000 of additional loan costs were capitalized during the year ended December
31, 2001.
On October 11, 2000, the Partnership refinanced the mortgage encumbering The
Knolls Apartments. The refinancing replaced indebtedness of approximately
$5,116,000 with a new mortgage in the amount of $9,900,000. The new mortgage
carries a stated interest rate of 7.78%. Interest on the old mortgage was 6.95%.
Principal and interest payments are due monthly until the loan matures on March
1, 2010 at which time a balloon payment of approximately $7,105,000 is due.
Total capitalized loan costs were approximately $218,000 during the year ended
December 31, 2000. Approximately $13,000 of additional loan costs were
capitalized during the year ended December 31, 2001. The Partnership recognized
an extraordinary loss on the early extinguishment of debt of approximately
$315,000 due to the write-off of unamortized loan costs and a prepayment
penalty.
Included in the loan costs capitalized associated with the above transactions
was a 1% fee of approximately $560,000 paid to the General Partner in accordance
with the terms of the Partnership Agreement.
Note J - Sale of Property
On January 19, 2001, the Partnership sold Magnolia Trace, located in Baton
Rouge, Louisiana, to an unaffiliated third party for net sales proceeds of
approximately $6,019,000, after payment of closing costs. The Partnership used
all of the proceeds from the sale of the property to pay down the Master Loan
principal as required by the Master Loan Agreement. The sale resulted in a gain
on sale of investment property of approximately $4,377,000. In conjunction with
the sale, a fee of approximately $206,000 was paid to the General Partner in
accordance with the Partnership Agreement.
On July 21, 2000 the Partnership sold Shirewood Townhomes, located in
Shreveport, Louisiana, to an unaffiliated third party for net sales proceeds of
approximately $4,526,000, after payment of closing costs. The Partnership used
all of the proceeds from the sale of the property to pay down the Master Loan
principal as required by the Master Loan Agreement. The sale resulted in a gain
on sale of investment property of approximately $3,121,000. In conjunction with
the sale, a fee of approximately $133,000 was paid to the General Partner in
accordance with the Partnership Agreement.
Note K - Selected Quarterly Financial Data (unaudited)
The following is a summary of the unaudited quarterly results of operations for
the Partnership (in thousands):
Year Ended December 31, 2001
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Revenues $ 4,584 $ 4,673 $ 4,783 $ 4,524 $ 18,564
Gain sale of investment
property 4,377 -- -- -- 4,377
Expenses 15,189 15,105 14,806 14,731 59,831
Net loss $ (6,228) $(10,432) $(10,023) $(10,207) $(36,890)
Year Ended December 31, 2000
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Revenues $ 4,936 $ 5,072 $ 4,803 $ 4,815 $ 19,626
Gain on sale of investment
property -- -- 3,024 97 3,121
Expenses 14,818 14,984 14,583 14,445 58,830
Loss before extraordinary item (9,882) (9,912) (6,756) (9,533) (36,083)
Extraordinary loss on early
extinguishment of debt -- -- (407) (1,003) (1,410)
Net loss $ (9,882) $ (9,912) $ (7,163) $(10,536) $(37,493)
EXHIBIT 10.23
THIRD AMENDMENT
TO THE LIMITED PARTNERSHIP AGREEMENT
OF CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
THIS THIRD AMENDMENT TO THE LIMITED PARTNERSHIP AGREEMENT OF
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES (this "Amendment") is entered into
as of the 17th day of October, 2000, by and among ConCap Equities, Inc., a
Delaware corporation (the "General Partner"), and each of the Limited Partners.
All capitalized terms used herein but not otherwise defined shall have the
meanings ascribed thereto in the "Partnership Agreement" (as defined below).
WHEREAS, Consolidated Capital Institutional Properties, a California
limited partnership (the "Partnership"), exists pursuant to that certain Limited
Partnership Agreement of Consolidated Capital Institutional Properties, dated as
of April 28, 1981, as amended by that certain First Amendment to the
Consolidated Capital Institutional Properties Limited Partnership Agreement,
dated as of July 11, 1985, and as further amended by that certain Second
Amendment to the Limited Partnership Agreement of Consolidated Capital
Institutional Properties, dated as of October 23, 1990 (as so amended, the
"Partnership Agreement"); and
WHEREAS, the General Partner has obtained consents of the requisite
percentage-in-interest of the Limited Partners (i.e., Limited Partners holding
greater than fifty percent (50%) of the Units) necessary to amend the
Partnership Agreement as provided in this Amendment.
NOW, THEREFORE, in consideration of the premises, the agreement of
the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged and confessed, the
parties hereby agree as follows:
1. Reserves. Section 4.09 is amended to read as follows:
"The Partnership shall maintain reasonable reserves for normal
working capital and contingencies in an amount equal to at least
five percent (5%) of invested Capital determined from time to time
by the General Partner in its sole discretion."
2. Miscellaneous.
a. Effect of Amendment. In the event of any inconsistency between the terms of
the Partnership Agreement and the terms of this Amendment, the terms of
this Amendment shall prevail. In the event any conflict or apparent
conflict between any of the provisions of the Partnership Agreement as
amended by this Amendment, such conflicting provisions shall be reconciled
and construed to give effect to the terms and intent of this Amendment.
b. Ratification. Except as otherwise expressly modified hereby, the
Partnership Agreement shall remain in full force and effect, and all of the
terms and provisions of the Partnership Agreement, as herein modified, are
hereby ratified and reaffirmed. Except as amended hereby, the Partnership
Agreement shall continue, unmodified, and in full force and effect.
c. Counterparts. This Amendment may be executed in as many counterparts as may
be deemed necessary and convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.
d. Governing Law. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of California, without
regard to its principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first set forth above.
THE GENERAL PARTNER:
CONCAP EQUITIES, INC.,
a Delaware corporation
By:
Patrick J. Foye
Executive Vice President
THE LIMITED PARTNERS:
AIMCO PROPERTIES, L.P.
a Delaware limited partnership
By: AIMCO-GP, INC.
(General Partner)
By:
Patrick J. Foye
Executive Vice President
COOPER RIVER PROPERTIES, L.L.C.
a Delaware limited liability company
By:
Patrick J. Foye
Executive Vice President
AIMCO IPLP, L.P.
a Delaware limited partnership
By: AIMCO/IPT, INC.
(General Partner)
By:
Patrick J. Foye
Executive Vice President
REEDY RIVER PROPERTIES, L.L.C.
a Delaware limited liability company
By:
Patrick J. Foye
Executive Vice President
By:
Patrick J. Foye
Executive Vice President of ConCap
Equities, Inc., agent and
attorney-in-fact for each of the
remaining Limited Partners of the
Partnership
EXHIBIT 10.24
FOURTH AMENDMENT
TO THE LIMITED PARTNERSHIP AGREEMENT
OF CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
THIS FOURTH AMENDMENT TO THE LIMITED PARTNERSHIP AGREEMENT OF
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES (this "Amendment") is entered into
as of the 25th day of May, 2001, by and among ConCap Equities, Inc., a Delaware
corporation (the "General Partner"), and each of the Limited Partners. All
capitalized terms used herein but not otherwise defined shall have the meanings
ascribed thereto in the "Partnership Agreement" (as defined below).
WHEREAS, Consolidated Capital Institutional Properties, a California
limited partnership (the "Partnership"), exists pursuant to that certain Limited
Partnership Agreement of Consolidated Capital Institutional Properties, dated as
of April 28, 1981, as amended by that certain First Amendment to the
Consolidated Capital Institutional Properties Limited Partnership Agreement,
dated as of July 11, 1985, as further amended by that certain Second Amendment
to the Limited Partnership Agreement of Consolidated Capital Institutional
Properties, dated as of October 23, 1990, and as further amended by that certain
Third Amendment to the Limited Partnership Agreement of Consolidated Capital
Institutional Properties, dated as of October 17, 2000 (as so amended, the
"Partnership Agreement"); and
WHEREAS, the General Partner has obtained consents of the requisite
percentage-in-interest of the Limited Partners (i.e., Limited Partners holding
greater than fifty percent (50%) of the Units) necessary to amend the
Partnership Agreement as provided in this Amendment.
NOW, THEREFORE, in consideration of the premises, the agreement of
the parties herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged and confessed, the
parties hereby agree as follows:
1. Surplus Funds. The definition of "Surplus Funds" contained in
Section 1.04(u) of the Partnership Agreement is hereby deleted, in its entirety,
and the following new definition is inserted in lieu thereof:
"(u) 'Surplus Funds' shall mean the Partnership's share of the
net cash funds or proceeds resulting from the Partnership's receipt
of (a) principal and additional interest from the Participating Note
issued by the Fee Owner or (b) any funds from the sale, lease,
financing or refinancing of any of the Partnership's properties, and
in each case, (i) after deduction of all expenses incurred in
connection therewith and (ii) less such amounts for working capital
reserves as the General Partner deems reasonably necessary for
future Partnership operations."
2. Purpose of Partnership and Investment Objectives. The first
paragraph of Section 1.05 of the Partnership Agreement is amended to read as
follows:
"Purpose of Partnership and Investment Objectives. The principal
purpose of the Partnership is to lend funds in return for the
Participating Note with participations secured by deeds of trust on
real properties (including apartment buildings, shopping centers,
industrial projects, office buildings and other similar properties)
as shall from time to time be acquired by the Fee Owner and which
offer the potential for (i) preserving and protecting the Limited
Partners' original Invested Capital; (ii) providing quarterly
distributions from interest received from the Fee Owner or other
sources; and (iii) providing special payments to the extent of
additional interest received from such Participating Note; and to
engage in any and all general business activities related to and
incidental to those purposes, including, without limitation, the
acquisition, ownership, improvement, management, operation, leasing,
financing, refinancing, sale or exchange of any real or personal
property obtained (x) in connection with the exercise of any remedy
available to it under the Participating Note or the Master Loan
Agreement or (y) in a transaction (a "1031 Transaction") that is
intended to a like-kind exchange under Section 1031 of the Internal
Revenue Code of 1986, as amended, or any successor statute, at law
or in equity (including, without limitation, those properties
commonly known as The Loft Apartments in Raleigh, North Carolina and
The Sterling Home and Commerce Center in Philadelphia,
Pennsylvania); provided, however, that the Partnership shall not own
or lease property jointly or in partnership with others but it may
transfer any such property to a single-purpose wholly-owned
subsidiary."
3. Powers and Duties of the General Partner.
(a) The fourth sentence of the first paragraph of Section 2.01 of
the Partnership Agreement is amended to read as follows:
"The General Partner shall have the right, power and authority
granted to General Partner hereunder or by law, or both, to obligate
and bind the Partnership and, on behalf and in the name of the
Partnership, to take such action as the General Partner deems
necessary or advisable, including, without limitation, making,
executing and delivering loan and other agreements, leases,
assignments and transfers and agreements to purchase, sell,
exchange, lease or otherwise deal with real or personal property,
escrow instructions, advances under the Participating Note, pledges,
deeds of trust, mortgages and other security agreements, promissory
notes, checks, drafts and other negotiable instruments, and all
other documents and agreements which the General Partner deems
reasonable or necessary in connection with the loaning and
investment of the Partnership's net proceeds resulting from the
Capital Contributions received and the management thereof,
including, without limitation, the acquisition, ownership,
improvement, management, operation, lease, financing, refinancing,
exchange or sale of any real or personal property (including the
transfer of such property to a single-purpose wholly-owned
subsidiary of the Partnership) obtained (i) in connection with the
exercise of any remedy available to it under the Participating Note
or the Master Loan Agreement or (ii) in a 1031 Transaction, at law
or in equity (including, without limitation, those properties
commonly known as The Loft Apartments in Raleigh, North Carolina and
The Sterling Home and Commerce Center in Philadelphia,
Pennsylvania)."
(b) The penultimate sentence of the second paragraph of Section 2.01
of the Partnership Agreement is amended to read as follows:
"The Partnership shall not be permitted to purchase real
property, directly or indirectly, but it may acquire real property
upon exercising any remedy under the Participating Note and the
Master Note Loan Agreement or a 1031 Transaction."
4. Miscellaneous.
e. Effect of Amendment. In the event of any inconsistency between the terms
of the Partnership Agreement and the terms of this Amendment, the terms of
this Amendment shall prevail. In the event any conflict or apparent
conflict between any of the provisions of the Partnership Agreement as
amended by this Amendment, such conflicting provisions shall be reconciled
and construed to give effect to the terms and intent of this Amendment.
f. Ratification. Except as otherwise expressly modified hereby, the
Partnership Agreement shall remain in full force and effect, and all of the
terms and provisions of the Partnership Agreement, as herein modified, are
hereby ratified and reaffirmed. Except as amended hereby, the Partnership
Agreement shall continue, unmodified, and in full force and effect.
g. Counterparts. This Amendment may be executed in as many counterparts as may
be deemed necessary and convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.
h. Governing Law. This Amendment shall be governed by and construed and
enforced in accordance with the laws of the State of California, without
regard to its principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first set forth above.
THE GENERAL PARTNER:
CONCAP EQUITIES, INC.,
a Delaware corporation
By:
Patrick J. Foye
Executive Vice President
THE LIMITED PARTNERS:
AIMCO PROPERTIES, L.P.
a Delaware limited partnership
By: AIMCO-GP, INC.
(General Partner)
By:
Patrick J. Foye
Executive Vice President
COOPER RIVER PROPERTIES, L.L.C.
a Delaware limited liability company
By:
Patrick J. Foye
Executive Vice President
AIMCO IPLP, L.P.
a Delaware limited partnership
By: AIMCO/IPT, INC.
(General Partner)
By:
Patrick J. Foye
Executive Vice President
REEDY RIVER PROPERTIES, L.L.C.
a Delaware limited liability company
By:
Patrick J. Foye
Executive Vice President
By:
Patrick J. Foye
Executive Vice President of ConCap
Equities, Inc., agent and
attorney-in-fact for each of the
remaining Limited Partners of the
Partnership