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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2002
or
[ ] TRANSITION REPORT PURSUANT 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
(Name of small business issuer in its charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes ______ No __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, 2002. 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
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.
PART I
Item 1. Description of Business
Consolidated Capital Properties IV (the "Partnership" or "Registrant") was
organized on September 22, 1981 as a limited partnership under the California
Uniform Limited Partnership Act. On December 18, 1981, the Partnership commenced
a public offering for the sale of 200,000 units (the "Units") with the general
partner's right to increase the offering to 400,000 units. The Units represent
equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each,
or gross proceeds of $171,553,000 to the Partnership. Since its initial
offering, the Partnership has not received, nor are limited partners required to
make, additional capital contributions.
By the end of fiscal year 1985, approximately 73% of the proceeds raised had
been invested in 48 properties. Of the remaining 27%, 11% was required for
organizational and offering expenses, sales commissions and acquisition fees,
and 16% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust. The directors and officers of the General
Partner also serve as executive officers of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2011 unless
terminated prior to that date.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership is engaged in the business of operating and
holding real estate properties for investment. As of the close of fiscal year
1985, the Partnership had completed its property acquisition stage and had
acquired 48 properties. At December 31, 2002, the Partnership owned 15
income-producing properties (or interests therein), which range in age from 26
to 31 years old, principally located in the midwest, southeastern and
southwestern United States. Prior to 2002, the Partnership had disposed of 33
properties originally owned by the Partnership. See "Item 2. Description of
Properties" for further information about the Partnership's remaining
properties.
Risk Factors
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Registrant's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for the apartments is local.
Laws benefiting disabled persons may result in the Partnership's incurrence of
unanticipated expenses. Under the Americans with Disabilities Act of 1990, or
ADA, all places intended to be used by the public are required to meet certain
Federal requirements related to access and use by disabled persons. Likewise,
the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties
first occupied after March 13, 1990 to be accessible to the handicapped. These
and other Federal, state and local laws may require modifications to the
Partnership's properties, or restrict renovations of the properties.
Noncompliance with these laws could result in the imposition of fines or an
award of damages to private litigants and also could result in an order to
correct any non-complying feature, which could result in substantial capital
expenditures. Although the General Partner believes that the Partnership's
properties are substantially in compliance with present requirements, the
Partnership may incur unanticipated expenses to comply with the ADA and the
FHAA.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
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.
Insurance coverage is becoming more expensive and difficult to obtain. The
current insurance market is characterized by rising premium rates, increasing
deductibles, and more restrictive coverage language. Recent developments have
resulted in significant increases in insurance premiums and have made it more
difficult to obtain certain types of insurance. As an example, many insurance
carriers are excluding mold-related risks from their policy coverages, or are
adding significant restrictions to such coverage. Continued deterioration in
insurance market place conditions may have a negative effect on the
Partnership's operating results.
The Registrant has no employees. Property management and administrative services
are provided by the General Partner and by agents of the General Partner. The
General Partner has also selected an affiliate to provide real estate advisory
and asset management services to the Partnership. As advisor, such affiliate
provides all Partnership accounting and administrative services, investment
management, and supervisory services over property management and leasing.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in "Item 7" of this Form 10-K.
Transfers of Control
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired a controlling
interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. In 1990, as part of its reorganization
plan, CEI acquired CCEC's general partner interests in the Partnership and in 15
other affiliated public limited partnerships (the "Affiliated Partnerships") and
CEI replaced CCEC as managing general partner in all 16 partnerships. The
selection of CEI as the sole managing general partner was approved by a majority
of the Limited Partners in the Partnership and in each of the affiliated
partnerships pursuant to a solicitation of the Limited Partners dated August 10,
1990. As part of this solicitation, the Limited Partners also approved an
amendment to the Partnership Agreement to limit changes of control of the
Partnership, and the conversion of CCMC from a general partner to a special
limited partner, thereby leaving CEI as the sole general partner of the
Partnership. On November 14, 1990, CCMC was dissolved and its special limited
partnership interest was divided among its former partners. All of CEI's
outstanding stock was owned by Insignia Properties Trust ("IPT") (See below).
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Item 2. Description of Properties
The Partnership originally acquired 48 properties of which thirteen (13) were
sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10)
were foreclosed upon by the lenders. As of December 31, 2002, the Partnership
owned fifteen (15) apartment complexes. Additional information about the
properties is found in "Item 8. Financial Statements and Supplementary Data".
Date of
Property Purchase Type of Ownership Use
The Apartments (1) 04/84 Fee ownership, subject to Apartment
Omaha, Nebraska a first mortgage 204 units
Arbours of Hermitage Apts. (1) 09/83 Fee ownership subject to Apartment
Nashville, Tennessee a first mortgage 350 units
Briar Bay Racquet Club Apts. (2) 09/82 Fee ownership subject to Apartment
Miami, Florida a first mortgage 194 units
Chimney Hill Apts. (2) 08/82 Fee ownership subject to Apartment
Marietta, Georgia a first mortgage 326 units
Citadel Apts. (1) 05/83 Fee ownership subject Apartment
El Paso, Texas to a first mortgage 261 units
Citadel Village Apts. (1) 12/82 Fee ownership subject Apartment
Colorado Springs, Colorado to a first mortgage 122 units
Foothill Place Apts. (2) 08/85 Fee ownership subject Apartment
Salt Lake City, Utah to a first mortgage 450 units
Knollwood Apts. (1) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 326 units
Lake Forest Apts. 04/84 Fee ownership subject Apartment
Omaha, Nebraska to a first mortgage 312 units
Nob Hill Villa Apts. (1) 04/83 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 472 units
Point West Apts. (1) 11/85 Fee ownership subject Apartment
Charleston, South Carolina a first mortgage 120 units
Post Ridge Apts. (2) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 150 units
Rivers Edge Apts. (2) 04/83 Fee ownership subject Apartment
Auburn, Washington to a first mortgage 120 units
South Port Apts. (3)(4) 11/83 Fee ownership subject Apartment
Tulsa, Oklahoma to a first mortgage 240 units
Village East Apts. (1) 12/82 Fee ownership subject Apartment
Cimarron Hills, Colorado to a first mortgage 137 units
(1) Property is held by a limited partnership and/or limited liability
corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Partnership owns a
99% interest.
(3) Property is held by a limited partnership in which the Partnership owns a
50% interest.
(4) Property sold subsequent to December 31, 2002.
Schedule of Properties
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Depreciable Method of Federal
Property Value Depreciation Life Depreciation Tax Basis
(in thousands) (in thousands)
The Apartments $ 9,372 $ 8,118 5-30 yrs S/L $ 1,585
Arbours of Hermitage
Apartments 15,088 11,998 5-30 yrs S/L 3,480
Briar Bay Racquet Club
Apartments 8,223 6,728 5-30 yrs S/L 2,086
Chimney Hill Apartments 12,297 10,342 5-30 yrs S/L 2,569
Citadel Apartments 8,172 6,949 5-30 yrs S/L 1,048
Citadel Village
Apartments 4,670 3,797 5-30 yrs S/L 1,414
Foothill Place
Apartments 16,805 11,725 5-30 yrs S/L 6,465
Knollwood Apartments 12,689 10,511 5-30 yrs S/L 2,658
Lake Forest Apartments 10,104 8,266 5-30 yrs S/L 1,917
Nob Hill Villa
Apartments 14,331 12,168 5-30 yrs S/L 2,137
Point West Apartments 3,375 2,697 5-30 yrs S/L 895
Post Ridge Apartments 5,605 4,406 5-30 yrs S/L 1,416
Rivers Edge Apartments 3,684 2,840 5-30 yrs S/L 1,020
South Port Apartments 8,957 7,034 5-30 yrs S/L 1,686
Village East Apartments 4,285 3,338 5-30 yrs S/L 1,083
Total $137,657 $110,917 $ 31,459
See "Note A - Organization and Significant Accounting Policies" to the
consolidated financial statements included in "Item 8. Financial Statements and
Supplementary Data" for a description of the Partnership's capitalization and
depreciation policies.
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
Principal Principal Principal
Balance At Balance At Stated Balance
December 31,December 31, Interest Period Maturity Due At
Property 2002 2001 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
The Apartments $ 4,489 $ 4,601 8.37% 20 yrs 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 6.95% (1) 12/05 5,650
Briar Bay Racquet Club
Apartments 3,500 3,500 6.95% (1) 12/05 3,500
Chimney Hill Apartments 5,400 5,400 6.95% (1) 12/05 5,400
Citadel Apartments 4,424 4,536 8.25% 20 yrs 03/20 --
Citadel Village 2,450 2,450 6.95% (1) 12/05 2,450
Apartments
Foothill Place 10,100 10,100 6.95% (1) 12/05 10,100
Apartments
Knollwood Apartments 6,780 6,780 6.95% (1) 12/05 6,780
Lake Forest Apartments 6,321 6,475 7.13% 20 yrs 10/21 --
Nob Hill Villa 6,640 6,789 9.20% 25 yrs 04/05 6,250
Apartments
Point West Apartments 2,288 2,350 7.86% 20 yrs 12/19 --
Post Ridge Apartments 4,398 4,500 6.63% 20 yrs 01/22 --
Rivers Edge Apartments 3,796 3,891 7.82% 20 yrs 09/20 --
South Port Apartments 4,244 4,303 7.19% 30 yrs 12/04 4,119
Village East Apartments 2,150 2,150 6.95% (1) 12/05 2,150
Totals $72,630 $73,475 $46,399
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Note C - Mortgage Notes Payable" to the consolidated financial
statements included in "Item 8. Financial Statements and Supplementary
Data" for information with respect to the Registrant's ability to prepay
these loans and other specific details about the loans.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the refinancing of the
mortgages encumbering The Apartments and Citadel Apartments in February 2000,
the refinancing of the mortgage encumbering River's Edge Apartments in August
2000, the refinancing of the mortgage encumbering Lake Forest Apartments in
September 2001, and the refinancing of the mortgage encumbering Post Ridge
Apartments in December 2001.
Rental Rates and Occupancy
The following table sets forth the average annual rental rates and occupancy for
2002 and 2001 for each property.
Average Annual Average
Rental Rates Occupancy
(per unit)
Property 2002 2001 2002 2001
The Apartments $ 7,159 $ 7,344 91% 91%
Arbours of Hermitage Apartments 7,496 7,926 94% 92%
Briar Bay Racquet Club Apartments 9,856 9,781 94% 96%
Chimney Hill Apartments 8,501 8,934 73% 94%
Citadel Apartments 6,616 6,908 94% 93%
Citadel Village Apartments 9,237 9,549 87% 95%
Foothill Place Apartments 8,303 8,257 88% 96%
Knollwood Apartments 8,049 8,434 94% 93%
Lake Forest Apartments 7,245 7,409 94% 92%
Nob Hill Villa Apartments 5,946 6,408 91% 92%
Point West Apartments 6,844 6,897 93% 96%
Post Ridge Apartments 9,339 9,924 92% 91%
Rivers Edge Apartments 8,402 8,232 92% 96%
South Port Apartments 6,466 6,851 94% 95%
Village East Apartments 7,866 8,331 81% 93%
The decrease in occupancy at Village East Apartments, River's Edge Apartments,
Point West Apartments, Foothill Place Apartments, and Citadel Village Apartments
is due to more tenants purchasing houses due to lower mortgage interest rates
and changing economic conditions in their respective local markets. The
Partnership attributes the decrease in occupancy at Chimney Hill Apartments
primarily to general economic conditions, local market conditions and the
location of the property. In addition, the presence of mold in a significant
number of the units and general deferred maintenance issues has resulted in all
apartment units not being available for rent at December 31, 2002. The General
Partner is currently evaluating its options with respect to Chimney Hill
Apartments, including rehabilitation or complete rebuild of the property.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
all of the properties are adequately insured. Each property is an apartment
complex which leases units for lease terms of one year or less. No residential
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, with the exception of Chimney Hill Apartments,
as described above, subject to normal depreciation and deterioration as is
typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 2002 and 2001 for each property were:
2002 2002 2001 2001
Billing Rate Billing Rate
(in thousands) (in thousands)
The Apartments $153 2.1% $147 2.0%
Arbours of Hermitage Apartments 192 3.8% 192 3.8%
Briar Bay Racquet Club Apartments 159 2.1% 167 2.2%
Chimney Hill Apartments 172 3.0% 139 3.0%
Citadel Apartments 208 3.0% 205 3.0%
Citadel Village Apartments 22 5.7% 21 5.5%
Foothill Place Apartments 169 1.5% 169 1.4%
Knollwood Apartments 206 3.8% 206 3.8%
Lake Forest Apartments 200 2.1% 193 2.0%
Nob Hill Villa Apartments 238 4.6% 238 4.6%
Point West Apartments 61 28.0% 62 28.0%
Post Ridge Apartments 104 3.8% 108 3.8%
Rivers Edge Apartments 51 1.4% 53 1.4%
South Port Apartments 69 1.4% 66 1.4%
Village East Apartments 24 5.9% 24 5.7%
Capital Improvements
The Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$70,000 of capital improvements at the property, consisting primarily of
structural upgrades, parking area improvements, office computers and appliance
and floor covering replacements. These improvements were funded from operating
cash flow. The Partnership is currently evaluating the capital improvement needs
of the property for the upcoming year and currently expects to budget
approximately $56,000. Additional improvements may be considered during 2003 and
will depend on the physical condition of the property as well as Partnership
reserves and anticipated cash flow generated by the property.
Arbours of Hermitage Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$208,000 of capital improvements at the property, consisting primarily of
structural enhancements, office computers, plumbing improvements, air
conditioning upgrades, roof replacements and floor covering replacements. These
improvements were funded from operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $105,000. Additional improvements
may be considered during 2003 and will depend on the physical condition of the
property as well as Partnership reserves and anticipated cash flow generated by
the property.
Briar Bay Racquet Club Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$57,000 of capital improvements at the property consisting primarily of roof
replacements, water heater replacements, installation of a sprinkler system, and
appliance and floor covering replacements. These improvements were funded from
operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $58,000. Additional improvements
may be considered during 2003 and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Chimney Hill Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$410,000 of capital improvements at the property consisting primarily of parking
lot resurfacing, appliance and floor covering replacements, roof replacements,
air conditioning upgrades, structural upgrades, water heater replacements and
clubhouse renovations. These expenditures included capitalized construction
period interest of approximately $107,000, taxes and insurance of approximately
$31,000 and other construction period expenses of approximately $65,000. These
improvements were funded from operating cash flow and Partnership reserves. The
Partnership is currently evaluating its options for the property for 2003,
including rehabilitation or complete rebuild of the property.
Citadel Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$116,000 of capital improvements at the property consisting primarily of
electrical upgrades, roof replacements, water heater replacements, plumbing
improvements, air conditioning replacements, floor covering and appliance
replacements and swimming pool improvements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $78,000. Additional improvements may be considered during
2003 and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property.
Citadel Village Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$90,000 of capital improvements at the property, consisting primarily of major
landscaping, plumbing improvements, water heater replacements, air conditioning
replacements and appliance and floor covering replacements and structural
upgrades. These improvements were funded from operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$37,000. Additional improvements may be considered during 2003 and will depend
on the physical condition of the property as well as Partnership reserves and
anticipated cash flow generated by the property.
Foothill Place Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$286,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements, plumbing fixture replacements, parking area
improvements, air conditioning upgrades, roof replacements, major landscaping,
office computers and water heater replacements. These improvements were funded
from operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $135,000. Additional improvements may be considered during
2003 and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property.
Knollwood Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$223,000 of capital improvements at the property, consisting primarily of
structural improvements, water heater replacements, roof replacements, office
computers, plumbing fixture replacements, air conditioning replacements and
floor covering and appliance replacements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $98,000. Additional improvements may be considered during
2003 and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property.
Lake Forest Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$126,000 of capital improvements at the property, consisting primarily of water
heater replacements, office computers, parking lot resurfacing and floor
covering and appliance replacements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $94,000. Additional improvements may be considered during
2003 and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Nob Hill Villa Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$277,000 of capital improvements at the property consisting primarily of
structural improvements, water heater replacements, office computers, plumbing
fixture replacements, perimeter fencing, air conditioning replacements and floor
covering and appliance replacements. These improvements were funded from
replacement reserves and operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $142,000. Additional improvements
may be considered during 2003 and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Point West Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$62,000 of capital improvements at the property consisting primarily of water
heater replacements, air conditioning replacements and floor covering and
appliance replacements. These improvements were funded from operating cash flow.
The Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$36,000. Additional improvements may be considered during 2003 and will depend
on the physical condition of the property as well as Partnership reserves and
anticipated cash flow generated by the property.
Post Ridge Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$139,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements, structural improvements, water submetering
enhancements, water heater replacements, office computers and air conditioning
replacements. These improvements were funded from operating cash flow and
Partnership reserves. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $45,000. Additional improvements may be considered during
2003 and will depend on the physical condition of the property as well as
Partnership reserves and anticipated cash flow generated by the property.
Rivers Edge Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$86,000 of capital improvements at the property, consisting primarily of major
landscaping and floor covering and appliance replacements. These improvements
were funded from operating cash flow. The Partnership is currently evaluating
the capital improvement needs of the property for the upcoming year and
currently expects to budget approximately $36,000. Additional improvements may
be considered during 2003 and will depend on the physical condition of the
property as well as Partnership reserves and anticipated cash flow generated by
the property.
South Port Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$105,000 of capital improvements at the property, consisting primarily of water
heater replacements, land improvements, floor covering and appliance
replacements and plumbing fixture replacements. These improvements were funded
from operating cash flow, insurance proceeds and replacement reserves. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$72,000. Additional improvements may be considered during 2003 and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property. In March 2000, South Port
Apartments had hail and wind damage, which affected all 240 units and damaged
100% of the roof, which was replaced. Insurance proceeds of approximately
$168,000 and $182,000 were received during the years ended December 31, 2002 and
2001, respectively. The Partnership recognized a casualty gain of approximately
$120,000 and $128,000 for the years ended December 31, 2002 and 2001,
respectively, which represents the excess of the proceeds received as of
December 31, 2002 and 2001, respectively, over the write-off of the
undepreciated damaged assets.
Village East Apartments
During the year ended December 31, 2002, the Partnership completed approximately
$310,000 of capital improvements at the property, consisting primarily of
plumbing fixture replacements, swimming pool improvements, land improvements,
water heater replacements, major landscaping, exterior building painting and
floor covering and appliance replacements. These improvements were funded from
Partnership reserves and operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $41,000. Additional improvements
may be considered during 2003 and will depend on the physical condition of the
property as well as Partnership reserves and anticipated cash flow generated by
the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purports to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) which are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs seek monetary damages and equitable relief, including judicial
dissolution of the Partnership. On June 25, 1998, the General Partner filed a
motion seeking dismissal of the action. In lieu of responding to the motion, the
plaintiffs filed an amended complaint. The General Partner filed demurrers to
the amended complaint which were heard February 1999.
Pending the ruling on such demurrers, settlement negotiations commenced. On
November 2, 1999, the parties executed and filed a Stipulation of Settlement,
settling claims, subject to court approval, on behalf of the Partnership and all
limited partners who owned units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Court, at which time
the Court set a final approval hearing for December 10, 1999. Prior to the
December 10, 1999 hearing, the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of prior lead counsel to enter the settlement. On
December 14, 1999, the General Partner and its affiliates terminated the
proposed settlement. In February 2000, counsel for some of the named plaintiffs
filed a motion to disqualify plaintiff's lead and liaison counsel who negotiated
the settlement. On June 27, 2000, the Court entered an order disqualifying them
from the case and an appeal was taken from the order on October 5, 2000. On
December 4, 2000, the Court appointed the law firm of Lieff Cabraser Heimann &
Bernstein LLP as new lead counsel for plaintiffs and the putative class.
Plaintiffs filed a third amended complaint on January 19, 2001. On March 2,
2001, the General Partner and its affiliates filed a demurrer to the third
amended complaint. On May 14, 2001, the Court heard the demurrer to the third
amended complaint. On July 10, 2001, the Court issued an order sustaining
defendants' demurrer on certain grounds. On July 20, 2001, Plaintiffs filed a
motion for reconsideration of the Court's July 10, 2001 order granting in part
and denying in part defendants' demurrer. On September 7, 2001, Plaintiffs filed
a fourth amended class and derivative action complaint. On September 12, 2001,
the Court denied Plaintiffs' motion for reconsideration. On October 5, 2001, the
General Partner and affiliated defendants filed a demurrer to the fourth amended
complaint, which was heard on December 11, 2001. On February 2, 2002, the Court
served its order granting in part the demurrer. The Court has dismissed without
leave to amend certain of the plaintiffs' claims. On February 11, 2002,
plaintiffs filed a motion seeking to certify a putative class comprised of all
non-affiliated persons who own or have owned units in the partnerships. The
General Partner and affiliated defendants 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 ordered 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 could have an opportunity to discuss settlement. On
October 30, 2002, the court entered an order extending the stay in effect
through January 10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. The Court
has scheduled the hearing on preliminary approval for April 4, 2003 and the
hearing on final approval for June 2, 2003.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $ 1 million toward the cost
of independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make a tender
offer to purchase all of the partnership interests in the Partnerships within
one year of final approval, if it is granted, and to provide partners with the
independent appraisals at the time of these tenders. The proposed settlement
also provides for the limitation of the allowable costs which the General
Partner or its affiliates will charge the Partnerships in connection with this
litigation and imposes limits on the class counsel fees and costs in this
litigation. If the Court grants preliminary approval of the proposed settlement
in April, a notice will be distributed to partners providing detail on the terms
of the proposed settlement.
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. Before completing briefing on the appeal, the parties stayed further
proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 2002.
PART II
Item 5. Market for the Registrant's Units of Limited Partnership and Related
Security Holder Matters
(A) No established trading market for the Partnership's Units exists, nor is
one expected to develop.
(B) Title of Class Number of Unitholders of Record
Limited Partnership Units 7,548 as of December 31, 2002
There were 342,773 Units outstanding at December 31, 2002, of which affiliates
of the General Partner owned 193,528.50 Units or approximately 56.46%.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 2000, 2001 and 2002 (see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
more details):
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/00 - 12/31/00 $11,239 (1) $31.32
01/01/01 - 12/31/01 9,205 (2) 25.59
01/01/02 - 12/31/02 5,620 (3) 15.66
(1) Consists of approximately $6,250,000 of cash from operations and
approximately $4,989,000 of surplus cash. The surplus funds were from the
refinancing of The Apartments, Citadel Apartments, Stratford Place
Apartments, and River's Edge Apartments and sales proceeds from Overlook
Apartments sold in December 1999. Approximately $197,000 of this
distribution from surplus cash was accrued at December 31, 2002.
(2) Consists of approximately $5,047,000 of cash from operations and
approximately $4,158,000 of surplus cash. Surplus funds were from the
refinancing of Lake Forest Apartments and sales proceeds from Stratford
Place Apartments sold in December of 2000. Approximately $166,000 of this
distribution from surplus cash was accrued at December 31, 2002.
(3) Consists of approximately $5,544,000 of cash from operations and
approximately $76,000 of surplus funds. The surplus funds were from the
refinancing proceeds of Post Ridge Apartments which occurred in December
2001. Approximately $3,000 of this distribution from surplus cash was
accrued at December 31, 2002.
During the year ended December 31, 2000, approximately $4,113,000 of surplus
funds from the financing of Point West Apartments in 1999 and previously
undistributed refinance proceeds from 1996 and 1997 were distributed. At
December 31, 2002, approximately $205,000, of the total distributions were
accrued.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturities, refinancings and/or property sales. The Partnership's cash available
for distribution is reviewed on a monthly basis. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit distributions to its partners in
the year 2003 or subsequent periods. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" for information
relating to anticipated capital expenditures at the properties.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units
in the Partnership representing 56.46% of the outstanding units at December 31,
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 56.46% 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.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the
Partnership. Certain 1998, 1999, 2000 and 2001 amounts have been restated to
conform to the 2002 presentation in accordance with accounting principles
generally accepted in the United States. This summary should be read in
conjunction with the Partnership's consolidated financial statements and notes
thereto appearing in "Item 8. Financial Statements and Supplementary Data."
Years Ended December 31,
(in thousands, except per unit data)
Consolidated Statements
of Operations 2002 2001 2000 1999 1998
(Restated) (Restated) (Restated) (Restated)
Total revenues $27,587 $ 29,063 $ 28,419 $ 29,557 $ 29,989
Total expenses (23,323) (24,989) (23,406) (24,059) (26,045)
Income before
discontinued operations 4,264 4,074 5,013 5,498 3,944
Gain from sale of discontinued
operations -- -- 3,440 638 --
Income (loss) from
discontinued
operations -- 84 21 (18) (20)
Net income $ 4,264 $ 4,158 $ 8,474 $ 6,118 $ 3,924
Per Limited Partnership Unit:
Income before
discontinued operations $ 11.94 $ 11.41 $ 14.04 $ 15.40 $ 11.05
Gain from sale of discontinued
operations -- -- 9.63 1.78 --
Income (loss) from
discontinued
operations -- .24 .06 (0.05) (0.06)
Net income $ 11.94 $ 11.65 $ 23.73 $ 17.13 $ 10.99
Distributions per Limited
Partnership Unit $ 15.66 $ 25.59 $ 31.32 $ 49.29 $ 11.07
Limited Partnership Units
outstanding 342,773 342,773 342,773 342,773 342,773
Consolidated Balance Sheets
Total assets $ 32,287 $ 34,180 $ 38,870 $ 44,464 $ 50,671
Mortgage notes payable $ 72,630 $ 73,475 $ 71,791 $ 70,997 $ 70,775
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
INTRODUCTION
The operations of the Partnership primarily include operating and holding
income-producing real estate properties for the benefit of its partners.
Therefore, the following discussion of operations, liquidity and capital
resources will focus on these activities and should be read in conjunction with
"Item 8. Financial Statements and Supplementary Data" and the notes related
thereto included elsewhere in this report.
Results of Operations
The Partnership's net income was approximately $4,264,000 for the year ended
December 31, 2002, as compared to approximately $4,158,000 for the year ended
December 31, 2001 and net income of approximately $8,474,000 for the year ended
December 31, 2000.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
public business enterprises report information about long-lived assets that are
either being held for sale or have already been disposed of by sale or other
means. The standard requires that results of operations for a long-lived asset
that is being held for sale or has already been disposed of be reported as a
discontinued operation on the statement of operations. As a result, the
accompanying consolidated statements of operations have been restated as of
December 31, 2001 and 2000, respectively, to reflect the operations of Stratford
Place Apartments and Overlook Apartments as income from discontinued operations
due to their sales ranging from December 1999 to December 2000. The gain on sale
of discontinued operations recognized during the year ended December 31, 2000,
was approximately $3,440,000. The income from discontinued operations recognized
during the years ended December 31, 2001 and 2000 was approximately $84,000 and
$21,000, respectively.
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 December 31, 2001 and 2000, respectively, to
reflect the loss on early extinguishment of debt of approximately $142,000 at
Post Ridge Apartments and approximately $40,000 at Lake Forest Apartments in
interest expense in 2001, approximately $26,000 at Citadel Apartments and
approximately $33,000 at the Apartments in interest expense in 2000 and
approximately $148,000 at Stratford Place Apartments in gain from sale of
discontinued operations rather than as an extraordinary item in 2000.
Excluding the impact of discontinued operations, the Partnership's income was
approximately $4,264,000 for the year ended December 31, 2002, as compared to
approximately $4,074,000 for the year ended December 31, 2001 and income of
approximately $5,013,000 for the year ended December 31, 2000.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each of its investment properties to
assess the feasibility of increasing rents, maintaining or increasing occupancy
levels and protecting the Partnership from increases in expenses. As part of
this plan, the General Partner attempts to protect the Partnership from the
burden of inflation-related increases in expenses by increasing rents and
maintaining a high overall occupancy level. However, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
2002 Compared to 2001
Excluding the impact of discontinued operations, income increased due to a
decrease in total expenses partially offset by a decrease in total revenues. The
decrease in total revenues is due to a decrease in rental income and casualty
gain partially offset by an increase in other income. The decrease in rental
income is due to decreased average rental rates at twelve of the Partnership's
fifteen properties, a decrease in occupancy levels at nine of the investment
properties and an increase in bad debt expense at thirteen of the investment
properties partially offset by a decrease in concessions and special promotions
at thirteen investment properties. The decrease in casualty gain was the result
of fires and wind and hail damage at three of the properties recognized in 2001
partially offset by a casualty gain at one property recognized in 2002 as
discussed below. The increase in other income is primarily attributable to an
increase in utility reimbursements and lease cancellation fees partially offset
by a decrease in miscellaneous income and interest income as a result of lower
average cash balances being maintained in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $168,000 and $182,000 were received during the years
ended December 31, 2002 and 2001, respectively. The Partnership recognized a
casualty gain of approximately $120,000 and $128,000 for the years ended
December 31, 2002 and 2001, which represents the excess of the proceeds received
as of December 31, 2002 and 2001, respectively, over the write-off of
undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
Total expenses decreased due to a decrease in operating, general and
administrative, depreciation and interest expenses partially offset by an
increase in property tax expense. Operating expense decreased due to a decrease
in property and maintenance expenses and property management fees partially
offset by an increase in advertising expense and insurance expense. Property
expense decreased due to a decrease in employee salaries, gas utility bills and
commissions and bonuses partially offset by an increase in utility processing
fees and leasing payroll. Maintenance expense decreased during 2002 due to an
increase in the capitalization of certain direct and indirect project costs,
primarily payroll related costs (see "Item 8. Financial Statements - Note A").
Property management fees are based on a percentage of revenues and decreased as
a result of decreases in rental income at many of the investment properties.
Advertising expense increased due to an increase in resident relations at
Chimney Hill Apartments and web advertising partially offset by a decrease in
newspaper advertising. Insurance expense increased due to an increase in hazard
insurance premiums at many of the Partnership's investment properties. General
and administrative expenses decreased due to a decrease in professional fees and
management reimbursements to the General Partner as allowed under the
Partnership Agreement partially offset by an increase in the 9% management fee
on distributions from operating cash flows. Depreciation decreased due to some
fixed assets becoming fully depreciated at The Apartments and Lake Forest
Apartments during 2002 partially offset by an increase in capital improvements
completed and placed into service during the past twelve months. Interest
expense decreased due to losses on early extinguishment of debt of approximately
$142,000 from Post Ridge Apartments and approximately $42,000 from Lake Forest
Apartments recognized in 2001 and the capitalization of approximately $107,000
of interest expense at Chimney Hill Apartments related to the renovation project
during 2002. The increase in property tax expense is due to an increase in the
assessed value of several of the Partnership's properties and a decrease in
refunds from overpayment of prior year taxes.
2001 Compared to 2000
Excluding the impact of discontinued operations, income decreased due to an
increase in total expenses partially offset by an increase in total revenues.
Total revenues increased due to an increase in rental income, casualty gain and
other income. The increase in rental income is due to increased average rental
rates at fourteen of the Partnership's fifteen properties partially offset by a
decrease in occupancy levels at eleven of the investment properties. The
increase in casualty gain was the result of fires and wind and hail damage at
three of the properties as discussed below. The increase in other income is
primarily attributable to an increase in utility reimbursements partially offset
by a decrease in interest income as a result of lower average cash balances
being maintained in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $182,000 were received during the year ended December
31, 2001. The Partnership recognized a casualty gain of approximately $128,000
for the year ended December 31, 2001, which represents the excess of the
proceeds received as of December 31, 2001 over the write-off of undepreciated
damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
Total expenses increased due to increases in operating, general and
administrative, depreciation, property taxes and interest expenses. Operating
expense increased due to increases in property, insurance, and maintenance
expenses. Property expense increased due to an increase in employee salaries and
related benefits and an increase in utility expense relating to vacant
apartments. Insurance expense increased due to an increase in insurance premiums
at fourteen of the Partnership's investment properties. Maintenance expense
increased due to contract labor and materials and supplies used by the
investment properties. General and administrative expenses increased primarily
due to a new tax imposed by the State of Tennessee on the Partnership's
properties in that state during the year ended December 31, 2001 and in an
increase in the cost of services included in management reimbursements to the
General Partner as allowed under the Partnership Agreement partially offset by a
decrease in the 9% management fee on distributions from operating cash flows.
Depreciation expense on the remaining properties increased due to capital
improvements completed and placed into service during the past twelve months.
The increase in property tax expense is due to an increase in the assessed value
of five of the Partnership's properties. The increase in interest expense is
attributable to an increase in debt balances is a result of refinancings that
occurred in late 2000 and 2001 at Rivers Edge and Lake Forest Apartments and
losses on early extinguishment of debt related to Lake Forest Apartments and
Post Ridge Apartments in 2001.
On December 28, 2000, ConCap Stratford Associates, Ltd. sold Stratford Place
Apartments to an unaffiliated third party for $7,600,000. After payment of
closing costs of approximately $587,000, the net proceeds received by the
Partnership were approximately $2,508,000. The purchaser assumed the mortgage
encumbering the property of approximately $4,505,000. The gain on the sale
recognized during the fourth quarter of 2000 was approximately $3,440,000 and is
included in gain from sale of discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
2002 Compared to 2001
At December 31, 2002, the Partnership held cash and cash equivalents of
approximately $2,127,000 as compared to approximately $2,729,000 at December 31,
2001. The decrease in cash and cash equivalents of approximately $602,000 since
the Partnership's year ended December 31, 2001 is due to approximately
$2,409,000 of cash used in investing activities and approximately $6,462,000 of
cash used in financing activities partially offset by approximately $8,269,000
of cash provided by operating activities. Cash used in financing activities
consisted primarily of distributions to partners and payments of principal on
the mortgages encumbering the Partnership's properties. Cash used in investing
activities consisted primarily of property improvements and replacements and
deposits to restricted escrow accounts partially offset by net insurance
proceeds received from the casualty at South Port Apartments. The Partnership
invests its working capital reserves in interest bearing accounts.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $168,000 and $182,000 were received during the years
ended December 31, 2002 and 2001, respectively. The Partnership recognized a
casualty gain of approximately $120,000 and $128,000 for the years ended
December 31, 2002 and 2001, which represents the excess of the proceeds received
as of December 31, 2002 and 2001, respectively, over the write-off of
undepreciated damaged assets.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
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. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming year
and currently expects to budget approximately $1,033,000, not including Chimney
Hill Apartments. The General Partner is currently evaluating its options with
respect to Chimney Hill Apartments, including rehabilitation or complete rebuild
of the property. The expected costs for these options is not estimable at this
time. Additional improvements may be considered during 2003 and will depend on
the physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. The additional capital
expenditures will be incurred only if cash is available from operations or from
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The Partnership's
mortgage indebtedness of approximately $72,630,000 matures at various dates
between 2004 and 2022 with balloon payments of approximately $4,119,000 and
$42,280,000 due in 2004 and 2005, respectively. The General Partner will attempt
to refinance such indebtedness and/or sell the properties prior to such maturity
dates. If a property cannot be refinanced or sold for a sufficient amount, the
Partnership will risk losing such property through foreclosure.
Pursuant to the Partnership Agreement, the term of the Partnership is scheduled
to expire on December 31, 2011. Accordingly, prior to such date the Partnership
will need to either sell its investment properties or extend the term of the
Partnership.
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000. The Partnership wrote off approximately $32,000 in
unamortized loan costs and paid prepayment penalties of approximately $110,000
resulting in a loss on early extinguishment of debt of approximately $142,000,
which was reflected in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,00 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in a loss on early extinguishment of debt of approximately $40,000
which was reflected 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.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers
Edge Apartments. The refinancing replaced mortgage indebtedness of approximately
$1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a
rate of 7.82% compared to a prior rate of 8.40% and matures on September 1,
2020. Capitalized loan costs incurred for the refinancing were approximately
$90,000. There was no loss recognized due to the refinancing occurring at the
maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford
Place Apartments. The refinancing replaced mortgage indebtedness of
approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was
refinanced at a rate of 8.48% compared to the prior rate of 8.65%. Capitalized
loan costs incurred for the refinancing were approximately $149,000. The
Partnership wrote off approximately $4,000 in unamortized loan costs and paid
prepayment penalties of approximately $1,000 resulting in a loss on early
extinguishment of debt of approximately $5,000. On December 28, 2000, the
Partnership sold Stratford Place Apartments to an unaffiliated third party that
assumed the mortgage encumbering the property. The Partnership wrote off the
unamortized loan costs resulting in an additional loss on early extinguishment
of debt of approximately $143,000. The loss on early extinguishment of debt is
included in gain from discontinued operations.
On February 28, 2000, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on
March 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $142,000. The Partnership wrote off approximately $19,000 in
unamortized loan costs and paid prepayment penalties of approximately $7,000
resulting in a loss on early extinguishment of debt of approximately $26,000,
which is included in interest expense.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately $129,000.
The Partnership wrote off approximately $11,000 in unamortized loan costs and
paid prepayment penalties of approximately $22,000 resulting in a loss on early
extinguishment of debt of approximately $33,000, which is included in interest
expense.
On November 9, 1999, the Partnership obtained financing on Point West
Apartments. An additional $20,000 of loan costs related to the 1999 transaction
were incurred during the year ended December 31, 2000.
The Partnership distributed the following amounts during the years ended
December 31, 2002, 2001 and 2000 (in thousands except per unit data):
Per Per Per
Year Ended Limited Year Ended Limited Year Ended Limited
December 31, Partnership December 31, Partnership December 31,Partnership
2002 Unit 2001 Unit 2000 Unit
Operations $5,515 $15.45 $4,981 $13.95 $ 6,194 $17.35
Refinance (1) 76 .21 1,548 4.33 2,724 7.63
Sale (2) -- -- 2,610 7.31 2,265 6.34
$5,591 $15.66 $9,139 $25.59 $11,183 $31.32
(1) From refinance proceeds of Post Ridge Apartments distributed in
2002, refinancing proceeds of Lake Forest Apartments distributed
in 2001 and refinancing proceeds of The Apartments, Citadel
Apartments, Rivers Edge Apartments and Stratford Place Apartments
distributed in 2000.
(2) From sale proceeds of Stratford Place Apartments distributed in
2001 and sale proceeds of Overlook Apartments distributed in
2000.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $29,000, $66,000
and $56,000 was distributed to the general partner of the majority owned
sub-tier limited partnerships during the years ended December 31, 2002, 2001,
and 2000, 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 in 2003 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 193,528.50 limited partnership units
in the Partnership representing 56.46% of the outstanding Units at December 31,
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 56.46% 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
A summary of the Partnership's significant accounting policies is included in
"Note A - Organization and Significant Accounting Policies" to the consolidated
financial statements included in "Item 8. Financial Statements and Supplementary
Data." The General Partner believes that the consistent application of these
policies enables the Partnership to provided readers of the financial statements
with useful and reliable information about the Partnership's operating results
and financial condition. The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires the Partnership to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities at the date of
the financial statements as well as reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
Judgments and assessments of uncertainties are required in applying the
Partnership's accounting policies in many areas. 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 and
the Partnership fully reserves all balances outstanding over thirty days. 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 7a. Market Risk Factors
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 2002, a
100 basis point increase or decrease in market interest rates would have an
annual impact of approximately $726,000 on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 2002. The interest rates represent the weighted-average rates. The fair
value of the debt obligations after discounting the scheduled loan payments to
maturity, at the Partnership's incremental borrowing rate was approximately
$75,912,000 at December 31, 2002.
Long-term Debt
Principal amount by expected maturity: Fixed Rate Debt Average Interest Rate
(in thousands)
2003 $ 923 7.81%
2004 5,112 7.81%
2005 43,138 7.42%
2006 875 7.68%
2007 945 7.68%
Thereafter 21,637 7.68%
Total $72,630
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Operations - Years ended December 31, 2002,2001
and 2000
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 2002, 2001, and 2000
Consolidated Statements of Cash Flows - Years ended December 31, 2002,
2001 and 2000
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties IV
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Properties IV as of December 31, 2002 and 2001, 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, 2002. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties IV at December 31, 2002 and 2001, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note A to the financial statements, in 2002 the Partnership
adopted Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" and Statement of Financial
Accounting Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64."
As a result, the accompanying consolidated financial statements have been
restated to conform to the presentation adopted in 2002 in accordance with
accounting principles generally accepted in the Unites States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
March 31, 2003
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
2002 2001
Assets
Cash and cash equivalents $ 2,127 $ 2,729
Receivables and deposits 1,166 1,186
Restricted escrows 656 644
Other assets 1,449 1,628
Due from affiliates (Note B) 149 --
Investment properties (Notes C and H):
Land 10,907 10,907
Buildings and related personal property 126,750 124,301
137,657 135,208
Less accumulated depreciation (110,917) (107,215)
26,740 27,993
$ 32,287 $ 34,180
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 407 $ 204
Tenant security deposit liabilities 523 497
Accrued property taxes 1,392 1,189
Other liabilities 820 947
Distribution payable (Note E) 571 568
Mortgage notes payable (Note C) 72,630 73,475
76,343 76,880
Partners' Deficit
General partners (Note E) (7,146) (7,064)
Limited partners (342,773 units issued and
outstanding) (36,910) (35,636)
(44,056) (42,700)
$ 32,287 $ 34,180
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Years Ended December 31,
2002 2001 2000
(Restated)
(Restated)
Revenues:
Rental income $24,687 $26,605 $26,281
Other income 2,780 2,222 2,138
Casualty gain (Note G) 120 236 --
Total revenues 27,587 29,063 28,419
Expenses:
Operating 10,367 11,335 10,456
General and administrative 1,565 1,929 1,844
Depreciation 3,770 4,082 3,763
Interest 5,512 5,797 5,614
Property taxes 2,109 1,846 1,729
Total expenses 23,323 24,989 23,406
Income before discontinued operations 4,264 4,074 5,013
Gain on sale of discontinued operations
(Note D) -- -- 3,440
Income from discontinued operations -- 84 21
Net income (Note H) $ 4,264 $ 4,158 $ 8,474
Net income allocated to general partners (4%) $ 171 $ 166 $ 339
Net income allocated to limited partners (96%) 4,093 3,992 8,135
Net income $ 4,264 $ 4,158 $ 8,474
Per limited partnership unit:
Income before discontinued operations $ 11.94 $ 11.42 $ 14.04
Gain on sale of discontinued operations -- -- 9.63
Income from discontinued operations -- .23 0.06
Net income $ 11.94 $ 11.65 $ 23.73
Distributions per limited partnership unit $ 15.66 $ 25.59 $ 31.32
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 1999 342,773 $ (6,634) $(28,254) $(34,888)
Net income for the year ended
December 31, 2000 -- 339 8,135 8,474
Distributions to partners -- (503) (10,736) (11,239)
Partners' deficit at
December 31, 2000 342,773 (6,798) (30,855) (37,653)
Net income for the year ended
December 31, 2001 -- 166 3,992 4,158
Distributions to partners -- (432) (8,773) (9,205)
Partners' deficit at
December 31, 2001 342,773 (7,064) (35,636) (42,700)
Net income for the year ended
December 31, 2002 -- 171 4,093 4,264
Distributions to partners -- (253) (5,367) (5,620)
Partners' deficit at
December 31, 2002 342,773 $ (7,146) $(36,910) $(44,056)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
2002 2001 2000
Cash flows from operating activities:
Net income $ 4,264 $ 4,158 $ 8,474
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,770 4,082 4,161
Amortization of loan costs 208 221 281
Gain from sale of discontinued operations -- -- (3,440)
Casualty gain (120) (236) (154)
Loss on early extinguishment of debt -- 182 207
Change in accounts:
Receivables and deposits 20 668 327
Due from affiliates (149) -- --
Other assets (29) 47 (22)
Accounts payable 203 (817) 61
Tenant security deposit liabilities 26 9 (18)
Accrued property taxes 203 (122) 27
Other liabilities (127) (563) 228
Net cash provided by operating activities 8,269 7,629 10,132
Cash flows from investing activities:
Property improvements and replacements (2,565) (3,895) (5,624)
Net proceeds from sale of investment property -- -- 2,508
Net (deposits to) withdrawals from restricted
escrows (12) 256 502
Net insurance proceeds received 168 298 354
Net cash used in investing activities (2,409) (3,341) (2,260)
Cash flows from financing activities:
Payments on mortgage notes payable (845) (566) (512)
Repayment of mortgage notes payable -- (8,750) (12,224)
Proceeds from mortgage notes payable -- 11,000 18,035
Prepayment penalties -- (110) (30)
Loan costs paid -- (471) (530)
Distributions to partners (5,617) (9,039) (15,155)
Net cash used in financing activities (6,462) (7,936) (10,416)
Net decrease in cash and cash equivalents (602) (3,648) (2,544)
Cash and cash equivalents at beginning of the year 2,729 6,377 8,921
Cash and cash equivalents at end of year $ 2,127 $ 2,729 $ 6,377
Supplemental disclosure of noncash activity:
Extinguishment of debt in connection with sale of
investment property $ -- $ -- $ 4,505
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 2002 and 2001, distributions payable to partners were each
adjusted by approximately $3,000 and $166,000 for non-cash activity,
respectively.
At December 31, 1999, distributions to partners of approximately $4,318,000 were
declared and approximately $4,113,000 of this balance was paid during the year
ended December 31, 2000. The remaining balance is deferred per the Partnership
Agreement.
Cash paid for interest was approximately $5,401,000, $5,408,000 and $5,552,000
for the years ended December 31, 2002, 2001 and 2000, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2002
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties IV (the "Partnership" or
"Registrant"), a California limited partnership, was formed on September 22,
1981, to operate and hold real estate properties. The general partner of the
Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a
Delaware corporation. Additionally, the General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The directors and officers of the General Partner also
serve as executive officers of AIMCO. The Partnership Agreement provides that
the Partnership is to terminate on December 31, 2011 unless terminated prior to
that date. As of December 31, 2002, the Partnership operates 15 residential
properties in or near major urban areas in the United States.
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired controlling interest
in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the
United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan,
CEI acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partners dated August 10, 1990. As
part of the solicitation, the Limited Partners also approved an amendment to the
Partnership Agreement to limit changes of control of the Partnership, and the
conversion of CCMC from a general partner to a Special Limited Partner, thereby
leaving CEI as the sole general partner of the Partnership. On November 14,
1990, CCMC was dissolved and its Special Limited Partnership interest was
divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"),
which is an affiliate of AIMCO. In December 1994, the parent of GII Realty,
Inc., entered into a transaction (the "Insignia Transaction") in which an
affiliate of Insignia acquired an option (exercisable in whole or in part from
time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to
a partial exercise of such option, acquired 50.5% of that stock. As part of the
Insignia Transaction, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity, and
a subsidiary of Insignia acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the Insignia affiliate exercised the remaining
portion of its option to purchase all of the remaining outstanding capital stock
of GII Realty, Inc.
Consolidation: The consolidated financial statements include the Partnership's
majority interest in a joint venture which owns South Port Apartments. The
Partnership has the ability to control the major operating and financial
policies of the joint venture. No minority interest has been reflected for the
joint venture because minority interests are limited to the extent of their
equity capital, and losses in excess of the minority interest equity capital are
charged against the Partnership's interest. Should the losses reverse, the
Partnership would be credited with the amount of minority interest losses
previously absorbed. The other partner of this joint venture is AIMCO
Properties, LP, an affiliate of the General Partner.
The Partnership's consolidated financial statements also include the accounts of
the Partnership, its wholly-owned partnerships, and its 99% limited partnership
interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd.,
Concap River's Edge Associates, Ltd., Foothill Chimney Associates, L.P., and
ConCap Stratford Associates, Ltd. The Partnership may remove the general partner
of its 99% owned partnerships; therefore, the partnerships are deemed controlled
and therefore consolidated by the Partnership. All significant interpartnership
balances have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks. At certain times, the amount of cash deposited at a bank may exceed the
limit on insured deposits. Cash balances include approximately $1,916,000 and
$2,504,000 at December 31, 2002 and 2001, respectively, that are maintained by
the affiliated management company on behalf of affiliated entities in a cash
concentration account.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserves - At the time of the refinancings of the
mortgage notes payable encumbering Nob Hill Villa Apartments, the Arbours
of Hermitage Apartments, Briar Bay Apartments, Chimney Hill Apartments,
Citadel Village Apartments, Foothill Place Apartments, Knollwood
Apartments, Village East Apartments, Lake Forest Apartments and South Port
Apartments, approximately $1,638,000 was designated for certain capital
improvements. At December 31, 2002, the total remaining escrow balance is
approximately $36,000 and $230,000 for Lake Forest Apartments and South
Port Apartments, respectively. The capital improvement reserves for Nob
Hill Villa Apartments, Arbours of Hermitage Apartments, Briar Bay Racquet
Club Apartments, Chimney Hill Apartments, Citadel Village Apartments,
Foothill Place Apartments, Knollwood Apartments and Village East
Apartments had been fully utilized as of December 31, 2002.
Replacement Reserve Account - At the time of the refinancings of the
mortgage notes payable encumbering the Arbours of Hermitage Apartments,
Briar Bay Racquet Club Apartments, Nob Hill Villa Apartments, South Port
Apartments, Chimney Hill Apartments, Citadel Village Apartments, Foothill
Place Apartments, Knollwood Apartments, and Village East Apartments,
$507,000 of the proceeds, ranging from $191 to $325 per unit, were
designated for replacement reserves. These funds were established to cover
necessary repairs and replacements of existing improvements. At December
31, 2002, the total remaining reserve balance was approximately $390,000.
Investments in Real Estate: Investment properties consist of fifteen apartment
complexes, which are stated at cost. Expenditures in excess of $250 that
maintain an existing asset which has a useful life of more than one year are
capitalized as capital replacement expenditures and depreciated over the
estimated useful life of the asset. Expenditures for ordinary repairs,
maintenance and apartment turnover costs are expensed as incurred. The
Partnership capitalized interest costs of approximately $107,000, tax and
insurance of approximately $31,000 and other construction period expenses of
approximately $65,000 during the year ended December 31, 2002 with respect to
the renovation project that is currently in process at Chimney Hill Apartments.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets ", the
Partnership records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. The impairment loss is measured by
comparing the fair value of the assets to its carrying amount. Costs of
apartment properties that have been permanently impaired have been written down
to appraised value. No adjustments for impairment of value were recorded in any
of the years ended December 31, 2002, 2001 or 2000.
During 2001, AIMCO, an affiliate of the General Partner, commissioned a project
to study process improvement ideas to reduce operating costs. The result of the
study led to a re-engineering of business processes and eventual redeployment of
personnel and related capital spending. The implementation of these plans during
2002, accounted for as a change in accounting estimate, resulted in a refinement
of the Partnership's process for capitalizing certain direct and indirect
project costs (principally payroll related costs) and increased capitalization
of such costs by approximately $316,000 in 2002 compared to 2001.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the modified accelerated cost recovery method is used for depreciation
of (1) real property over 27 1/2 years and (2) personal property additions over
5 years.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases and fully
reserves all balances outstanding over thirty days. In addition, the General
Partner's policy is to offer rental concessions during particularly slow months
or in response to heavy competition from other similar complexes in the area.
Concessions are charged against rental income as incurred.
Loan Costs: Loan costs of approximately $2,345,000 and $2,226,000, net of
accumulated amortization of approximately $1,198,000 and $1,080,000, are
amortized using the straight-line method over the lives of the related mortgage
notes at December 31, 2002 and 2001, respectively. Unamortized loan costs are
included in other assets. Amortization of loan costs is included in interest
expense. Amortization expense is expected to be approximately $211,000 for each
of the years 2003 and 2004, approximately $183,000 in 2005 and approximately
$70,000 for each of the years 2006 and 2007.
Fair Value of Financial Statements: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, at the Partnership's
incremental borrowing rate was approximately $75,912,000 at December 31, 2002.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for
net income (losses) and distributions of distributable cash from operations to
be allocated generally 96% to the Limited Partners and 4% to the General
Partner.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per Limited
Partnership Unit is computed by dividing net income (loss) allocated to the
Limited Partners by the number of Units outstanding. Per Unit information has
been computed based on the number of Units outstanding at the beginning of each
year.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also established standards
for related disclosures about products and services, geographic areas, and major
customers. As defined in SFAS No. 131, the Partnership has only one reportable
segment.
Advertising Costs: Advertising costs of approximately $542,000, $469,000 and
$543,000 in 2002, 2001 and 2000, respectively, are charged to operating expense
as incurred.
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.
Reclassification: Certain reclassifications have been made to the 2000 and 2001
balances to conform to the 2002 presentation.
Recent Accounting Pronouncements: Effective January 1, 2002, the Partnership
adopted Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", which
established standards for the way that public business enterprises report
information about long-lived assets that are either being held for sale or have
already been disposed of by sale or other means. The standard requires that
results of operations for a long-lived asset that is being held for sale or has
already been disposed of be reported as a discontinued operation on the
statement of operations. As a result, the accompanying consolidated statements
of operations have been restated as of January 1, 2001 and 2000, respectively,
to reflect the operations of Stratford Place Apartments and Overlook Apartments
as gain from discontinued operations due to their sales ranging from December
1999 to December 2000. The gain from the sale of discontinued operations
recognized during the year ended December 31, 2000 was approximately $3,440,000.
The income from discontinued operations recognized during the years ended
December 31, 2001 and 2000 was approximately $84,000 and $21,000, respectively.
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 January 1, 2001 and 2000, respectively, to
reflect the loss on early extinguishment of debt of approximately $142,000 at
Post Ridge Apartments and approximately $40,000 at Lake Forest Apartments in
interest expense in 2001, approximately $26,000 at Citadel Apartments and
approximately $33,000 at the Apartments in total expenses in 2000 and
approximately $148,000 at Stratford Place Apartments in income from discontinued
operations rather than as an extraordinary item in 2000.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and for reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership.
During the years ended December 31, 2002, 2001 and 2000, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,382,000,
$1,569,000 and $1,515,000 for the years ended December 31, 2002, 2001 and 2000,
respectively. An affiliate of the General Partner owed the Partnership
approximately $38,000 at December 31, 2002 for overpayment of property
management fees during 2002.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $906,000, $2,172,000 and $1,103,000, for the years
ended December 31, 2002, 2001 and 2000, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $55,000, $1,208,000 and $159,000 for the
years ended December 31, 2002, 2001 and 2000, respectively. The construction
management service fees are calculated based on a percentage of current
additions to investment properties. The first three quarters of 2002 were based
on estimated amounts and in the fourth quarter of 2002 the reimbursements were
adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the
General Partner owed the Partnership approximately $111,000 for overpayment of
management reimbursements during 2002.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner paid approximately $477,000, $430,000 and $535,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2002, 2001 and 2000, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000 and $180,000 in 2001 and
2000, respectively, for loan costs which are capitalized and included with other
assets on the consolidated balance sheets. These loan costs were associated with
the refinancing of two of the Partnership's properties in 2001 and four of the
Partnership's properties in 2000.
For acting as real estate broker in connection with the sale of Stratford Place
Apartments, a real estate commission of approximately $228,000 was accrued as of
December 31, 2000 and was paid to the General Partner during the year ended
December 31, 2001. For acting as real estate broker in connection with the sale
of Overlook Apartments in December 1999, the General Partner was paid a real
estate commission of approximately $40,000 during the year ended December 31,
2000. When the Partnership terminates, the General Partner will have to return
these commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the years ended December 31, 2002
and 2001, respectively, the Partnership paid AIMCO and its affiliates
approximately $423,000 and $313,000 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 193,528.50 limited partnership units
in the Partnership representing 56.46% of the outstanding Units at December 31,
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 56.46% 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.
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
Principal Principal Monthly Principal
Balance At Balance At Payment Stated Balance
December 31, December 31, Including Interest Maturity Due At
Property 2002 2001 Interest Rate Date Maturity
(in thousands) (in thousands)
The Apartments $ 4,489 $ 4,601 $ 41 (b) 8.37% 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 33 (a) 6.95% 12/05 5,650
Briar Bay Racquet Club
Apartments 3,500 3,500 20 (a) 6.95% 12/05 3,500
Chimney Hill Apartments 5,400 5,400 31 (a) 6.95% 12/05 5,400
Citadel Apartments 4,424 4,536 40 (c) 8.25% 03/20 --
Citadel Village 2,450 2,450 14 (a) 6.95% 12/05 2,450
Apartments
Foothill Place 10,100 10,100 58 (a) 6.95% 12/05 10,100
Apartments
Knollwood Apartments 6,780 6,780 39 (a) 6.95% 12/05 6,780
Lake Forest Apartments 6,321 6,475 51 (e) 7.13% 10/21 --
Nob Hill Villa 6,640 6,789 64 9.20% 04/05 6,250
Apartments
Point West Apartments 2,288 2,350 20 7.86% 12/19 --
Post Ridge Apartments 4,398 4,500 34 (f) 6.63% 01/22 --
Rivers Edge Apartments 3,796 3,891 33 (d) 7.82% 09/20 --
South Port Apartments 4,244 4,303 31 7.19% 12/04 4,119
Village East Apartments 2,150 2,150 12 (a) 6.95% 12/05 2,150
Total $72,630 $73,475 $ 521 $46,399
(a) Monthly payments of interest only at the stated rate until maturity. (b)
Debt was obtained effective February 2, 2000 (see below for further
explanation). (c) Debt was obtained effective February 28, 2000 (see below for
further explanation). (d) Debt was obtained effective August 31, 2000 (see below
for further explanation). (e) Debt was obtained effective September 28, 2001
(see below for further explanation). (f) Debt was obtained effective December
21, 2001 (see below for further explanation).
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000. The Partnership wrote off approximately $32,000 in
unamortized loan costs and paid prepayment penalties of approximately $110,000
resulting in a loss on early extinguishment of debt of approximately $142,000,
which is included in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,000 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in a loss on early extinguishment of debt of approximately $40,000
which is included in interest expense.
On August 31, 2000, the Partnership refinanced the mortgage encumbering Rivers
Edge Apartments. The refinancing replaced mortgage indebtedness of approximately
$1,895,000 with a new mortgage of $4,000,000. The mortgage was refinanced at a
rate of 7.82% compared to a prior rate of 8.40% and matures on September 1,
2020. Capitalized loan costs incurred for the refinancing were approximately
$90,000. There was no loss recognized due to the refinancing occurring at the
maturity of the prior mortgage.
On May 31, 2000, the Partnership refinanced the mortgage encumbering Stratford
Place Apartments. The refinancing replaced mortgage indebtedness of
approximately $2,493,000 with a new mortgage of $4,550,000. The mortgage was
refinanced at a rate of 8.48% compared to the prior rate of 8.65% and matures on
June 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $149,000. The Partnership wrote off approximately $4,000 in
unamortized loan costs and paid prepayment penalties of approximately $1,000
resulting in a loss on early extinguishment of debt of approximately $5,000. On
December 28, 2000, the Partnership sold Stratford Place Apartments to an
unaffiliated third party whom assumed the mortgage encumbering the property. The
Partnership wrote off the unamortized loan costs resulting in an additional loss
on early extinguishment of debt of approximately $143,000. The loss on early
extinguishment of debt of approximately $148,000 is included in gain from
discontinued operations.
On February 28, 2000, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,548,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on
March 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $142,000. The Partnership wrote off approximately $19,000 in
unamortized loan costs and paid prepayment penalties of approximately $7,000
resulting in a loss on early extinguishment of debt of approximately $26,000,
which is included in interest expense.
On February 2, 2000, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately $129,000.
The Partnership wrote off approximately $11,000 in unamortized loan costs and
paid prepayment penalties of approximately $22,000 resulting in a loss on early
extinguishment of debt of approximately $33,000, which is included in interest
expense.
The notes payable represent borrowings on the properties purchased by the
Partnership. The notes are non-recourse, and are collateralized by deeds of
trust on the investment properties. The notes mature between 2004 and 2022 with
balloon payments of approximately $4,119,000 and $42,280,000 due in 2004 and
2005, respectively, and bear interest at rates ranging from 6.63% to 9.20%.
Various mortgages require prepayment penalties if repaid prior to maturity.
Further, the properties may not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes
payable subsequent to December 31, 2002, are as follows (in thousands):
2003 $ 923
2004 5,112
2005 43,138
2006 875
2007 945
Thereafter 21,637
Total $72,630
Note D - Disposition of Investment Property
On December 28, 2000, ConCap Stratford Associated, Ltd. sold Stratford Place
Apartments to an unaffiliated third party for $7,600,000. After payment of
closing costs of approximately $587,000, the net proceeds received by the
Partnership were approximately $2,508,000. The purchaser assumed the mortgage
encumbering the property of approximately $4,505,000. The gain on the sale
recognized during the fourth quarter of 2000 was approximately $3,440,000 and is
included in gain on sale of discontinued operations.
The sales transactions are summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 7,013
Less: Net real estate (1) (3,574)
Net other assets 1
Gain from sale of discontinued
operations $ 3,440
(1) Net of accumulated depreciation of approximately $4,851,000.
Note E - Distributions
During 2002, the Partnership declared distributions of approximately $5,591,000
(approximately $5,367,000 to the limited partners or $15.66 per limited
partnership unit) consisting of approximately $5,515,000 (approximately
$15,294,000 or $15.45 per limited partnership unit) from operations and
approximately $76,000 (approximately $73,000 to the limited partners or $.21 per
limited partnership unit) of refinancing proceeds from Post Ridge Apartments.
Approximately $3,000 of these distributions from proceeds is payable at December
31, 2002 to the General Partner and special limited partners as this portion is
subordinated and deferred per the Partnership Agreement until the limited
partners receive 100% of their original capital contributions from surplus cash.
In conjunction with the transfer of fund from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $29,000 was
distributed to the general partner of the majority owned sub-tier limited
partnerships.
During 2001, the Partnership declared distributions of approximately $9,139,000
(approximately $8,773,000 to the limited partners or $25.59 per limited
partnership unit) consisting of approximately $4,981,000 (approximately
$4,782,000 to the limited partners or $13.95 per limited partnership unit) from
operations and approximately $4,158,000 (approximately $3,991,000 to the limited
partners or $11.64 per limited partnership unit) of refinance proceeds for Lake
Forest Apartments and sale proceeds of Stratford Place Apartments, which sold in
December of 2000. Approximately $166,000 of these distributions from proceeds is
payable at December 31, 2002 to the General Partner and special limited partners
as this portion is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus cash. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$66,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 2000, the Partnership declared distributions of approximately $11,183,000
(approximately $10,736,000 to the limited partners or $31.32 per limited
partnership unit) consisting of approximately $6,194,000 (approximately
$5,947,000 to the limited partners or $17.35 per limited partnership unit) from
operations and approximately $4,989,000 (approximately $4,789,000 to the limited
partners or $13.97 per limited partnership unit) of refinancing proceeds from
The Apartments, Citadel Apartments, Rivers Edge Apartments, and Stratford Place
Apartments and sale proceeds from Overlook Apartments which sold December 1999.
Approximately $197,000 of the distribution from proceeds is payable at December
31, 2002 to the General Partner and special limited partners as this
distribution is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus funds. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$56,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
As of December 31, 1999, the Partnership had a distribution payable of
approximately $4,318,000 (approximately $3,921,000 to the limited partners or
$11.44 per limited partnership unit) consisting of cash from operations of
approximately $1,874,000 (approximately $1,679,000 to the limited partners or
$4.90 per limited partnership unit) and a distribution of refinance proceeds
representing funds from the financing of Point West Apartments of approximately
$2,444,000 (approximately $2,242,000 to the limited partners or $6.54 per
limited partnership unit). In January 2000, approximately $4,113,000 of this
distribution was paid and the remainder of approximately $205,000 is payable at
December 31, 2002.
Note F - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Net Cost
and Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Apartments $ 4,489 $ 438 $ 6,218 $ 2,716
Arbours of Hermitage
Apartments 5,650 547 8,574 5,967
Briar Bay Racquet Club
Apartments 3,500 1,084 5,271 1,868
Chimney Hill Apartments 5,400 659 7,188 4,450
Citadel Apartments 4,424 695 5,619 1,858
Citadel Village Apartments 2,450 337 3,334 999
Foothill Place Apartments 10,100 3,492 9,435 3,878
Knollwood Apartments 6,780 345 7,065 5,279
Lake Forest Apartments 6,321 692 5,811 3,601
Nob Hill Villa Apartments 6,640 490 8,922 4,919
Point West Apartments 2,288 285 2,919 171
Post Ridge Apartments 4,398 143 2,498 2,964
Rivers Edge Apartments 3,796 512 2,160 1,012
South Port Apartments 4,244 1,175 6,496 1,286
Village East Apartments 2,150 184 2,236 1,865
Totals $72,630 $11,078 $83,746 $42,833
Gross Amount At Which
Carried
At December 31, 2002
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
The Apartments $ 438 $ 8,934 $ 9,372 $ 8,118 1973 04/84 5-18
Arbours of Hermitage
Apartments 547 14,541 15,088 11,998 1973 09/83 5-18
Briar Bay Racquet
Club
Apartments 1,084 7,139 8,223 6,728 1975 09/82 5-18
Chimney Hill 659 11,638 12,297 10,342 1973 08/82 5-18
Apartments
Citadel Apartments 694 7,478 8,172 6,949 1973 05/83 5-18
Citadel Village 337 4,333 4,670 3,797 1974 12/82 5-18
Apartments
Foothill Place 3,402 13,403 16,805 11,725 1973 08/85 5-18
Apartments
Knollwood Apartments 345 12,344 12,689 10,511 1972 07/82 5-18
Lake Forest 692 9,412 10,104 8,266 1971 04/84 5-18
Apartments
Nob Hill Villa 490 13,841 14,331 12,168 1971 04/83 5-18
Apartments
Point West Apartments 206 3,169 3,375 2,697 1973 11/85 5-40
Post Ridge Apartments 143 5,462 5,605 4,406 1972 07/82 5-18
Rivers Edge 512 3,172 3,684 2,840 1976 04/83 5-18
Apartments
South Port Apartments 1,175 7,782 8,957 7,034 -- 11/83 5-18
Village East 183 4,102 4,285 3,338 1973 12/82 5-18
Apartments
Totals $10,907 $126,750 $137,657 $110,917
Reconciliation of "investment properties and accumulated depreciation":
Years Ended December 31,
2002 2001 2000
(in thousands)
Investment Properties
Balance at beginning of year $135,208 $131,514 $134,633
Additions 2,565 3,895 5,624
Property dispositions - other (116) (201) (8,743)
Balance at end of year $137,657 $135,208 $131,514
Accumulated Depreciation
Balance at beginning of year $107,215 $103,272 $104,057
Additions charged to expense 3,770 4,082 4,161
Property dispositions - other (68) (139) (4,946)
Balance at end of year $110,917 $107,215 $103,272
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 2002, 2001 and 2000, is approximately $149,635,000, $153,587,000
and $149,980,000, respectively. The accumulated depreciation taken for Federal
income tax purposes at December 31, 2002, 2001 and 2000, is approximately
$118,176,000, $120,682,000 and $116,415,000, respectively.
Note G - Casualty Events
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 years ended December 31, 2002 and 2001, respectively.
The Partnership recognized casualty gains of approximately $120,000 and $128,000
during the years ended December 31, 2002 and 2001, which represents the excess
of the proceeds received as of December 31, 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 $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001 as the damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2002. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001 which represents the
excess of the proceeds received as of December 31, 2001 over the write-off of
the undepreciated damaged assets.
In January 2000, Stratford Place Apartments had a fire which damaged 12
apartment units and 30% of the roof. Insurance proceeds of approximately
$354,000 were received during the year ended December 31, 2000. The General
Partner successfully completed the repairs prior to the sale of the property on
December 20, 2000. The Partnership recognized a casualty gain of approximately
$154,000 for the year ended December 31, 2000 and is included in gain from sale
of discontinued operations.
Note H - Income Taxes
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 2002, 2001 and 2000 (in thousands, except per unit data):
2002 2001 2000
Net income as reported $ 4,264 $ 4,158 $ 8,474
(Deduct) add: Deferred revenue and other
liabilities 150 (89) (151)
Depreciation differences 130 (185) 15
Accrued expenses (35) 20 30
Minority interest (305) (255) (302)
Other (283) (22) 41
Gain (loss) on casualty/
disposition/foreclosure (119) (343) 412
Federal taxable income $ 3,802 $ 3,284 $ 8,519
Federal taxable income per
Limited Partnership unit $ 10.65 $ 9.20 $ 23.86
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities (in thousands):
Net liabilities as reported $(44,056)
Land and Buildings 11,978
Accumulated depreciation (7,259)
Syndication fees 18,871
Other 4,776
Net liabilities - Federal tax basis $(15,690)
Note I - 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 ordered 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 could have an opportunity to discuss settlement. On
October 30, 2002, the court entered an order extending the stay in effect
through January 10, 2003.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action described below. The Court
has scheduled the hearing on preliminary approval for April 4, 2003 and the
hearing on final approval for June 2, 2003.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $ 1 million toward the cost
of independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make a tender
offer to purchase all of the partnership interests in the Partnerships within
one year of final approval, if it is granted, and to provide partners with the
independent appraisals at the time of these tenders. The proposed settlement
also provides for the limitation of the allowable costs which the General
Partner or its affiliates will charge the Partnerships in connection with this
litigation and imposes limits on the class counsel fees and costs in this
litigation. If the Court grants preliminary approval of the proposed settlement
in April, a notice will be distributed to partners providing detail on the terms
of the proposed settlement.
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. Before completing briefing on the appeal, the parties stayed further
proceedings in the appeal pending the Court's review of the terms of the
proposed settlement described above.
The General Partner does not anticipate that any costs to the Partnership,
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 J - 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):
2002 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 7,318 $ 7,023 $ 6,735 $ 6,511 $ 27,587
Total expenses (5,890) (6,290) (5,855) (5,288) (23,323)
Income before discontinued
operations 1,428 733 880 1,223 4,264
Discontinued operations -- -- -- -- --
Net income $ 1,428 $ 733 $ 880 $ 1,223 $ 4,264
Per limited partnership unit:
Income before discontinued
operations $ 4.00 $ 2.05 $ 2.47 $ 3.42 $ 11.94
Discontinued operations -- -- -- -- --
Net income $ 4.00 $ 2.05 $ 2.47 $ 3.42 $ 11.94
2001 (Restated) 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 7,109 $ 7,224 $ 7,366 $ 7,364 $ 29,063
Total expenses (6,042) (6,467) (6,261) (6,219) (24,989)
Income before discontinued
operations 1,067 757 1,105 1,145 4,074
Income from discontinued 84 -- -- -- 84
operations
Net income $ 1,151 $ 757 $ 1,105 $ 1,145 $ 4,158
Per limited partnership unit:
Income before discontinued
operations $ 2.99 $ 2.12 $ 3.10 $ 3.21 $ 11.42
Income from discontinued
operations .23 -- -- -- .23
Net income $ 3.22 $ 2.12 $ 3.10 $ 3.21 $ 11.65
Note K - Subsequent Event
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party for approximately $8,625,000. South Port Apartments had revenues of
approximately $1,690,000, $1,753,000 and $1,596,000 and net income of
approximately $498,000, $536,000, and $524,000 for the years ended December 31,
2002, 2001 and 2000, respectively. The Partnership will determine distribution
to partners in April of 2003.
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
None.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no
officers or directors. ConCap Equities, Inc. ("CEI" or the "General Partner")
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business.
The names of the director, and executive officers of the General Partner, their
ages and the nature of all positions presently held by them are set forth below.
Name Age Position
Patrick J. Foye 45 Executive Vice President and Director
Paul J. McAuliffe 46 Executive Vice President and Chief
Financial Officer
Thomas C. Novosel 44 Senior Vice President and Chief Accounting
Officer
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, where he is responsible for continuous improvement,
acquisitions of partnership securities, consolidation of minority interests, and
corporate and other acquisitions. Prior to joining AIMCO, Mr. Foye was a Merger
and Acquisitions Partner in the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP from 1989 to 1998.
Paul J. McAuliffe has been Executive Vice President and Chief Financial Officer
of the General Partner since April 1, 2002. Mr. McAuliffe has served as
Executive Vice President of AIMCO since February 1999 and Chief Financial
Officer of AIMCO since October 1999. From May 1996 until he joined AIMCO, Mr.
McAuliffe was Senior Managing Director of Secured Capital Corp.
Thomas C. Novosel has been Senior Vice President and Chief Accounting Officer of
the General Partner since April 1, 2002. Mr. Novosel has served as Senior Vice
President and Chief Accounting Officer of AIMCO since April 2000. From October
1993 until he joined AIMCO, Mr. Novosel was a partner at Ernst & Young LLP,
where he served as the director of real estate advisory services for the
southern Ohio Valley area offices but did not work on any assignments related to
AIMCO or the Partnership.
One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited partnerships which
either have a class of securities registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section 15(d) of such Act. Further, one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general partner of AIMCO Properties, L.P., entities that have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting requirements of Section 15 (d) of such
Act.
The executive officers and director of the General Partner fulfill the
obligations of the Audit Committee and oversee the Partnership's financial
reporting process on behalf of the General Partner. Management has the primary
responsibility for the financial statements and the reporting process including
the systems of internal controls. In fulfilling its oversight responsibilities,
the executive officers and director of the General Partner reviewed the audited
financial statements with management including a discussion of the quality, not
just the acceptability, of the accounting principles, the reasonableness of
significant judgments, and the clarity of disclosures in the financial
statements.
The executive officers and director of the General Partner reviewed with the
independent auditors, who are responsible for expressing an opinion on the
conformity of those audited financial statements with accounting principles
generally accepted in the United States, their judgments as to the quality, not
just the acceptability, of the Partnership's accounting principles and such
other matters as are required to be discussed with the Audit Committee or its
equivalent under auditing standards generally accepted in the United States. In
addition, the Partnership has discussed with the independent auditors the
auditors' independence from management and the Partnership including the matters
in the written disclosures required by the Independence Standards Board and
considered the compatibility of non-audit services with the auditors'
independence.
The executive officers and director of the General Partner discussed with the
Partnership's independent auditors the overall scope and plans for their audit.
In reliance on the reviews and discussions referred to above, the executive
officers and director of the General Partner have approved the inclusion of the
audited financial statements in the Form 10-K for the year ended December 31,
2002 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 2003. Fees for 2002
were audit services of approximately $123,000 and non-audit services
(principally tax-related) of approximately $66,000.
Item 11. Executive Compensation
Neither the director nor officers of the General Partner received any
remuneration from the Registrant during the year ended December 31, 2002.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 2002, no person or group was known
to CEI to own of record or beneficially more than five percent of the Units of
the Partnership:
Entity Number of Units Percentage
Insignia Properties, LP 67,033.50 19.55%
(an affiliate of AIMCO)
IPLP Acquisition I, LLC 29,612.50 8.64%
(an affiliate of AIMCO)
AIMCO Properties, LP 96,882.50 28.27%
(an affiliate of AIMCO)
Insignia Properties, LP and IPLP Acquisition I, LLC are indirectly, ultimately
owned by AIMCO. Their business address is 55 Beattie Place, Greenville, SC
29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is Stanford Place 3, 4582 S. Ulster St. Parkway, Suite 1100,
Denver, Colorado 80237.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own any
Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of December 31, 2002, the following persons were known to CEI to be the
beneficial owners of more than five percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100%
55 Beattie Place, Greenville, SC 29602
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December
31, 2002, AIMCO owns 51% of the outstanding common shares of beneficial interest
of IPT.
Item 13. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and for reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership.
During the years ended December 31, 2002, 2001 and 2000, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,382,000,
$1,569,000 and $1,515,000 for the years ended December 31, 2002, 2001 and 2000,
respectively. An affiliate of the General Partner owed the Partnership
approximately $38,000 at December 31, 2002 for overpayment of property
management fees during 2002.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $906,000, $2,172,000 and $1,103,000, for the years
ended December 31, 2002, 2001 and 2000, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $55,000, $1,208,000 and $159,000 for the
years ended December 31, 2002, 2001 and 2000, respectively. The construction
management service fees are calculated based on a percentage of current
additions to investment properties. The first three quarters of 2002 were based
on estimated amounts and in the fourth quarter of 2002 the reimbursements were
adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the
General Partner owed the Partnership approximately $111,000 for overpayment of
management reimbursements during 2002.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner paid approximately $477,000, $430,000 and $535,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2002, 2001 and 2000, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000 and $180,000 in 2001 and
2000, respectively, for loan costs which are capitalized and included with other
assets on the consolidated balance sheets. These loan costs were associated with
the refinancing of two of the Partnership's properties in 2001 and four of the
Partnership's properties in 2000.
For acting as real estate broker in connection with the sale of Stratford Place
Apartments, a real estate commission of approximately $228,000 was accrued as of
December 31, 2000 and was paid to the General Partner during the year ended
December 31, 2001. For acting as real estate broker in connection with the sale
of Overlook Apartments in December 1999, the General Partner was paid a real
estate commission of approximately $40,000 during the year ended December 31,
2000. When the Partnership terminates, the General Partner will have to return
these commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the years ended December 31, 2002
and 2001, respectively, the Partnership paid AIMCO and its affiliates
approximately $423,000 and $313,000 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 193,528.50 limited partnership units
in the Partnership representing 56.46% of the outstanding Units at December 31,
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 56.46% 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.
Item 14. 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 annual 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.
Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Consolidated Balance Sheets - December 31, 2002 and 2001
Consolidated Statements of Operations - Years Ended December 31,
2002, 2001 and 2000
Consolidated Statements of Changes in Partners' Deficit - Years
Ended December 31, 2002, 2001 and 2000
Consolidated Statements of Cash Flows - Years Ended December 31,
2002, 2001 and 2000
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, or
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
S-K Reference
Number Document Description
2.1 Agreement and Plan of Merger, dated as of October 1, 1999 by
and between AIMCO and IPT; incorporated by reference to
Registrant's Current Report on Form 8-K dated October 1, 1999.
3 Certificate of Limited Partnership, as amended to date.
10.1 Property Management Agreement No. 105 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.2 Property Management Agreement No. 106 dated October 23, 1990, by
and between the LeTourneau Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.3 Property Management Agreement No. 107 dated October 23, 1990, by
and between Overlook Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.4 Property Management Agreement No., 108 dated October 23, 1990, by
and between Park 77 Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.5 Property Management Agreement No., 205 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.6 Property Management Agreement No., 306 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.7 Property Management Agreement No., 307 dated October 23, 1990, by
and between Point West Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.8 Property Management Agreement No., 403 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.9 Property Management Agreement No., 404 dated October 23, 1990, by
and between Denbigh Village Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.10Property Management Agreement No., 405 dated October 23, 1990,
by and between Stratford Place Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.11 Bill of Sale and Assignment dated October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.12 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCEC and ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).
10.13 Assignment and Assumption Agreement as to Certain Property
Management Services dated October 23, 1990, by and between
CCMLP and ConCap Capital Company (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.14 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and The Hayman Company (100 Series of
Property Management Contracts) (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.15 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.16 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Metro ConCap, Inc. (300 Series of
Property Management Contracts). (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.17 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and R&B Realty Group (400 Series of Property
Management Contracts). (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.18 Assignment and Assumption Agreement dated February 21, 1991,
by and between the Partnership and Greenbriar Apartments
Associates Limited Partnership (Property Management Agreement
No. 403). CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.19 Assignment and Assumption Agreement dated April 1, 1991, by
and between the Partnership and ConCap Village East Apartments
Associates, L.P. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.20Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Nob Hill Apartments Associates, L.P.
(Property Management Agreement No. 306). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.21Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Barnett Regency Tower Associates,
Limited Partnership (Property Management Agreement No. 105).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.22 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Denbigh Village Associates, Ltd.).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.23 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Greenbriar Associates Limited Partnership).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.24 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with the Partnership concerning Briar Bay Racquet
Club). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.25 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Stratford Place Associates, Ltd.).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.26 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Property Management Agreement No. 306). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.27 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Property Management Agreement No. 205). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.28 Assignment and Assumption Agreement dated September 1, 1991,
by and between ConCap Village East Apartments Associates, L.P.
and CCP IV Associates, Ltd. (Property Management Agreement No.
205). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.29Assignment and Assumption Agreement dated September 15, 1991, by
and between the Partnership and Foothill Chimney Associates
Limited Partnership (Property Management Agreement No. 105).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.30Assignment and Assumption Agreement dated September 15, 1991, by
and between the Partnership and Foothill Chimney Associates
Limited Partnership (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.31 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and
Horn-Barlow Companies (the "Horn-Barlow Construction
Management Agreement") (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.33 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Horn-Barlow Construction Management
Agreement Concerning Chimney Hill Apartments). (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.34Assignment and Assumption Agreement dated September 1, 1991, by
and between ConCap Village East Apartments Associates, L.P. and
CCP IV Associates, Ltd. (Village East Construction Agreement).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.35 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and Metro
ConCap, Inc. (the "Metro Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.36 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Metro Construction Management Agreement concerning Arbour
East and Knollwood Apartments). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.37 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The Hayman
Company (the "Hayman Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.38 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Hayman Construction Management Agreement
concerning Chimney Hill Apartments). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.39 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and R & B
Apartment Management Company, Inc. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended December
31, 1991).
10.40 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between ConCap Metro Centre
Associates, L.P. and R & B Commercial Management Company, Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.41 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991). .
10.42 Assignment and Assumption Agreement (Investor Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Services Company (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1990).
10.43 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("PSI") to the Partnership regarding the change
in ownership and dissolution of ConCap Services Company
whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.44 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.45 Assignment and Assumption Agreement (Financial Service
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.46 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.47 Property Management Agreement No. 419 dated May 13, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.48Assignment and Assumption Agreement (Property Management
Agreement No. 419) dated May 13, 1993, by and between Coventry
Properties, Inc., R & B Apartment Management Company, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.49Assignment and Assumption as to certain Property Management
Services dated May 13, 1993, by and between Coventry Properties,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.50Property Management Agreement No. 419A dated October 11, 1993,
by and between ConCap Stratford Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993).
10.51Assignment and Assumption Agreement (Property Management
Agreement No. 419A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management Company,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.52Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
10.53Property Management Agreement No. 427A dated October 11, 1993,
by and between ConCap River's Edge Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993).
10.54Assignment and Assumption Agreement (Property Management
Agreement No. 427A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management Company,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.55Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
10.56Property Management Agreement No. 513A dated August 18, 1993, by
and between ConCap Citadel Associates, Ltd. and Coventry
Properties, Inc.
10.57Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.58Property Management Agreement No. 514 dated June 1, 1993, by and
between the Partnership and Coventry Properties, Inc.
10.59Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.60Stock and Asset Purchase Agreement, dated December 8, 1994 (the
"Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"), Gordon
Realty Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and
certain other parties. (Incorporated by reference to Form 8-K
dated December 8, 1994).
10.61 Exercise of the Option (as defined in the Gordon Agreement),
dated December 8, 1994, between MAE-ICC and Gordon.
(Incorporated by reference to Form 8-K dated December 8,
1994).
10.62 Contracts related to refinancing of debt:
(a) Deed of Trust and Security Agreement dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
(b) Promissory Note dated March 27, 1995 between Nob Hill
Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina,
a North Carolina Corporation.
(c) Assignment of leases and Rents dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
10.63Multifamily Note dated November 30, 1995 between Briar Bay
Apartments, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.64Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.65Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.66Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.67Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.68Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
10.69Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
10.70Multifamily Note dated September 30, 1996 between Foothill Post
Ridge Associates, Ltd. Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings, Inc.
10.71 Exercise of the remaining portion of the option (as defined in
the Gordon Agreement), dated December 8, 1994 between MAE-ICC
and Gordon. (Incorporated by reference to Form 8-K dated
October 24, 1995).
10.72Multifamily Note dated November 1, 1996 between Post Ridge
Associates, Ltd., Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings, Inc.
10.73Amended and Restated Multifamily note dated November 1, 1996,
between Post Ridge Associates, Ltd., Limited Partnership, a
Tennessee Limited Partnership and Lehman Brothers Holding, Inc.
d/b/a Lehman Capital, a division of Lehman Brothers Holdings,
Inc.
10.74Multifamily Note dated November 1, 1996 between Consolidated
Capital Properties IV, a California Limited Partnership and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings, Inc.
10.75Mortgage and Security Agreement dated November 18, 1997, between
Southport CCP IV, L.L.C., a South Carolina limited liability
company and Lehman Brothers Holdings, Inc. d/b/a Lehman Capital,
a division of Lehman Brothers Holdings, Inc., a Delaware
Corporation.
10.76 Multifamily Note dated November 9, 1999 between Point West
Associates Limited Partnership, a Georgia limited partnership
and GMAC Commercial Mortgage Corporation, a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.77 Purchase and Sale Contract between Registrant and Overlook
Associates, Ltd, a Georgia limited partnership dated December
13, 1999, documenting sale of Overlook Apartments located in
Memphis, Tennessee. (Incorporated by reference to Annual
Report on Form 10-K ended December 31, 1999).
10.78Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS Commercial
Mortgage Co., L.P., a California limited partnership.
(Incorporated by reference to Annual Report on Form 10-K ended
December 31, 1999).
10.79Multifamily Note dated February 28, 2000 between ConCap Citadel
Associated, Ltd., a Texas limited partnership and ARCs Commercial
Mortgage Cl., L.P., a California corporation. (Incorporated by
reference to Annual Report on Form 10-K ended December 31, 1999).
10.80 Multifamily Note dated May 31, 2000 between Concap
Stratford Associates, Ltd., a Texas limited partnership and ARCS
Commercial Mortgage Co., L.P., a California limited partnership.
(Incorporated by reference to Quarterly Report on Form 10-Q for
quarter ended June 30, 2000.)
10.81Multifamily Note dated August 29, 2000 between ConCap Rivers
Edge Associates, Ltd., a Texas Limited Partnership, and GMAC
Commercial Mortgage Corporation, a California Corporation.
(Incorporated by reference to Quarterly Report on Form 10-Q for
quarter ended September 30, 2000.)
10.82Purchase and Sale Contract dated September 26, 2000 between
ConCap Stratford Associates, Ltd., a Texas Limited Partnership,
and First Worthing Company Limited, a Texas Limited Partnership.
10.83First Amendment to Purchase and Sale Contract dated October 26,
2000 between ConCap Stratford Associates, Ltd., a Texas Limited
Partnership, and First Worthing Company Limited, a Texas Limited
Partnership.
10.84Second Amendment to Purchase and Sale Contract dated October 31,
2000 between ConCap Stratford Associates, Ltd., a Texas Limited
Partnership, and First Worthing Company Limited, a Texas Limited
Partnership.
10.85 Multifamily Note dated September 27, 2001 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and AIMCO Properties, L.P., a Delaware
limited partnership, in favor of GMAC Commercial Mortgage
Corporation, a California corporation.
10.86 Multifamily Note dated December 20, 2001 between Post Ridge
Associates, Ltd., a Tennessee limited partnership, and GMAC
Commercial Mortgage Corporation, a California corporation.
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note A of Item 8 -
Financial Statements of this Form 10-K).
19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to
incorporate first amended Chapter 11 Plan filed October 27, 1992
and second amendments to Chapter 11 Plan of CCP/IV Associates,
Ltd. filed December 14, 1992) dated December 14, 1992, and filed
December 14, 1992, in the United States Bankruptcy Court for the
Middle District of Tennessee. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1992).
19.2 First amended disclosure statement to accompany Chapter 11
Plan, dated February 21, 1992, and amended October 27, 1992
filed by CCP/IV Associates, Ltd. filed October 27, 1992, in
the United States Bankruptcy Court for the Middle District of
Tennessee. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1992).
99 Certification of Chief Executive Officer and Chief Financial
Officer.
(b) Reports on Form 8-K filed during the fourth quarter of calendar year 2002:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: ConCap Equities, Inc.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Thomas C. Novosel
Thomas C. Novosel
Senior Vice President and
Chief Accounting Officer
Date: March 31, 2003
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 and on the date indicated.
/s/Patrick J. Foye Date: March 31, 2003
Patrick J. Foye
Executive Vice President and Director
/s/Thomas C. Novosel Date: March 31, 2003
Thomas C. Novosel
Senior Vice President and Chief Accounting Officer
CERTIFICATION
I, Patrick J. Foye, certify that:
1. I have reviewed this annual report on Form 10-K of Consolidated Capital
Properties IV;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual 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
annual report (the "Evaluation Date"); and
c) Presented in this annual 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
annual 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: March 31, 2003
/s/Patrick J. Foye
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 annual report on Form 10-K of Consolidated Capital
Properties IV;
2. Based on my knowledge, this annual 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 annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual 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 annual 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 annual 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
annual report (the "Evaluation Date"); and
c) Presented in this annual 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
annual 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: March 31, 2003
/s/Paul J. McAuliffe
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 Annual Report on Form 10-K of Consolidated Capital
Properties IV (the "Partnership"), for the year ended December 31, 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: March 31, 2003
/s/Paul J. McAuliffe
Name: Paul J. McAuliffe
Date: March 31, 2003
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.