UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact name of registrant as specified in its charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
September 30, December 31,
2002 2001
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 1,489 $ 2,729
Receivables and deposits 1,289 1,186
Restricted escrows 536 644
Other assets 1,621 1,628
Investment properties:
Land 10,907 10,907
Buildings and related personal property 125,937 124,301
136,844 135,208
Less accumulated depreciation (110,025) (107,215)
26,819 27,993
$ 31,754 $ 34,180
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 193 $ 204
Tenant security deposit liabilities 530 497
Accrued property taxes 1,465 1,189
Other liabilities 1,424 947
Distribution payable 571 568
Mortgage notes payable 72,850 73,475
77,033 76,880
Partners' Deficit
General partners (7,195) (7,064)
Limited partners (342,773 units issued and
outstanding) (38,084) (35,636)
(45,279) (42,700)
$ 31,754 $ 34,180
Note: The balance sheet at December 31, 2001, has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2002 2001 2002 2001
(Restated) (Restated)
Revenues:
Rental income $ 5,951 $ 6,750 $18,895 $19,894
Other income 761 533 2,061 1,593
Casualty gain 23 83 120 228
Total revenues 6,735 7,366 21,076 21,715
Expenses:
Operating 2,679 2,980 7,929 8,569
General and administrative 377 396 1,393 1,502
Depreciation 865 995 2,877 3,055
Interest 1,399 1,408 4,222 4,203
Property taxes 535 482 1,614 1,373
Total expenses 5,855 6,261 18,035 18,702
Net income $ 880 $ 1,105 $ 3,041 $ 3,013
Net income allocated to general partners (4%) $ 36 $ 44 $ 122 $ 121
Net income allocated to limited partners (96%) 844 1,061 2,919 2,892
$ 880 $ 1,105 $ 3,041 $ 3,013
Net income per limited partnership unit $ 2.47 $ 3.09 $ 8.52 $ 8.44
Distributions per limited partnership unit $ 2.97 $ 2.30 $ 15.66 $ 18.57
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partners Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2000 342,773 $ (6,798) $(30,855) $(37,653)
Distributions to partners -- (327) (6,364) (6,691)
Net income for the nine months
ended September 30, 2001 -- 121 2,892 3,013
Partners' deficit at
September 30, 2001 342,773 $ (7,004) $(34,327) $(41,331)
Partners' deficit at
December 31, 2001 342,773 $ (7,064) $(35,636) $(42,700)
Distributions to partners -- (253) (5,367) (5,620)
Net income for the nine months
ended September 30, 2002 -- 122 2,919 3,041
Partners' deficit at
September 30, 2002 342,773 $ (7,195) $(38,084) $(45,279)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2002 2001
Cash flows from operating activities:
Net income $ 3,041 $ 3,013
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 2,877 3,055
Amortization of loan costs 156 173
Casualty gain (120) (228)
Loss on early extinguishment of debt -- 40
Change in accounts:
Receivables and deposits (103) 560
Other assets (149) (122)
Accounts payable (11) (586)
Tenant security deposit liabilities 33 28
Accrued property taxes 276 77
Other liabilities 477 (322)
Net cash provided by operating activities 6,477 5,688
Cash flows from investing activities:
Property improvements and replacements (1,751) (3,421)
Net withdrawals from restricted escrows 108 401
Insurance proceeds from casualties 168 290
Net cash used in investing activities (1,475) (2,730)
Cash flows from financing activities:
Payments on mortgage notes payable (625) (402)
Repayment of mortgage notes payable -- (4,700)
Proceeds of mortgage notes payable -- 6,500
Loan costs paid -- (221)
Distributions to partners (5,617) (6,587)
Net cash used in financing activities (6,242) (5,410)
Net decrease in cash and cash equivalents (1,240) (2,452)
Cash and cash equivalents at beginning of period 2,729 6,377
Cash and cash equivalents at end of period $ 1,489 $ 3,925
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
Cash paid for interest was approximately $4,044,000 and $4,020,000 for the nine
months ended September 30, 2002 and 2001, respectively.
Distribution payable and distributions to partners were each adjusted by
approximately $3,000 and $104,000 for non-cash activity for the nine months
ended September 30, 2002 and 2001, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of ConCap Equities, Inc. ("CEI" or the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine months ended September 30, 2002, are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31,
2002. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Partnership's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001. The General Partner is a subsidiary
of Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust.
Effective April 1, 2002, the Partnership adopted SFAS No. 145, "Rescission of
FASB Statements No. 4, 44 and 64". SFAS No. 4 "Reporting Gains and Losses from
Extinguishment of Debt," required that all gains and losses from extinguishment
of debt be aggregated and, if material, classified as an extraordinary item.
SFAS No. 145 rescinds SFAS No. 4, and accordingly, gains and losses from
extinguishment of debt should only be classified as extraordinary if they are
unusual in nature and occur infrequently. Neither of these criteria applies to
the Partnership. As a result, the accompanying consolidated statements of
operations have been restated as of September 30, 2001 to reflect the loss on
early extinguishment of debt of approximately $40,000 at Lake Forest Apartments
in interest expense.
Note B - Transactions with Affiliated Partners
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) reimbursements of certain expenses incurred by affiliates on
behalf of the Partnership.
During the nine months ended September 30, 2002 and 2001, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,074,000 and
$1,107,000 for the nine months ended September 30, 2002 and 2001, respectively,
which is included in operating expenses.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $776,000 and $1,869,000 for
the nine months ended September 30, 2002 and 2001, respectively, which is
included in general and administrative expenses and investment properties.
Included in these amounts are fees related to construction management services
provided by an affiliate of the General Partner of approximately $38,000 and
$1,130,000 for the nine months ended September 30, 2002 and 2001, respectively.
The construction management service fees are calculated based on a percentage of
current year additions to investment properties.
The Partnership Agreement provides for a special management fee equal to 9% of
the total distributions made to the limited partners from cash flow provided by
operations to be paid to the General Partner for executive and administrative
management services. The Partnership paid approximately $477,000 and $347,000
under this provision of the Partnership Agreement to the General Partner during
the nine months ended September 30, 2002 and 2001, respectively, which is
included in general and administrative expenses.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $65,000 for loan costs related to
the refinancing of Lake Forest Apartments during the nine months ended September
30, 2001. There were no loan costs paid to an affiliate of the General Partner
for the nine months ended September 30, 2002. These costs were capitalized and
are included in other assets on the consolidated balance sheet.
For acting as real estate broker in connection with the sale of Stratford Place
Apartments, the General Partner was paid a real estate commission of
approximately $228,000 during the nine months ended September 30, 2001. When the
Partnership terminates, the General Partner will have to return this commission
if the limited partners do not receive their original invested capital plus a 6%
per annum cumulative return.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the nine months ended September
30, 2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately $296,000 and $313,000, respectively, for insurance coverage and
fees associated with policy claims administration.
Note C - Casualty Gains
In March 2000, South Port Apartments had wind and hail damage, which damaged the
majority of the 240 rental units. The repairs included roof replacements to the
majority of units. Insurance proceeds of approximately $168,000 and $182,000
were received during the nine months ended September 30, 2002 and 2001,
respectively. The Partnership recognized casualty gains of approximately
$120,000 and $128,000 during the nine months ended September 30, 2002 and 2001,
which represents the excess of the proceeds received as of September 30, 2002
and 2001 over the write-off of the undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $75,000 were received during the
nine months ended September 30, 2001. The Partnership recognized a casualty gain
of approximately $75,000 for the nine months ended September 30, 2001. The
damaged assets were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the nine
months ended September 30, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the nine months ended September 30, 2001 which
represents the excess of the proceeds received as of September 30, 2001 over the
write-off of the undepreciated damaged assets.
Note D - Refinancing and Loss on Early Extinguishment of Debt
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of $4,700,000
with a new mortgage of $6,500,000. The mortgage was refinanced at a rate of
7.13% compared to the prior rate of 7.33% and matures on October 1, 2021.
Capitalized loan costs incurred for the refinancing were approximately $221,000.
The Partnership wrote off unamortized loan costs which resulted in a loss on
early extinguishment of debt of approximately $40,000, which is included in
interest expense. The Partnership was required to establish a repair escrow of
approximately $36,000 at the date of the refinancing. The Partnership is also
required to establish a replacement reserve escrow by making monthly deposits
until the mortgage is paid in full.
Note E - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants oppose the motion. On April 29, 2002,
the Court held a hearing on plaintiffs' motion for class certification and took
the matter under submission after further briefing, as order by the court, was
submitted by the parties. On July 10, 2002, the Court entered an order vacating
the current trial date of January 13, 2003 (as well as the pre-trial and
discovery cut-off dates) and stayed the case in its entirety through November 7,
2002 so that the parties can have an opportunity to discuss settlement. On
October 30, 2002, the court entered an order extending the stay in effect
through January 10, 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. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint. The parties are currently in the midst of briefing that appeal.
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 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. The matters discussed
in this report contain certain forward-looking statements, including, without
limitation, statements regarding future financial performance and the effect of
government regulations. The discussions of the Registrant's business and results
of operations, including forward-looking statements pertaining to such matters,
do not take into account the effects of any changes to the Registrant's business
and results of operations. Actual results may differ materially from those
described in the forward-looking statements and will be affected by a variety of
risks and factors including, without limitation: national and local economic
conditions; the terms of governmental regulations that affect the Registrant and
interpretations of those regulations; the competitive environment in which the
Registrant operates; financing risks, including the risk that cash flows from
operations may be insufficient to meet required payments of principal and
interest; real estate risks, including variations of real estate values and the
general economic climate in local markets and competition for tenants in such
markets; and possible environmental liabilities. Readers should carefully review
the Registrant's financial statements and the notes thereto, as well as the risk
factors described in the documents the Registrant files from time to time with
the Securities and Exchange Commission.
The Partnership's investment properties consist of fifteen apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 2002 and 2001:
Average Occupancy
Property 2002 2001
The Apartments 91% 91%
Omaha, NE
Arbours of Hermitage Apartments 93% 93%
Nashville, TN
Briar Bay Racquet Club Apartments 95% 96%
Miami, FL
Chimney Hill Apartments 81% 94%
Marietta, GA
Citadel Apartments 93% 91%
El Paso, TX
Citadel Village Apartments 88% 95%
Colorado Springs, CO
Foothill Place Apartments 89% 96%
Salt Lake City, UT
Knollwood Apartments 94% 92%
Nashville, TN
Lake Forest Apartments 94% 90%
Omaha, NE
Nob Hill Villa Apartments 91% 91%
Nashville, TN
Point West Apartments 93% 96%
Charleston, SC
Post Ridge Apartments 91% 91%
Nashville, TN
Rivers Edge Apartments 94% 97%
Auburn, WA
South Port Apartments 94% 95%
Tulsa, OK
Village East Apartments 83% 94%
Cimarron Hills, CO
The decrease in occupancy at Chimney Hill Apartments, Village East Apartments,
Citadel Village Apartments, Foothill Place Apartments, Point West Apartments,
and River's Edge Apartments is due to increased competition and changing
economic conditions in their respective local markets. The increase in occupancy
at the Lake Forest Apartments is attributable to a more aggressive marketing
campaign.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
2002, was approximately $880,000 and $3,041,000 as compared to net income of
approximately $1,105,000 and $3,013,000 for the three and nine months ended
September 30, 2001. The increase in net income for the nine months ended
September 30, 2002 is due to a decrease in total expenses partially offset by a
decrease in total revenues. The decrease in net income for the three months
ended September 30, 2002 is due to a decrease in total revenues partially offset
by a decrease in total expenses.
Total expenses for the three and nine months ended September 30, 2002 decreased
due to a decrease in operating, general and administrative and depreciation
expenses partially offset by an increase in property tax. Interest expense
increased for the nine months ended September 30, 2002, and remained comparable
for the three months ended September 30, 2002. Operating expenses decreased due
to a decrease in property and maintenance expenses. Property expense decreased
due to decreased utility bills primarily due to the milder winter nation-wide
experienced this year as compared to last year and employee salaries at many of
the Partnership's properties. General and administrative expense decreased
primarily due to a decrease in state operating taxes and professional expenses
partially offset by an increase in the 9% management fee on distributions from
operating cash flows. Also included in general and administrative expenses for
the three and nine months ended September 30, 2002 and 2001 are cost of services
included in management reimbursements to the General Partner as allowed under
the Partnership Agreement and costs associated with the quarterly and annual
communications with investors and regulatory agencies and the annual audit
required by the Partnership Agreement. Depreciation expense decreased due to
some assets at several of the properties becoming fully depreciated during the
three and nine months ended September 30, 2002. The increase in property tax
expense is due to an increase in the assessed values of some of the
Partnership's properties. The increase in interest expense for the nine months
ended September 30, 2002 is due to the refinancing of the mortgages encumbering
Lake Forest Apartments and Post Ridge Apartments during the latter half of 2001
which increased their debt balance partially offset by the loss in early
extinguishment of debt of approximately $40,000 related to Lake Forest
Apartments. Interest expense for the three month period ended September 30, 2002
and 2001, respectively, was comparable.
The decrease in total revenues for the three and nine months ended September 30,
2002, is attributable to a decrease in rental income and casualty gains
partially offset by an increase in other income. The decrease in rental income
is due to decreased average occupancy at eight of the Partnership's fifteen
properties, a decrease in average rental rates at eleven properties and an
increase in bad debt expense at twelve properties, partially offset by an
increase in average rental rate at four properties and reduced concessions and
promotions at eleven properties.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $75,000 were received during the
nine months ended September 30, 2001. The Partnership recognized a casualty gain
of approximately $75,000 for the three and nine months ended September 30, 2001.
The damaged assets were fully depreciated at the time of the fire.
In March 2000, South Port Apartments had wind and hail damage, which damaged the
majority of the 240 rental units. The repairs included roof replacements to the
majority of units. Insurance proceeds of approximately $168,000 and $182,000
were received during the nine months ended September 30, 2002 and 2001,
respectively. The Partnership recognized casualty gains of approximately $23,000
and $120,000 for the three and nine months ended September 30, 2002 as compared
to approximately $128,000 for the nine months ended September 30, 2001,
respectively, which represents the excess of the proceeds received as of
September 30, 2002 and 2001 over the write-off of the undepreciated damaged
assets.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the nine
months ended September 30, 2001. The Partnership recognized a casualty gain of
approximately $8,000 and $25,000 for the three and nine months ended September
30, 2001 which represents the excess of the proceeds received as of September
30, 2001 over the write-off of the undepreciated damaged assets.
The increase in other income is primarily attributable to an increase in utility
reimbursements at eight of the Partnership's fifteen investment properties and
lease cancellation fees at Nob Hill Villa Apartments and Foothills Place
Apartments partially offset by a decrease in interest income as a result of
lower average cash balances maintained in interest bearing accounts.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
Liquidity and Capital Resources
At September 30,2002 the Partnership held cash and cash equivalents of
approximately $1,489,000 as compared to approximately $3,925,000 at September
30, 2001. The decrease in cash and cash equivalents of approximately $1,240,000
from the Partnership's year ended December 31, 2001 is due to approximately
$6,242,000 of cash used in financing activities and approximately $1,475,000 of
cash used in investing activities partially offset by approximately $6,477,000
of cash provided by operating activities. Cash used in financing activities
consisted primarily of the distributions to the partners and principal payments
on the mortgages encumbering the Partnership's properties. Cash used in
investing activities consisted primarily of property improvements and
replacements partially offset by insurance proceeds received from the South Port
Apartments casualty (see discussion in "Results of Operations") and net
withdrawals from restricted escrows. The Partnership 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 properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance and is studying new
federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act
of 2002 mandates or suggests additional compliance measures with regard to
governance, disclosure, audit and other areas. In light of these changes, the
Partnership expects that it will incur higher expenses related to compliance,
including increased legal and audit fees. Capital improvements planned for each
of the Partnership's properties are detailed below.
The Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $51,000 of capital improvements at the property, consisting
primarily of parking area improvements and floor covering and appliance
replacements. These improvements were funded from operating cash flow. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $74,000 for 2002 at this property, which consist primarily of
floor covering replacements, structural improvements, and parking area
improvements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property.
Arbours of Hermitage Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $162,000 of capital improvements at the property, consisting
primarily of parking area improvements, office computers, plumbing improvements,
air conditioning upgrades, floor covering replacements and structural
enhancements. These improvements were funded from operating cash flow. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $205,000 for 2002 at this property, which consist primarily of
floor covering replacements, water and sewer upgrades, roof replacement and
structural upgrades. Additional capital improvements may be considered and will
depend on the physical condition of the property as well as the anticipated cash
flow generated by the property.
Briar Bay Racquet Club Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $40,000 of capital improvements at the property, consisting
primarily of floor covering and appliance replacements and roof replacements.
These improvements were funded from operating cash flow and Partnership
reserves. The Partnership has budgeted, but is not limited to, capital
improvements of approximately $67,000 for 2002 at this property, which consist
primarily of floor covering replacements, swimming pool upgrades and appliance
replacements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property and replacement reserves.
Chimney Hill Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $170,000 of budgeted and unbudgeted capital improvements at the
property, consisting primarily of appliance and floor covering replacements,
roof replacement, air conditioning upgrades, structural upgrades, water heater
replacements, and clubhouse renovations. These improvements were funded from
Partnership reserves and operating cash flow. The Partnership has budgeted, but
is not limited to, capital improvements of approximately $136,000 for 2002 at
this property, which consist primarily of floor covering replacements, parking
lot resurfacing and structural upgrades. Additional capital improvements may be
considered and will depend on the physical condition of the property as well as
the anticipated cash flow generated by the property and replacement reserves.
Citadel Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $81,000 of capital improvements at the property, consisting
primarily of floor covering replacements, swimming pool improvements, water
heater replacements, air conditioning upgrades and appliance replacements. These
improvements were funded from operating cash flow. The Partnership has budgeted,
but is not limited to, capital improvements of approximately $111,000 for 2002
at this property, which consist primarily of floor covering replacements,
swimming pool improvements, air conditioning upgrades and appliance
replacements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property.
Citadel Village Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $58,000 of budgeted and unbudgeted capital improvements at the
property, consisting primarily of floor covering replacements, major landscaping
and plumbing fixture replacements. These improvements were funded from operating
cash flow. The Partnership has budgeted, but is not limited to, capital
improvements of approximately $55,000 for 2002 at this property, which consist
primarily of floor covering and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Foothill Place Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $170,000 of capital improvements at the property, consisting
primarily of plumbing fixture replacements, parking area improvements, air
conditioning upgrades, roof replacements, major landscaping and appliance and
floor covering replacements. These improvements were funded from operating cash
flow. The Partnership has budgeted, but is not limited to, capital improvements
of approximately $188,000 for 2002 at this property which consist primarily of
floor covering replacements, plumbing fixture replacements, water heater
replacements, interior decoration and air conditioning upgrades. Additional
capital improvements may be considered and will depend on the physical condition
of the property as well as the anticipated cash flow generated by the property.
Knollwood Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $186,000 of capital improvements at the property, consisting
primarily of structural improvements, water heater replacements, office
computers, appliance and floor covering replacements, air conditioning, and roof
replacements. These improvements were funded from operating cash flow. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $214,000 for 2002 at this property, which consist primarily of
water and sewer upgrades, water heater replacements, structural improvements,
floor covering replacements and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Lake Forest Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $107,000 of capital improvements at the property, consisting
primarily of floor covering replacements, parking lot resurfacing, and water
heater replacements. These improvements were funded from operating cash flow.
The Partnership has budgeted, but is not limited to, capital improvements of
approximately $120,000 for 2002 at this property which consist primarily of
appliance and floor covering replacements, parking lot resurfacing and swimming
pool upgrades. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property and replacement reserves.
Nob Hill Villa Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $209,000 of capital improvements at the property, consisting
primarily of water submetering, swimming pool improvements, office computers,
plumbing upgrades, appliance and floor covering replacements and water heater
replacements. These improvements were funded from operating cash flow and
Partnership reserves. The Partnership has budgeted, but is not limited to,
capital improvements of approximately $250,000 for 2002 at this property, which
consist primarily of water submetering, major landscaping, appliance and floor
covering replacements and water heater replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property and
replacement reserves.
Point West Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $47,000 of capital improvements at the property, consisting
primarily of floor covering replacements, air conditioning and appliance
replacements. These improvements were funded from operating cash flow. The
Partnership has budgeted, but is not limited to, capital improvements of
approximately $49,000 for 2002 at this property, which consist primarily of
floor covering, air conditioning and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Post Ridge Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $124,000 of capital improvements at the property, consisting
primarily of water submetering, structural upgrades, air conditioning
replacements, roof replacements and appliance and floor covering replacements.
These improvements were funded from Partnership reserves and operating cash
flow. The Partnership has budgeted, but is not limited to, capital improvements
of approximately $128,000 for 2002 at this property, which consist primarily of
water submetering, floor covering replacements, structural upgrades and roof
replacements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property.
Rivers Edge Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $66,000 of budgeted and unbudgeted capital improvements at the
property, consisting primarily of floor covering replacements, major landscaping
and appliance replacements. These improvements were funded from operating cash
flow. The Partnership has budgeted, but is not limited to, capital improvements
of approximately $55,000 for 2002 at this property, which consist primarily of
floor covering replacements and appliance replacements. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
South Port Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $84,000 of capital improvements at the property, consisting
primarily of floor covering and appliance replacements and office computers.
These improvements were funded from operating cash flow and Partnership
reserves. The Partnership has budgeted, but is not limited to, capital
improvements of approximately $94,000 for 2002 at this property, which consist
primarily of floor covering replacements, structural upgrades, air conditioning
and appliance replacements. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as the
anticipated cash flow generated by the property and replacement reserves.
Village East Apartments
During the nine months ended September 30, 2002, the Partnership completed
approximately $196,000 of budgeted and unbudgeted capital improvements at the
property, consisting primarily of plumbing fixture replacements, swimming pool
improvements, water heater replacements, land improvements, major landscaping,
and floor covering replacements. These improvements were funded from operating
cash flow. The Partnership has budgeted, but is not limited to, capital
improvements of approximately $158,000 for 2002 at this property which consist
primarily of plumbing fixture upgrades and appliance and floor covering
replacements. Additional capital improvements may be considered and will depend
on the physical condition of the property as well as the anticipated cash flow
generated by the property.
The additional capital expenditures will be incurred only if cash is available
from operations or from Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Partnership's distributable cash flow,
if any, may be adversely affected at least in the short term.
The Partnership's assets are currently thought to be sufficient for any
near-term needs (exclusive of capital improvements) of the Partnership. The
mortgage indebtedness of approximately $72,850,000 matures at various dates
between 2004 and 2022. 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 Partnership
will risk losing such properties through foreclosure.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2011. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership.
The Partnership distributed the following amounts during the nine months ended
September 30, 2002 and 2001 (in thousands except per unit data):
Nine Months Per Nine months Per
Ended Limited Ended Limited
September 30, Partnership September 30, Partnership
2002 Unit 2001 Unit
Operations $5,515 $15.45 $4,020 $11.26
Refinance (1) 76 .21 -- --
Sale (2) -- -- 2,610 7.31
$5,591 $15.66 $6,630 $18.57
(1) From refinance proceeds of Post Ridge Apartments. (2) From sale proceeds of
Stratford Place Apartments.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $29,000 and
$61,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships during the nine months ended September 30, 2002 and 2001,
respectively.
The Partnership'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. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations,
after planned capital improvement expenditures, to permit further distributions
to its partners during the remainder of 2002 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 193,390.50 limited partnership units
in the Partnership representing 56.42% of the outstanding units at September 30,
2002. 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
acquire additional units of limited partnership interest in the Partnership in
exchange for cash or a combination of cash and units in the operating
partnership of AIMCO either through private purchases or tender offers. Under
the Partnership Agreement, unitholders holding a majority of the Units are
entitled to take action with respect to a variety of matters, which would
include voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 56.42% of the
outstanding units, AIMCO is in a position to control all such voting decisions
with respect to the Partnership. Although the General Partner owes fiduciary
duties to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO,
as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include changes in the
national, regional and local economic climate; local conditions, such as an
oversupply of multifamily properties; competition from other available
multifamily property owners and changes in market rental rates. Any adverse
changes in these factors could cause an impairment in the Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area.
Concessions are charged to income as incurred.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at September 30, 2002, a
100 basis point increase or decrease in market interest rates would not have a
material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at September
30, 2002. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximated the recorded value as of September
30, 2002.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2002 $ 220 7.81%
2003 923 7.81%
2004 5,112 7.81%
2005 43,138 7.42%
2006 875 7.68%
Thereafter 22,582 7.68%
Total $72,850
ITEM 4. CONTROLS AND PROCEDURES
The principal executive officer and principal financial officer of the General
Partner, who are the equivalent of the Partnership's principal executive officer
and principal financial officer, respectively, have, within 90 days of the
filing date of this quarterly report, evaluated the effectiveness of the
Partnership's disclosure controls and procedures (as defined in Exchange Act
Rules (13a-14(c) and (15d-14(c)) and have determined that such disclosure
controls and procedures are adequate. There have been no significant changes in
the Partnership's internal controls or in other factors that could significantly
affect the Partnership's internal controls since the date of evaluation. The
Partnership does not believe any significant deficiencies or material weaknesses
exist in the Partnership's internal controls. Accordingly, no corrective actions
have been taken.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (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. On April 29, 2002,
the Court held a hearing on plaintiffs' motion for class certification and took
the matter under submission after further briefing, as order by the court, was
submitted by the parties. On July 10, 2002, the Court entered an order vacating
the current trial date of January 13, 2003 (as well as the pre-trial and
discovery cut-off dates) and stayed the case in its entirety through November 7,
2002 so that the parties can have an opportunity to discuss settlement. On
October 30, 2002, the court entered an order extending the stay in effect
through January 10, 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. On
March 27, 2002, the plaintiffs filed a notice appealing the order striking the
complaint. The parties are currently in the midst of briefing that appeal.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
3.1 Certificate of Limited Partnership, (incorporated by
reference to the Registration statement of the
Partnership (file No. 2-74353), filed October 9, 1981,
as amended to date).
3.2 Limited Partnership Agreement (Exhibit to the Prospectus
of the Partnership, filed October 12, 1981).
99 Certification of Chief Executive Officer and
Chief Financial Officer.
b) Reports on Form 8-K:
None filed during the quarter ended September 30, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President and
Chief Accounting Officer
Date: November 13, 2002
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
_______________________
Patrick J. Foye
Executive Vice President of ConCap Equities,
Inc., equivalent of the chief executive
officer of the Partnership
CERTIFICATION
I, Paul J. McAuliffe, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report is
being prepared;
b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 13, 2002
_______________________
Paul J. McAuliffe
Executive Vice President and Chief Financial
Officer of ConCap Equities, Inc., equivalent of
the chief financial officer of the Partnership
Exhibit 99
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Consolidated Capital
Properties IV (the "Partnership"), for the quarterly period ended September 30,
2002 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), Patrick J. Foye, as the equivalent of the chief executive
officer of the Partnership, and Paul J. McAuliffe, as the equivalent of the
chief financial officer of the Partnership, each hereby certifies, pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to the best of his knowledge:
(1) The Report fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act
of 1934; and
(2) The information contained in the Report fairly
presents, in all material respects, the financial
condition and results of operations of the Partnership.
/s/Patrick J. Foye
Name: Patrick J. Foye
Date: November 13, 2002
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: November 13, 2002
This certification accompanies the Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the
Sarbanes-Oxley Act of 2002, be deemed filed by the Partnership for purposes of
Section 18 of the Securities Exchange Act of 1934, as amended.