UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact Name of Registrant as Specified in Its Charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
March 31, December 31,
2004 2003
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 2,361 $ 1,537
Receivables and deposits 1,027 1,163
Restricted escrows 819 748
Other assets 2,038 1,504
Investment properties:
Land 12,790 12,996
Buildings and related personal property 107,675 109,374
120,465 122,370
Less accumulated depreciation (94,381) (96,547)
26,084 25,823
$ 32,329 $ 30,775
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 630 $ 731
Tenant security deposit liabilities 471 510
Accrued property taxes 653 1,247
Other liabilities 1,064 1,107
Distributions payable 715 715
Due to affiliates 957 --
Mortgage notes payable 65,469 67,900
69,959 72,210
Partners' Deficit
General partners (6,895) (7,044)
Limited partners (342,773 units issued and
outstanding) (30,735) (34,391)
(37,630) (41,435)
$ 32,329 $ 30,775
Note: The balance sheet at December 31, 2003, has been derived from the audited
financial statements at that date but does not include all the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended
March 31,
2004 2003
(Restated)
Revenues:
Rental income $ 4,852 $ 4,721
Other income 593 637
Casualty gain 44 --
Total revenues 5,489 5,358
Expenses:
Operating 2,253 2,534
General and administrative 247 351
Depreciation 705 828
Interest 1,169 1,174
Property taxes 394 377
Total expenses 4,768 5,264
Income from continuing operations 721 94
(Loss) income from discontinued operations (54) 16
Gain on sale of discontinued operations 3,141 6,149
Net income $ 3,808 $ 6,259
Net income allocated to general partners (4%) $ 152 $ 250
Net income allocated to limited partners (96%) 3,656 6,009
$ 3,808 $ 6,259
Per limited partnership unit:
Income from continuing operations $ 2.12 $ 0.26
(Loss) income from discontinued operations (0.15) 0.05
Gain on sale of discontinued operations 8.70 17.22
Net income $ 10.67 $ 17.53
Distributions per limited partnership unit $ -- $ 2.22
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partners Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2003 342,773 $ (7,044) $(34,391) $(41,435)
Distributions to partners -- (3) -- (3)
Net income for the three months
ended March 31, 2004 -- 152 3,656 3,808
Partners' deficit at
March 31, 2004 342,773 $ (6,895) $(30,735) $(37,630)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2004 2003
Cash flows from operating activities:
Net income $ 3,808 $ 6,259
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 739 919
Amortization of loan costs 52 52
Casualty gain (44) --
Loss on early extinguishment of debt 48 13
Gain on sale of discontinued operations (3,141) (6,149)
Change in accounts:
Receivables and deposits 136 359
Other assets (634) 10
Accounts payable 42 (79)
Tenant security deposit liabilities (39) (44)
Accrued property taxes (594) (702)
Other liabilities (43) 297
Due to affiliates 212 149
Net cash provided by operating activities 542 1,084
Cash flows from investing activities:
Property improvements and replacements (1,796) (816)
Net (deposits to) withdrawals from restricted escrows (71) 299
Insurance proceeds from casualty 44 --
Proceeds from sale of discontinued operations 3,794 8,137
Net cash provided by investing activities 1,971 7,620
Cash flows from financing activities:
Payments on mortgage notes payable (227) (224)
Repayment of mortgage note payable (2,204) (4,229)
Advances from affiliates 900 --
Distributions to partners (3) (796)
Payments on advances from affiliates (155) --
Net cash used in financing activities (1,689) (5,249)
Net increase in cash and cash equivalents 824 3,455
Cash and cash equivalents at beginning of period 1,537 2,127
Cash and cash equivalents at end of period $ 2,361 $ 5,582
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest was approximately $1,277,000 and $1,366,000 for the three
months ended March 31, 2004 and 2003, respectively.
At December 31, 2003, property improvements and replacements of approximately
$243,000 were included in accounts payable.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of ConCap Equities, Inc. ("CEI" or the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three months ended March 31, 2004, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2004. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Partnership's Annual Report on Form 10-K for the fiscal
year ended December 31, 2003. The General Partner is a subsidiary of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statement of operations for the three months ended
March 31, 2003 has been restated to reflect the operations of Point West
Apartments, as (loss) income from discontinued operations due to its sale in
March 2004. In addition, the operations of South Port Apartments are shown as
(loss) income from discontinued operations due to its sale in March 2003.
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 Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursements of certain expenses incurred by affiliates on
behalf of the Partnership.
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all the Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$282,000 and $295,000 for the three months ended March 31, 2004 and 2003,
respectively, which is included in operating expenses and discontinued
operations.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $212,000 and $252,000 for the
three months ended March 31, 2004 and 2003, respectively, which is included in
general and administrative expenses and investment properties. Included in these
amounts are fees related to construction management services provided by an
affiliate of the General Partner of approximately $21,000 and $27,000 for the
three months ended March 31, 2004 and 2003, respectively. The construction
management service fees are calculated based on a percentage of current year
additions to investment properties. During the three months ended March 31,
2003, an affiliate of the General Partner refunded the Partnership approximately
$111,000 for overpayment of management reimbursements during 2002. At March 31,
2004, the Partnership owed an affiliate of the General Partner approximately
$212,000 of accrued accountable administrative expenses. Subsequent to March 31,
2004, this amount was paid in full.
The Partnership Agreement provides for a special management fee equal to 9% of
the total distributions made to the limited partners from cash flow provided by
operations to be paid to the General Partner for executive and administrative
management services. The Partnership paid approximately $68,000 under this
provision of the Partnership Agreement to the General Partner during the three
months ended March 31, 2003, which is included in general and administrative
expenses. There were no such special management fees paid or earned during the
three months ended March 31, 2004.
For acting as real estate broker in connection with the sale of South Port
Apartments, the General Partner was paid a real estate commission of
approximately $295,000 during the three months ended March 31, 2003. When the
Partnership terminates, the General Partner will have to return this commission
if the limited partners do not receive their original invested capital plus a 6%
per annum cumulative return.
In accordance with the Partnership Agreement, an affiliate of the General
Partner advanced the Partnership approximately $900,000 during the three months
ended March 31, 2004 to assist with the construction of Belmont Place
Apartments. During the same period, the Partnership repaid approximately
$160,000, which included approximately $5,000 of interest. There were no such
advances or repayments during the three months ended March 31, 2003. At March
31, 2004, the amount of the outstanding loans and accrued interest was
approximately $745,000 and is included in Due to affiliates on the accompanying
consolidated balance sheet. Interest on advances is charged at prime plus 2% or
6.00% at March 31, 2004. Interest expense was approximately $5,000 for the three
months ended March 31, 2004. There was no interest expense for the three months
ended March 31, 2003. Subsequent to March 31, 2004, the outstanding loan balance
was paid in full.
The Partnership insures 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 2004, the Partnership anticipates its cost for insurance
coverage and fees associated with policy claims administration provided by AIMCO
and its affiliates will be approximately $244,000. The Partnership was charged
approximately $350,000 for 2003.
Note C - Casualty Gain
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the three months ended March 31, 2004. The Partnership recognized a casualty
gain of approximately $44,000 during the three months ended March 31, 2004. The
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. Subsequent to March 31, 2004, the Partnership received insurance
proceeds of approximately $190,000. The Partnership anticipates that it will
record a gain of approximately $162,000 related to the casualty.
In October 2003, Citadel Village Apartments experienced damage due to a fire.
Management is currently trying to estimate the costs to repair that damage but
does not anticipate that the Partnership will record a loss related to this
casualty.
Note D - Disposition of Investment Properties
On March 31, 2004, the Partnership sold Point West Apartments to an unrelated
third party, for a gross sales price of $3,900,000. The net proceeds realized by
the partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the three months ended March 31,
2004, as a result of this sale. The property's operations, a loss of
approximately $54,000 and $17,000 for the three months ended March 31, 2004 and
2003, respectively, including revenues of approximately $208,000 and $198,000,
respectively, are included in (loss) income from discontinued operations. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $48,000 for the three months ended March 31, 2004 due to the write
off of unamortized loan costs, which is also included in (loss) income from
discontinued operations in the accompanying consolidated statements of
operations.
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,149,000 for the three months ended March 31,
2003, as a result of this sale. The property's operations, income of
approximately $33,000 for the three months ended March 31, 2003, including
revenues of approximately $340,000, are included in (loss) income from
discontinued operations. In addition, the Partnership recorded a loss on early
extinguishment of debt of approximately $13,000 for the three months ended March
31, 2003 due to the write-off of unamortized loan costs, which is also included
in (loss) income from discontinued operations in the accompanying consolidated
statements of operations.
Note E - Redevelopment of Belmont Place Apartments
During 2003, the General Partner has determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner has designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, partnership reserves and loans
from the General Partner. During the three months ended March 31, 2004,
approximately $1,309,000 of construction cost were incurred. These expenditures
included capitalized construction period interest of approximately $98,000 and
capitalized tax expenses of approximately $60,000.
Note F - Contingencies
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 purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that 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 that 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 sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, 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 Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
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 at least
one round of tender offers 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 provided 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. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. On April 23, 2004, the General Partner and
its affiliates filed a response brief in support of the settlement and the
judgment thereto. Plaintiffs have also filed a brief in support of the
settlement. Objector is scheduled to file a reply brief no later than May 13,
2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The Complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The Defendants have filed
an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
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
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Pursuant to a formal order of investigation received by AIMCO on March 29, 2004,
the Central Regional Office of the United States Securities and Exchange
Commission is conducting an investigation relating to certain matters. AIMCO
believes the areas of investigation include AIMCO's miscalculated monthly net
rental income figures in third quarter 2003, forecasted guidance, accounts
payable, rent concessions, vendor rebates, and capitalization of expenses and
payroll. AIMCO is cooperating fully. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations taken as a whole. Similarly, the General
Partner does not believe that the ultimate outcome will have a material adverse
effect on the Partnership's consolidated financial condition or results of
operations taken as a whole.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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. 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; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
The Partnership's investment properties consist of thirteen apartment complexes.
The following table sets forth the average occupancy of the properties for the
three months ended March 31, 2004 and 2003:
Average Occupancy
Property 2004 2003
The Apartments 89% 91%
Omaha, NE
Arbours of Hermitage Apartments 93% 94%
Nashville, TN
Briar Bay Racquet Club Apartments 94% 90%
Miami, FL
Belmont Place -- 6%
Marietta, GA
Citadel Apartments 92% 92%
El Paso, TX
Citadel Village Apartments 83% 61%
Colorado Springs, CO
Foothill Place Apartments 90% 83%
Salt Lake City, UT
Knollwood Apartments 89% 96%
Nashville, TN
Lake Forest Apartments 92% 94%
Omaha, NE
Nob Hill Villa Apartments 86% 88%
Nashville, TN
Post Ridge Apartments 90% 96%
Nashville, TN
Rivers Edge Apartments 93% 92%
Auburn, WA
Village East Apartments 60% 67%
Cimarron Hills, CO
The increase in occupancy at Briar Bay Apartments is due to increased marketing
efforts by management. The decrease in occupancy at Knollwood, Post Ridge and
Village East Apartments is due to a more stringent tenant acceptance policy in
order to create a more stable customer base. The increase in occupancy at
Citadel Village and Foothill Place Apartments is due to a more aggressive
marketing campaign and the use of competitive pricing strategies in their
respective markets.
The General Partner determined that Belmont Place Apartments suffered from
severe structural defects in the buildings' foundation and as such, demolished
the property. The General Partner has designed and approved a redevelopment plan
for the property. Site work on the redevelopment began during the fourth quarter
of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, partnership reserves and loans
from the General Partner.
The Partnership's financial results are dependent upon a number of factors
including the ability to attract and maintain tenants at the investment
properties, interest rates on mortgage loans, costs incurred to operate the
investment properties, general economic conditions and weather. As part of the
ongoing business plan of the Partnership, the General Partner monitors the
rental market environment 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, the General Partner may use rental concessions and
rental rate reductions to offset softening market conditions, accordingly, there
is no guarantee that the General Partner will be able to sustain such a plan.
Further, a number of factors which are outside the control of the Partnership
such as the local economic climate and weather can adversely or positively
impact the Partnership's financial results.
Results of Operations
The Partnership's net income for the three months ended March 31, 2004 was
approximately $3,808,000, compared to net income of approximately $6,259,000 for
the three months ended March 31, 2003. The decrease in net income is due to a
decrease in the gain on sale of discontinued operations.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statement of operations for the three months ended
March 31, 2003 has been restated to reflect the operations of Point West
Apartments, as (loss) income from discontinued operations due to its sale in
March 2004. In addition, the operations of South Port Apartments are shown as
(loss) income from discontinued operations due to its sale in March 2003.
On March 31, 2004, the Partnership sold Point West Apartments to an unrelated
third party, for a gross sales price of $3,900,000. The net proceeds realized by
the Partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the three months ended March 31,
2004, as a result of this sale. The property's operations, a loss of
approximately $54,000 and $17,000 for the three months ended March 31, 2004 and
2003, respectively, including revenues of approximately $208,000 and $198,000,
respectively, are included in (loss) income from discontinued operations. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $48,000 for the three months ended March 31, 2004 due to the write
off of unamortized loan costs, which is also included in (loss) income from
discontinued operations in the accompanying consolidated statements of
operations.
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing cost of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,149,000 for the three months ended March 31,
2003, as a result of this sale. The property's operations, income of
approximately $33,000 for the three months ended March 31, 2003, including
revenues of approximately $340,000, are included in (loss) income from
discontinued operations. In addition, the Partnership recorded a loss on early
extinguishment of debt of approximately $13,000 for the three months ended March
31, 2003 due to the write-off of unamortized loan costs, which is also included
in (loss) income from discontinued operations in the accompanying consolidated
statements of operations.
Excluding the impact of the discontinued operations and the gain on sale of
discontinued operations, the Partnership's income from continuing operations for
the three months ended March 31, 2004 was approximately $721,000 compared to
income from continuing operations of approximately $94,000 for the three months
ended March 31, 2003. The increase in income from continuing operations is due
to an increase in total revenues and a decrease in total expenses. The increase
in total revenues is due to an increase in rental income and a casualty gain
recognized in 2004 partially offset by a decrease in other income. Rental income
increased due to a significant increase in occupancy at Citadel Village
Apartments, as well as smaller increases at three other properties, and a
decrease in bad debt expense at eight of the Partnership's properties partially
offset by a decrease in average rental rates at six of the thirteen investment
properties and decreases in occupancy at eight of the investment properties.
Other income decreased due to decreases in late charges, lease cancellation fees
and cleaning and damage fees at most of the investment properties.
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the three months ended March 31, 2004. The Partnership recognized a casualty
gain of approximately $44,000 during the three months ended March 31, 2004. The
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. Management is currently trying to estimate the costs to repair the
damaged units but does not anticipate that the Partnership will record a loss
related to this casualty.
In October 2003, Citadel Village Apartments experienced damage due to a fire.
Management is currently trying to estimate the costs to repair that damage but
does not anticipate that the Partnership will record a loss related to this
casualty.
Total expenses decreased due to decreases in operating, general and
administrative and depreciation expenses. Operating expense decreased due to
decreases in property and advertising expenses. Property and advertising
expenses decreased due to the ongoing construction project at Belmont Place
Apartments which resulted in the property not recognizing any property or
advertising expense during the three months ended March 31, 2004. Depreciation
expense decreased due to some fixed assets becoming fully depreciated at
Foothill Place Apartments in 2003. General and administrative expense decreased
due to a decrease in management reimbursements to the General Partner as allowed
under the Partnership Agreement and a decrease in the 9% management fee on
distributions from operating cash flows. Also included in general and
administrative expenses for the three months ended March 31, 2004 and 2003 are
costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
Liquidity and Capital Resources
At March 31, 2004, the Partnership held cash and cash equivalents of
approximately $2,361,000 compared to approximately $5,582,000 at March 31, 2003.
The increase in cash and cash equivalents of approximately $824,000 from the
Partnership's year ended December 31, 2003, is due to approximately $542,000 of
cash provided by operating activities and approximately $1,971,000 of cash
provided by investing activities, partially offset by approximately $1,689,000
of cash used in financing activities. Cash provided by investing activities
consisted of net proceeds received from the sale of Point West Apartments and
insurance proceeds received from the casualty at Lake Forest Apartments
partially offset by net deposits to escrow accounts maintained by the mortgage
lenders and property improvements and replacements. Cash used in financing
activities consisted of payments of principal made on the mortgages encumbering
the Partnership's properties, repayment of the mortgage encumbering Point West
Apartments, distributions to the partners and payment on advances from an
affiliate of the General Partner partially offset by advances from an affiliate
of the General Partner. The Partnership invests its working capital reserves in
interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance and is studying new
federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act
of 2002 mandates or suggests additional compliance measures with regard to
governance, disclosure, audit and other areas. In light of these changes, the
Partnership expects that it will incur higher expenses related to compliance,
including increased legal and audit fees. Capital improvements planned for each
of the Partnership's properties are detailed below.
The Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $19,000 of capital improvements at The Apartments, consisting
primarily of floor covering replacements, water heaters, and heating system
upgrades. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $93,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Arbours of Hermitage Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $19,000 of capital improvements at Arbours of Hermitage
Apartments, consisting primarily of structural improvements and floor covering
and appliance replacements. These improvements were funded from operating cash
flow. The Partnership evaluates the capital improvement needs of the property
during the year and currently expects to complete an additional $174,000 in
capital improvements during the remainder of 2004. Additional capital
improvements may be considered and will depend on the physical condition of the
property as well as the anticipated cash flow generated by the property.
Briar Bay Racquet Club Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $9,000 of capital improvements at Briar Bay Racquet Club
Apartments, consisting primarily of appliance and floor covering replacements.
These improvements were funded from operating cash flow. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $98,000 in capital improvements
during the remainder of 2004. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and the anticipated cash flow generated by the property.
Belmont Place Apartments
The General Partner has determined that Belmont Place Apartments suffered from
severe structural defects in the building's foundation and as such, has
demolished the property. The General Partner has designed and approved a
redevelopment plan for the property that requires the complete demolition and
reconstruction of the apartment complex. The property was completely demolished
and site work on the redevelopment began during the fourth quarter of 2003.
The Partnership has entered into a construction contract with Casden Builders,
Inc. (a related party) to develop the new Belmont Place Apartments at an
estimated cost of approximately $26.4 million. The construction contract
provides for the payment of the cost of the work plus a fee without a maximum
guaranteed price. Construction is expected to be completed in 2005. The
Partnership plans to fund these construction expenditures from operating cash
flow, proceeds from a cross collateralized loan, partnership reserves and loans
from the General Partner. During the three months ended March 31, 2004,
approximately $1,309,000 of construction costs were incurred. These expenditures
included capitalized construction period interest of approximately $98,000 and
capitalized tax expenses of approximately $60,000.
Citadel Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $3,000 of capital improvements at Citadel Apartments, consisting
primarily of air conditioning unit and appliance replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $141,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Citadel Village Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $26,000 of capital improvements at Citadel Village Apartments,
consisting primarily of appliance and floor covering replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $41,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Foothill Place Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $52,000 of capital improvements at Foothill Place Apartments,
consisting primarily of water heater and plumbing fixture installations,
appliance and floor covering replacements and structural upgrades. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $196,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Knollwood Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $15,000 of capital improvements at Knollwood Apartments,
consisting primarily of water heater, appliance and floor covering replacements.
These improvements were funded from operating cash flow. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $164,000 in capital improvements
during the remainder of 2004. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as the
anticipated cash flow generated by the property.
Lake Forest Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $21,000 of capital improvements at Lake Forest Apartments,
consisting primarily of structural upgrades and floor covering and appliance
replacements. These improvements were funded from operating cash flow. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $151,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Nob Hill Villa Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $49,000 of capital improvements at Nob Hill Villa Apartments,
consisting primarily of appliance and floor covering replacements, water heater
replacements and plumbing fixtures. These improvements were funded from
operating cash flow. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$211,000 in capital improvements during the remainder of 2004. Additional
capital improvements may be considered and will depend on the physical condition
of the property as well as replacement reserves and anticipated cash flow
generated by the property.
Point West Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $3,000 of capital improvements at Point West Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The property was sold on March 31, 2004.
Post Ridge Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $9,000 of capital improvements at Post Ridge Apartments,
consisting primarily of parking area improvements and floor covering and water
heater replacements. These improvements were funded from operating cash flow.
The Partnership evaluates the capital improvement needs of the property during
the year and currently expects to complete an additional $74,000 in capital
improvements during the remainder of 2004. Additional capital improvements may
be considered and will depend on the physical condition of the property as well
as the anticipated cash flow generated by the property.
Rivers Edge Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $9,000 of capital improvements at Rivers Edge Apartments,
consisting primarily of floor covering and appliance replacements. These
improvements were funded from operating cash flow. The Partnership evaluates the
capital improvement needs of the property during the year and currently expects
to complete an additional $57,000 in capital improvements during the remainder
of 2004. Additional capital improvements may be considered and will depend on
the physical condition of the property as well as the anticipated cash flow
generated by the property.
Village East Apartments
During the three months ended March 31, 2004, the Partnership completed
approximately $10,000 of capital improvements at Village East Apartments,
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The Partnership evaluates the capital
improvement needs of the property during the year and currently expects to
complete an additional $65,000 in capital improvements during the remainder of
2004. Additional capital improvements may be considered and will depend on the
physical condition of the property as well as the anticipated cash flow
generated by the property.
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 mortgage
indebtedness encumbering the Partnership's investment properties of
approximately $65,469,000 matures at various dates between 2005 and 2022 with
balloon payments of approximately $42,280,000 and $173,000 due in 2005 and 2022,
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.
The Partnership distributed the following amounts during the three months ended
March 31, 2004 and 2003 (in thousands except per unit data):
Three Months Per Three Months Per
Ended Limited Ended Limited
March 31, Partnership March 31, Partnership
2004 Unit 2003 Unit
Operations $ -- $ -- $ 792 $ 2.22
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $3,000 and
$4,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships during the three months ended March 31, 2004 and 2003,
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 distributions to its
partners during the remainder of 2004 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 202,937.50 limited partnership units
(the "Units") in the Partnership representing 59.21% of the outstanding Units at
March 31, 2004. 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 in exchange for cash or a combination of cash and
units in AIMCO Properties, L.P., the operating partnership of AIMCO, either
through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.21% of the
outstanding units, AIMCO is in a position to control all such voting decisions
with respect to the Partnership. Although the General Partner owes fiduciary
duties to the limited partners of the Partnership, the General Partner also owes
fiduciary duties to AIMCO as its sole stockholder. As a result, the duties of
the General Partner, as general partner, to the Partnership and its limited
partners may come into conflict with the duties of the General Partner to AIMCO,
as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States which require the Partnership
to make estimates and assumptions. The Partnership believes that of its
significant accounting policies, the following may involve a higher degree of
judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, 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 impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at March 31, 2004, a 100
basis point increase or decrease in market interest rates would not have a
material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at March 31,
2004. The interest rates represent the weighted-average rates. The fair value of
the debt obligations approximated the recorded value as of March 31, 2004.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2004 $ 654 7.78%
2005 43,066 7.36%
2006 797 7.54%
2007 860 7.54%
2008 928 7.54%
Thereafter 19,164 7.36%
Total $65,469
ITEM 4. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of 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, has evaluated
the effectiveness of the Partnership's disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on such evaluation, 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 concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that 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 that 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 sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, 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 Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
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 at least
one round of tender offers 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 provided 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. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. On April 23, 2004, the Managing General
Partner and its affiliates filed a response brief in support of the settlement
and the judgment thereto. Plaintiffs have also filed a brief in support of the
settlement. Objector is scheduled to file a reply brief no later than May 13,
2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. On March 5, 2004 Plaintiffs filed an
amended complaint also naming NHP Management Company, which is also an affiliate
of the General Partner. The Complaint is styled as a Collective Action under the
FLSA and seeks to certify state subclasses in California, Maryland, and the
District of Columbia. Specifically, the plaintiffs contend that AIMCO Properties
L.P. failed to compensate maintenance workers for time that they were required
to be "on-call". Additionally, the Complaint alleges AIMCO Properties L.P.
failed to comply with the FLSA in compensating maintenance workers for time that
they worked in responding to a call while "on-call". The Defendants have filed
an answer to the Amended Complaint denying the substantive allegations.
Discovery is currently underway.
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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
3.1 Certificate of Limited Partnership, (incorporated by
reference to the Registration statement of the
Partnership (file No. 2-74353), filed October 9, 1981,
as amended to date).
3.2 Limited Partnership Agreement (Exhibit to the Prospectus
of the Partnership, filed October 12, 1981).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
b) Reports on Form 8-K filed during the quarter ended March 31,
2004:
Current report on Form 8-K dated March 31, 2004 and filed on
April 13, 2004 disclosing the sale of Point West Apartments to
an unrelated third party.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President
and Chief Accounting Officer
Date: May 13, 2004
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 13, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of ConCap Equities,
Inc., equivalent of the chief executive
officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Thomas M. Herzog, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Properties IV;
2. Based on my knowledge, this 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
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, 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 report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: May 13, 2004
/s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President and Chief
Accounting Officer of ConCap
Equities, Inc., equivalent of the
chief financial officer of the
Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report on Form 10-Q of Consolidated Capital
Properties IV (the "Partnership"), for the quarterly period ended March 31, 2004
as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Martha L. Long, as the equivalent of the chief executive officer of
the Partnership, and Thomas M. Herzog, 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/Martha L. Long
Name: Martha L. Long
Date: May 13, 2004
/s/Thomas M. Herzog
Name: Thomas M. Herzog
Date: May 13, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.