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 September 30, 2004
or
[ ] 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
(Registrant's telephone number)
Check 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 proceeding
12 months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the past
90 days. Yes X No ___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
September 30, December 31,
2004 2003
(Unaudited) (Note)
(Restated)
Assets
Cash and cash equivalents $ 841 $ 1,537
Receivables and deposits 1,142 1,163
Restricted escrows 960 748
Other assets 1,825 1,388
Assets held for sale (Note A) 3,745 4,479
Investment properties:
Land 11,216 11,216
Buildings and related personal property 98,945 84,614
110,161 95,830
Less accumulated depreciation (75,587) (74,370)
34,574 21,460
$ 43,087 $ 30,775
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 2,696 $ 731
Tenant security deposit liabilities 323 352
Accrued property taxes 965 1,014
Other liabilities 898 1,107
Due to affiliates (Note B) 10,129 --
Distributions payable 715 715
Mortgage notes payable 53,653 55,703
Liabilities related to assets held for sale (Note A) 10,259 12,588
79,638 72,210
Partners' Deficit
General partners (6,855) (7,044)
Limited partners (342,773 units issued and
outstanding) (29,696) (34,391)
(36,551) (41,435)
$ 43,087 $ 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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
(Restated) (Restated)
Revenues:
Rental income $ 4,033 $ 4,148 $11,727 $11,936
Other income 494 533 1,499 1,466
Casualty gain (Note C) 129 23 528 23
Total revenues 4,656 4,704 13,754 13,425
Expenses:
Operating 2,254 2,016 6,052 5,608
General and administrative 240 383 750 1,005
Depreciation 520 637 1,600 2,081
Interest 971 945 2,872 2,841
Property taxes 264 329 886 893
Loss on early extinguishment of debt (Note E) 278 -- 278 --
Total expenses 4,527 4,310 12,438 12,428
Income from continuing operations 129 394 1,316 997
Income from discontinued operations (Note A) 205 172 434 345
Gain on sale of discontinued operations
(Note D) -- 83 3,141 6,232
Net income $ 334 $ 649 $ 4,891 $ 7,574
Net income allocated to general partners (4%) $ 13 $ 26 $ 196 $ 303
Net income allocated to limited partners (96%) 321 623 4,695 7,271
$ 334 $ 649 $ 4,891 $ 7,574
Per limited partnership unit:
Income from continuing operations $ 0.37 $ 1.10 $ 3.69 $ 2.79
Income from discontinued operations 0.57 0.49 1.21 0.97
Gain on sale of discontinued operations -- 0.23 8.80 17.45
Net income $ 0.94 $ 1.82 $ 13.70 $ 21.21
Distributions per limited partnership unit $ -- $ 2.90 $ -- $ 15.62
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 -- (7) -- (7)
Net income for the nine months
ended September 30, 2004 -- 196 4,695 4,891
Partners' deficit at
September 30, 2004 342,773 $ (6,855) $(29,696) $(36,551)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2004 2003
Cash flows from operating activities:
Net income $ 4,891 $ 7,574
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,992 2,572
Amortization of loan costs 107 156
Casualty gain (528) (23)
Loss on early extinguishment of debt 326 13
Gain on sale of discontinued operations (3,141) (6,232)
Change in accounts:
Receivables and deposits 21 (103)
Other assets (473) (445)
Accounts payable 2 (276)
Tenant security deposit liabilities (67) (2)
Accrued property taxes 13 50
Other liabilities (209) 191
Due to affiliates 75 149
Net cash provided by operating activities 3,009 3,624
Cash flows from investing activities:
Property improvements and replacements (13,141) (2,431)
Net (deposits to) withdrawals from restricted escrows (212) 309
Insurance proceeds received 528 23
Net proceeds from sale of discontinued operations 3,794 8,137
Net cash (used in) provided by investing activities (9,031) 6,038
Cash flows from financing activities:
Payments on mortgage notes payable (609) (654)
Proceeds from mortgage notes payable 3,810 --
Repayment of mortgage notes payable (7,604) (4,229)
Loan costs and prepayment penalties paid (318) --
Advances from affiliate 12,073 --
Payments on advances from affiliate (2,019) --
Distributions to partners (7) (5,432)
Net cash provided by (used in) financing activities 5,326 (10,315)
Net decrease in cash and cash equivalents (696) (653)
Cash and cash equivalents at beginning of period 1,537 2,127
Cash and cash equivalents at end of period $ 841 $ 1,474
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
Cash paid for interest was approximately $3,922,000 and $4,084,000 for the nine
months ended September 30, 2004 and 2003, respectively.
At September 30, 2004 and December 31, 2003, property improvements and
replacements of approximately $2,106,000 and $243,000, respectively, were
included in accounts payable.
Distributions payable and distributions to partners were adjusted by
approximately $144,000 for non-cash activity for the nine months ended September
30, 2003.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (the "Partnership" or "Registrant") have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of ConCap Equities, Inc. ("CEI" or the "General
Partner"), all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three and nine months ended September 30, 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 balance sheet as of December 31, 2003 and the
consolidated statements of operations as of January 1, 2003 have been restated
to reflect the operations of Point West Apartments as income from discontinued
operations due to its sale in March 2004 and the operations of Briar Bay and Nob
Hill Villa Apartments as income from discontinued operations due to their sales
subsequent to September 30, 2004 (see Note H). In addition, the operations of
South Port Apartments are shown as income from discontinued operations due to
its sale in March 2003.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends 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
$819,000 and $881,000 for the nine months ended September 30, 2004 and 2003,
respectively, which is included in operating expenses and income from
discontinued operations.
An affiliate of the General Partner charged reimbursement of accountable
administrative expenses amounting to approximately $715,000 and $624,000 for the
nine months ended September 30, 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 $156,000 and $50,000 for
the nine months ended September 30, 2004 and 2003, respectively. The
construction management service fees are calculated based on a percentage of
current year additions to investment properties. At September 30, 2004, the
Partnership owed approximately $57,000 for such reimbursements, which is
included in due to affiliates.
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 $158,000 under this
provision of the Partnership Agreement to the General Partner during the nine
months ended September 30, 2003, which is included in general and administrative
expenses. There were no such special management fees paid or earned during the
nine months ended September 30, 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 nine months ended September 30, 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 $12,073,000 during the nine
months ended September 30, 2004 to assist with the construction of Belmont Place
Apartments and to repay the mortgage encumbering the property (see Note E).
During the same period, the Partnership repaid approximately $2,033,000, which
included approximately $14,000 of interest. There were no such advances or
repayments during the nine months ended September 30, 2003. Interest on advances
is charged at prime plus 2% or 6.75% at September 30, 2004. Interest expense was
approximately $32,000 for the nine months ended September 30, 2004. There was no
interest expense for the nine months ended September 30, 2003. At September 30,
2004, the Partnership owed approximately $10,072,000 for advances and accrued
interest, which is included in due to affiliates. Subsequent to September 30,
2004, the Partnership received additional advances of approximately $1,915,000
to pay construction invoices for Belmont Place Apartments.
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 the nine months ended September 30, 2004 and 2003, the
Partnership was charged by AIMCO and its affiliates approximately $388,000 and
$350,000, respectively, for insurance coverage and fees associated with policy
claims administration.
Note C - Casualty Gains
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the nine months ended September 30, 2004. The Partnership recognized a
casualty gain of approximately $92,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of its
rental units. Insurance proceeds of approximately $44,000 were received during
the nine months ended September 30, 2004. The Partnership recognized a casualty
gain of approximately $44,000 during the nine months ended September 30, 2004 as
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. During the nine months ended September 30, 2004, the Partnership
received insurance proceeds of approximately $319,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $290,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of its
rental units. Insurance proceeds of approximately $47,000 were received during
the nine months ended September 30, 2004. The Partnership recognized a casualty
gain of approximately $47,000 during the nine months ended September 30, 2004 as
the damaged assets were fully depreciated at the time of the casualty.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the nine months ended September 30, 2004. The Partnership recognized a
casualty gain of approximately $55,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In January 2003, The Apartments had a fire, which damaged five apartment units
and a hallway. Insurance proceeds of approximately $23,000 were received during
the nine months ended September 30, 2003. The Partnership recognized a casualty
gain of approximately $23,000 during the nine months ended September 30, 2003 as
the damaged assets were fully depreciated at the time of the casualty.
Note D - Disposition of Investment Properties
On March 31, 2004, the Partnership sold Point West Apartments to a 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 nine months ended September
30, 2004, as a result of this sale. The property's operations, a loss of
approximately $87,000 and $65,000 for the nine months ended September 30, 2004
and 2003, respectively, including revenues of approximately $189,000 and
$607,000, respectively, are included in income from discontinued operations. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $48,000 for the nine months ended September 30, 2004 due to the
write off of unamortized loan costs, which is also included in income from
discontinued operations in the accompanying consolidated statements of
operations.
On March 28, 2003, the Partnership sold South Port Apartments to a 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 $6,232,000 for the nine months ended September
30, 2003, as a result of this sale. The property's operations, income of
approximately $8,000 for the nine months ended September 30, 2003, including
revenues of approximately $327,000, are included in income from discontinued
operations. In addition, the Partnership recorded a loss on early extinguishment
of debt of approximately $13,000 for the nine months ended September 30, 2003
due to the write-off of unamortized loan costs, which is also included in income
from discontinued operations in the accompanying consolidated statements of
operations.
Note E - Redevelopment of Belmont Place Apartments
During 2003, 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. During the nine months ended September 30, 2004,
approximately $12,332,000 of construction costs were incurred. These
expenditures included capitalized construction period interest of approximately
$299,000 and capitalized property tax expense of approximately $186,000. The
Partnership anticipates additional construction costs of approximately $6.9
million during the remainder of 2004.
As part of the redevelopment, during the nine months ended September 30, 2004,
an affiliate of the General Partner advanced the Partnership approximately
$5,600,000 to repay the mortgage and associated accrued interest encumbering
Belmont Place Apartments. The loan was scheduled to mature in December 2005. In
addition to repaying the mortgage of approximately $5,400,000, the Partnership
paid prepayment penalties of approximately $169,000 and wrote off unamortized
loan costs of approximately $109,000, which is shown as loss on early
extinguishment of debt on the accompanying consolidated statements of
operations.
Note F - Second Mortgage Financing
On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest
Apartments in the amount of $2,500,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on
the financing were approximately $83,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Lake Forest Apartments.
The modification of terms consisted of an interest rate of 7.43%, a payment of
approximately $44,000 due on July 1, 2004 and monthly payments of approximately
$42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $5,255,000 is due. The previous
terms consisted of monthly payments of approximately $51,000 with a stated
interest rate of 7.13% through the maturity date of October 1, 2021, at which
time the loan was scheduled to be fully amortized.
On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel
Apartments in the amount of $1,310,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on
the financing were approximately $66,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Citadel Apartments. The
modification of terms consisted of an interest rate of 8.55%, a payment of
approximately $38,000 due on July 1, 2004 and monthly payments of approximately
$33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $3,748,000 is due. The previous
terms consisted of monthly payments of approximately $40,000 with a stated
interest rate of 8.25% through the maturity date of March 1, 2020, at which time
the loan was scheduled to be fully amortized.
Note G - 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 captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. 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 (the "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. The Objector filed a second
appeal challenging the court's use of a referee and its order requiring Objector
to pay those fees.
On January 28, 2004, the Objector filed his opening brief in the Appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. The plaintiffs have also
filed a brief in support of the settlement. On June 4, 2004, Objector filed a
reply to the briefs submitted by the General Partner and Plaintiffs. In addition
both the Objector and plaintiffs filed briefs in connection with the second
appeal. The Court of Appeals heard oral argument on both appeals on September
22, 2004 and took the matters under submission.
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.
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 the 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.
Some discovery has taken place and settlement negotiations continue. Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
financial condition or results of operations. 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.
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.
As previously disclosed, the Central Regional Office of the United States
Securities and Exchange Commission (the "SEC") is conducting a formal
investigation relating to certain matters. Although the staff of the SEC is not
limited in the areas that it may investigate, 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, capitalization of payroll and certain other costs, and tax
credit transactions. AIMCO is cooperating fully. AIMCO is not able to predict
when the matter will be resolved. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations. 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.
Note H - Subsequent Event
On October 29, 2004, the Partnership sold Nob Hill Villa Apartments to a third
party, for net proceeds of approximately $10,518,000 after payment of closing
costs. The Partnership used approximately $6,374,000 of the net proceeds to
repay the mortgage encumbering the property. The Partnership anticipates that it
will recognize a gain on the sale of approximately $8,189,000. In addition, the
Partnership recorded a loss on early extinguishment of debt of approximately
$20,000 as a result of unamortized loan costs being written off. The property's
operations, income of approximately $9,000 and loss of approximately $81,000 for
the nine months ended September 30, 2004 and 2003, respectively, include
revenues of approximately $1,935,000 and $1,968,000, respectively, and are
included in income from discontinued operations.
On October 29, 2004, the Partnership sold Briar Bay Racquet Club Apartments to a
third party, for net proceeds of approximately $19,547,000 after payment of
closing costs. The Partnership used approximately $3,520,000 of the net proceeds
to repay the mortgage encumbering the property. The Partnership anticipates that
it will recognize a gain on the sale of approximately $17,961,000. In addition,
the Partnership recorded a loss on early extinguishment of debt of approximately
$114,000 as a result of unamortized loan costs being written off and prepayment
penalties paid. The property's operations, income of approximately $512,000 and
$483,000 for the nine months ended September 30, 2004 and 2003, respectively,
include revenues of approximately $1,425,000 and $1,344,000, respectively, and
are included in income from discontinued operations.
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 eleven apartment complexes.
The following table sets forth the average occupancy of the properties for the
nine months ended September 30, 2004 and 2003:
Average Occupancy
Property 2004 2003
The Apartments (1) 91% 94%
Omaha, NE
Arbours of Hermitage Apartments 94% 95%
Nashville, TN
Belmont Place -- 2%
Marietta, GA
Citadel Apartments (2) 92% 95%
El Paso, TX
Citadel Village Apartments (3) 87% 78%
Colorado Springs, CO
Foothill Place Apartments (4) 86% 90%
Salt Lake City, UT
Knollwood Apartments (4) 90% 95%
Nashville, TN
Lake Forest Apartments 95% 95%
Omaha, NE
Post Ridge Apartments (4) 91% 95%
Nashville, TN
Rivers Edge Apartments (5) 96% 92%
Auburn, WA
Village East Apartments (3) 77% 70%
Cimarron Hills, CO
(1) The General Partner attributes the decrease in occupancy at The Apartments
to damage sustained in an ice storm in February 2004 which caused many
tenants to vacate the property.
(2) The General Partner attributes the decrease in occupancy at Citadel
Apartments to military deployments in the local area.
(3) The General Partner attributes the increase in occupancy at Citadel
Village and Village East Apartments to a more aggressive marketing
campaign and the use of competitive pricing strategies in the local market
coupled with the return of military personnel from overseas deployment.
(4) The General Partner attributes the decrease in occupancy at Knollwood,
Foothill Place and Post Ridge Apartments to a more stringent tenant
acceptance policy in order to create a more stable customer base coupled
with units being uninhabitable due to fire damage at Knollwood and roofing
issues at Post Ridge.
(5) The General Partner attributes the increase in occupancy at Rivers Edge
Apartments to a more aggressive marketing campaign and the use of
competitive pricing strategies in the local market.
During 2003, 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 depend 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 that are outside the control of the Partnership such as the
local economic climate and weather can adversely or positively affect the
Partnership's financial results.
Results of Operations
The Partnership's net income for the three and nine months ended September 30,
2004 was approximately $334,000 and $4,891,000, compared to net income of
approximately $649,000 and $7,574,000 for the three and nine months ended
September 30, 2003, respectively. The decrease in net income for the three
months ended September 30, 2004 is due to a decrease in gain on sale of
discontinued operations, a decrease in total revenues and an increase in total
expenses. The decrease in net income for the nine months ended September 30,
2004 is primarily due to the decrease in gain on sale of discontinued
operations.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated balance sheet as of December 31, 2003 and the
consolidated statements of operations as of January 1, 2003 have been restated
to reflect the operations of Point West Apartments as income from discontinued
operations due to its sale in March 2004 and the operations of Briar Bay and Nob
Hill Villa Apartments as income from discontinued operations due to their sales
subsequent to September 30, 2004. In addition, the operations of South Port
Apartments are shown as income from discontinued operations due to its sale in
March 2003.
The operations of Briar Bay Apartments were income of approximately $512,000 and
$483,000 for the nine months ended September 30, 2004 and 2003, respectively,
and include revenues of approximately $1,425,000 and 1,344,000, respectively.
The operations of Nob Hill Villa Apartments were income of approximately $9,000
and loss of approximately $81,000 for the nine months ended September 30, 2004
and 2003, respectively, and include revenues of approximately $1,935,000 and
$1,968,000, respectively. These amounts are included in income from discontinued
operations in the accompanying consolidated statements of operations.
On March 31, 2004, the Partnership sold Point West Apartments to a 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 nine months ended September
30, 2004, as a result of this sale. The property's operations, a loss of
approximately $87,000 and $65,000 for the nine months ended September 30, 2004
and 2003, respectively, including revenues of approximately $189,000 and
$607,000, respectively, are included in income from discontinued operations. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $48,000 for the nine months ended September 30, 2004 due to the
write off of unamortized loan costs, which is also included in income from
discontinued operations in the accompanying consolidated statements of
operations.
On March 28, 2003, the Partnership sold South Port Apartments to a 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 $6,232,000 for the nine months ended September
30, 2003, as a result of this sale. The property's operations, income of
approximately $8,000 for the nine months ended September 30, 2003, including
revenue of approximately $327,000, is included in income from discontinued
operations. In addition, the Partnership recorded a loss on early extinguishment
of debt of approximately $13,000 for the nine months ended September 30, 2003
due to the write-off of unamortized loan costs, which is also included in income
from discontinued operations in the accompanying consolidated statements of
operations.
Excluding the discontinued operations and gain on sales, the Partnership's
income from continuing operations for the three and nine months ended September
30, 2004 was approximately $129,000 and $1,316,000, respectively, compared to
income from continuing operations of approximately $394,000 and $997,000 for the
corresponding periods in 2003. Income from continuing operations decreased for
the three month period due to a decrease in total revenues and an increase in
total expenses. Income from continuing operations increased for the nine month
period due to an increase in total revenues.
Total revenues for the three month period decreased due to decreases in rental
and other income partially offset by an increase in casualty gains recognized in
2004. Total revenues for the nine month period increased due to casualty gains
recognized in 2004 and an increase in other income partially offset by a
decrease in rental income. Rental income for both periods decreased due to
decreases in occupancy at six of the investment properties and decreases in the
average rental rate at four of the investment properties partially offset by
increases in occupancy at three of the investment properties and a decrease in
bad debt expense at most of the investment properties. Other income for the
three month period decreased due to a decrease in late charges and
non-refundable fees at most of the investment properties and a decrease in lease
cancellation fees at four of the investment properties. Other income for the
nine month period increased due to an increase in cleaning and damage charges
and lease cancellation fees, primarily at Foothill Place Apartments.
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the nine months ended September 30, 2004. The Partnership recognized a
casualty gain of approximately $92,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of its
rental units. Insurance proceeds of approximately $44,000 were received during
the nine months ended September 30, 2004. The Partnership recognized a casualty
gain of approximately $44,000 during the nine months ended September 30, 2004 as
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. During the nine months ended September 30, 2004, the Partnership
received insurance proceeds of approximately $319,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $290,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of its
rental units. Insurance proceeds of approximately $47,000 were received during
the nine months ended September 30, 2004. The Partnership recognized a casualty
gain of approximately $47,000 during the nine months ended September 30, 2004 as
the damaged assets were fully depreciated at the time of the casualty.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the nine months ended September 30, 2004. The Partnership recognized a
casualty gain of approximately $55,000 during the nine months ended September
30, 2004 as the damaged assets were fully depreciated at the time of the
casualty.
In January 2003, The Apartments had a fire, which damaged five apartment units
and a hallway. Insurance proceeds of approximately $23,000 were received during
the nine months ended September 30, 2003. The Partnership recognized a casualty
gain of approximately $23,000 during the nine months ended September 30, 2003 as
the damaged assets were fully depreciated at the time of the casualty.
Total expenses for the three month period increased due to an increase in
operating expense and the loss on early extinguishment of debt recognized in
2004 partially offset by decreases in general and administrative, depreciation
and property tax expenses. Although total expenses for the nine month period
remained relatively constant, an increase in operating expense and the loss on
early extinguishment of debt recognized in 2004 were offset by decreases in
general and administrative and depreciation expenses. Operating expense for both
periods increased due to increases in property and maintenance expenses.
Property expense increased due to an increase in payroll and related benefits
and utilities at most of the investment properties partially offset by the
ongoing construction project at Belmont Place Apartments which resulted in the
property not incurring significant property expenses in 2004. Maintenance
expense increased due to an increase in contract labor at most of the investment
properties and due to fewer capitalized costs associated with the reconstruction
of Belmont Place Apartments. Depreciation expense for both periods decreased due
to the building at Foothill Place Apartments becoming fully depreciated in 2003
and due to no depreciation being charged at Belmont Place Apartments during 2004
while the property is being constructed. Property tax expense for the three
month period decreased due to decreases in the assessed values at nine of the
investment properties and due to an increase in the amount of capitalized
construction period taxes at Belmont Place Apartments.
General and administrative expense decreased for both periods due to a decrease
in management reimbursements to the General Partner, as allowed under the
Partnership Agreement, and a decrease in management fees paid to the General
Partner in connection with distributions made from operations. Also included in
general and administrative expenses 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 September 30, 2004, the Partnership had cash and cash equivalents of
approximately $841,000 compared to approximately $1,474,000 at September 30,
2003. The decrease in cash and cash equivalents of approximately $696,000 from
the Partnership's year ended December 31, 2003 is due to approximately
$9,031,000 of cash used in investing activities partially offset by
approximately $3,009,000 and $5,326,000 of cash provided by operating and
financing activities, respectively. Cash used in investing activities consisted
of property improvements and replacements and net deposits to restricted escrows
maintained by the mortgage lenders partially offset by insurance proceeds
received and net proceeds from the sale of Point West Apartments. Cash provided
by financing activities consisted of proceeds from mortgage notes payable and
advances received from an affiliate of the General Partner partially offset by
payments of principal on the mortgages encumbering the investment properties,
repayment of the mortgages encumbering Point West and Belmont Place Apartments,
repayment of advances from an affiliate of the General Partner, loan costs and
prepayment penalties paid and distributions to partners. The Partnership invests
its working capital reserves in interest bearing accounts.
On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest
Apartments in the amount of $2,500,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on
the financing were approximately $83,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Lake Forest Apartments.
The modification of terms consisted of an interest rate of 7.43%, a payment of
approximately $44,000 due on July 1, 2004 and monthly payments of approximately
$42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $5,255,000 is due. The previous
terms consisted of monthly payments of approximately $51,000 with a stated
interest rate of 7.13% through the maturity date of October 1, 2021, at which
time the loan was scheduled to be fully amortized.
On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel
Apartments in the amount of $1,310,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (4.84% at September 30, 2004). Capitalized loan costs incurred on
the financing were approximately $66,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Citadel Apartments. The
modification of terms consisted of an interest rate of 8.55%, a payment of
approximately $38,000 due on July 1, 2004 and monthly payments of approximately
$33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $3,748,000 is due. The previous
terms consisted of monthly payments of approximately $40,000 with a stated
interest rate of 8.25% through the maturity date of March 1, 2020, at which time
the loan was scheduled to be fully amortized.
As part of the redevelopment of Belmont Place Apartments, during the nine months
ended September 30, 2004, an affiliate of the General Partner advanced the
Partnership approximately $5,600,000 to repay the mortgage and associated
accrued interest encumbering Belmont Place Apartments. The loan was scheduled to
mature in December 2005. In addition to repaying the mortgage of approximately
$5,400,000, the Partnership paid prepayment penalties of approximately $169,000
and wrote off unamortized loan costs of approximately $109,000, which is shown
as loss on early extinguishment of debt on the accompanying consolidated
statements of operations.
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. For example, 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. Capital improvements planned for each of the Partnership's
properties are detailed below.
The Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $405,000 of capital improvements at The Apartments, consisting
primarily of casualty repairs, floor covering replacements, water heaters, and
heating system upgrades. These improvements were funded from operating cash flow
and insurance proceeds. The Partnership evaluates the capital improvement needs
of the property during the year and currently expects to complete an additional
$146,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $189,000 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 $12,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $61,000 of capital improvements at Briar Bay Racquet Club
Apartments, consisting primarily of structural and floor covering replacements.
These improvements were funded from operating cash flow. The property was sold
subsequent to September 30, 2004.
Belmont Place Apartments
During 2003, 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. During the nine months ended September 30, 2004,
approximately $12,332,000 of construction costs were incurred. These
expenditures included capitalized construction period interest of approximately
$299,000 and capitalized property tax expense of approximately $186,000. The
Partnership anticipates additional construction costs of approximately $6.9
million during the remainder of 2004.
Citadel Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $29,000 of capital improvements at Citadel Apartments, consisting
primarily of air conditioning unit, 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 $116,000 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.
Citadel Village Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $509,000 of capital improvements at Citadel Village Apartments,
consisting primarily of casualty repairs from a fire and appliance and floor
covering replacements. These improvements were funded from operating cash flow
and insurance proceeds. The Partnership evaluates the capital improvement needs
of the property during the year and currently expects to complete an additional
$12,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $534,000 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 $45,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $200,000 of capital improvements at Knollwood Apartments,
consisting primarily of roof replacement and water heater, appliance and floor
covering replacements. These improvements were funded from operating cash flow
and insurance proceeds. The Partnership evaluates the capital improvement needs
of the property during the year and currently expects to complete an additional
$5,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $170,000 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 and
insurance proceeds. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$5,000 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.
Nob Hill Villa Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $203,000 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. This property was sold subsequent to September 30, 2004.
Point West Apartments
During the nine months ended September 30, 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 nine months ended September 30, 2004, the Partnership completed
approximately $120,000 of capital improvements at Post Ridge Apartments,
consisting primarily of parking area improvements, roof replacements, 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
$30,000 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 nine months ended September 30, 2004, the Partnership completed
approximately $52,000 of capital improvements at Rivers Edge Apartments,
consisting primarily of floor covering replacements and structural improvements.
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 nine months ended September 30, 2004, the Partnership completed
approximately $197,000 of capital improvements at Village East Apartments,
consisting primarily of floor covering replacements and plumbing fixtures. These
improvements were funded from operating cash flow and insurance proceeds. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $14,000 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.
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 $53,653,000 matures at various dates between 2005 and 2022 with
balloon payments of approximately $27,130,000 due in 2005, $3,810,000 due in
2007, $9,003,000 due in 2014 and $173,000 due in 2022. 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 nine months ended
September 30, 2004 and 2003 (in thousands except per unit data):
Nine Months Per Nine Months Per
Ended Limited Ended Limited
September 30, Partnership September 30, Partnership
2004 Unit 2003 Unit
Operations $ -- $ -- $1,827 $ 5.12
Sale (1) -- -- 3,743 10.50
Total $ -- $ -- $5,570 $15.62
(1) Proceeds from the sale of Southport Apartments in March 2003.
In conjunction with the transfer of funds from certain majority-owned sub-tier
limited partnerships to the Partnership, approximately $7,000 and $6,000 was
distributed to the general partner of the majority owned sub-tier limited
partnerships during the nine months ended September 30, 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 203,674.50 limited partnership units
(the "Units") in the Partnership representing 59.42% of the outstanding Units at
September 30, 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. In this regard, on November
8, 2004 AIMCO Properties, L.P. made a tender offer to purchase any and all of
the Units not owned by affiliates of AIMCO for a purchase price of $181.82 per
Unit. The tender off expires on December 8, 2004, unless extended. 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 59.42%
of the outstanding units, AIMCO is in a position to control all such voting
decisions with respect to the Partnership. Although the General Partner owes
fiduciary duties to the limited partners of the Partnership, the General Partner
also owes fiduciary duties to AIMCO as its sole stockholder. As a result, the
duties of the General Partner, as general partner, to the Partnership and its
limited partners may come into conflict with the duties of the General Partner
to AIMCO as its sole stockholder.
Critical Accounting Policies and Estimates
The consolidated financial statements are prepared in accordance with accounting
principles generally accepted in the United States, which require the
Partnership to make estimates and assumptions. The Partnership believes that of
its significant accounting policies, the following may involve a higher degree
of judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, 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 September 30, 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 September
30, 2004. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximated the recorded value as of September
30, 2004.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2004 $ 225 7.54%
2005 27,869 6.67%
2006 797 7.54%
2007 4,670 7.19%
2008 928 7.54%
Thereafter 19,164 7.54%
Total $53,653
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 captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. 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 (the "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. The Objector filed a second
appeal challenging the court's use of a referee and its order requiring Objector
to pay those fees.
On January 28, 2004, the Objector filed his opening brief in the Appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. The plaintiffs have also
filed a brief in support of the settlement. On June 4, 2004, Objector filed a
reply to the briefs submitted by the General Partner and Plaintiffs. In addition
both the Objector and plaintiffs filed briefs in connection with the second
appeal. The Court of Appeals heard oral argument on both appeals on September
22, 2004 and took the matters under submission.
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.
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 the 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.
Some discovery has taken place and settlement negotiations continue. Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
financial condition or results of operations. 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.
ITEM 6. EXHIBITS
See Exhibit Index Attached.
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/Stephen B. Waters
Stephen B. Waters
Vice President
Date: November 12, 2004
S-K Reference
Number Document Description
3 Certificate of Limited Partnership, as amended to date.
10.62 Contracts related to refinancing of debt:
(a) Deed of Trust and Security Agreement dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
(b) Promissory Note dated March 27, 1995 between Nob Hill
Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina,
a North Carolina Corporation.
(c) Assignment of leases and Rents dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
10.63 Multifamily Note dated November 30, 1995 between Briar Bay
Apartments, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.64 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.65 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.66 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.67 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc. (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December
31, 1995).
10.68 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1995).
10.69 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1995).
10.78 Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS
Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.79 Multifamily Note dated February 28, 2000 between ConCap
Citadel Associated, Ltd., a Texas limited partnership and
ARCs Commercial Mortgage Cl., L.P., a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.81 Multifamily Note dated August 29, 2000 between ConCap
Rivers Edge Associates, Ltd., a Texas Limited Partnership,
and GMAC Commercial Mortgage Corporation, a California
Corporation. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended September 30, 2000.)
10.85 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 (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30,
2001).
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.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 2001).
10.87 Purchase and Sale Contract dated January 14, 2003 between
South Port CCP IV, L.L.C., a South Carolina limited
liability company, and Warren Lortie Associates, Inc., a
California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2003).
10.88 Reinstatement and First Amendment of Purchase and Sale
Contract between South Port IV, L.L.C., a South Carolina
limited liability company, and Warren Lortie Associates,
Inc., a California corporation. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended
December 31, 2003).
10.89 Form of Multifamily Note dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2000).
10.90 Form of Replacement Reserve Agreement dated October 22, 2003
between Post Ridge Associates, Ltd., Limited Partnership, a
Tennessee limited partnership, and GMAC Commercial Mortgage
Corporation, a California corporation. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 2003).
10.91 Form of Repair Agreement dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
2003).
10.92 Form of Cross-Collateralization Agreement dated October 22,
2003 between Post Ridge Associates, Ltd., Limited Partnership,
a Tennessee limited partnership, and Federal Home Loan
Mortgage Corporation, a corporation organized and existing
under the laws of the United States of America. (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 2003).
10.93 Form of Cross-Collateralization Agreement dated October 22,
2003 between Foothill Chimney Associates Limited Partnership,
a Georgia limited partnership, and Federal Home Loan Mortgage
Corporation, a corporation organized and existing under the
laws of the United States of America. (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 2003.)
10.94 Form of Debt Service Escrow Agreement dated October 22, 2003
between Foothill Chimney Associates Limited Partnership, a
Georgia limited partnership, and Federal Homes Loan Mortgage
Corporation, a corporate instrumentality of the United States
of America. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 2003.)
10.95 Form of Second Modification to Replacement Reserve Agreement
dated October 22, 2003 between Foothill Chimney Associates
Limited Partnership, a Georgia limited partnership, and
Federal Homes Loan Mortgage Corporation, a corporate
instrumentality of the United States of America. (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 2003.)
10.96 Purchase and Sale Contract between Point West Associates
Limited Partnership, a Georgia limited partnership, as Seller
and Focus Development, Inc., a Georgia corporation, as
Purchaser, effective November 17, 2003. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.97 First Amendment to Purchase and Sale Contract dated January
23, 2004 between Point West Associates Limited Partnership, a
Georgia limited partnership, as Seller and Focus Development,
Inc., a Georgia corporation, as Purchaser. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.98 Multifamily Note dated June 21, 2004 between Concap Citadel
Associates, Ltd., a Texas limited partnership, and GMAC
Commercial Mortgage Bank. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended June
30, 2004).
10.99 Replacement Reserve Agreement dated June 21, 2004 between
Concap Citadel Associates, Ltd. a Texas limited
partnership, and GMAC Commercial Mortgage Bank.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).
10.100 Allonge and Amendment to Multifamily Note dated June 21,
2004 between Concap Citadel Associates, Ltd., a Texas
limited partnership, and Federal Home Loan Mortgage
Corporation. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 2004).
10.101 Multifamily Note dated June 8, 2004 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and GMAC Commercial Mortgage Bank.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).
10.102 Replacement Reserve Agreement dated June 8, 2004 between
Consolidated Capital Properties IV, a California limited
partnership, doing business in Nebraska as Consolidated
Capital Properties IV Limited Partnership and GMAC
Commercial Mortgage Bank. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended June
30, 2004).
10.103 Allonge and Amendment to Multifamily Note dated June 8, 2004
between Consolidated Capital Properties IV, a California
limited partnership, doing business in Nebraska as
Consolidated Capital Properties IV Limited Partnership and
Federal Home Loan Mortgage Corporation. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004).
10.104 Purchase and Sale Contract between Briar Bay Associates,
Ltd., a Texas limited partnership, as Seller, and Victoria
Real Estate Management, Inc., a Florida corporation, as
Purchaser, effective September 13, 2004. (Incorporated by
reference to Form 8-K dated September 13, 2004).
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.
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: November 12, 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, Stephen B. Waters, 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: November 12, 2004
/s/Stephen B. Waters
Stephen B. Waters
Vice President 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 September 30,
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 Stephen B. Waters, 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: November 12, 2004
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 12, 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.