EXHIBIT 99.1
CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED
JUNE 30, 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
(in thousands)
June 30, December 31,
1996 1995
(Unaudited) (Note)
Assets
Cash and cash equivalents $ 3,160 $ 2,225
Investments in limited partnerships 387 460
Other assets 4,566 5,725
Investment properties:
Land 10,452 10,452
Building and related personal property 96,883 94,906
107,335 105,358
Less accumulated depreciation (70,612) (68,167)
36,723 37,191
$ 44,836 $ 45,601
Liabilities and Partners' Deficit
Accounts payable and accrued liabilities $ 2,123 $ 3,035
Mortgage notes and interest payable 24,964 25,050
Master loan and interest payable 248,488 233,490
275,575 261,575
Partners' Deficit
General partner (2,307) (2,159)
Limited partners (228,432) (213,815)
(230,739) (215,974)
$ 44,836 $ 45,601
<FN>
Note: The balance sheet at December 31, 1995, 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
EXHIBIT 99.1 (Continued)
b) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues:
Rental income $ 5,117 $ 6,075 $ 9,959 $ 12,129
Other income 41 43 56 58
Total revenues 5,158 6,118 10,015 12,187
Expenses:
Operating 2,904 3,768 6,001 7,619
General and administrative 210 458 367 674
Depreciation and
amortization 1,343 1,630 2,662 3,207
Interest 7,868 6,523 15,723 15,330
Total expenses 12,325 12,379 24,753 26,830
Loss on disposition
of property (15) (2) (27) (9)
Casualty gain -- -- -- 45
Net loss $(7,182) $(6,263) $(14,765) $(14,607)
Net loss allocated
to general partner (1%) $ (72) $ (63) $ (148) $ (146)
Net loss allocated
to limited partners (99%) (7,110) (6,200) (14,617) (14,461)
$(7,182) $(6,263) $(14,765) $(14,607)
<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 Six Months Ended June 30, 1996 and 1995
(in thousands)
General Limited
Partner Partners Total
Partners' deficit at
December 31, 1994 $ (1,780) $(176,260) $(178,040)
Net loss for the six months
ended June 30, 1995 (146) (14,461) (14,607)
Partners' deficit at
June 30, 1995 $ (1,926) $(190,721) $(192,647)
Partners' deficit at
December 31, 1995 $ (2,159) $(213,815) $(215,974)
Net loss for the six months
ended June 30, 1996 (148) (14,617) (14,765)
Partners' deficit at
June 30, 1996 $ (2,307) $(228,432) $(230,739)
<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)
Six Months Ended
June 30,
1996 1995
Cash flows from operating activities:
Net loss $(14,765) $(14,607)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization 2,701 3,210
Loss on disposition of property 27 9
Casualty gain -- (45)
Change in accounts:
Other assets 1,137 (1,047)
Accounts payable and accrued liabilities (911) 1,049
Interest on Master Loan 14,805 15,113
Due to affiliates -- (918)
Interest payable 63 11
Net cash provided by operating activities 3,057 2,775
Cash flows from investing activities:
Property improvements and replacements (2,164) (1,429)
Proceeds from sale of securities available
for sale -- 195
Net cash used in investing activities (2,164) (1,234)
Cash flows from financing activities:
Advances on Master Loan 367 --
Principal payments on Master Loan (175) --
Principal payments on notes payable (149) (296)
Loan costs paid (1) --
Net cash provided by (used in)
financing activities 42 (296)
Net increase in cash and cash equivalents 935 1,245
Cash and cash equivalents at beginning of period 2,225 3,393
Cash and cash equivalents at end of period $ 3,160 $ 4,638
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 815 $ 1,121
<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 of Consolidated
Capital Equity Partners, L.P. ("CCEP") 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 ConCap Holdings, Inc. ("General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and six month
periods ended June 30, 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
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 six months ended June 30, 1995, for The Carlton House
Apartment and Office Building ("The Carlton House") are consolidated in CCEP's
financial statements pursuant to accounting guidelines regarding notes
receivable in-substance foreclosed. The 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 six month periods ended June 30,
1996 and 1995. Fees paid to affiliates of Insignia during the six month periods
ended June 30, 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. The General Partner, and its current
affiliates, received reimbursements for the six months ended June 30, 1996 and
1995, as reflected in the following table.
Note B - Related Party Transactions (continued)
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 Six Months Ended
June 30,
1996 1995
(in thousands)
Property management fees $500 $615
Investment advisory fees 91 129
Lease commissions 26 --
Reimbursement for services of affiliates (1) 239 300
(1) Included in "reimbursements for services of affiliates" for 1996 is
approximately $39,000 in reimbursements for construction oversight
costs.
The decrease in property management fees for the six months ended June 30, 1996,
as compared to the six months ended June 30, 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.
Interest payments made during the six month periods ended June 30, 1996 and
1995, were $0 and approximately $918,000, respectively. (See further discussion
in "Note C"). Advances of approximately $367,000 were made under the Master
Loan Agreement during the six months ended June 30, 1996. Principal payments of
approximately $175,000 were made on the Master Loan during the six months ended
June 30, 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 June 30,
1996, and December 31, 1995, are approximately $248.5 million and approximately
$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 and six month periods ended June 30, 1996 and 1995, was 12.5%.
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 and capital expenditures. Any unpaid
interest is added to principal, compounded annually, and is payable at the
loan's maturity. Any net proceeds from sale or refinancing of any of CCEP'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 six months ended June
30, 1996, as additional advances under the Master Loan. CCEP used the funds to
pay for deferred maintenance and capital improvements on certain properties
which collateralize the Master Loan. A portion of the advance was used to pay
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 six months ended June 30, 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 Master Loan Agreement, accounted for approximately $74,000.
Note D - Note Receivable Deemed In-Substance Foreclosed
Prior to the transfer of The 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
The 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 six months ended June 30, 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 Six Months Ended
June 30, 1996
(in thousands)
Revenues:
Rental income $ 2,908
Other income 14
Total revenues 2,922
Expenses:
Operating 2,217
Depreciation and amortization 517
Interest 1
Administrative 93
Total expenses 2,828
Net income $ 94