EXHIBIT 99.1 CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 EXHIBIT 99.1 (Continued) PART I - FINANCIAL INFORMATION TEM 1. FINANCIAL STATEMENTS a) CONSOLIDATED CAPITAL EQUITY PARTNERS, L.P. CONSOLIDATED BALANCE SHEETS (in thousands) September 30, December 31, 1996 1995 (Unaudited) (Note) Assets Cash and cash equivalents $ 3,173 $ 2,225 Investments in limited partnerships 336 460 Other assets 4,264 5,725 Investment properties: Land 10,217 10,452 Building and related personal property 94,260 94,906 104,477 105,358 Less accumulated depreciation (69,281) (68,167) 35,196 37,191 $ 42,969 $ 45,601 Liabilities and Partners' Deficit Accounts payable and accrued liabilities $ 2,223 $ 3,035 Mortgage notes and interest payable 23,591 25,050 Master loan and interest payable 254,450 233,490 280,264 261,575 Partners' Deficit General partner (2,372) (2,159) Limited partners (234,923) (213,815) (237,295) (215,974) $ 42,969 $ 45,601 Note: The balance sheet at December 31, 1995, has been derived from the consolidated financial statements at that date, but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. <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 Nine Months Ended September 30, September 30, 1996 1995 1996 1995 Revenues: Rental income $ 4,987 $ 6,695 $ 14,946 $ 18,824 Other income 50 43 106 101 Total revenues 5,037 6,738 15,052 18,925 Expenses: Operating 3,128 4,616 9,156 12,199 General and administrative 192 169 559 843 Depreciation and amortization 1,356 1,655 4,018 4,862 Interest 7,831 7,655 23,554 22,985 Write-down of investment properties and investment in limited partnerships -- 3,814 -- 3,814 Total expenses 12,507 17,909 37,287 44,703 Gain on sale of investment property 914 -- 914 -- Net loss $(6,556) $(11,171) $(21,321) $(25,778) Net loss allocated to general partner (1%) $ (66) $ (112) $ (213) $ (258) Net loss allocated to limited partners (99%) (6,490) (11,059) (21,108) (25,520) $(6,556) $(11,171) $(21,321) $(25,778) <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 Nine Months Ended September 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 nine months ended September 30, 1995 (258) (25,520) (25,778) Partners' deficit at September 30, 1995 $ (2,038) $(201,780) $(203,818) Partners' deficit at December 31, 1995 $ (2,159) $(213,815) $(215,974) Net loss for the nine months ended September 30, 1996 (213) ( 21,108) (21,321) Partners' deficit at September 30, 1996 $ (2,372) $(234,923) $(237,295) 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) Nine Months Ended September 30, 1996 1995 Cash flows from operating activities: Net loss $(21,321) $(25,778) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 4,077 4,862 Gain on sale of investment property (914) -- Write-down of investment properties and investment in limited partnerships -- 3,814 Change in accounts: Other assets 1,454 (1,843) Accounts payable and accrued liabilities (754) 1,151 Interest on Master Loan 22,181 20,167 Due to affiliates -- (918) Interest payable 68 11 Net cash provided by operating activities 4,791 1,466 Cash flows from investing activities: Property improvements and replacements (2,987) (2,365) Proceeds from sale of investment property 1,882 -- Proceeds from sale of securities available for sale -- 195 Net cash used in investing activities (1,105) (2,170) Cash flows from financing activities: Advances on Master Loan 367 -- Principal payments on Master Loan (1,588) -- Principal payments on notes payable (220) (460) Repayment of note payable (1,295) Loan costs paid (2) -- Net cash used in financing activities (2,738) (460) Net increase (decrease) in cash and cash equivalents 948 (1,164) Cash and cash equivalents at beginning of period 2,225 3,393 Cash and cash equivalents at end of period $ 3,173 $ 2,229 Supplemental disclosure of cash flow information: Cash paid for interest $ 1,257 $ 3,721 <FN> See Accompanying Notes to Consolidated Financial Statements EXHIBIT 99.1 (Continued) 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 nine month periods ended September 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 nine months ended September 30, 1995, for The Sterling Apartment Home and Commerce Center ("The Sterling") (formerly known as The Carlton House Apartment and Office Building) are consolidated in CCEP's financial statements pursuant to accounting guidelines regarding notes receivable in-substance foreclosed. The Sterling 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 has no employees and is dependent on the General Partner and its affiliates for the management and administration of all partnership activities. CCEP paid property management fees based upon collected gross rental revenues for property management services in each of the nine month periods ended September 30, 1996 and 1995. Fees paid to affiliates of Insignia during the nine month periods ended September 30, 1996 and 1995, are included in operating expenses on the consolidated statements 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 nine months ended September 30, 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 Nine Months Ended September 30, 1996 1995 (in thousands) Property management fees $748 $966 Investment advisory fees 136 199 Lease commissions 55 186 Reimbursement for services of affiliates (1) 373 362 (1) Included in "reimbursements for services of affiliates" for 1996 is approximately $82,000 in reimbursements for construction oversight costs. The decrease in property management fees for the nine months ended September 30, 1996, compared to the nine months ended September 30, 1995, is the result of the transfer of The Sterling 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 nine month periods ended September 30, 1996 and 1995, were $0 and approximately $2.5 million, respectively. (See further discussion in "Note C"). Advances of approximately $367,000 were received under the Master Loan Agreement during the nine months ended September 30, 1996. Principal payments of approximately $1,588,000 were made on the Master Loan during the nine months ended September 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 September 30, 1996, and December 31, 1995, are approximately $254.5 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 nine month periods ended September 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 nine months ended September 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 a wholly owned subsidiary. During the nine months ended September 30, 1996, CCEP paid approximately $1,588,000 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 $124,000. Approximately $1,363,000 was due to an excess cash flow payment paid to CCIP as stipulated by the Master Loan Agreement. Subsequent to September 30, 1996, an excess cash payment of $69,000 was made to CCIP. NOTE D - NOTE RECEIVABLE DEEMED IN-SUBSTANCE FORECLOSED Prior to the transfer of The Sterling from CCEP to CCIP on November 30, 1995, CCEP held the "Sterling Note" which was secured by a deed of trust on The Sterling 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 Sterling. 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 Sterling that are included in CCEP's financial statements for the nine months ended September 30, 1995, prepared on the same basis as CCEP's financial statements. Any intercompany balances between the Partnership and The Sterling have been eliminated in CCEP's consolidated financial statements and the summarized financial statements set forth below: For the Nine Months Ended September 30, 1995 (in thousands) Revenues: Rental income $ 4,502 Other income 22 Total revenues 4,524 Expenses: Operating 3,358 Depreciation and amortization 791 Interest 731 Administrative 98 Total expenses 4,978 Net loss $ (454) NOTE E - SALE OF LAKEVIEW OFFICE TOWER On September 13, 1996, the Partnership sold Lakeview Office Tower to an unrelated third party for a contract price of $2,060,000. The Partnership received net proceeds of approximately $1,882,000 after payment of closing costs, and recognized a gain on the sale of approximately $914,000. A mortgage note payable on the property in the amount of approximately $1,295,000 was repaid with a portion of the proceeds. The remaining cash proceeds of approximately $587,000 from the sale of Lakeview were remitted to CCIP subsequent to September 30, 1996, to pay down the Master Loan.