EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1996 AND 1995
EXHIBIT 99.1 (Continued)
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
March 31, December 31,
1996 1995
Assets
Cash and cash equivalents $ 1,914 $ 2,225
Investments in limited partnerships 387 460
Other assets 5,122 5,725
Investment properties:
Land 10,452 10,452
Building and related personal property 95,990 94,906
106,442 105,358
Less accumulated depreciation (69,391) (68,167)
37,051 37,191
$ 44,474 $ 45,601
Liabilities and Partners' Deficit
Accounts payable and accrued liabilities $ 1,909 $ 3,035
Mortgage notes and interest payable 25,039 25,050
Master loan and interest payable 241,083 233,490
Partners' Deficit
General partner (2,235) (2,159)
Limited partners (221,322) (213,815)
(223,557) (215,974)
$ 44,474 $ 45,601
<FN>
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
1996 1995
Revenues:
Rental income $ 4,842 $ 6,054
Other income 15 15
Total revenues 4,857 6,069
Expenses:
Operating 3,097 3,851
General and administrative 157 216
Depreciation and amortization 1,319 1,577
Interest 7,855 8,807
Total expenses 12,428 14,451
Loss on disposition of property (12) (7)
Casualty gain -- 45
Net loss $ (7,583) $ (8,344)
Net loss allocated to general partner (1%) $ (76) $ (83)
Net loss allocated to limited partners (99%) (7,507) (8,261)
$ (7,583) $ (8,344)
<FN>
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
c) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
For the Three Months Ended March 31, 1996 and 1995
(in thousands)
General Limited
Partners Partners Total
Partners' deficit at
December 31, 1994 $ (1,780) $(176,260) $(178,040)
Net loss for the three months
ended March 31, 1995 (83) (8,261) (8,344)
Partners' deficit at
March 31, 1995 $ (1,863) $(184,521) $(186,384)
Partners' deficit at
December 31, 1995 $ (2,159) $(213,815) $(215,974)
Net loss for the three months
ended March 31, 1996 (76) (7,507) (7,583)
Partners' deficit at
March 31, 1996 $ (2,235) $(221,322) $(223,557)
<FN>
See Accompanying Notes to Consolidated Financial Statements
EXHIBIT 99.1 (Continued)
d) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
1996 1995
Cash flows from operating activities:
Net loss $ (7,583) $ (8,344)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 1,338 1,577
Loss on disposition of property 12 7
Casualty gain -- (45)
Change in accounts:
Other assets 630 (935)
Accounts payable and accrued liabilities (1,127) 886
Interest on Master Loan 7,401 7,556
Interest payable 64 1,158
Net cash provided by operating activities 735 1,860
Cash flows from investing activities:
Property improvements and replacements (1,162) (441)
Proceeds from sale of securities available
for sale -- 195
Net cash used in investing activities (1,162) (246)
Cash flows from financing activities:
Advances on Master Loan 367 --
Principal payments on Master Loan (175) --
Principal payments on notes payable (74) (136)
Loan costs paid (2) --
Net cash provided by (used in)
financing activities 116 (136)
Net (decrease) increase in cash and cash equivalents (311) 1,478
Cash and cash equivalents at beginning of period 2,225 3,393
Cash and cash equivalents at end of period $ 1,914 $ 4,871
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 371 $ 92
<FN>
See Accompanying Notes to Consolidated Financial Statements
e) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. 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 the General Partner, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1996, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1996.
Certain reclassifications have been made to the 1995 information to conform
to the 1996 presentation.
Consolidation
Consolidated Capital Equity Partners, L.P. ("CCEP") owns a 75% interest in a
limited partnership ("Western Can, Ltd.") which owns 444 De Haro, an office
building in San Francisco, California. CCEP's investment in Western Can, Ltd.
is consolidated in CCEP's financial statements. No minority interest liability
has been reflected for the 25% minority interest because Western Can, Ltd. has a
net capital deficit and no minority liability exists with respect to CCEP.
The operations for the three months ended March 31, 1995, of Carlton House
are consolidated in CCEP's financial statements pursuant to accounting
guidelines regarding notes receivable in-substance foreclosed. Carlton House
was transferred to a wholly owned subsidiary of Consolidated Capital
Institutional Properties ("CCIP") in a series of transactions on November 30,
1995.
Note B - Related Party Transactions
CCEP paid property management fees based upon collected gross rental revenues
for property management services in each of the three month periods ended March
31, 1996 and 1995. Fees paid to affiliates of Insignia during the three month
periods ended March 31, 1996 and 1995, are included in operating expenses on the
consolidated statement of operations and are reflected in the following table.
The Partnership Agreement ("Agreement") also provides for reimbursement to the
General Partner and its affiliates for costs incurred in connection with the
administration of CCEP activities. These reimbursements are included in general
and administrative expense on the consolidated statement of operations. The
General Partner, and its current affiliates, received reimbursements for the
three months ended March 31, 1996 and 1995, as reflected in the following table.
Also, CCEP is subject to an Investment Advisory Agreement between the
Partnership and an affiliate of ConCap Holdings, Inc. ("CHI"). This agreement
provides for an annual fee, payable in monthly installments, to an affiliate of
CHI for advising and consulting services for CCEP's properties. Advisory fees
paid pursuant to this agreement are included in general and administrative
expenses on the consolidated statement of operations and are reflected in the
following table:
For the Three Months Ended
March 31,
1996 1995
(in thousands)
Property management fees $ 248 $314
Investment advisory fees 45 64
Lease commissions 7 --
Reimbursement for services of affiliates 113 126
The decrease in property management fees for the three months ended March 31,
1996, as compared to the three months ended March 31, 1995, is the result of the
transfer of The Carlton House to CCIP on November 30, 1995.
In addition to the compensation and reimbursements described above, interest
payments are made to and loan advances are received from CCIP pursuant to the
Master Loan Agreement, which is described more fully in the 1995 Annual Report.
No interest payments were made during the three month periods ended March 31,
1996 and 1995. (See further discussion in "Note C"). Advances of approximately
$367,000 were made under the Master Loan Agreement during the three months ended
March 31, 1996. Principal payments of approximately $175,000 were made on the
Master Loan during the three months ended March 31, 1996.
On July 1, 1995, CCEP began insuring its properties under a master policy
through an agency and insurer unaffiliated with the General Partner. An
affiliate of the General Partner acquired, in the acquisition of a business,
certain financial obligations from an insurance agency which was later acquired
by the agent who placed the current year's master policy. The current agent
assumed the financial obligations to the affiliate of the General Partner, who
receives payments on these obligations from the agent. The amount of CCEP's
insurance premiums accruing to the benefit of the affiliate of the General
Partner by virtue of the agent's obligations is not significant.
Note C - Master Loan and Accrued Interest Payable
The Master Loan principal and accrued interest payable balances at March 31,
1996, and December 31, 1995, are $241.1 million and $233.5 million,
respectively.
Terms of Master Loan Agreement
Under the terms of the Master Loan Agreement, interest accrues at a
fluctuating rate per annum adjusted annually on July 15 by the percentage change
in the U.S. Department of Commerce Implicit Price Deflator for the Gross
National Product subject to an interest rate ceiling of 12.5%. The interest
rates for each of the three month periods ended March 31, 1996 and 1995, was
12.5%. Interest payments are currently payable quarterly in an amount equal to
"Excess Cash Flow", generally defined in the Master Loan Agreement as net cash
flow from operations after third-party debt service. If such Excess Cash Flow
payments are less than the current accrued interest during the quarterly period,
the unpaid interest is added to principal, compounded annually, and is payable
at the loan's maturity. If such Excess Cash Flow payments are greater than the
currently payable interest, the excess amount is applied to the principal
balance of the loan. Any net proceeds from sale or refinancing of any of the
Partnership's properties are paid to CCIP under the terms of the Master Loan
Agreement. The Master Loan Agreement matures in November 2000.
CCIP invested approximately $367,000 in CCEP during the three months ended
March 31, 1996, as additional advances under the Master Loan. CCEP used the
funds to pay for deferred maintenance and capital improvements on the properties
which collateralize the Master Loan. A portion of the advance was used to pay
for additional expenses related to the December 1995 financing of six of CCEP's
investment properties. Also, a portion of the advance was used to pay taxes on
behalf of 1801 Tower Inc., a wholly owned subsidiary.
During the three months ended March 31, 1996, CCEP paid approximately
$175,000 to CCIP as principal payments on the Master Loan. Approximately
$101,000 was due to the return of a real estate tax escrow set up at the time of
the December 1995 financing of a certain CCEP investment property. This escrow
was held until CCEP was able to provide proof of payment to the mortgage lender.
Cash received on certain investments by CCEP, which are required to be
transferred to CCIP per the agreement, accounted for approximately $74,000.
Note D - Note Receivable Deemed In-Substance Foreclosed
Prior to the transfer of Carlton House from CCEP to CCIP on November 30,
1995, CCEP held the Carlton House Note which was secured by a deed of trust on
Carlton House with a scheduled maturity in 1995. According to the note terms,
interest accrued at 10% and compounded monthly on principal plus accrued but
unpaid interest. The note receivable had been in default since 1991. As
described more fully in the 1995 audited financial statements, the required debt
service payments were reduced to only the amount of net cash flow from the
Carlton House. In 1995 no interest income was recognized as no cash related to
the note receivable was received by CCEP.
Summarized below are the results of operations of the Carlton House that are
included in CCEP's financial statements for the three months ended March 31,
1995, prepared on the same basis as CCEP's financial statements. Any
intercompany balances between the Partnership and the Carlton House have been
eliminated in CCEP's consolidated financial statements and the summarized
financial statements set forth below:
For the Three Months Ended
March 31, 1995
(in thousands)
Revenues:
Rental income $ 1,369
Other income 9
Total revenues 1,378
Expenses:
Operating 1,248
Depreciation and amortization 250
Interest 1,141
Total expenses 2,639
Net loss $(1,261)