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 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact Name of Registrant as Specified in Its Charter)
California 94-2744492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 120-2 of the Exchange Act). Yes _____ No __X__
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
September 30, December 31,
2004 2003
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 752 $ 2,417
Receivables and deposits 1,034 404
Restricted escrows 879 922
Other assets 1,410 999
Investment in affiliated partnerships (Note D) 1,067 992
Investment properties:
Land 20,365 22,780
Buildings and related personal property 94,354 100,078
114,719 122,858
Less: Accumulated depreciation (26,665) (23,194)
88,054 99,664
$ 93,196 $105,398
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 1,255 $ 211
Tenant security deposit liabilities 864 964
Accrued property taxes 757 564
Other liabilities 1,364 1,499
Due to affiliates (Note C) 55 255
Mortgage notes payable 66,258 75,195
70,553 78,688
Partners' Capital
General partner 129 128
Limited partners (199,043.2 units issued and
outstanding) 22,514 26,582
22,643 26,710
$ 93,196 $105,398
Note: The consolidated 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 generally accepted accounting
principles for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
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
Revenues: (Restated) (Restated)
Rental income $ 5,640 $ 3,626 $16,297 $10,518
Other income 504 294 1,554 865
Casualty gain (Note G) -- -- -- 25
Total revenues 6,144 3,920 17,851 11,408
Expenses:
Operating 2,984 1,600 8,686 4,960
General and administrative 225 211 710 738
Depreciation 1,318 855 3,989 2,697
Interest 1,157 770 3,465 2,334
Property taxes 451 241 1,317 709
Casualty loss (Note G) 427 -- 453 --
Total expenses 6,562 3,677 18,620 11,438
(Loss) income from continuing operations (418) 243 (769) (30)
(Loss) income from discontinued
operations (Notes A and E) (13) 50 (1,113) 118
Gain on sale of discontinued
operations (Note E) -- -- 1,716 --
Gain on foreclosure of real
estate (Note B) -- -- 156 --
Equity in income from investment
(Note D) -- 748 75 1,098
Net (loss) income $ (431) $ 1,041 $ 65 $ 1,186
Net (loss) income allocated to general
partner (1%) $ (4) $ 10 $ 1 $ 12
Net (loss) income allocated to limited
partners (99%) (427) 1,031 64 1,174
$ (431) $ 1,041 $ 65 $ 1,186
Per limited partnership unit:
(Loss) income from continuing operations (2.08) 1.21 (3.82) (0.15)
(Loss) income from discontinued
operations (0.07) 0.25 (5.54) 0.59
Gain on sale of discontinued operations -- -- 8.54 --
Gain on foreclosure of real estate -- -- 0.77 --
Equity in income from investment -- 3.72 0.37 5.46
Net (loss) income per limited
partnership unit $ (2.15) $ 5.18 $ 0.32 $ 5.90
Distributions per limited partnership
unit $ 11.63 $ 5.38 $ 20.76 $ 17.11
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 200,342.0 $ 1 $200,342 $200,343
Partners' capital at
December 31, 2003 199,043.2 $ 128 $ 26,582 $ 26,710
Distributions to partners -- -- (4,132) (4,132)
Net income for the nine months
ended September 30, 2004 -- 1 64 65
Partners' capital at
September 30, 2004 199,043.2 $ 129 $ 22,514 $ 22,643
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2004 2003
Cash flows from operating activities:
Net income $ 65 $ 1,186
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 4,126 2,981
Amortization of loan costs, lease commissions and
mortgage premiums (155) (53)
Casualty loss (gain) 453 (18)
Equity in income of investment (75) (1,098)
Gain on sale of discontinued operations (1,716) --
Loss on early extinguishment of debt 1,161 --
Gain on foreclosure of real estate (156) --
Change in accounts:
Receivables and deposits (483) 117
Other assets (501) (452)
Accounts payable 52 (95)
Tenant security deposit liabilities (100) (9)
Accrued property taxes 193 52
Other liabilities (135) (292)
Due to affiliates (200) --
Net cash provided by operating activities 2,529 2,319
Cash flows from investing activities:
Net proceeds from sale of discontinued operations 12,589 --
Net receipts from restricted escrows 43 223
Property improvements and replacements (3,270) (1,019)
Insurance proceeds received 284 112
Receipts on Master Loan 156 15
Distributions from affiliated partnerships -- 1,047
Net cash provided by investing activities 9,802 378
Cash flows from financing activities:
Distributions to partners (4,132) (3,424)
Payments on mortgage notes payable (1,232) (829)
Repayment of mortgage note payable (7,099) --
Prepayment penalties (1,527) --
Lease commissions paid (6) (115)
Advances from general partner -- 220
Repayment of advances from general partner -- (220)
Net cash used in financing activities (13,996) (4,368)
Net decrease in cash and cash equivalents (1,665) (1,671)
Cash and cash equivalents at beginning of period 2,417 3,175
Cash and cash equivalents at end of period $ 752 $ 1,504
Supplemental disclosure of cash flow information:
Cash paid for interest $ 3,789 $ 3,007
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 868 $ 124
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Institutional Properties (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. (the "General
Partner"), which is ultimately owned by Apartment Investment and Management
Company ("AIMCO"), a publicly traded real estate investment trust, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three and nine
month periods 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.
As a result of the sales of Silverado Apartments and Tates Creek Village
Apartments to third parties on March 31, 2004 and June 28, 2004, respectively,
and in accordance with Statement of Financial Accounting Standards ("SFAS") No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying consolidated statements of operations for the three and nine months
ended September 30, 2003 have been restated as of January 1, 2003 to reflect the
operations of Silverado Apartments and Tates Creek Village Apartments as income
from discontinued operations of approximately $50,000 and $118,000 for the three
and nine months ended September 30, 2003, respectively, including revenues of
approximately $710,000 and $2,075,000, respectively.
Segment Reporting: SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information" established standards for the way that public business
enterprises report information about operating segments in annual financial
statements and requires that those enterprises report selected information about
operating segments in interim financial reports. It also established standards
for related disclosures about products and services, geographic areas, and major
customers. (See "Note F" for detailed disclosure of the Partnership's segments).
Note B - Net Investment in Master Loan
The Partnership was initially formed for the benefit of its limited partners to
lend funds to Consolidated Capital Equity Partners ("CCEP"), a California
general partnership. The general partner of CCEP is an affiliate of the General
Partner. The Partnership loaned funds to CCEP subject to a nonrecourse note with
a participation interest (the "Master Loan"). The loans were made to, and the
real properties that secured the Master Loan were purchased and owned by, CCEP.
The Master Loan matured in November 2000. The General Partner had been
negotiating with CCEP with respect to its options which included foreclosing on
the properties which collateralized the Master Loan or extending the terms of
the Master Loan. The General Partner decided to foreclose on the properties that
collateralized the Master Loan. The General Partner began the process of
foreclosure or executing deeds in lieu of foreclosure during 2002 on all the
properties in CCEP. During August 2002, the General Partner executed deeds in
lieu of foreclosure on four of the active properties of CCEP. In addition, one
of the properties held by CCEP was sold in December 2002. On November 10, 2003
the Partnership acquired the remaining four properties held by CCEP through a
foreclosure sale. As the deeds were executed, title in the properties previously
owned by CCEP was transferred to the Partnership subject to the existing liens
on such properties, including the first mortgage loans. As a result, during the
years ended December 2003 and 2002, the Partnership assumed responsibility for
the operations of such properties. The results of operations of the four
properties foreclosed on in 2002 are reflected in the accompanying consolidated
statements of operations for the three and nine months ended September 30, 2004
and 2003. The results of operations for the four properties foreclosed on in
November 2003 are included in the three and nine months ended September 30,
2004.
Prior to the acquisition of the four remaining properties held by CCEP at a
foreclosure sale in 2003, the principal balance of the Master Loan due to the
Partnership totaled approximately $14,144,000 at December 31, 2002. This amount
represented the fair market value of the remaining properties held by CCEP at
December 31, 2002, less the net liabilities owed by the properties. Interest,
calculated on the accrual basis, due to the Partnership pursuant to the terms of
the Master Loan Agreement, but not recognized in the income statements due to
the impairment of the loan, totaled approximately $1,322,000 for the nine months
ended September 30, 2003. Interest income was recognized on the cash basis as
required by SFAS 114.
During the nine months ended September 30, 2004, the Partnership received
approximately $156,000 from CCEP as the final payment on the Master Loan. During
the nine months ended September 30, 2003, the Partnership received approximately
$15,000 from escrows released by the mortgage lender of Society Park which was
sold during 2002 as principal payments on the Master Loan from CCEP. No advances
were made by the Partnership to CCEP on the Master Loan during the nine months
ended September 30, 2003 or 2004.
Note C - Related Party Transactions
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) reimbursement 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 the Partnership's properties for providing property management services.
The Partnership paid to such affiliates approximately $926,000 and $695,000 for
the nine months ended September 30, 2004 and 2003, respectively, which is
included in operating expenses and (loss) income from discontinued operations.
An affiliate of the General Partner charged the Partnership for reimbursement of
accountable administrative expenses amounting to approximately $872,000 and
$375,000 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 $328,000 and $36,000 for the nine months ended September 30, 2004
and 2003, respectively. At September 30, 2004, approximately $55,000 of these
fees remain unpaid and are included in due to affiliates. The construction
management fees are calculated based on a percentage of current year additions
to investment properties.
In connection with the sale of Silverado Apartments on March 31, 2004 (see "Note
E"), the General Partner earned a disposition fee of approximately $333,000. In
connection with the sale of Tates Creek Village Apartments on June 28, 2004 the
General Partner earned a disposition fee of approximately $349,000. These fees
are included in gain on sale of discontinued operations and were paid during the
nine months ended September 30, 2004.
In accordance with the Partnership Agreement, the General Partner advanced the
Partnership approximately $220,000 for expenses at four of the Partnership's
properties during the nine months ended September 30, 2003. This advance was
repaid in full prior to September 30, 2003. Interest was charged at the prime
rate plus 2% and amounted to less than $1,000 for the nine months ended
September 30, 2003. There were no loans from the General Partner or associated
interest expense during the nine months ended September 30, 2004.
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 $290,000 and
$212,000, respectively, for insurance coverage and fees associated with policy
claims administration.
Note D - Investment in Affiliated Partnerships
Ownership Investment Balance
Partnership Type of Ownership Percentage September 30, 2004
(in thousands)
Consolidated Capital Non-controlling
Growth Fund General Partner 0.40% $ 13
Consolidated Capital Non-controlling
Properties III General Partner 1.85% 27
Consolidated Capital Non-controlling
Properties IV General Partner 1.85% 1,027
$1,067
These investments were assumed during the foreclosure of investment properties
from CCEP (see "Note B") and are accounted for on the equity method of
accounting. Distributions from the affiliated partnerships are accounted for as
a reduction of the investment balance until the investment balance is reduced to
zero. When the investment balance has been reduced to zero, subsequent
distributions received are recognized as income in the accompanying statements
of operations. During the nine months ended September 30, 2004, the Partnership
recognized approximately $75,000 in equity in income from investment primarily
related to the sale of a property in Consolidated Capital Properties IV. There
was no distribution associated with this sale. During the nine months ended
September 30, 2003, the Partnership received approximately $1,048,000 in
distributions from two of the investments. Approximately $1,013,000 of the
distributions received during the nine months ended September 30, 2003 related
to the sale of three properties in Consolidated Capital Growth Fund. Of this
amount, approximately $984,000 was recognized as equity in income from
investment once the investment balance allocated to those properties had been
reduced to zero. The Partnership also recognized equity in income from
investment of approximately $114,000 related to the sale of a property in
Consolidated Capital Properties IV. There was no distribution associated with
this sale.
Note E - Sale of Investment Property
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to a third party for $6,650,000. After payment of closing costs,
the net sales proceeds received by the Partnership were approximately
$6,169,000. The Partnership used a portion of the proceeds to repay the mortgage
encumbering the property of approximately $3,248,000. The sale resulted in a
gain on sale of investment property of approximately $1,510,000 during the nine
months ended September 30, 2004. In addition, the Partnership recorded a loss on
early extinguishment of debt of approximately $685,000 as a result of prepayment
penalties paid partially offset by the write off of the unamortized mortgage
premium which is included in loss from discontinued operations. Pursuant to the
Partnership Agreement and in conjunction with the sale, a disposition fee of
approximately $333,000 was earned by and paid to the General Partner during the
nine months ended September 30, 2004. Included in (loss) income from
discontinued operations for the three months ended September 30, 2003 are
results of the property's operations of approximately $38,000, including
revenues of approximately $369,000 during the three months ended September 30,
2003. Included in (loss) income from discontinued operations for the nine months
ended September 30, 2004 and 2003 are results of the property's operations of
approximately $(672,000) and $73,000, respectively, including revenues of
approximately $339,000 and $1,057,000, respectively.
On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located
in Lexington, Kentucky, to a third party for $6,980,000. After payment of
closing costs, the net sales proceeds received by the Partnership were
approximately $6,420,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,851,000. The
sale resulted in a gain on sale of investment property of approximately $206,000
during the nine months ended September 30, 2004. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $476,000 as a
result of prepayment penalties paid, partially offset by the write off of the
unamortized mortgage premium which is included in loss from discontinued
operations. Pursuant to the Partnership Agreement and in conjunction with the
sale, a disposition fee of approximately $349,000 was earned by and paid to the
General Partner during the nine months ended September 30, 2004. Included in
(loss) income from discontinued operations for the three months ended September
30, 2004 and 2003 are results of the property's operations of approximately
$(13,000) and $12,000, respectively, including revenues of approximately
$341,000 during the three months ended September 30, 2003. There were no
revenues included in loss from discontinued operations during the three months
ended September 30, 2004. Included in (loss) income from discontinued operations
for the nine months ended September 30, 2004 and 2003 are results of the
property's operations of approximately $(441,000) and $45,000, respectively,
including revenues of approximately $704,000 and $1,018,000, respectively.
Note F - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has two reportable segments:
residential properties and commercial property. The Partnership's property
segments consist of seven apartment complexes one each in North Carolina,
Colorado and Kansas, four in Florida and one multiple use facility consisting of
apartment units and commercial space in Pennsylvania. The Partnership rents
apartment units to tenants for terms that are typically less than twelve months.
The commercial property leases space to various medical offices, career service
facilities, and retail shops at terms ranging from month to month to six years.
Measurement of segment profit and loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments are business units (investment properties)
that offer different products and services. The reportable segments are each
managed separately because they provide distinct services with different types
of products and customers.
Segment information for the three and nine months ended September 30, 2004 and
2003 is shown in the tables below (in thousands). The "Other" Column includes
partnership administration related items and income and expense not allocated to
reportable segments.
For the three months ended
September 30, 2004 Residential Commercial Other Totals
Rental income $ 5,278 $ 362 $ -- $ 5,640
Other income 457 46 1 504
Casualty loss (427) -- -- (427)
Interest expense 1,099 56 2 1,157
Depreciation 1,233 85 -- 1,318
General and administrative expenses -- -- 225 225
Loss from discontinued operations (13) -- -- (13)
Segment loss (126) (79) (226) (431)
For the nine months ended
September 30, 2004 Residential Commercial Other Totals
Rental income $15,224 $ 1,073 $ -- $16,297
Other income 1,453 98 3 1,554
Casualty loss (453) -- -- (453)
Interest expense 3,292 167 6 3,465
Depreciation 3,773 216 -- 3,989
General and administrative expense -- -- 710 710
Gain on sale of investment 1,716 -- -- 1,716
Loss from discontinued operations (1,113) -- -- (1,113)
Gain on foreclosure of real estate 156 -- -- 156
Equity in income from investment -- -- 75 75
Segment profit (loss) 1,121 (418) (638) 65
Total assets 90,319 1,710 1,167 93,196
Capital expenditures 3,423 715 -- 4,138
For the three months ended
September 30, 2003 Residential Commercial Other Totals
(Restated)
Rental income $ 3,331 $ 295 $ -- $ 3,626
Other income 262 32 -- 294
Interest expense 713 57 -- 770
Depreciation 812 43 -- 855
General and administrative expense -- -- 211 211
Income from discontinued
operations 50 -- -- 50
Equity in income of investment -- -- 748 748
Segment profit (loss) 601 (97) 537 1,041
For the nine months ended
September 30, 2003 Residential Commercial Other Totals
(Restated)
Rental income $ 9,722 $ 796 $ -- $10,518
Other income 777 88 -- 865
Casualty gain 25 -- -- 25
Interest expense 2,165 169 -- 2,334
Depreciation 2,570 127 -- 2,697
General and administrative expense -- -- 738 738
Income from discontinued
operations 118 -- -- 118
Equity in income of investment -- -- 1,098 1,098
Segment profit (loss) 1,229 (403) 360 1,186
Total assets 63,327 956 15,646 79,929
Capital expenditures 1,064 79 -- 1,143
Note G - Casualty Gains and Losses
During the nine months ended September 30, 2004, there was a casualty loss of
approximately $26,000 recorded at Regency Oaks Apartments related to a fire that
damaged four apartment units. The loss was the result of the write off of net
fixed assets of approximately $79,000, net of the receipt of insurance proceeds
of approximately $42,000 and a receivable for an additional $11,000 of insurance
proceeds.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $200,000 recorded at Indian Creek Village Apartments related to a
fire that damaged nine units. This loss was the result of the write off of net
fixed assets of approximately $442,000, net of the receipt of insurance proceeds
of approximately $242,000.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $51,000 recorded at Palm Lake Apartments related to damages to the
property caused by Hurricane Frances. This loss was the result of the write off
of net fixed assets of approximately $51,000. No insurance proceeds are
anticipated to cover this loss. In addition, the property incurred approximately
$6,000 in clean up costs related to this hurricane.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $34,000 recorded at The Dunes Apartments related to damages to the
property caused by Hurricane Frances. This loss was the result of the write off
of net fixed assets of approximately $34,000. No insurance proceeds are
anticipated to cover this loss. In addition, the property incurred approximately
$4,000 in clean up costs related to this hurricane.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $103,000 recorded at Regency Oaks Apartments related to damages to
the property caused by Hurricane Frances. This loss was the result of the write
off of net fixed assets of approximately $103,000. No insurance proceeds are
anticipated to cover this loss. In addition, the property incurred approximately
$19,000 in clean up costs related to this hurricane.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $39,000 recorded at Regency Oaks Apartments related to damages to
the property caused by Hurricane Charlie. This loss was the result of the write
off of net fixed assets of approximately $175,000, net of estimated insurance
proceeds of approximately $136,000. In addition, the property incurred
approximately $63,000 in clean up costs related to this hurricane.
During the nine months ended September 30, 2003, there was a casualty gain of
approximately $25,000 recorded at The Sterling Apartment Homes related to an
electrical fire that damaged two units. This gain was the result of the receipt
of insurance proceeds of approximately $73,000, net of the write off of net
fixed assets of approximately $48,000.
During the nine months ended September 30, 2003, there was a casualty loss of
approximately $7,000 recorded at Tates Creek Village Apartments related to an
ice storm which resulted in major landscaping damage which is included in (loss)
income from discontinued operations. The loss was the result of the receipt of
insurance proceeds of approximately $39,000, net of the write off of
undepreciated fixed assets of approximately $46,000.
Note H - 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 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 I - Subsequent Event
Subsequent to September 30, 2004, the General Partner advanced the Partnership
approximately $750,000 to fund redevelopment costs at The Sterling and The
Knolls Apartments and hurricane damage related expenditures at Palm Lake
Apartments and Regency Oaks Apartments.
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 eight properties. The
Sterling is a multiple-use facility which consists of an apartment complex and
commercial space. 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 Loft Apartments (3) 86% 82%
Raleigh, North Carolina
The Sterling Apartment Homes 93% 93%
The Sterling Commerce Center (1) 79% 55%
Philadelphia, Pennsylvania
The Knolls Apartments 84% 84%
Colorado Springs, Colorado
Indian Creek Village Apartments (2) 88% 91%
Overland Park, Kansas
Plantation Gardens Apartments 91% 92%
Plantation, Florida
Palm Lake Apartments 93% 93%
Tampa, Florida
The Dunes Apartments (3) 94% 91%
Indian Harbor, Florida
Regency Oaks Apartments 93% 95%
Fern Park, Florida
(1) The General Partner attributes the low occupancy in 2003 at The Sterling
Commerce Center to the loss of a major tenant in late December 2001.
During the fourth quarter of 2003, a new tenant signed a lease and
occupied a large portion of the vacant space.
(2) The General Partner attributes the decrease in occupancy at Indian Creek
Village to the competitive market of the apartment industry in the
property's location.
(3) The General Partner attributes the increase in occupancy at The Loft
Apartments and The Dunes Apartments to an increase in marketing outreach
and promotions.
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 (loss) income for the three and nine months ended
September 30, 2004 was approximately ($431,000) and $65,000 compared to net
income of approximately $1,041,000 and $1,186,000 for the corresponding periods
in 2003. The decrease in net income for the three and nine months ended
September 30, 2004 as compared to the three and nine months ended September 30,
2003 is due to the increase in loss from continuing operations and a decrease in
equity in income from investment, partially offset by the sale of Silverado and
Tates Creek Apartments during the nine months ended September 30, 2004 and a
gain on foreclosure of real estate recorded in 2004 as discussed below.
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to a third party for $6,650,000. After payment of closing costs,
the net sales proceeds received by the Partnership were approximately
$6,169,000. The Partnership used a portion of the proceeds to repay the mortgage
encumbering the property of approximately $3,248,000. The sale resulted in a
gain on sale of investment property of approximately $1,510,000 during the nine
months ended September 30, 2004. In addition, the Partnership recorded a loss on
early extinguishment of debt of approximately $685,000 as a result of prepayment
penalties paid partially offset by the write off of the unamortized mortgage
premium which is included in loss from discontinued operations. Pursuant to the
Partnership Agreement and in conjunction with the sale, a disposition fee of
approximately $333,000 was earned by and paid to the General Partner during the
nine months ended September 30, 2004.
On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located
in Lexington, Kentucky, to a third party for $6,980,000. After payment of
closing costs, the net sales proceeds received by the Partnership were
approximately $6,420,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,851,000. The
sale resulted in a gain on sale of investment property of approximately $206,000
during the nine months ended September 30, 2004. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $476,000 as a
result of prepayment penalties paid, partially offset by the write off of the
unamortized mortgage premium which is included in loss from discontinued
operations. Pursuant to the Partnership Agreement and in conjunction with the
sale, a disposition fee of approximately $349,000 was earned by and paid to the
General Partner during the nine months ended September 30, 2004.
As a result of the sales of Silverado Apartments and Tates Creek Village
Apartments to third parties during the nine months ended September 30, 2004 and
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying consolidated statements of operations for the three and nine months
ended September 30, 2003 have been restated as of January 1, 2003 to reflect the
operations of Silverado Apartments and Tates Creek Village Apartments as income
from discontinued operations of approximately $118,000 for the nine months ended
September 30, 2003, including revenues of approximately $2,075,000. For the
three months ended September 30, 2003 income from discontinued operations was
approximately $50,000, including revenues of approximately $710,000.
The decrease in equity in income from investment for the three and nine months
ended September 30, 2004 is due to a decrease in the recognition of the
Partnership's share of distributions received and recognized as earnings from
affiliated partnerships in excess of investment balance during the three and
nine months ended September 30, 2004. The Partnership assumed investments in
three affiliated partnerships during the foreclosure of investment properties
from CCEP as discussed below. These investments are accounted for on the equity
method of accounting. Distributions from the affiliated partnerships are
accounted for as a reduction of the investment balance until the investment
balance is reduced to zero. When the investment balance has been reduced to
zero, subsequent distributions received are recognized as income in the
accompanying statements of operations. During the nine months ended September
30, 2004, the Partnership recognized approximately $75,000 in equity in income
from investment primarily related to the sale of a property in Consolidated
Capital Properties IV. There was no distribution associated with this sale.
During the nine months ended September 30, 2003, the Partnership received
approximately $1,048,000 in distributions from two of the investments.
Approximately $1,013,000 of the distribution related to the sale of three
properties in Consolidated Capital Growth Fund. Of this amount, approximately
$984,000 was recognized as equity in income from investment once the investment
balance allocated to those properties had been reduced to zero. The Partnership
also recognized equity in income from investment of approximately $114,000
related to the sale of a property in Consolidated Capital Properties IV. There
was no distribution associated with this sale.
The Partnership recognized a loss from continuing operations for the three and
nine months ended September 30, 2004 of approximately $418,000 and $769,000
compared to income (loss) of approximately $243,000 and $(30,000) for the
corresponding periods in 2003. The increase in loss from continuing operations
for the three and nine months ended September 30, 2004, is due to an increase in
total expenses partially offset by an increase in total revenues. The increase
in total expenses and total revenues is largely due to the acquisition at a
foreclosure sale of four properties (Plantation Gardens, Palm Lake, The Dunes
and Regency Oaks Apartments) during November 2003. These properties were
acquired at a foreclosure sale due to CCEP's inability to repay the Master Loan
to the Partnership and accrued interest. The Master Loan matured in November
2000. The General Partner had been negotiating with CCEP with respect to its
options which included foreclosing on the properties which collateralized the
Master Loan or extending the terms of the Master Loan. The General Partner
decided to foreclose on the properties that collateralized the Master Loan. The
General Partner began the process of foreclosure or executing deeds in lieu of
foreclosure during 2002 on all the properties in CCEP. The foreclosure process
on the above four properties held by CCEP was completed during the fourth
quarter of 2003. As the deeds were executed, title in the properties previously
owned by CCEP were transferred to the Partnership, subject to the existing liens
on such properties, including the first mortgage loans. As a result, the
Partnership assumed responsibility for the operations of such properties during
the fourth quarter of 2003. During the nine months ended September 30, 2004 the
Partnership recognized a gain on foreclosure of real estate of approximately
$156,000. The gain on the foreclosure was primarily the result of CCEP's
remaining funds being sent to the Partnership. The remaining funds were
primarily a refund of reimbursement of accountable administrative expenses from
an affiliate of the General Partner.
For the three and nine months ended September 30, 2004, the four properties
foreclosed in 2003 had losses of approximately $258,000 and $73,000,
respectively, which includes revenues of approximately $1,941,000 and
$6,055,000, respectively. Excluding the operations of the properties foreclosed
in 2003, the Partnership's net loss from continuing operations, including equity
income from investment, for the three and nine months ended September 30, 2004
was approximately $160,000 and $621,000 compared to net income from continuing
operations, including equity income from investment, for the three and nine
months ended September 30, 2003 of approximately $991,000 and 1,068,000,
respectively. The increase in net loss from continuing operations for the three
and nine months ended September 30, 2004 as compared to the three months and
nine months ended September 30, 2003 is due to an increase in total expenses
partially offset by an increase in total revenues.
Total expenses, exclusive of the properties foreclosed in 2003, increased during
the nine months ended September 30, 2004 primarily due to increases in
operating, property tax and depreciation expenses and casualty losses as
discussed below, partially offset by decreases in interest and general and
administrative expenses. Total expenses increased for the three months ended
September 30, 2004 due to increases in operating, property tax, depreciation and
general and administrative expenses, partially offset by reduced interest
expense. Operating expenses increased during the three and nine months ended
September 30, 2004 primarily due to an increase in property and maintenance
expenses. Property expenses increased primarily due to an increase in utility
expenses at The Sterling Commerce Center, The Sterling Apartment Homes, The
Knolls Apartments and Indian Creek Village Apartments and an increase in
salaries and other related benefits at The Knolls and The Lofts Apartments and
The Sterling Commerce Center. Maintenance expenses increased primarily due to
increased contract service costs and water damage repairs at The Knolls
Apartments. Property tax expense increased for both periods primarily due to a
prior year tax adjustment recorded during 2003 at Indian Creek Village
Apartments. Depreciation expense increased for both periods due to fixed asset
additions being placed into service during the past year at The Sterling
Commerce Center and Indian Creek Village Apartments partially offset by assets
becoming fully depreciated at The Sterling Apartment Homes. Interest expense
decreased for both periods due to principal payments made on the mortgage notes
encumbering the Partnership's properties.
During the three months ended September 30, 2004, there was a casualty loss of
approximately $200,000 recorded at Indian Creek Village Apartments related to a
fire that damaged nine units. This loss was the result of the write off of net
fixed assets of approximately $442,000, net of the receipt of insurance proceeds
of approximately $242,000.
During the nine months ended September 30, 2003, there was a casualty gain of
approximately $25,000 recorded at The Sterling Apartment Homes related to an
electrical fire that damaged two units. This gain was the result of the receipt
of insurance proceeds of approximately $73,000, net of the write off of net
fixed assets of approximately $48,000.
General and administrative expenses decreased for the nine months ended
September 30, 2004 primarily due to the timing of the payment of a business
privilege tax paid to the city of Philadelphia during the nine months ended
September 30, 2003 and reduced legal fees associated with the foreclosures of
the properties held by CCEP during 2003 partially offset by increases in the
costs of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement. General and administrative
expenses increased for the three months ended September 30, 2004 primarily due
to an increase in the costs of services included in the management
reimbursements to the General Partner as allowed under the Partnership Agreement
and legal fees paid in 2004 associated with the foreclosures of the properties
held by CCEP during 2003, partially offset by the timing of the payment of a
business privilege tax paid to the city of Philadelphia during the nine months
ended September 30, 2003. Also included in general and administrative expenses
for the three and nine months ended September 30, 2004 and 2003 are costs
associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
Total revenues increased for the three and nine months ended September 30, 2004
due to an increase in rental revenue. Rental revenue increased for both periods
due to increases in occupancy at The Sterling Commerce Center, and The Loft and
The Dunes Apartments and increased average rental rates at The Sterling
Apartments, partially offset by reduced occupancy at Indian Creek Village,
Plantation Gardens and Regency Oaks Apartments and reduced average rental rates
at The Loft Apartments, The Sterling, Commerce Center, The Knolls Apartments and
Indian Creek Village Apartments.
Liquidity and Capital Resources
At September 30, 2004, the Partnership had cash and cash equivalents of
approximately $752,000 compared to approximately $1,504,000 at September 30,
2003. Cash and cash equivalents decreased approximately $1,665,000 since
December 31, 2003 due to approximately $13,996,000 of cash used in financing
activities, partially offset by approximately $9,802,000 and $2,529,000 of cash
provided by investing and operating activities, respectively. Cash used in
financing activities consisted of principal payments made on the mortgages
encumbering the Partnership's properties, repayment of the mortgage notes
payable as a result of the sale of Silverado and Tates Creek Village Apartments,
prepayment penalties paid, distributions to partners and lease commissions paid.
Cash provided by investing activities consisted of proceeds from the sale of
Silverado and Tates Creek Village Apartments, insurance proceeds received,
receipts on the Master Loan and net receipts from restricted escrow accounts
maintained by the mortgage lenders, partially offset by property improvements
and replacements. The Partnership invests its working capital reserves in
interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance. 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 Loft Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $113,000 of capital improvements at The Loft Apartments,
consisting primarily of floor covering replacements and fitness equipment
upgrades. These improvements were funded from operating cash flow and
replacement reserves. The Partnership evaluates the capital improvement needs of
the property during the year and currently expects to complete an additional
$13,000 in capital improvements during the remainder of 2004. Additional
improvements may be considered and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
The Sterling Apartment Homes and Commerce Center
During the nine months ended September 30, 2004, the Partnership completed
approximately $1,916,000 of capital improvements at The Sterling Apartment Homes
and Commerce Center, consisting primarily of costs of a redevelopment project at
The Sterling Apartment Homes, tenant improvements, structural upgrades, floor
covering replacements, interior decorating and heating upgrades. These
improvements were funded from operating cash flow and replacement reserves. The
Partnership evaluates the capital improvement needs of the property during the
year and currently expects to complete an additional $5,234,000 in capital
improvements during the remainder of 2004. The redevelopment project began
during the three months ended September 30, 2004 and is scheduled to be
completed during 2006. The project budget is approximately $23,487,000. The
Partnership plans to fund these redevelopment expenditures from operating cash
flow, partnership reserves and loans from the General Partner. During the three
months ended September 30, 2004 approximately $971,000 of redevelopment costs
were incurred. Additional improvements may be considered and will depend on the
physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
The Knolls Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $698,000 of capital improvements at The Knolls Apartments
consisting primarily of costs of a redevelopment project, floor covering and
appliance replacements, and swimming pool decking replacement. 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 $1,675,000 in capital improvements during the
remainder of 2004 primarily on the redevelopment project costs. The
redevelopment project began during the third quarter of 2004 and is scheduled to
be completed in 2006. The total project budget is approximately $6,913,000. The
Partnership plans to fund these redevelopment expenditures from operating cash
flow, Partnership reserves and loans from the General Partner. During the three
months ended September 30, 2004 approximately $506,000 in redevelopment costs
were incurred. Additional improvements may be considered and will depend on the
physical condition of the property as well as anticipated cash flow generated by
the property.
Indian Creek Village Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $204,000 of capital improvements at Indian Creek Village
Apartments consisting primarily of costs related to the reconstruction of nine
units damaged by fire, floor covering replacements and parking lot resurfacing.
These improvements were funded from insurance proceeds and operating cash flow.
The Partnership evaluates the capital improvement needs of the property during
the year and currently expects to complete an additional $526,000 in capital
improvements during the remainder of 2004. Additional improvements may be
considered and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Plantation Gardens Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $155,000 of capital improvements at Plantation Gardens Apartments
consisting primarily of floor covering and appliance replacements and parking
area resurfacing. 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 $50,000 in capital
improvements during the remainder of 2004. Additional improvements may be
considered and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Palm Lake Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $318,000 of capital improvements at Palm Lake Apartments
consisting primarily of reconstruction of damages to the property caused by
Hurricane Frances, roof replacement, structural improvements 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 $24,000 in capital
improvements during the remainder of 2004. Additional improvements may be
considered and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
The Dunes Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $80,000 of capital improvements at The Dunes Apartments consisting
primarily of floor covering replacements. This property was also damaged by
Hurricane Frances and reconstruction costs will be incurred during the remainder
of 2004. 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 $88,000 in capital
improvements during the remainder of 2004. Additional improvements may be
considered and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Regency Oaks Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $618,000 of capital improvements at Regency Oaks Apartments
consisting primarily of floor covering, air conditioning unit and appliance
replacements, parking area resurfacing, major landscaping, clubhouse
renovations, structural improvements and reconstruction of damages to the
property caused by a fire and damages caused by Hurricane Charlie. 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 $67,000 in capital
improvements during the remainder of 2004. Additional improvements may be
considered and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Silverado Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $8,000 of capital improvements at Silverado Apartments, consisting
primarily of floor covering replacements. These improvements were funded from
operating cash flow. The property was sold to a third party on March 31, 2004.
Tates Creek Village Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $28,000 of capital improvements at Tates Creek Village Apartments
consisting primarily of floor covering replacements. These improvements were
funded from operating cash flow. The property was sold to a third party on June
28, 2004.
The additional capital improvements at the Partnership's properties will be made
only to the extent of cash available from operations and Partnership reserves,
with the exception of the redevelopment projects at The Sterling and The Knolls
Apartments which will also be funded by loans from the General Partner. 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 properties of approximately
$66,258,000 requires monthly payments of principal and interest and balloon
payments of approximately $3,903,000, $19,975,000 and $31,040,000 during 2005,
2008 and 2010, respectively. The General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
may risk losing such properties 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 Ended Per Limited Nine Months Ended Per Limited
September 30, Partnership September 30, Partnership
2004 Unit 2003 Unit
Operations $ 39 $ 0.20 $1,793 $ 8.92
Sale (1) -- -- 1,631 8.19
Sale (2) 4,093 20.56 -- --
$4,132 $20.76 $3,424 $17.11
(1) From the sale of Society Park Apartments owned by CCEP and received as a
principal payment on the Master Loan.
(2) From the sale of Silverado Apartments in March 2004 and the sale of
Tates Creek Village in June 2004.
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. Given the extent of the
redevelopment projects planned at The Sterling and The Knolls Apartments it is
not anticipated that the Partnership will make distributions in the foreseeable
future.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 138,849.70 limited partnership units
(the "Units") in the Partnership representing 69.76% 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, an affiliate of AIMCO commenced a tender offer to purchase any and all
of the remaining partnership interests for a purchase price of $252.29. 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 would 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 69.76% of the outstanding Units, AIMCO and its affiliates are 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. The investment properties foreclosed upon in the third
quarter of 2002 and fourth quarter of 2003 were recorded at fair market value at
the time of the foreclosure. 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 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.
The Partnership leases certain commercial space to tenants under various lease
terms. The leases are accounted for as operating leases in accordance with SFAS
No. 13, "Accounting for Leases". Some of the leases contain stated rental
increases during their term. For leases with fixed rental increases, rents are
recognized on a straight-line basis over the terms of the leases. For all other
leases, minimum rents are recognized over the terms of the leases.
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 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 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
Fixed Rate Debt
Long-term Average Interest
Debt Rate 7.87%
(in thousands)
2004 $ 398
2005 5,604
2006 1,750
2007 1,887
2008 21,900
Thereafter 32,984
Total $ 64,523
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 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 INSTITUTIONAL PROPERTIES
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
EXHIBIT INDEX
S-K Reference Document Description
3 Certificates of Limited Partnership, as amended to date.
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991 ("1991 Annual
Report")).
10.1 Amended Loan Agreement dated November 15, 1990 (the "Effective
Date"), by and between the Partnership and EP (Incorporated by
reference to the Annual Report of Form 10-K for the year ended
December 31, 1990 ("1990 Annual Report")).
10.2 Assumption Agreement as of the Effective Date, by and between
EP and CCEP (Incorporated by reference to the 1990 Annual
Report).
10.3 Assignment of Claims as of the Effective Date, by and between
the Partnership and EP (Incorporated by reference to the 1990
Annual Report).
10.20 Mortgage and Security Agreement between Kennedy Boulevard
Associates I, L.P., and Lehman Brothers Holdings, Inc.,
dated August 25, 1998, securing The Sterling Apartment Home
and Commerce Center filed in Form 10-Q for the quarter
ended September 30, 1998.
10.21 Repair Escrow Agreement between Kennedy Boulevard
Associates I, L.P., and Lehman Brothers Holdings, Inc.,
dated August 25, 1998, securing The Sterling Apartment Home
and Commerce Center filed in Form 10-Q for the quarter
ended September 30, 1998.
10.22 Replacement Reserve and Security Agreement between Kennedy
Boulevard Associates I, L.P., and Lehman Brothers Holdings,
Inc., dated August 25, 1998, securing The Sterling
Apartment Home and Commerce Center filed in Form 10-Q for
the quarter ended September 30, 1998.
10.23 Third Amendment to the Limited Partnership Agreement filed as
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2001 and incorporated herein
by reference.
10.24 Fourth Amendment to the Limited Partnership Agreement filed as
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2001 and incorporated herein
by reference.
10.28 Form of Amended Order Setting Foreclosure Sale Date pursuant
to amending the foreclosure date filed on September 25, 2003
(Schedules and supplemental materials to this exhibit filed
herewith have been omitted but will be provided to the
Securities and Exchange Commission upon request).*
10.29 Form of Certificate of Sale as to Property "1" pursuant to
sale of Palm Lake Apartments to CCIP Palm Lake, L.L.C.
filed October 28, 2003.*
10.30 Form of Certificate of Sale as to Property "2" pursuant to
sale of Regency Oaks Apartments to CCIP Regency Oaks,
L.L.C. filed October 28, 2003.*
10.31 Form of Certificate of Sale as to Property "3" pursuant to
sale of The Dunes Apartments (formerly known as Society Park
East Apartments) to CCIP Society Park East, L.L.C.
filed October 28, 2003.*
10.32 Form of Certificate of Sale as to Property "4" pursuant to
sale of Plantation Gardens Apartments to CCIP Plantation
Gardens, L.L.C. filed October 28, 2003.*
10.33 Purchase and Sale contract between Consolidated Capital Equity
Partner, LP, a California limited partnership and Cash
Investments of El Paso, LLC, a Texas limited liability company
dated December 8, 2003 filed as exhibit 10.33 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.
10.34 Assignment of purchase and sale contract between Consolidated
Capital Equity Partners, LP, a California limited partnership
and CCIP Silverado, LP, a Delaware limited partnership dated
December 8, 2003 filed as exhibit 10.34 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.
10.35 Reinstatement and first amendment to purchase and sale
contract by and between CCIP Silverado, LP, a Delaware limited
partnership, assignee of Consolidated Capital Equity Partners,
LP, a California limited liability partnership, and Cash
Investments of El Paso, LLC, a Texas limited liability company
and EPT San Mateo Apartments, LP, a Texas limited liability
partnership, assignee of original purchaser dated February 6,
2004 filed as exhibit 10.35 to the Quarterly Report on Form
10-Q for the quarter ended March 31, 2004 and incorporated
herein by reference.
10.36 Purchase and Sale contract between CCIP Tates Creek Village,
LLC, a Delaware limited liability company and Tates Creek
Investments, LLC, a Michigan limited liability company dated
April 13, 2004 for the sale of Tates Creek Village Apartments
filed as exhibit 10.36 to the Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004 and incorporated herein by
reference.
10.37 Amendment of purchase and sale contract between CCIP Tates
Creek Village, LLC and Tates Creek Investments, LLC, dated May
27, 2004 filed as exhibit 10.37 to the Quarterly Report on
Form 10-Q for the quarter ended June 30, 2004 and incorporated
herein by reference.
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.
*Filed as exhibits 10.28 through 10.32 in the Registrant's
Quarterly Form 10-Q for the quarter ended September 30, 2003
incorporated herein by reference.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Institutional Properties;
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
Institutional Properties;
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
Institutional Properties (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.