March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Consolidated Capital Properties IV
Form 10-K
File No. 0-11002
To Whom it May Concern:
The accompanying Form 10-K for the year ended December 31, 1999 describes a
change in the method of accounting to capitalize exterior painting and major
landscaping, which would have been expensed under the old policy. The
Partnership believes that this accounting principle change is preferable because
it provides a better matching of expenses with the related benefit of the
expenditures and it is consistent with industry practice and the policies of the
General Partner.
Please do not hesitate to contact the undersigned with any questions or comments
that you might have.
Very truly yours,
Stephen Waters
Real Estate Controller
FORM 10-K--ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the fiscal year ended December 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPTIAL PROPERTIES IV
(Name of small business issuer in its charter)
California 94-2768742
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(Title of class)
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 if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 1999. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Description of Business
Consolidated Capital Properties IV (the "Partnership" or "Registrant") was
organized on September 22, 1981 as a limited partnership under the California
Uniform Limited Partnership Act. On December 18, 1981, the Partnership commenced
a public offering for the sale of 200,000 Units with the general partner's right
to increase the offering to 400,000 Units. The Units represent equity interests
in the Partnership and entitle the holders thereof to participate in certain
allocations and distributions of the Partnership. The sale of Units closed on
December 14, 1983, with 343,106 Units sold at $500 each, or gross proceeds of
$171,553,000 to the Partnership. Since its initial offering, the Partnership has
not received, nor are limited partners required to make, additional capital
contributions.
By the end of fiscal year 1985, approximately 73% of the proceeds raised had
been invested in 48 properties. Of the remaining 27%, 11% was required for
organizational and offering expenses, sales commissions and acquisition fees,
and 16% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"). The
directors and officers of the General Partner also serve as executive officers
of AIMCO. The Partnership Agreement provides that the Partnership is to
terminate on December 31, 2011 unless terminated prior to that date.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership is engaged in the business of operating and
holding real estate properties for investment. As of the close of fiscal year
1985, the Partnership had completed its property acquisition stage and had
acquired 48 properties. At December 31, 1999, the Partnership owned 16
income-producing properties (or interests therein), which range in age from 23
to 28 years old, principally located in the midwest, southeastern and
southwestern United States. Prior to 1999, the Partnership had disposed of 31
properties originally owned by the Partnership. In December 1999, the
Partnership sold an additional property. See "Item 2. Description of Properties"
for further information about the Partnership's remaining properties.
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the Managing General
Partner, in such market area could have a material effect on the rental market
for the apartments at the Registrant's properties and the rents that may be
charged for such apartments. While the General Partner and its affiliates own
and/or control a significant number of apartment units in the United States,
such units represent an insignificant percentage of total apartment units in the
United States and competition for the apartments is local.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
The Registrant has no employees. Property management and administrative services
are provided by the General Partner and by agents of the General Partner. The
General Partner has also selected an affiliate to provide real estate advisory
and asset management services to the Partnership. As advisor, such affiliate
provides all partnership accounting and administrative services, investment
management, and supervisory services over property management and leasing.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in "Item 7" of this Form 10-K.
Transfers of Control
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1998, through a series of
transactions, Southmark Corporation ("Southmark") acquired a controlling
interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. In 1990, as part of its reorganization
plan, CEI acquired CCEC's general partner interests in the Partnership and in 15
other affiliated public limited partnerships (the "Affiliated Partnerships") and
CEI replaced CCEC as managing general partner in all 16 partnerships. The
selection of CEI as the sole managing general partner was approved by a majority
of the Limited Partners in the Partnership and in each of the affiliated
partnerships pursuant to a solicitation of the Limited Partners dated August 10,
1990. As part of this solicitation, the Limited Partners also approved an
amendment to the Partnership Agreement to limit changes of control of the
Partnership, and the conversion of CCMC from a general partner to a special
limited partner, thereby leaving CEI as the sole general partner of the
Partnership. On November 14, 1990, CCMC was dissolved and its special limited
partnership interest was divided among its former partners. All of CEI's
outstanding stock was owned by Insignia Properties Trust ("IPT") (See below).
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Segments
Segment data for the years ended December 31, 1999, 1998, and 1997 is included
in "Item 8. Financial Statements and Supplementary Date - Note M" and is an
integral part of the Form 10-K.
Item 2. Description of Properties:
The Partnership originally acquired 48 properties of which twelve (12) were
sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10)
were foreclosed upon by the lenders. As of December 31, 1999, the Partnership
owned sixteen (16) apartment complexes. Additional information about the
properties is found in "Item 8. Financial Statements and Supplementary Data".
Date of
Property Purchase Type of Ownership Use
The Apartments (1) 04/84 Fee ownership, subject to Apartment
Omaha, Nebraska a first mortgage 204 units
Arbours of Hermitage Apts. (1) 09/83 Fee ownership subject to Apartment
Nashville, Tennessee a first mortgage 350 units
Briar Bay Racquet Club Apts. (2) 09/82 Fee ownership subject to Apartment
Miami, Florida a first mortgage 194 units
Chimney Hill Apts. (2) 08/82 Fee ownership subject to Apartment
Marietta, Georgia a first mortgage 326 units
Citadel Apts. (1) 05/83 Fee ownership subject Apartment
El Paso, Texas to a first mortgage 261 units
Citadel Village Apts. (1) 12/82 Fee ownership subject Apartment
Colorado Springs, Colorado to a first mortgage 122 units
Foothill Place Apts. (2) 08/85 Fee ownership subject Apartment
Salt Lake City, Utah to a first mortgage 450 units
Knollwood Apts. (1) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 326 units
Lake Forest Apts. 04/84 Fee ownership subject Apartment
Omaha, Nebraska to a first mortgage 312 units
Nob Hill Villa Apts. (1) 04/83 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 472 units
Point West Apts. (1) 11/85 Fee ownership subject Apartment
Charleston, South Carolina a first mortgage 120 units
Post Ridge Apts. (2) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 150 units
Rivers Edge Apts. (2) 04/83 Fee ownership subject Apartment
Auburn, Washington to a first mortgage 120 units
South Port Apts. (3) 11/83 Fee ownership subject Apartment
Tulsa, Oklahoma to a first mortgage 240 units
Stratford Place Apts. (2) 08/85 Fee ownership subject Apartment
Austin, Texas to a first mortgage 223 units
Village East Apts. (1) 12/82 Fee ownership subject Apartment
Cimarron Hills, Colorado to a first mortgage 137 units
(1) Property is held by a limited partnership and/or limited liability
corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Registrant owns a
99% interest.
(3) Property is held by a limited partnership in which the Partnership owns a
50% interest.
Schedule of Properties:
Set forth below for each of the Registrant's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Federal
Property Value Depreciation Rate Method Tax Basis
(in thousands) (in thousands)
The Apartments $ 9,026 $ 6,845 5-18 yrs S/L $ 2,322
Arbours of Hermitage Apartments 13,142 10,941 5-18 yrs S/L 2,717
Briar Bay Racquet Club
Apartments 7,848 6,488 5-18 yrs S/L 2,006
Chimney Hill Apartments 11,237 9,689 5-18 yrs S/L 2,492
Citadel Apartments 7,855 6,539 5-18 yrs S/L 1,187
Citadel Village Apartments 4,285 3,448 5-18 yrs S/L 1,364
Foothill Place Apartments 15,544 9,533 5-18 yrs S/L 7,507
Knollwood Apartments 11,453 9,531 5-18 yrs S/L 2,458
Lake Forest Apartments 9,576 6,727 5-18 yrs S/L 2,522
Nob Hill Villa Apartments 13,208 11,221 5-18 yrs S/L 2,020
Point West Apartments 3,171 2,312 5-40 yrs S/L 1,293
Post Ridge Apartments 4,941 3,863 5-18 yrs S/L 1,227
Rivers Edge Apartments 3,424 2,636 5-18 yrs S/L 971
South Port Apartments 8,178 6,660 5-18 yrs S/L 1,692
Stratford Place Apartments 8,083 4,549 5-20 yrs S/L 3,023
Village East Apartments 3,662 3,075 5-18 yrs S/L 737
Total $134,633 $104,057 $ 35,538
See "Note A" to the consolidated financial statements included in "Item 8.
Financial Statements and Supplementary Data" for a description of the
Partnership's depreciation policy and "Note O - Change in Accounting Principle".
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Registrant's properties.
Principal Principal
Balance At Stated Balance
December 31, Interest Period Maturity Due At
Property 1999 Rate Amortized Date Maturity (2)
(in thousands) (in thousands)
The Apartments $ 3,294 8.34% 25 years 09/00 $ 3,244
Arbours of Hermitage Apartments 5,650 6.95% (1) 12/05 5,650
Briar Bay Racquet Club Apartments 3,500 6.95% (1) 12/05 3,500
Chimney Hill Apartments 5,400 6.95% (1) 12/05 5,400
Citadel Apartments 4,565 8.38% 25 years 10/00 4,488
Citadel Village Apartments 2,450 6.95% (1) 12/05 2,450
Foothill Place Apartments 10,100 6.95% (1) 12/05 10,100
Knollwood Apartments 6,780 6.95% (1) 12/05 6,780
Lake Forest Apartments 4,700 7.33% (1) 11/03 4,700
Nob Hill Villa Apartments 7,050 9.20% 25 years 04/05 6,250
Point West Apartments 2,460 7.86% 20 years 12/19 --
Post Ridge Apartments 4,050 7.33% (1) 11/03 4,050
Rivers Edge Apartments 1,924 8.40% 25 years 09/00 1,895
South Port Apartments 4,409 7.19% 30 years 12/04 4,119
Stratford Place Apartments 2,515 8.65% 25 years 09/00 2,478
Village East Apartments 2,150 6.95% (1) 12/05 2,150
Totals $70,997 $67,254
(1) Monthly payments of interest only at the stated rate until maturity.
(2) See "Item 8. Financial Statements and Supplementary Date - Note D" for
information with respect to the Registrant's ability to prepay these loans
and other specific details about the loans.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the refinancing of the
mortgage encumbering South Port Apartments in the fourth quarter of 1997, the
financing at Point West Apartments in the fourth quarter of 1999, and the
refinancing of the mortgages encumbering The Apartments and Citadel Apartments
in February 2000.
Rental Rate and Occupancy:
The following table sets forth the average annual rental rates and occupancy for
1999 and 1998 for each property.
Average Annual Average
Rental Rates Occupancy
(per unit)
Property 1999 1998 1999 1998
The Apartments $ 6,989 $ 6,733 93% 94%
Arbours of Hermitage Apartments 7,388 7,166 96% 95%
Briar Bay Racquet Club Apartments 8,922 8,648 96% 97%
Chimney Hill Apartments 8,238 8,025 95% 91%
Citadel Apartments 6,800 6,779 94% 96%
Citadel Village Apartments 8,818 8,556 97% 96%
Foothill Place Apartments 7,973 7,893 97% 94%
Knollwood Apartments 7,983 7,821 96% 95%
Lake Forest Apartments 7,452 7,160 87% 92%
Nob Hill Villa Apartments 6,191 6,074 94% 92%
Point West Apartments 6,002 5,606 97% 98%
Post Ridge Apartments 9,440 9,261 96% 96%
Rivers Edge Apartments 7,448 7,068 97% 96%
South Port Apartments 6,346 5,874 95% 97%
Stratford Place Apartments 7,387 7,185 95% 92%
Village East Apartments 7,422 7,182 98% 96%
The increase in occupancy at Chimney Hill Apartments, Foothill Place Apartments
and Stratford Place Apartments is attributable to a strong local market and more
aggressive marketing plan in 1999. The decrease in occupancy at Lake Forest
Apartments is due to a number of units temporarily lost during completion of
structural improvements in 1999 and increased competition in the local market.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
all of the properties are adequately insured. Each property is an apartment
complex which leases units for lease terms of one year or less. No residential
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, subject to normal depreciation and deterioration
as is typical for assets of this type and age.
Real Estate Taxes and Rates:
Real estate taxes and rates in 1999 for each property were:
1999 1999
Billing Rate
(in thousands)
The Apartments $121 2.2%
Arbours of Hermitage Apartments 149 1.4%
Briar Bay Racquet Club Apartments 170 2.3%
Chimney Hill Apartments 130 2.9%
Citadel Apartments 147 2.9%
Citadel Village Apartments 21 .6%
Foothill Place Apartments 188 1.5%
Knollwood Apartments 163 1.4%
Lake Forest Apartments 166 2.2%
Nob Hill Villa Apartments 205 1.7%
Point West Apartments 35 2.2%
Post Ridge Apartments 92 1.4%
Rivers Edge Apartments 56 1.5%
South Port Apartments 61 1.5%
Stratford Place Apartments 153 2.6%
Village East Apartments 20 .6%
Capital Improvements:
The Apartments
During 1999, the Partnership completed approximately $322,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, air conditioning units, roof replacement, major landscaping, and
other building improvements. These improvements were funded from the
Partnership's reserves and operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $61,200.
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.
Arbours of Hermitage Apartments
During 1999, the Partnership completed approximately $464,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, roof replacement, structural upgrades, parking lot upgrades, major
landscaping, and electrical upgrades. These improvements were funded from the
Partnership's operating cash flow and reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $105,000.
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.
Briar Bay Racquet Club Apartments
During 1999, the Partnership completed approximately $123,000 of capital
improvements at the property, consisting primarily of plumbing upgrades, parking
lot resurfacing, carpet and vinyl replacement, major landscaping, and roof
replacements. These improvements were funded from Partnership operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $58,200. 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.
Chimney Hill Apartments
During 1999, the Partnership completed approximately $210,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, cabinet upgrades, air conditioning unit replacements, major
landscaping, and structural upgrades. These improvements were funded from the
Partnership's operating cash flow. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $97,800. 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.
Citadel Apartments
During 1999, the Partnership completed approximately $278,000 of capital
improvements at the property, consisting primarily of carpet and appliance
replacements, major landscaping, other building improvements and parking area
upgrades. These improvements were funded from the Partnership's operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $78,300. 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.
Citadel Village Apartments
During 1999, the Partnership completed approximately $239,000 of capital
improvements at the property, consisting primarily of roof replacement, carpet
and vinyl replacement, recreational facilities upgrades, major landscaping,
signage, and other building improvements. These improvements were funded from
the Partnership's reserves and operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or $36,600.
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.
Foothill Place Apartments
During 1999, the Partnership completed approximately $373,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, other improvements, swimming pool improvements, major landscaping,
parking area upgrades, and roof replacement. These improvements were funded from
the Partnership's operating cash flow. The Partnership is currently evaluating
the capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $135,000. 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.
Knollwood Apartments
During 1999, the Partnership completed approximately $587,000 of capital
improvements at the property, consisting primarily of roof replacement,
structural upgrades, carpet and vinyl replacement, parking area upgrades, other
building improvements, and electrical upgrades. These improvements were funded
from the Partnership's operating cash flow and reserves. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $97,800. 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.
Lake Forest Apartments
During 1999, the Partnership completed approximately $482,000 of capital
improvements at the property, consisting primarily of structural upgrades,
carpet and vinyl replacement, parking area upgrades, air conditioning units
replacement, major landscaping, and other building improvements. These
improvements were primarily funded from the Partnership replacement and capital
reserves. The Partnership is currently evaluating the capital improvement needs
of the property for the upcoming year. The minimum amount to be budgeted is
expected to be $300 per unit or $93,600. 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.
Nob Hill Villa Apartments
During 1999, the Partnership completed approximately $319,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, electrical upgrades, other building improvements, major
landscaping, appliance replacement, and plumbing upgrades. These improvements
were primarily funded from the Partnership's operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $141,600. 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.
Point West Apartments
During 1999, the Partnership completed approximately $138,000 of capital
improvements at the property, consisting primarily of fencing, roof replacement,
carpet and vinyl replacement, electrical upgrades, major landscaping, and other
building improvements. These improvements were funded from the Partnership's
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year. The minimum amount to
be budgeted is expected to be $300 per unit or $36,000. 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.
Post Ridge Apartments
During 1999, the Partnership completed approximately $391,000 of capital
improvements at the property, consisting primarily of roof replacement, carpet
and vinyl replacement, plumbing upgrades, major landscaping, other building
improvements, and light fixture replacement. These improvements were primarily
funded from Partnership reserves. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $45,000. 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.
Rivers Edge Apartments
During 1999, the Partnership completed approximately $82,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, and other improvements. These improvements
were funded from the Partnership's reserves and operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year. The minimum amount to be budgeted is expected to
be $300 per unit or $36,000. 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.
South Port Apartments
During 1999, the Partnership completed approximately $244,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacements, major landscaping, and structural upgrades.
These improvements were funded from operating cash flow. The Partnership is
currently evaluating the capital improvement needs of the property for the
upcoming year. The minimum amount to be budgeted is expected to be $300 per unit
or $72,000. 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.
Stratford Place Apartments
During 1999, the Partnership completed approximately $587,000 of capital
improvements at the property, consisting primarily of structural upgrades, air
conditioning units, parking area upgrades, carpet and vinyl replacement, major
landscaping, and electrical upgrades. These improvements were funded from the
Partnership's operating cash flow. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year. The minimum
amount to be budgeted is expected to be $300 per unit or $66,900. 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.
Village East Apartments
During 1999, the Partnership completed approximately $202,000 of capital
improvements at the property, consisting primarily of model interior upgrades,
roofing replacement, structural upgrades, exterior painting, and carpet and
vinyl replacement. These improvements were funded from the Partnership's
operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year.
The minimum amount to be budgeted is expected to be $300 per unit or
approximately $41,100. 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.
Overlook Apartments
During 1999, the Partnership completed approximately $166,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacement, appliance replacement, major landscaping, and other building
improvements. The property was sold on December 13, 1999.
Item 3. 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. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Item 8. Financial Statements and Supplementary Data, Note B - Transfer of
Control"). The plaintiffs seek monetary damages and equitable relief, including
judicial dissolution of the Partnership. On June 25, 1998, the General Partner
filed a motion seeking dismissal of the action. In lieu of responding to the
motion, the plaintiffs have filed an amended complaint. The General Partner
filed demurrers to the amended complaint which were heard February 1999. Pending
the ruling on such demurrers, settlement negotiations commenced. On November 2,
1999, the parties executed and filed a Stipulation of Settlement, settling
claims, subject to final court approval, on behalf of the Partnership and all
limited partners who own units as of November 3, 1999. Preliminary approval of
the settlement was obtained on November 3, 1999 from the Superior Court of the
State of California, County of San Mateo, at which time the Court set a final
approval hearing for December 10, 1999. Prior to the December 10, 1999 hearing
the Court received various objections to the settlement, including a challenge
to the Court's preliminary approval based upon the alleged lack of authority of
class plaintiffs' counsel to enter the settlement. On December 14, 1999, the
General Partner and its affiliates terminated the proposed settlement. Certain
plaintiffs have filed a motion to disqualify some of the plaintiffs' counsel in
the action. The General Partner does not anticipate that costs associated with
this case will be material to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 1999.
PART II
Item 5. Market for the Registrant's Units of Limited Partnership and Related
Security Holder Matters
(A) No established trading market for the Partnership's Units exists, nor is
one expected to develop.
(B) Title of Class Number of Unitholders of Record
Limited Partnership Units 8,881 as of December 31, 1999
There were 342,773 Units outstanding at December 31, 1999, of which affiliates
of the General Partner owned 166,949 Units or approximately 48.71%.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 1997, 1998 and 1999 (see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
more details):
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/97 - 12/31/97 $2,503 (1) $ 7.01
01/01/98 - 12/31/98 3,951 (1) 11.07
01/01/99 - 12/31/99 17,601 (2) 49.29
(1) Distributions were made from cash from operations.
(2) Consists of approximately $12,544,000 of cash from operations and
approximately $5,057,000 of cash from surplus funds. The surplus funds
were from the financing at Point West Apartments and previously
undistributed refinance proceeds from 1996 and 1997. Of these amounts,
$4,318,000 was accrued at December 31, 1999 and paid in January 2000.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturities, refinancings and/or property sales. The Partnership's distribution
policy is reviewed on a quarterly basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit any distributions to its partners in the
year 2000 or subsequent periods. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" for information
relating to anticipated capital expenditures at the properties and the working
capital reserve requirement.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999, 1998, and 1997. As a
result of these tender offers, AIMCO and its affiliates currently own 166,949
limited partnership units in the Partnership representing approximately 48.71%
of the outstanding units. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Consequently, AIMCO is in a position to significantly
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the units it acquired in a manner favorable
to the interest of the General Partner because of their affiliation with the
General Partner.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the
Partnership. Certain reclassifications have been made to the 1995 through 1997
information to conform to the 1998 and 1999 presentation. This summary should be
read in conjunction with the Partnership's consolidated financial statements and
notes thereto appearing in "Item 8. Financial Statements and Supplementary
Data."
Consolidated Statements of Operations Years Ended December 31,
(in thousands, except per unit data)
1999 1998 1997 1996 1995
Total revenues $ 31,189 $ 30,093 $ 28,710 $ 27,907 $ 27,195
Total expenses (25,071) (26,164) (28,296) (28,780) (28,435)
Income (loss) before extraordinary
items 6,118 3,929 414 (873) (1,240)
Extraordinary items -- (5) (47) 2,909 43
Net income (loss) $ 6,118 $ 3,924 $ 367 $ 2,036 $ (1,197)
Net income (loss) per Limited
Partnership Unit:
Income (loss) before extraordinary
items 17.13 11.00 1.15 (2.45) (3.47)
Extraordinary items -- (.01) (.12) 8.15 .12
Net income (loss) $ 17.13 $ 10.99 $ 1.03 $ 5.70 $ (3.35)
Distributions per Limited
Partnership
Unit $ 49.29 $ 11.07 $ 7.01 $ 12.91 $ 2.58
Limited Partnership Units
outstanding 342,773 342,773 342,773 342,783 342,783
Consolidated Balance Sheets
Total assets $ 44,464 $ 50,671 $ 52,381 $ 53,844 $ 61,146
Mortgage notes payable $ 70,997 $ 70,775 $ 72,439 $ 71,763 $ 76,336
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
INTRODUCTION
The matters discussed in this Form 10-K contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Form 10-K and the other filings with the Securities and
Exchange Commission made by the Registrant from time to time. The discussion of
the Registrant's business and results of operations, including forward-looking
statements pertaining to such matters, does not take into account the effects of
any changes to the Registrant's business and results of operation. Accordingly,
actual results could differ materially from those projected in the
forward-looking statements as a result of a number of factors, including those
identified herein.
The operations of the Partnership primarily include operating and holding
income-producing real estate properties for the benefit of its partners.
Therefore, the following discussion of operations, liquidity and capital
resources will focus on these activities and should be read in conjunction with
"Item 8. Financial Statements and Supplementary Data" and the notes related
thereto included elsewhere in this report.
Results of Operations
The Partnership's net income before extraordinary items total approximately
$6,118,000 for the year ended December 31, 1999, as compared to approximately
$3,929,000 for the year ended December 31, 1998 and net income before
extraordinary items of approximately $414,000 for the year ended December 31,
1997. For the year ended December 31, 1999, an increase in total revenues and an
overall decrease in expenses resulted in an increase in income before
extraordinary items as compared to 1998.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $287,000 ($0.80 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
As part of the ongoing business plan of the Partnership, the General Partner
monitors the rental market environment of each 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, due to changing market
conditions, which can result in the use of rental concessions and rental
reductions to offset softening market conditions, there is no guarantee that the
General Partner will be able to sustain such a plan.
1999 Compared to 1998
Revenues:
The increase in total revenues is primarily attributable to increased rental
income for the year ended December 31, 1999, as compared to the year ended
December 31, 1998. These increases are due to increased rental rates at the
Partnership's investment properties accompanied by increased occupancy levels at
some of the properties which more than offset occupancy decreases at other
properties. An increase in bad debt expense at most of the Partnership's
properties partially offset the increase in rental income. The gain on the sale
of Overlook Apartments of approximately $638,000 recognized in 1999 also
contributed to the increase in total revenue versus a casualty gain of
approximately $363,000 recognized in 1998. Partially offsetting these increases
was a decrease in other income for 1999 as compared to 1998. The decrease in
other income is due to reduced interest income as a result of lower cash
balances being held in interest bearing accounts.
Expenses:
Expenses decreased primarily due to reductions in operating expense and, to a
lesser extent, reductions in depreciation expenses partially offset by increases
in general and administrative expense and property tax expense. Operating
expenses decreased due to a decrease in maintenance expenses in 1999 due to the
completion of repair and maintenance projects in 1998 as well as a change in the
Partnership's accounting policy as discussed above. In addition, there were
decreases in 1999 in expenses related to casualties at some of the Partnership's
properties incurred in 1998. Depreciation expense decreased due to major assets
at several of the Partnership's investment properties becoming fully depreciated
during 1999. General and administrative expenses increased primarily due to an
increase in the 9% management fee on distributions from operating cash flows.
Distributions from operations increased by approximately $8,593,000 during 1999
as compared to 1998. In addition, legal expenses increased due to the settlement
of a lawsuit as discussed in the Partnership's Form 10-K at December 31, 1998.
Included in general and administrative expenses at both December 31, 1999 and
1998, are reimbursements to the General Partner allowed under the Partnership
Agreement associated with the quarterly and annual communications with investors
and regulatory agencies and the annual audit required by the Partnership
Agreement are also included. Property tax expense increased due to an increase
in the assessed value at several of the Partnership's properties.
On December 14, 1999, Overlook Associates, Ltd. sold Overlook to an unaffiliated
third party for $1,975,000. After payment of closing costs of approximately
$84,000 the net proceeds received by the Partnership were approximately
$1,891,000. The Partnership used most of the proceeds to pay off the mortgage
encumbering the property of approximately $1,780,000. The remaining net proceeds
were used to establish additional cash reserves for the Partnership. The
Partnership's gain on the sale during the fourth quarter of 1999 was
approximately $638,000.
1998 Compared to 1997
Revenues:
The increase in revenues is primarily attributable to increased rental income
for the year ended December 31, 1998, as compared to the year ended December 31,
1997. These increases are due to increased rental rates at the Partnership's
investment properties accompanied by increased occupancy levels at some of the
properties which more than offset occupancy decreases at other properties. In
addition, revenues decreased due to an increase in other income resulting from
higher cash balances in interest bearing accounts, as well as the casualty gain
of approximately $363,000 recognized in 1998.
Expenses:
Expenses decreased primarily due to reductions in operating and depreciation
expenses, and, to a lesser extent, reductions in property tax expenses.
Operating expenses decreased due to the completion of repair projects at a
number of the Partnership's investment properties, including exterior building
repairs, parking lot repairs, and exterior painting, as well as decreases in
expenses related to the casualties which occurred in 1997 at some of the
Partnership's properties. Depreciation expense decreased due to major assets at
several of the Partnership's investment properties becoming fully depreciated
during 1997. Property tax expense decreased due to tax reductions received in
1998 for billings under appeal at December 31, 1997 at several of the
Partnership's investment properties. Partially offsetting these decreases in
expenses is an increase in general and administrative expenses. General and
administrative expenses increased primarily due to an increase in the special 9%
management fee on distributions from operating cash flows. Distributions from
operations increased by approximately $2,351,000 during 1998 as compared to
1997. Included in general and administrative expenses at both December 31, 1998
and 1997, are reimbursements to the General Partner allowed under the
Partnership Agreement associated with its management of the Partnership. In
addition, costs associated with the quarterly and annual communications with
investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
During 1998, the two mortgages secured by the Denbigh Woods property were paid
in full. Approximately $5,000 in prepayment penalties was paid in connection
with these repayments. Such amount is included on the consolidated statements of
operations as extraordinary loss on retirement of debt, which caused a slight
decrease in net income for 1998. See "Item 8. Financial Statements and
Supplementary Data - Note G" for additional information on these mortgages.
During 1998, a net casualty gain of approximately $192,000 resulted from fire
and smoke damage to Overlook Apartments suffered in November 1997. In March
1998, Nob Hill Apartments sustained damages from a fire in one of the property's
buildings, resulting in a net casualty gain of approximately $204,000. Other
minor damage claims less related insurance proceeds resulted in a net casualty
loss of approximately $6,000. Additionally in 1998, Foothill Place Apartments
suffered windstorm damage resulting in a net casualty loss of approximately
$27,000. The net result of all of the above was the recognition of a casualty
gain of $363,000 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
1999 Compared to 1998
At December 31, 1999, the Partnership held cash and cash equivalents of
approximately $9,502,000 as compared to approximately $13,241,000 at December
31, 1998. The decrease in cash and cash equivalents of approximately $3,739,000
since the Partnership's year ended December 31, 1998 is due to approximately
$13,108,000 and $1,975,000 of cash used in financing and investing activities,
respectively, partially offset by approximately $11,344,000 of cash provided by
operating activities. Cash used in financing activities consisted primarily of
distributions to partners and, to a lesser extent, payments of principal on the
mortgages encumbering the Partnership's properties, payoff of the Overlook
mortgage, and payment of loan costs slightly offset by proceeds from the
financing of Point West Apartments. Cash used in investing activities consisted
primarily of property improvements and replacements, which was partially offset
by proceeds from the sale of Overlook and net withdrawals from restricted
escrows. The Partnership invests its working capital reserves in money market
accounts.
On December 14, 1999, Overlook Associates, Ltd. sold Overlook Apartments to an
unaffiliated third party for $1,975,000. After payment of closing costs of
approximately $84,000 the net proceeds received by the Partnership were
approximately $1,891,000. The Partnership used most of the proceeds to pay off
the mortgage encumbering the property of approximately $1,780,000. The remaining
net proceeds were used to establish additional cash reserves for the
Partnership. The Partnership's gain on the sale during the fourth quarter of
1999 was approximately $638,000.
1998 Compared to 1997
At December 31, 1998, the Partnership held cash and cash equivalents of
approximately $13,241,000 as compared to approximately $12,090,000 at December
31, 1997. The increase in cash and cash equivalents of approximately $1,151,000
since the Partnership's year ended December 31, 1997 is due to approximately
$8,474,000 of cash provided by operating activities, which was partially offset
by approximately $2,751,000 and $4,572,000 of cash used in investing and
financing activities, respectively. Cash used in investing activities consisted
of property improvements and replacements, which was partially offset by note
receivable collections, net withdrawals from restricted escrows and insurance
proceeds from casualty losses. Cash used in financing activities consisted
primarily of distributions to partners and, to a lesser extent, payments of
principal on the mortgages encumbering the Partnership's properties, payoff of
the Denbigh Woods mortgages, and payment of loan costs. The Partnership invests
its working capital reserves in money market 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 Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming
year. The minimum amount to be budgeted is expected to be $300 per unit or
$1,202,100. Additional improvements may be considered and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. The additional capital
expenditures will be incurred only if cash is available from operations or from
Partnership reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Partnership. The mortgage
indebtedness of approximately $70,997,000 matures at various dates between 2000
and 2019. On November 9, 1999, the Partnership obtained financing on Point West
Apartments in the amount of $2,460,000. The mortgage was financed at a rate of
7.86% and matures on December 1, 2019. 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 will risk losing such properties through foreclosure.
On November 18, 1997, the Partnership refinanced the mortgage encumbering the
South Port Apartments. The refinancing replaced indebtedness of $3,432,000,
including accrued interest of approximately $18,000, with a new mortgage in the
amount of $4,500,000. The mortgage was refinanced at a rate of 7.19%, compared
to the prior rate of 10.85% and matures on December 1, 2004. Capitalized loan
costs incurred for the refinancing were approximately $120,000 during the year
ended December 31, 1997. In 1998, approximately $17,000 of additional loan costs
were paid in connection with the South Port refinancing. The Partnership paid
approximately $34,000 in prepayment penalties and wrote off $13,000 in
unamortized loan costs, resulting in an extraordinary loss on extinguishment of
debt in the amount of approximately $47,000.
Subsequent to year end, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate of 8.37% compared to the prior rate of 8.34% and matures on March 1, 2020.
Capitalized loan costs incurred for the refinancing were approximately $112,000.
The Partnership wrote off approximately $12,000 in unamortized loan costs.
Subsequent to year end, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,582,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate of 8.25% compared to the prior rate of 8.38% and matures on
March 1, 2020. Capitalized loan costs incurred for the refinancing were
approximately $88,000. The Partnership wrote off approximately $27,000 in
unamortized loan costs.
During 1999, the Partnership paid distributions attributable to cash flow from
operations totaling approximately $10,670,000 (approximately $10,117,000 to the
limited partners or $29.52 per limited partnership unit) and approximately
$2,613,000 (all to the limited partners or $7.62 per limited partnership unit)
representing funds from previously undistributed refinance proceeds from 1996
and 1997. As of December 31, 1999, the Partnership had distributions payable
from cash from operations of approximately $1,874,000 (approximately $1,679,000
to the limited partners or $4.90 per limited partnership unit) and a
distribution of refinance proceeds representing funds from the financing of
Point West Apartments of approximately $2,444,000 (approximately $2,242,000 to
the limited partners or $6.54 per limited partnership unit). This distribution
was paid in January 2000.
During 1998, the Partnership declared and paid distributions attributable to
cash flow from operations totaling approximately $3,951,000 (approximately
$3,793,000 to the limited partners or $11.07 per limited partnership unit).
During 1997, the Partnership declared and paid distributions attributable to
cash flow from operations totaling approximately $1,600,000 (approximately
$1,536,000 to the limited partners or $4.48 per limited partnership unit) and
approximately $903,000 (approximately $867,000 to the limited partners or $2.53
per limited partnership unit) representing a portion of the previously
undistributed refinance proceeds from 1996.
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. The Partnership's distribution
policy is reviewed on a quarterly basis. There can be no assurance, however,
that the Partnership will generate sufficient funds from operations after
required capital expenditures to permit any distributions to its partners in the
year 2000 or subsequent periods.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies. On September 25, 1995, the partners were
proxied and approved a reduction of the capital reserve requirements to $500 per
apartment unit. The replacement reserve requirement at the residential
properties is approximately $2,004,000. In the event expenditures are made from
these reserves, operating revenue shall be allocated to such reserves to the
extent necessary to maintain the foregoing level. Reserves, including cash and
cash equivalents, totaling approximately $9,502,000 at December 31, 1999,
exceeded the Partnership's reserve requirements of approximately $2,004,000.
Tender Offer
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999, 1998, and 1997. As a
result of these tender offers, AIMCO and its affiliates currently own 166,949
limited partnership units in the Partnership representing approximately 48.71%
of the outstanding units. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Consequently, AIMCO is in a position to significantly
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the units it acquired in a manner favorable
to the interest of the General Partner because of their affiliation with the
General Partner.
Year 2000 Compliance
General Description
The Year 2000 issue is the result of computer programs being written using two
digits rather than four digits to define the applicable year. The Partnership is
dependent upon the General Partner and its affiliates for management and
administrative services ("Managing Agent"). Any of the Managing Agent's computer
programs or hardware that had date-sensitive software or embedded chips might
have recognized a date using "00" as the year 1900 rather than the year 2000.
This could have resulted in a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.
Computer Hardware, Software and Operating Equipment
In 1999, the Managing Agent completed all phases of its Year 2000 program by
completing the replacement and repair of any hardware or software system or
operating equipment that was not yet Year 2000 compliant. The Managing Agent's
hardware and software systems and its operating equipment are now Year 2000
compliant. No material failure or erroneous results have occurred in the
Managing Agent's computer applications related to the failure to reference the
Year 2000 to date.
Third Parties
To date, the Managing Agent is not aware of any significant supplier or
subcontractor (external agent) or financial institution of the Partnership that
has a Year 2000 issue that would have a material impact on the Partnership's
results of operations, liquidity or capital resources. However, the Managing
Agent has no means of ensuring or determining the Year 2000 compliance of
external agents. At this time, the Managing Agent does not believe that a Year
2000 issue of any non-compliant external agent will have a material impact on
the Partnership's financial position or results of operations.
Costs
The total cost of the Managing Agent's Year 2000 project was approximately $3.2
million and was funded from operating cash flows.
Risks Associated with the Year 2000
The Managing Agent completed all necessary phases of its Year 2000 program in
1999, and did not experience system or equipment malfunctions related to a
failure to reference the Year 2000. The Managing Agent or Partnership have not
been materially adversely effected by disruptions in the economy generally
resulting from the Year 2000 issue.
At this time, the Managing Agent does not believe that the Partnership's
businesses, results of operations or financial condition will be materially
adversely effected by the Year 2000 issue.
Contingency Plans Associated with the Year 2000
The Managing Agent has not had to implement contingency plans such as manual
workarounds or selecting new relationships for its banking or elevator operation
activities in order to avoid the Year 2000 issue.
Item 7a. Market Risk Factors
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 1999, a
1% increase or decrease in market interest rate would not have a material impact
on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 1999. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximated the recorded value as of December 31,
1999.
Long-term Debt
Principal amount by expected maturity: Fixed Rate Debt Average Interest Rate
(in thousands)
2000 $ 12,526 7.58%
2001 248 7.30%
2002 270 7.30%
2003 9,044 7.30%
2004 4,433 7.29%
Thereafter 44,476 7.30%
Total $70,997
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPTIAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Operations - Years ended December 31, 1999,
1998 and 1997
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 1999, 1998, and 1997
Consolidated Statements of Cash Flows - Years ended December 31, 1999,
1998 and 1997
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties IV
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Properties IV as of December 31, 1999 and 1998, and the related
consolidated statements of operations, changes in partners' deficit and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties IV at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999, in conformity with accounting principles
generally accepted in the United States.
As discussed in Note O to the consolidated financial statements, the Partnership
changed its method of accounting to capitalize the cost of exterior painting and
major landscaping effective January 1, 1999.
/s/ ERNST & YOUNG LLP
Greenville, South Carolina
February 24, 2000
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
Assets 1999 1998
Cash and cash equivalents $ 9,502 $ 13,241
Receivables and deposits 1,581 2,246
Restricted escrows 1,402 2,743
Other assets 1,403 1,459
Investment properties (Notes D and J):
Land 12,094 12,491
Buildings and related personal property 122,539 121,741
134,633 134,232
Less accumulated depreciation (104,057) (103,250)
30,576 30,982
$ 44,464 $ 50,671
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 960 $ 379
Tenant security deposit liabilities 506 568
Accrued property taxes 1,284 1,309
Other liabilities 1,287 1,045
Distribution payable 4,318 --
Mortgage notes payable (Note D) 70,997 70,775
79,352 74,076
Partners' Deficit
General partners (6,634) (6,175)
Limited partners (342,773 units issued and
outstanding) (28,254) (17,230)
(34,888) (23,405)
$ 44,464 $ 50,671
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPTIAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except unit data)
Years Ended December 31,
1999 1998 1997
Revenues:
Rental income $ 28,533 $ 27,620 $ 26,769
Other income 2,018 2,110 1,941
Gain on sale of investment property 638 -- --
Casualty gain -- 363 --
Total revenues 31,189 30,093 28,710
Expenses:
Operating 11,146 12,449 12,985
General and administrative 1,942 1,188 990
Depreciation 4,398 4,871 6,558
Interest 5,661 5,840 5,868
Property taxes 1,924 1,816 1,895
Total expenses 25,071 26,164 28,296
Income before extraordinary items 6,118 3,929 414
Extraordinary loss on refinancing -- -- (47)
Extraordinary loss on retirement of debt -- (5) --
Net income (Note L) $ 6,118 $ 3,924 $ 367
Net income allocated to general partners (4%) $ 245 $ 157 $ 15
Net income allocated to limited partners (96%) 5,873 3,767 352
Net income $ 6,118 $ 3,924 $ 367
Net income per limited partnership unit:
Income before extraordinary items $ 17.13 $ 11.00 $ 1.15
Extraordinary loss on refinancing -- -- (.12)
Extraordinary loss on retirement of debt -- (.01) --
Net income per limited partnership unit $ 17.13 $ 10.99 $ 1.03
Distributions per limited partnership unit $ 49.29 $ 11.07 $ 7.01
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPTIAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit
at December 31, 1996 342,783 $(6,089) $(15,153) $(21,242)
Net income for the year ended
December 31, 1997 -- 15 352 367
Distributions paid -- (100) (2,403) (2,503)
Abandonment of limited
Partnership units (Note F) (10) -- -- --
Partners' deficit at
December 31, 1997 342,773 (6,174) (17,204) (23,378)
Net income for the year ended
December 31, 1998 -- 157 3,767 3,924
Distributions paid -- (158) (3,793) (3,951)
Partners' deficit at
December 31, 1998 342,773 (6,175) (17,230) (23,405)
Net income for the year ended
December 31, 1999 -- 245 5,873 6,118
Distributions paid -- (704) (16,897) (17,601)
Partners' deficit at
December 31, 1999 342,773 $(6,634) $(28,254) $(34,888)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Year Ended December 31,
1999 1998 1997
Cash flows from operating activities:
Net income $ 6,118 $ 3,924 $ 367
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 4,398 4,871 6,558
Amortization of loan costs 315 317 284
Gain on sale of investment property (638) -- --
Casualty (gain) loss -- (363) 46
Extraordinary loss on refinancing -- -- 47
Extraordinary loss on retirement of debt -- 5 --
Change in accounts:
Receivables and deposits 613 (344) (128)
Other assets (203) 115 (22)
Accounts payable 581 (147) (118)
Tenant security deposit liabilities (62) (12) (79)
Accrued property taxes (25) (3) 207
Other liabilities 247 111 (13)
Net cash provided by operating activities 11,344 8,474 7,149
Cash flows from investing activities:
Property improvements and replacements (5,207) (3,717) (2,559)
Proceeds from sale of investment property 1,891 -- 492
Collections on notes receivable -- 48 43
Net withdrawals from (deposits to) restricted
escrows 1,341 431 (264)
Net insurance proceeds from casualty -- 487 (29)
Net cash used in investing activities (1,975) (2,751) (2,317)
Cash flows from financing activities:
Payments on mortgage notes payable (458) (437) (409)
Repayment of mortgage notes payable (1,780) (194) (3,415)
Proceeds from mortgage notes payable 2,460 -- 4,500
Prepayment penalties -- (5) (34)
Loan costs paid (47) (17) (120)
Distributions to partners (13,283) (3,919) (2,503)
Net cash used in financing activities (13,108) (4,572) (1,981)
Net (decrease) increase in cash and cash equivalents (3,739) 1,151 2,851
Cash and cash equivalents at beginning of the year 13,241 12,090 9,239
Cash and cash equivalents at end of year $ 9,502 $ 13,241 $ 12,090
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(in thousands)
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 1999, distributions payable and distributions to partners were
each adjusted by $4,318,000 for non-cash activity.
At December 31, 1998, notes and interest receivable and mortgage notes payable
were adjusted by approximately $1,033,000 related to Denbigh Wood Apartments
(see "Note G"), and distributions were adjusted by approximately $32,000,
respectively, for non-cash activity.
At December 31, 1997, accounts receivable and accounts payable were adjusted by
$64,000 and $49,000, respectively, for non-cash activity.
Cash paid for interest was approximately $5,372,000, $5,528,000 and $5,596,000
for the years ended December 31, 1999, 1998, and 1997, respectively.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties IV (the "Partnership" or
"Registrant"), a California limited partnership, was formed on September 22,
1981, to operate and hold real estate properties. The general partner of the
Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a
Delaware corporation. Additionally, the General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"). The directors and
officers of the General Partner also serve as executive officers of AIMCO. The
Partnership Agreement provides that the Partnership is to terminate on December
31, 2011 unless terminated prior to that date. As of December 31, 1999, the
Partnership operates 16 residential properties in or near major urban areas in
the United States.
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired controlling interest
in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the
United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan,
CEI acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partners dated August 10, 1990. As
part of the solicitation, the Limited Partners also approved an amendment to the
Partnership Agreement to limit changes of control of the Partnership, and the
conversion of CCMC from a general partner to a Special Limited Partner, thereby
leaving CEI as the sole general partner of the Partnership. On November 14,
1990, CCMC was dissolved and its Special Limited Partnership interest was
divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"),
which is an affiliate of AIMCO. In December 1994, the parent of GII Realty,
Inc., entered into a transaction (the "Insignia Transaction") in which an
affiliate of Insignia acquired an option (exercisable in whole or in part from
time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to
a partial exercise of such option, acquired 50.5% of that stock. As part of the
Insignia Transaction, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity, and
a subsidiary of Insignia acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the Insignia affiliate exercised the remaining
portion of its option to purchase all of the remaining outstanding capital stock
of GII Realty, Inc.
Consolidation: The consolidated financial statements include the Partnership's
majority interest in a joint venture which owns South Port Apartments. The
Partnership has the ability to control the major operating and financial
policies of the joint venture. No minority interest has been reflected for the
joint venture because minority interests are limited to the extent of their
equity capital, and losses in excess of the minority interest equity capital are
charged against the Partnership's interest. Should the losses reverse, the
Partnership would be credited with the amount of minority interest losses
previously absorbed.
The Partnership's consolidated financial statements also include the accounts of
the Partnership, its wholly-owned partnerships, its 99% limited partnership
interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd.,
Concap River's Edge Associates, Ltd., Foothill Chimney Associates, L.P., and
ConCap Stratford Associates, Ltd. The Partnership may remove the general partner
of its 99% owned partnerships; therefore, the partnerships are deemed controlled
and therefore consolidated by the Partnership. All significant interpartnership
balances have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand, in
banks, and money market accounts. At certain times, the amount of cash deposited
at a bank may exceed the limit on insured deposits.
Cash balances include approximately $218,000 at December 31, 1999 that are
maintained by the affiliated management company on behalf of affiliated entities
in a cash concentration account.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserves - At the time of the refinancing of the
mortgage note payable encumbering Nob Hill Villa, $219,000 of the proceeds
were designated for certain capital improvements. At the time of the
refinancing of the mortgages note payable encumbering the Arbours of
Hermitage, Briar Bay, Chimney Hill, Citadel Village, Foothill Place,
Knollwood, and Village East, approximately $1,145,000 was designated for
certain capital improvements. At the time of the refinancing of the
mortgage note payable encumbering Lake Forest, $555,000 of the proceeds
were designated for certain capital improvements. At the time of the
refinancing of the mortgage note payable encumbering South Port, $238,000
of the proceeds were designated for certain capital improvements. At
December 31, 1999, the total remaining escrow balance is approximately
$49,000.
Replacement Reserve Account - At the time of the refinancing of the
mortgage notes payable encumbering the Arbours of Hermitage, Briar Bay,
Chimney Hill, Citadel Village, Foothill Place, Knollwood, and Village
East, $507,000 of the proceeds, ranging from $191 to $325 per unit, were
designated for replacement reserves. At the time of the refinancing of the
mortgage note payable encumbering Post Ridge, $389,000 of the proceeds
were designated for replacement reserves. These funds were established to
cover necessary repairs and replacements of existing improvements. At
December 31, 1999, the total remaining reserve balance was approximately
$1,070,000.
Investments in Real Estate: Investment properties consist of sixteen apartment
complexes, which are stated at cost. Acquisition fees are capitalized as a cost
of real estate. In accordance with Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting foe the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed Of". The Partnership records impairment losses
on long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those assets.
The impairment loss is measured by comparing the fair value of the assets to its
carrying amount. Costs of apartment properties that have been permanently
impaired have been written down to appraised value. No adjustments for
impairment of value were recorded in any of the years ended December 31, 1999,
1998, or 1997.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987, and (2) for personal property over 5 years for additions prior to January
1, 1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the alternative depreciation system is used for depreciation of (1)
real property over 40 years and (2) personal property additions over 5-20 years.
Effective January 1, 1999 the Partnership change its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note O).
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. In addition,
the General Partner's policy is to offer rental concessions during particularly
slow months or in response to heavy competition from other similar complexes in
the area. Concessions are charged against rental income as incurred.
Loan Costs: Loan costs, net of accumulated amortization, of $1,119,000 and
$1,377,000 at December 31, 1999 and 1998, respectively, are amortized using the
straight-line method over the lives of the related mortgage notes. Unamortized
loan costs are included in other assets. Amortization of loan costs is included
in interest expense.
Fair Value of Financial Instruments: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, approximates its carrying
balance.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for
net income (losses) and distributions of distributable cash from operations to
be allocated, generally 96% to the Limited Partners and 4% to the General
Partner.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per Limited
Partnership Unit is computed by dividing net income (loss) allocated to the
Limited Partners by the number of Units outstanding. Per Unit information has
been computed based on the number of Units outstanding at the beginning of each
year.
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 establishes standards
for related disclosures about products and services, geographic areas, and major
customers. See "Note M" for required disclosure.
Advertising Costs: Advertising costs of approximately $549,000, $482,000 and
$441,000 in 1999, 1998 and 1997, respectively, are charged to operating expense
as incurred.
Uses of Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Note C - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were charged to expense in 1999, 1998,
1997:
1999 1998 1997
(in thousands)
Property management fees (included in
operating expense) $ 1,547 $1,478 $1,413
Reimbursements for services of affiliates
(included in investment property
general and administrative expense
and operating expense) 565 627 608
Partnership management fee (included in
general and administrative expense) 1,084 341 138
Loan costs (included in other assets) 25 7 13
During the years ended December 31, 1999, 1998 and 1997, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,547,000,
$1,478,000 and $1,413,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $565,000, $627,000 and
$608,000, for the years ended December 31, 1999, 1998 and 1997, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner of the Partnership earned approximately $1,084,000, $341,000 and
$138,000 under this provision of the Partnership Agreement for the years ended
December 31, 1999, 1998 and 1997, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $25,000, $7,000, and $13,000 in
1999, 1998 and 1997, respectively, for loan costs which are capitalized and
included in other assets on the consolidated balance sheets. These loan costs
were associated with the refinancing of one of the Partnership's properties in
1999 and one in 1997 (See "Note D").
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999, 1998, and 1997. As a
result of these tender offers, AIMCO and its affiliates currently own 166,949
limited partnership units in the Partnership representing approximately 48.71%
of the outstanding units. It is possible that AIMCO or its affiliates will make
one or more additional offers to acquire additional limited partnership
interests in the Partnership for cash or in exchange for units in the operating
partnership of AIMCO. Consequently, AIMCO is in a position to significantly
influence all voting decisions with respect to the Registrant. Under the
Partnership Agreement, unitholders holding a majority of the units are entitled
to take action with respect to a variety of matters. When voting on matters,
AIMCO would in all likelihood vote the units it acquired in a manner favorable
to the interest of the General Partner because of their affiliation with the
General Partner.
Note D - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Including Interest Maturity Due At
Property 1999 Interest Rate Date Maturity
(in thousands) (in
thousands)
The Apartments $ 3,294 $ 29 (c) 8.34% 09/00 $ 3,244
Arbours of Hermitage 5,650 33 (a) 6.95% 12/05 5,650
Briar Bay Racquet Club 3,500 20 (a) 6.95% 12/05 3,500
Chimney Hill Apartments 5,400 31 (a) 6.95% 12/05 5,400
Citadel Apartments 4,565 40 (c) 8.38% 10/00 4,488
Citadel Village
Apartments 2,450 14 (a) 6.95% 12/05 2,450
Foothill Place
Apartments 10,100 58 (a) 6.95% 12/05 10,100
Knollwood Apartments 6,780 39 (a) 6.95% 12/05 6,780
Lake Forest Apartments 4,700 29 (a) 7.33% 11/03 4,700
Nob Hill Villa
Apartments 7,050 64 9.20% 04/05 6,250
Point West Apartments 2,460 20 (b) 7.86% 12/19 --
Post Ridge Apartments 4,050 25 (a) 7.33% 11/03 4,050
Rivers Edge Apartments 1,924 17 8.40% 09/00 1,895
South Port Apartments 4,409 31 7.19% 12/04 4,119
Stratford Place
Apartments 2,515 23 8.65% 09/00 2,478
Village East Apartments 2,150 12 (a) 6.95% 12/05 2,150
Total $ 70,997 $ 485 $ 67,254
(a) Monthly payments of interest only at the stated rate until maturity.
(b) Debt was obtained effective November 9, 1999 (see below for
further explanation).
(c) Debt was refinanced subsequent to December 31, 1999 (see "Note P" for
further detail).
On November 9, 1999, the Partnership obtained financing on Point West Apartments
in the amount of $2,460,000. The mortgage was financed at a rate equal to 7.86%
and matures on December 1, 2019. Capitalized loan costs incurred for the
financing were approximately $47,000 during the year ended December 31, 1999.
On November 18, 1997, the Partnership refinanced the mortgage encumbering the
South Port Apartments. The refinancing replaced indebtedness of $3,432,000,
including accrued interest of approximately $18,000, with a new mortgage in the
amount of $4,500,000. The mortgage was refinanced at a rate equal to 7.19%,
compared to the prior rate of 10.85% and matures on December 1, 2004.
Capitalized loan costs incurred for the refinancing were approximately $120,000
during the year ended December 31, 1997. In 1998, approximately $17,000 of
additional loan costs were paid in connection with the South Port refinancing.
The Partnership paid approximately $34,000 in prepayment penalties and wrote off
$13,000 in unamortized loan costs, resulting in an extraordinary loss on
extinguishment of debt in the amount of approximately $47,000.
The notes payable represent borrowings on the properties purchased by the
Partnership. The notes are non-recourse, and are collateralized by deeds of
trust on the investment properties. The notes mature between 2000 and 2019 and
bear interest at rates ranging from 6.95% to 9.20%. Various mortgages require
prepayment penalties if repaid prior to maturity. Further, the properties may
not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes
payable subsequent to December 31, 1999, are as follows (in thousands):
2000 $ 12,526
2001 248
2002 270
2003 9,044
2004 4,433
Thereafter 44,476
Total $ 70,997
Note E - Contingencies
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies. On September 25, 1995, the partners were
proxied and approved a reduction of the capital reserve requirements to $500 per
apartment unit. In the event expenditures are made from these reserves,
operating revenue shall be allocated to such reserves to the extent necessary to
maintain the foregoing level. Reserves, including cash and cash equivalents,
totaling approximately $9,502,000 at December 31, 1999, exceeded the
Partnership's reserve requirements of approximately $2,004,000.
Note F - Abandoned Limited Partnership Units
In 1997, the number of Limited Partnership Units decreased by 10 units due to
Limited Partners abandoning their Limited Partnership Units. In abandoning his
or her Limited Partnership Units, a Limited Partner relinquishes all right,
title and interest in the Partnership as of the date of abandonment. However,
the Limited Partner is allocated his or her share of income (loss) for that
year. The income (loss) per Limited Partnership Unit in the accompanying
consolidated statements of operations is calculated based on the number of units
outstanding at the beginning of the year.
Note G - Sale of Real Estate
In August 1994, the Partnership sold the Denbigh Woods Apartments. In connection
with the sale, the Partnership accepted a $1,200,000 wrap-note receivable and
received net sales proceeds of $881,000. The wrap-note receivable accrued
interest at an annual rate of 9%, required monthly payments of principal and
interest totaling $11,814, and matured in March 1996. The Partnership negotiated
with the purchaser to extend the note on a number of occasions, at the same
interest rate, ultimately until December 31, 1998. All other terms of the note
remain unchanged. Since the wrap-around promissory note was subordinate and
inferior to the first-lien mortgages, the Partnership remained obligated under
two underlying first-lien mortgages totaling approximately $1,248,000 which were
secured by the Denbigh Woods Apartments. Pursuant to the sale contract, the
Partnership received, from the purchaser, a capital improvement escrow totaling
$150,000. After completion in 1997 of certain repairs and capital improvements
at the property, the Partnership fully reimbursed the purchaser the balance
remaining in the escrow account. The two mortgages, as well as the note and any
accrued interest receivable, were repaid in full on December 31, 1998.
Approximately $5,000 of prepayment penalties were paid in connection with
repayment of one of the mortgage notes payable.
Note H - Disposition of Real Estate
On December 14, 1999, Overlook Associates, Ltd. sold Overlook Apartments to an
unaffiliated third party for $1,975,000. After payment of closing costs of
approximately $84,000 the net proceeds received by the Partnership were
approximately $1,891,000. The Partnership used most of the proceeds to pay off
the mortgage encumbering the property of approximately $1,780,000. The remaining
net proceeds were used to establish additional cash reserves for the
Partnership. The Partnership's gain on the sale during the fourth quarter of
1999 was approximately $638,000.
The sales transactions are summarized as follows (amounts in thousands):
Net sale price, net of selling costs $ 1,891
Net real estate (1) (1,215)
Net other assets (38)
Gain on sale of real estate $ 638
(1) Net of accumulated depreciation of approximately $3,591,000.
The following pro-forma information reflects the operations of the Partnership
for the twelve months ended December 31, 1999 and 1998, as if Overlook
Apartments had been sold January 1, 1998.
1999 1998
(in thousands, except per unit data)
Revenues $29,558 $28,799
Net income 5,517 3,927
Income per limited partnership unit 15.45 11.00
Note I - Distributions
During 1999, the Partnership paid distributions attributable to cash flow from
operations totaling approximately $10,670,000 (approximately $10,117,000 to the
limited partners or $29.52 per limited partnership unit) and approximately
$2,613,000 (all to the limited partners or $7.62 per limited partnership unit)
representing funds from previously undistributed refinance proceeds from 1996
and 1997. As of December 31, 1999, the Partnership had distributions payable
from cash from operations of approximately $1,874,000 (approximately $1,679,000
to the limited partners or $4.90 per limited partnership unit) and a
distribution of refinance proceeds representing funds from the financing of
Point West Apartments of approximately $2,444,000 (approximately $2,242,000 to
the limited partners or $6.54 per limited partnership unit). This distribution
was paid in January 2000.
During 1998, the Partnership declared and paid distributions attributable to
cash flow from operations totaling approximately $3,951,000 ($11.07 per limited
partnership unit). During 1997, the Partnership declared and paid distributions
attributable to cash flow from operations totaling approximately $1,600,000
($4.48 per limited partnership unit) and approximately $903,000 ($2.53 per
limited partnership unit) representing a portion of the previously undistributed
refinance proceeds from 1996.
Note J - Real Estate and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Net Cost
Buildings Capitalized
and (Written-Down)
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Apartments $ 3,294 $ 438 $ 6,218 $ 2,370
Arbours of Hermitage
Apartments 5,650 547 8,574 4,021
Briar Bay Racquet
Club Apartments 3,500 1,084 5,271 1,493
Chimney Hill Apartments 5,400 659 7,188 3,390
Citadel Apartments 4,565 695 5,619 1,541
Citadel Village
Apartments 2,450 337 3,334 614
Foothill Place Apartments 10,100 3,492 9,435 2,617
Knollwood Apartments 6,780 345 7,065 4,043
Lake Forest Apartments 4,700 692 5,811 3,073
Nob Hill Villa Apartments 7,050 490 8,922 3,796
Point West Apartments 2,460 285 2,919 (33)
Post Ridge Apartments 4,050 143 2,498 2,300
Rivers Edge Apartments 1,924 512 2,160 752
South Port Apartments 4,409 1,175 6,496 507
Stratford Place
Apartments 2,515 1,186 4,628 2,269
Village East Apartments 2,150 184 2,236 1,242
Totals $ 70,997 $ 12,264 $ 88,374 $ 33,995
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
The Apartments $ 438 $ 8,588 $ 9,026 $ 6,845 1973 4/84 5-18
Arbours of Hermitage 547 12,595 13,142 10,941 1973 9/83 5-18
Apts
Briar Bay Racquet 1,084 6,764 7,848 6,488 1975 9/82 5-18
Club Apt
Chimney Hill 659 10,578 11,237 9,689 1973 8/82 5-18
Apartments
Citadel Apartments 695 7,160 7,855 6,539 1973 5/83 5-18
Citadel Village 337 3,948 4,285 3,448 1974 12/82 5-18
Apartments
Foothill Place 3,402 12,142 15,544 9,533 1973 8/85 5-18
Apartments
Knollwood Apartments 345 11,108 11,453 9,531 1972 7/82 5-18
Lake Forest 692 8,884 9,576 6,727 1971 4/84 5-18
Apartments
Nob Hill Villa 490 12,718 13,208 11,221 1971 4/83 5-18
Apartments
Point West Apartments 206 2,965 3,171 2,312 1973 11/85 5-40
Post Ridge Apartments 143 4,798 4,941 3,863 1972 7/82 5-18
Rivers Edge 512 2,912 3,424 2,636 1976 4/83 5-18
Apartments
South Port Apartments 1,175 7,003 8,178 6,660 -- 11/83 5-18
Stratford Place 1,186 6,897 8,083 4,549 1975 8/85 5-20
Apartments
Village East 183 3,479 3,662 3,075 1973 12/82 5-18
Apartments
Totals $12,094 $122,539 $134,633 $104,057
Reconciliation of "Real Estate and Accumulated Depreciation":
Years Ended December 31,
1999 1998 1997
(in thousands)
Real Estate
Balance at beginning of year $ 134,232 $ 130,653 $ 128,128
Additions 5,207 3,717 2,559
Property dispositions - other (4,806) (138) (34)
Balance at end of year $ 134,633 $ 134,232 $ 130,653
Accumulated Depreciation
Balance at beginning of year $ 103,250 $ 98,490 $ 91,934
Additions charged to expense 4,398 4,871 6,558
Property dispositions - other (3,591) (111) (2)
Balance at end of year $ 104,057 $ 103,250 $ 98,490
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 1999, 1998 and 1997, is approximately $152,079,000, $151,943,000
and $148,650,000. The accumulated depreciation taken for Federal income tax
purposes at December 31, 1999, 1998 and 1997, is approximately $116,541,000,
$115,959,000 and $111,953,000, respectively.
Note K - Casualties
In the third quarter of 1998, Foothill Place Apartments sustained windstorm
damage. The Partnership incurred expenses of approximately $27,000. These costs
are included in net casualty gain for the year ended December 31, 1998. The
Partnership is in the process of negotiating a settlement with the insurance
carrier.
In March 1998, Nob Hill Apartments had a fire that destroyed one apartment unit
in a section of a 24-unit building. Additionally, the remaining units in this
section of the building, as well as the laundry room, sustained water and smoke
damage which eventually caused mold and mildew. Work on the project was
substantially completed at September 30, 1998. Approximately $204,000 of net
insurance proceeds were received in 1998, with such amount included in net
casualty gain for the year ended December 31, 1998.
In November 1997, Overlook Apartments had a fire which destroyed one apartment
unit and caused water and smoke damage in the remaining apartment units in the
affected building. Insurance proceeds of approximately $239,000 were received
during the year ended December 31, 1998. Repair efforts were completed in July
1998 and the related costs have been capitalized as a part of the investment
property. Total insurance proceeds received less the cost of repairs and the
write off of assets replaced, resulted in a net casualty of approximately
$192,000 for the year ended December 31, 1998.
In January 1997, Foothill Place Apartment sustained extensive wind and flood
damage from severe storms. Additionally, in February 1997, a fire occurred at
Foothill Place Apartments resulting in minor damage to one of its balconies
including the immediately surrounding area. The insurance proceeds received less
the cost to repair Foothill Place Apartments and the write-off of assets that
were replaced, resulted in a net casualty gain for these events of approximately
$46,000 which is included in operating expense for the year ended December 31,
1997. All repairs and replacements related to these casualties were completed in
the second quarter of 1997.
Note L - Income Taxes
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 1999, 1998 and 1997 (in thousands, except per unit data):
1999 1998 1997
Net income as reported $ 6,118 $ 3,924 $ 367
Add (deduct):
Deferred revenue and other
liabilities (393) 408 359
Depreciation differences 473 864 917
Accrued expenses 39 15 7
Minority interest (220) -- --
Other (29) 78 15
(Loss) gain on casualty/
disposition/ Foreclosure (514) (396) 32
Federal taxable income $ 5,474 $ 4,893 $ 1,697
Federal taxable income per
Limited Partnership unit $ 15.33 $ 13.70 $ 4.75
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net assets and liabilities (in thousands):
Net deficit as reported
$ (34,888)
Land and Buildings 17,446
Accumulated depreciation (12,484)
Syndication fees 18,871
Other 9,461
Net liabilities - Federal tax basis $ (1,594)
Note M - Segment Information
Description of the types of products and services from which the reportable
segment derives its revenues:
The Partnership has one reportable segment: residential properties. The
Partnership's residential property segment consists of sixteen apartment
complexes in the southeastern, western, and mid-western United States. The
Partnership rents apartment units to tenants for terms that are typically twelve
months or less.
Measurement of segment profit or loss:
The Partnership evaluates performance based on segment profit (loss) before
depreciation. The accounting policies of the reportable segment are the same as
those described in the summary of significant accounting policies.
Factors management used to identify the Partnership's reportable segments:
The Partnership's reportable segment consists of investment properties that
offer similar products and services. Although each of the investment properties
are managed separately, they have been aggregated into one segment as they
provide services with similar types of products and customers.
Segment information for the years 1999, 1998 and 1997 is shown in the tables
below (in thousands). The "Other" column includes Partnership administration
related items and income and expense not allocated to the reportable segment.
1999 Residential Other Totals
Rental income $ 28,533 $ -- $ 28,533
Other income 1,882 136 2,018
Interest expense 5,648 13 5,661
Depreciation 4,398 -- 4,398
General and administrative expense -- 1,942 1,942
Gain on sale of investment property 638 -- 638
Segment profit (loss) 7,937 (1,819) 6,118
Total assets 37,344 7,120 44,464
Capital expenditures for investment
Properties 5,207 -- 5,207
1998 Residential Other Totals
Rental income $ 27,620 $ -- $ 27,620
Other income 1,573 537 2,110
Interest expense 5,717 123 5,840
Depreciation 4,871 -- 4,871
General and administrative expense -- 1,188 1,188
Loss on extraordinary item (5) -- (5)
Segment profit (loss) 4,698 (774) 3,924
Total assets 37,123 13,548 50,671
Capital expenditures for investment
properties 3,717 -- 3,717
1997 Residential Other Totals
Rental income $ 26,769 $ -- $ 26,769
Other income 1,442 499 1,941
Interest expense 5,749 119 5,868
Depreciation 6,558 -- 6,558
General and administrative expense -- 990 990
Loss on extraordinary item (47) -- (47)
Segment profit (loss) 977 (610) 367
Total assets 40,933 11,448 52,381
Capital expenditures for investment
properties 2,559 -- 2,559
Note N - 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. in the Superior Court of the State of California
for the County of San Mateo. The plaintiffs named as defendants, among others,
the Partnership, the General Partner and several of their affiliated
partnerships and corporate entities. The action purports to assert claims on
behalf of a class of limited partners and derivatively on behalf of a number of
limited partnerships (including the Partnership) which are named as nominal
defendants, challenging the acquisition by Insignia Financial Group, Inc.
("Insignia") and entities which were, at one time, affiliates of Insignia
("Insignia Affiliates") of interests in certain general partner entities, past
tender offers by Insignia Affiliates to acquire limited partnership units, the
management of partnerships by Insignia Affiliates and the Insignia Merger (see
"Note B - Transfer of Control"). The plaintiffs seek monetary damages and
equitable relief, including judicial dissolution of the Partnership. On June 25,
1998, the General Partner filed a motion seeking dismissal of the action. In
lieu of responding to the motion, the plaintiffs have filed an amended
complaint. The General Partner filed demurrers to the amended complaint which
were heard February 1999. Pending the ruling on such demurrers, settlement
negotiations commenced. On November 2, 1999, the parties executed and filed a
Stipulation of Settlement settling claims, subject to final court approval, on
behalf of the Partnership and all limited partners who own units as of November
3, 1999. Preliminary approval of the settlement was obtained on November 3, 1999
from the Superior Court of the State of California, County of San Mateo, at
which time the Court set a final approval hearing for December 10, 1999. Prior
to the December 10, 1999 hearing the Court received various objections to the
settlement, including a challenge to the Court's preliminary approval based upon
the alleged lack of authority of class plaintiffs' counsel to enter the
settlement. On December 14, 1999, the General Partner and its affiliates
terminated the proposed settlement. Certain plaintiffs have filed a motion to
disqualify some of the plaintiffs' counsel in the action. The General Partner
does not anticipate that costs associated with this case will be material to the
Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation that
is not of a routine nature arising in the ordinary course of business.
Note O - Change in Accounting Principle
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the cost of exterior painting and major landscaping on a prospective
basis. The Partnership believes that this accounting principle change is
preferable because it provides a better matching of expenses with the related
benefit of the expenditures and it is consistent with industry practice and the
policies of the General Partner. The effect of the change in 1999 was to
increase net income by approximately $287,000 ($0.80 per limited partnership
unit). The cumulative effect, had this change been applied to prior periods, is
not material. The accounting principle change will not have an effect on cash
flow, funds available for distribution or fees payable to the General Partner
and affiliates.
Note P - Subsequent Event
Subsequent to year end, the Partnership refinanced the mortgage encumbering The
Apartments. The refinancing replaced mortgage indebtedness of approximately
$3,288,000 with a new mortgage of $4,775,000. The mortgage was refinanced at a
rate equal to 8.37% compared to the prior rate of 8.34% and matures on March 1,
2020. Capitalized loan costs incurred for the refinancing were approximately
$112,000. The Partnership wrote off approximately $12,000 in unamortized loan
costs.
Subsequent to year end, the Partnership refinanced the mortgage encumbering
Citadel Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,582,000 with a new mortgage of $4,710,000. The mortgage was
refinanced at a rate equal to 8.25% compared to the prior rate of 8.38% and
matures on March 1, 2020. Capitalized loan costs incurred for the refinancing
were approximately $88,000. The Partnership wrote off approximately $27,000 in
unamortized loan costs.
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no
officers or directors. ConCap Equities, Inc. ("CEI" or the "General Partner")
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business.
The names of the directors, and executive officers of the General Partner, their
ages and the nature of all positions presently held by them are set forth below.
Name Age Position
Patrick J. Foye 42 Executive Vice President and Director
Martha L. Long 40 Senior Vice President and Controller
Patrick J. Foye has been Executive Vice President and Director of the General
Partner since October 1, 1998. Mr. Foye has served as Executive Vice President
of AIMCO since May 1998. Prior to joining AIMCO, Mr. Foye was a partner in the
law firm of Skadden, Arps, Slate, Meagher & Flom LLP from 1989 to 1998 and was
Managing Partner of the firm's Brussels, Budapest and Moscow offices from 1992
through 1994. Mr. Foye is also Deputy Chairman of the Long Island Power
Authority and serves as a member of the New York State Privatization Council. He
received a B.A. from Fordham College and a J.D. from Fordham University Law
School.
Martha L. Long has been Senior Vice President and Controller of the General
Partner and AIMCO since October 1998, as a result of the acquisition of Insignia
Financial Group, Inc. From June 1994 until January 1997, she was the Controller
for Insignia, and was promoted to Senior Vice President - Finance and Controller
in January 1997, retaining that title until October 1998. From 1988 to June
1994, Ms. Long was Senior Vice President and Controller for The First Savings
Bank, FSB in Greenville, South Carolina.
Based solely upon a review of Forms 3 and 4 and amendments thereto furnished to
the Registrant under Rule 16a-3(e) during the Registrant's most recent fiscal
year and Form 5 and amendments thereto furnished to the Registrant with respect
to its most recent fiscal year, the Registrant is not aware of any director,
officer, beneficial owner of more than ten percent of the units of limited
partnership interest in the Registrant that failed to file on a timely basis, as
disclosed in the above Forms, reports required by Section 16(a) of the Exchange
Act during the most recent fiscal year or prior fiscal years except as follows:
AIMCO and its joint filers failed to timely file a Form 4 with respect to its
acquisition of Units.
Item 11. Executive Compensation
None of the directors and officers of the General Partner received any
remuneration from the Registrant during the year ended December 31, 1999.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 1999, no person or group was known
to CEI to own of record or beneficially own more than five percent of the Units
of the Partnership:
Entity Number of Units Percentage
Insignia Properties LP 67,033.50 19.56%
(an affiliate of AIMCO)
IPLP Acquisition I, LLC 29,612.50 8.64%
(an affiliate of AIMCO)
AIMCO Properties LP 70,303.00 20.51%
(an affiliate of AIMCO)
Insignia Properties LP and IPLP Acquisition I, LLC are indirectly, ultimately
owned by AIMCO. Its business address is 55 Beattie Place, Greenville, SC 29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Blvd., Denver, CO 80222.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own any
Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of December 31, 1999, the following persons were known to CEI to be
the beneficial owners of more than five percent (5%) of its common
stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100%
55 Beattie Place, Greenville, SC 29602
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December
31, 1999, AIMCO owns 51% of the outstanding common shares of beneficial interest
of IPT.
Item 13. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all of the Partnership
activities. The Partnership Agreement provides for certain payments to
affiliates for services and as reimbursements of certain expenses incurred by
affiliates on behalf of the Partnership. The following transactions with the
General Partner and/or its affiliates were charged to expense in 1999, 1998,
1997:
1999 1998 1997
(in thousands)
Property management fees $ 1,547 $1,478 $1,413
Reimbursements for services of affiliates 565 627 608
Partnership management fee 1,084 341 138
Loan costs 25 7 13
During the years ended December 31, 1999, 1998 and 1997, affiliates of the
General Partner were entitled to receive 5% of gross receipts from all of
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $1,547,000,
$1,478,000 and $1,413,000 for the years ended December 31, 1999, 1998 and 1997,
respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $565,000, $627,000 and
$608,000, for the years ended December 31, 1999, 1998 and 1997, respectively.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner of the Partnership earned approximately $1,084,000, $341,000 and
$138,000 under this provision of the Partnership Agreement for the years ended
December 31, 1999, 1998 and 1997, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $25,000, $7,000 and $13,000 in
1999, 1998 and 1997, respectively, for loan costs which are capitalized and
included in other assets on the consolidated balance sheets. These loan costs
were associated with the refinancing of one of the Partnership's properties in
1999 and one in 1997.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999, 1998, and 1997. As a
result of these tender offers, AIMCO and its affiliates currently own 166,949
limited partnership units in the Partnership representing 48.71% of the
outstanding units. It is possible that AIMCO or its affiliates will make one or
more additional offers to acquire additional limited partnership interests in
the Partnership for cash or in exchange for units in the operating partnership
of AIMCO. Consequently, AIMCO is in a position to significantly influence all
voting decisions with respect to the Registrant. Under the Partnership
Agreement, unitholders holding a majority of the units are entitled to take
action with respect to a variety of matters. When voting on matters, AIMCO would
in all likelihood vote the units it acquired in a manner favorable to the
interest of the General Partner because of their affiliation with the General
Partner.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Consolidated Balance Sheets - December 31, 1999 and 1998
Consolidated Statements of Operations - Years Ended December 31,
1999, 1998 and 1997
Consolidated Statements of Changes in Partners' Deficit - Years
Ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows - Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, or
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
S-K Reference
Number Document Description
2.1 Agreement and Plan of Merger, dated as of October 1, 1999 by
and between AIMCO and IPT; incorporated by reference to
Registrant's Current Report on Form 8-K dated October 1, 1999.
3 Certificate of Limited Partnership, as amended to date.
10.1 Property Management Agreement No. 105 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.2 Property Management Agreement No. 106 dated October 23, 1990, by
and between the LeTourneau Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.3 Property Management Agreement No. 107 dated October 23, 1990, by
and between Overlook Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.4 Property Management Agreement No., 108 dated October 23, 1990, by
and between Park 77 Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.5 Property Management Agreement No., 205 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.6 Property Management Agreement No., 306 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.7 Property Management Agreement No., 307 dated October 23, 1990, by
and between Point West Associates, Ltd. and CCEC (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.8 Property Management Agreement No., 403 dated October 23, 1990, by
and between the Partnership and CCEC (Incorporated by reference
to the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.9 Property Management Agreement No., 404 dated October 23, 1990, by
and between Denbigh Village Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.10 Property Management Agreement No., 405 dated October 23, 1990, by
and between Stratford Place Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990).
10.11 Bill of Sale and Assignment dated October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.12 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCEC and ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).
10.13 Assignment and Assumption Agreement as to Certain Property
Management Services dated October 23, 1990, by and between
CCMLP and ConCap Capital Company (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.14 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and The Hayman Company (100 Series of
Property Management Contracts) (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.15 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.16 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Metro ConCap, Inc. (300 Series of Property
Management Contracts). (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1990).
10.17 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and R&B Realty Group (400 Series of Property
Management Contracts). (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.18 Assignment and Assumption Agreement dated February 21, 1991,
by and between the Partnership and Greenbriar Apartments
Associates Limited Partnership (Property Management Agreement
No. 403). CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.19 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and ConCap Village East Apartments
Associates, L.P. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.20 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Nob Hill Apartments Associates, L.P.
(Property Management Agreement No. 306). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.21 Assignment and Assumption Agreement dated April 1, 1991, by and
between the Partnership and Barnett Regency Tower Associates,
Limited Partnership (Property Management Agreement No. 105).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.22 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Denbigh Village Associates, Ltd.).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.23 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Greenbriar Associates Limited Partnership).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.24 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with the Partnership concerning Briar Bay Racquet
Club). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.25 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Stratford Place Associates, Ltd.).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.26 Assignment and Assumption Agreement dated September 1, 1991, by
and between the Partnership and CCP IV Associates, Ltd. (Property
Management Agreement No. 306). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1991).
10.27 Assignment and Assumption Agreement dated September 1, 1991, by
and between the Partnership and CCP IV Associates, Ltd. (Property
Management Agreement No. 205). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31, 1991).
10.28 Assignment and Assumption Agreement dated September 1, 1991, by
and between ConCap Village East Apartments Associates, L.P. and
CCP IV Associates, Ltd. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.29 Assignment and Assumption Agreement dated September 15, 1991, by
and between the Partnership and Foothill Chimney Associates
Limited Partnership (Property Management Agreement No. 105).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.30 Assignment and Assumption Agreement dated September 15, 1991, by
and between the Partnership and Foothill Chimney Associates
Limited Partnership (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.31 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and
Horn-Barlow Companies (the "Horn-Barlow Construction
Management Agreement") (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.33 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Horn-Barlow Construction Management
Agreement Concerning Chimney Hill Apartments). (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.34 Assignment and Assumption Agreement dated September 1, 1991, by
and between ConCap Village East Apartments Associates, L.P. and
CCP IV Associates, Ltd. (Village East Construction Agreement).
(Incorporated by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.35 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and Metro
ConCap, Inc. (the "Metro Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.36 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Metro Construction Management Agreement concerning Arbour
East and Knollwood Apartments). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.37 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The Hayman
Company (the "Hayman Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.38 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Hayman Construction Management Agreement
concerning Chimney Hill Apartments). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.39 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and R & B
Apartment Management Company, Inc. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended December
31, 1991).
10.40 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between ConCap Metro Centre
Associates, L.P. and R & B Commercial Management Company, Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.41 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991). .
10.42 Assignment and Assumption Agreement (Investor Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Services Company (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1990).
10.43 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("PSI") to the Partnership regarding the change
in ownership and dissolution of ConCap Services Company
whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.44 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.45 Assignment and Assumption Agreement (Financial Service
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.46 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.47 Property Management Agreement No. 419 dated May 13, 1993, by and
between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993).
10.48 Assignment and Assumption Agreement (Property Management
Agreement No. 419) dated May 13, 1993, by and between Coventry
Properties, Inc., R & B Apartment Management Company, Inc. and
Partnership Services, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September 30,
1993).
10.49 Assignment and Assumption as to certain Property Management
Services dated May 13, 1993, by and between Coventry Properties,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.50 Property Management Agreement No. 419A dated October 11, 1993, by
and between ConCap Stratford Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993).
10.51 Assignment and Assumption Agreement (Property Management
Agreement No. 419A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management Company,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.52 Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
10.53 Property Management Agreement No. 427A dated October 11, 1993, by
and between ConCap River's Edge Associates, Ltd. and Coventry
Properties, Inc. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended September 30, 1993).
10.54 Assignment and Assumption Agreement (Property Management
Agreement No. 427A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management Company,
Inc. and Partnership Services, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended September
30, 1993).
10.55 Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1993).
10.56 Property Management Agreement No. 513A dated August 18, 1993, by
and between ConCap Citadel Associates, Ltd. and Coventry
Properties, Inc.
10.57 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.58 Property Management Agreement No. 514 dated June 1, 1993, by and
between the Partnership and Coventry Properties, Inc.
10.59 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.60 Stock and Asset Purchase Agreement, dated December 8, 1994 (the
"Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"), Gordon
Realty Inc. ("Gordon"), GII Realty, Inc. ("GII Realty"), and
certain other parties. (Incorporated by reference to Form 8-K
dated December 8, 1994).
10.61 Exercise of the Option (as defined in the Gordon Agreement),
dated December 8, 1994, between MAE-ICC and Gordon.
(Incorporated by reference to Form 8-K dated December 8,
1994).
10.62 Contracts related to refinancing of debt:
(a) Deed of Trust and Security Agreement dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
(b) Promissory Note dated March 27, 1995 between Nob Hill Villa
Apartment Associates, L.P., a Tennessee limited partnership, and
First Union National Bank of North Carolina, a North Carolina
Corporation.
(c) Assignment of leases and Rents dated March 27, 1995 between
Nob Hill Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina, a
North Carolina Corporation.
10.63 Multifamily Note dated November 30, 1995 between Briar Bay
Apartments, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.64 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.65 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.66 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.67 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of Lehman
Brothers Holdings Inc.
10.68 Multifamily Note dated November 30, 1995 between Foothill Chimney
Associates Limited Partnership, a Georgia limited partnership,
and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A
Division of Lehman Brothers Holdings Inc.
10.69 Multifamily Note dated November 30, 1995 between Foothill Chimney
Associates Limited Partnership, a Georgia limited partnership,
and Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A
Division of Lehman Brothers Holdings Inc.
10.70 Multifamily Note dated September 30, 1996 between Foothill Post
Ridge Associates, Ltd. Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings, Inc.
10.71 Exercise of the remaining portion of the option (as defined in
the Gordon Agreement), dated December 8, 1994 between MAE-ICC
and Gordon. (Incorporated by reference to Form 8-K dated
October 24, 1995).
10.72 Multifamily Note dated November 1, 1996 between Post Ridge
Associates, Ltd., Limited Partnership, a Tennessee Limited
Partnership and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings, Inc.
10.73 Amended and Restated Multifamily note dated November 1, 1996,
between Post Ridge Associates, Ltd., Limited Partnership, a
Tennessee Limited Partnership and Lehman Brothers Holding, Inc.
d/b/a Lehman Capital, a division of Lehman Brothers Holdings, Inc.
10.74 Multifamily Note dated November 1, 1996 between Consolidated
Capital Properties IV, a California Limited Partnership and
Lehman Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings, Inc.
10.75 Mortgage and Security Agreement dated November 18, 1997, between
Southport CCP IV, L.L.C., a South Carolina limited liability
company and Lehman Brothers Holdings, Inc. d/b/a Lehman Capital,
a division of Lehman Brothers Holdings, Inc., a Delaware
Corporation.
10.76 Multifamily Note dated November 9, 1999 between Point West
Associates Limited Partnership, a Georgia limited partnership
and GMAC Commercial Mortgage Corporation, a California
corporation.
10.77 Purchase and Sale Contract between Registrant and Overlook
Associates, Ltd, a Georgia limited partnership dated December
13, 1999, documenting sale of Overlook Apartments located in
Memphis, Tennessee.
10.78 Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS Commercial
Mortgage Co., L.P., a California limited partnership.
10.79 Multifamily Note dated February 28, 2000 between ConCap Citadel
Associated, Ltd., a Texas limited partnership and ARCs Commercial
Mortgage Cl., L.P., a California corporation.
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note 1 of Item 8 -
Financial Statements of this Form 10-K).
16.1 Letter, dated August 12, 1992, from Ernst & Young to the
Securities and Exchange Commission regarding change in
certifying accountant. (Incorporated by reference to Form 8-K
dated August 6, 1992).
16.2 Letter dated May 9, 1995 from the Registrant's former
independent accountant regarding its concurrence with the
statements made by the Registrant regarding a change in the
certifying accountant. (Incorporated by reference to Form 8-K
dated May 3, 1995).
18 Independent Accountants' Preferability Letter for Change in
Accounting Principle.
19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to
incorporate first amended Chapter 11 Plan filed October 27,
1992 and second amendments to Chapter 11 Plan of CCP/IV
Associates, Ltd. filed December 14, 1992) dated December 14,
1992, and filed December 14, 1992, in the United States
Bankruptcy Court for the Middle District of Tennessee.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.2 First amended disclosure statement to accompany Chapter 11
Plan, dated February 21, 1992, and amended October 27, 1992
filed by CCP/IV Associates, Ltd. filed October 27, 1992, in
the United States Bankruptcy Court for the Middle District of
Tennessee. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1992).
27 Financial Data Schedule.
(b) Reports on Form 8-K filed during the fourth quarter of calendar
year 1999:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
CONSOLIDATED CAPITAL PROPERTIES IV
By: ConCap Equities, Inc.
General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President
By: /s/Martha L. Long
Martha L. Long
Senior Vice President and
Controller
Date: March 30, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities on the date indicated.
/s/Patrick J. Foye Date: March 30, 2000
Patrick J. Foye
Executive Vice President and Director
/s/Martha L. Long Date: March 30, 2000
Martha L. Long
Senior Vice President and Controller
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
ConCap Equities, Inc.
General Partner of Consolidated Capital Properties IV
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note O of Notes to the Consolidated Financial Statements of Consolidated Capital
Properties IV included in its Form 10-K for the year ended December 31, 1999
describes a change in the method of accounting to capitalize exterior painting
and major landscaping, which would have been expensed under the old policy. You
have advised us that you believe that the change is to a preferable method in
your circumstances because it provides a better matching of expenses with the
related benefit of the expenditures and is consistent with policies currently
being used by your industry and conforms to the policies of the General Partner.
There are no authoritative criteria for determining a preferable method based on
the particular circumstances; however, we conclude that the change in the method
of accounting for exterior painting and major landscaping is to an acceptable
alternative method which, based on your business judgment to make this change
for the reasons cited above, is preferable in your circumstances.
Very truly yours,
/s/Ernst & Young LLP
EXHIBIT 10.76
FHLMC Loan No. 002523841
MULTIFAMILY NOTE
(MULTISTATE)
US $2,460,000.00 As of October ____, 1999
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Two Million Four
Hundred Sixty Thousand and 00/100 Dollars (US $2,460,000.00), with interest on
the unpaid principal balance at the annual rate of seven and eight hundred sixty
thousandths percent (7.860%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the holder
of this Note, and (ii) the term "Indebtedness" means the principal of, interest
on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable at 650
Dresher Road, P.O. Box 1015, Horsham, Pennsylvania 19044-8015, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be paid as
follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the first
day of the month, interest for the period beginning on the date of disbursement
and ending on and including the last day of the month in which such disbursement
is made shall be payable simultaneously with the execution of this Note.
Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in the
amount of Twenty Thousand Three Hundred Sixty-Two and 61/100 Dollars (US
$20,362.61), shall be payable on the first day of each month beginning on
January 1, 2000, until the entire unpaid principal balance evidenced by this
Note is fully paid. Any accrued interest remaining past due for 30 days or more
shall be added to and become part of the unpaid principal balance and shall bear
interest at the rate or rates specified in this Note, and any reference below to
"accrued interest" shall refer to accrued interest which has not become part of
the unpaid principal balance. Any remaining principal and interest shall be due
and payable on December 1, 2019 or on any earlier date on which the unpaid
principal balance of this Note becomes due and payable, by acceleration or
otherwise (the "Maturity Date"). The unpaid principal balance shall continue to
bear interest after the Maturity Date at the Default Rate set forth in this Note
until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest that
is received by Lender before the date it is due shall be deemed to have been
received on the due date solely for the purpose of calculating interest due.
4. Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a multifamily
mortgage, deed to secure debt or deed of trust dated as of the date of this Note
(the "Security Instrument"), and reference is made to the Security Instrument
for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing, the
entire unpaid principal balance, any accrued interest, the prepayment premium
payable under Paragraph 10, if any, and all other amounts payable under this
Note and any other Loan Document shall at once become due and payable, at the
option of Lender, without any prior notice to Borrower. Lender may exercise this
option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
ten (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to five percent (5%) of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note remains
past due for 30 days or more, or (b) any other Event of Default has occurred and
is continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of 4 percentage points above the rate stated
in the first paragraph of this Note or the maximum interest rate which may be
collected from Borrower under applicable law. If the unpaid principal balance
and all accrued interest are not paid in full on the Maturity Date, the unpaid
principal balance and all accrued interest shall bear interest from the Maturity
Date at the Default Rate. Borrower also acknowledges that its failure to make
timely payments will cause Lender to incur additional expenses in servicing and
processing the Loan, that, during the time that any monthly installment under
this Note is delinquent for more than 30 days, Lender will incur additional
costs and expenses arising from its loss of the use of the money due and from
the adverse impact on Lender's ability to meet its other obligations and to take
advantage of other investment opportunities, and that it is extremely difficult
and impractical to determine those additional costs and expenses. Borrower also
acknowledges that, during the time that any monthly installment under this Note
is delinquent for more than 30 days or any other Event of Default has occurred
and is continuing, Lender's risk of nonpayment of this Note will be materially
increased and Lender is entitled to be compensated for such increased risk.
Borrower agrees that the increase in the rate of interest payable under this
Note to the Default Rate represents a fair and reasonable estimate, taking into
account all circumstances existing on the date of this Note, of the additional
costs and expenses Lender will incur by reason of the Borrower's delinquent
payment and the additional compensation Lender is entitled to receive for the
increased risks of nonpayment associated with a delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a portion
of the Indebtedness equal to zero percent (0%) of the original principal balance
of this Note, plus any other amounts for which Borrower has personal liability
under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under Paragraph
9(b) and Paragraph 9(c), all payments made by Borrower or any guarantor of this
Note with respect to the Indebtedness and all amounts received by Lender from
the enforcement of its rights under the Security Instrument shall be applied
first to the portion of the Indebtedness for which Borrower has no personal
liability.
(e) Borrower shall become personally liable to Lender for the repayment of all
of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower shall
be personally liable to Lender for (1) the performance of all of Borrower's
obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this Paragraph 9,
Lender may exercise its rights against Borrower personally without regard to
whether Lender has exercised any rights against the Mortgaged Property or any
other security, or pursued any rights against any guarantor, or pursued any
other rights available to Lender under this Note, the Security Instrument, any
other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any prepayment made
under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal balance of this
Note on the last Business Day of a calendar month if Borrower has given Lender
at least 30 days prior notice of its intention to make such prepayment. Such
prepayment shall be made by paying (A) the amount of principal being prepaid,
(B) all accrued interest, (C) all other sums due Lender at the time of such
prepayment, and (D) the prepayment premium calculated pursuant to Schedule A.
For all purposes including the accrual of interest, any prepayment received by
Lender on any day other than the last calendar day of the month shall be deemed
to have been received on the last calendar day of such month. For purposes of
this Note, a "Business Day" means any day other than a Saturday, Sunday or any
other day on which Lender is not open for business. Borrower shall not have the
option to voluntarily prepay less than all of the unpaid principal balance.
(2) Upon Lender's exercise of any right of acceleration under this Note,
Borrower shall pay to Lender, in addition to the entire unpaid principal balance
of this Note outstanding at the time of the acceleration, (A) all accrued
interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to the
repayment of any portion of the unpaid principal balance of this Note prior to
the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment premium
shall be payable with respect to (A) any prepayment made no more than 180 days
before the Maturity Date, or (B) any prepayment occurring as a result of the
application of any insurance proceeds or condemnation award under the Security
Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal balance of
this Note, whether voluntary or involuntary or resulting from a default by
Borrower, will result in Lender's incurring loss, including reinvestment loss,
additional expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth on Schedule A represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs, including
fees and out-of-pocket expenses of attorneys and expert witnesses and costs of
investigation, incurred by Lender as a result of any default under this Note or
in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or remedy
under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan
Document, whether considered separately or together with other charges provided
for in any other Loan Document, violates that law, and Borrower is entitled to
the benefit of that law, that interest or charge is hereby reduced to the extent
necessary to eliminate that violation. The amounts, if any, previously paid to
Lender in excess of the permitted amounts shall be applied by Lender to reduce
the unpaid principal balance of this Note. For the purpose of determining
whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and
spread ratably over the stated term of the Note. Unless otherwise required by
applicable law, such allocation and spreading shall be effected in such a manner
that the rate of interest so computed is uniform throughout the stated term of
the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or permitted
to be given by Lender to Borrower pursuant to this Note shall be given in
accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any controversy
arising under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO ELECT A
TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
-----
X Schedule A Prepayment Premium (required)
-----
-----
X Schedule B Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
POINT WEST ASSOCIATES LIMITED PARTNERSHIP, a
Georgia limited partnership
By: CCP/IV Residential GP, L.L.C., a South
Carolina limited liability company, its
general partner
By: Consolidated Capital Properties IV,
a California limited partnership,
its sole and managing member
By: Concap Equities, Inc., a
Delaware corporation, its
general partner
By:
Name: Patti K. Fielding
Title: Vice President
75-2361470
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS _____ DAY OF NOVEMBER, 1999.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:_________________________________
Donald W. Marshall
Vice President
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be
computed as follows:
(a) If the prepayment is made between the date of this Note and the date that is
180 months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be the
greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed Reinvestment
Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of the Note,
expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on which the
prepayment is made; in any other case, the date on which Lender accelerates the
unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as of the date 5
Business Days before the Prepayment Date, on the 9.250% U.S. Treasury Security
due February 1, 2016, as reported in The Wall Street Journal, expressed as a
decimal calculated to five digits. In the event that no yield is published on
the applicable date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the non-callable
Treasury Security maturing in the same year as the Treasury Security specified
above with the lowest yield published in The Wall Street Journal as of the
applicable date. If the publication of such yield rates in The Wall Street
Journal is discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine the Assumed
Reinvestment Rate. The selection of an alternate security pursuant to this
Paragraph shall be made in Lender's discretion.
Present Value Factor: the factor that discounts to present value the costs
resulting to Lender from the difference in interest rates during the months
remaining in the Yield Maintenance Period, using the Assumed Reinvestment Rate
as the discount rate, with monthly compounding, expressed numerically as
follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield Maintenance
Period but more than 180 days before the Maturity Date, the prepayment premium
shall be 1.0% of the unpaid principal balance of this Note.
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer charges,
taxes, fire, hazard or other insurance premiums, ground rents in accordance with
the terms of the Security Instrument.
127702.07-Los AngelesS1A
EXHIBIT 10.77
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
TO CHICAGO TITLE INSURANCE COMPANY
dated
September __, 1999
by and between
OVERLOOK APARTMENTS PARTNERSHIP,
a Tennessee general partnership,
as Buyer,
and
OVERLOOK ASSOCIATES, LTD.,
a Georgia limited partnership
as Seller
TABLE OF CONTENTS
PAGE
1. PURCHASE AND SALE.....................................................11
2. PURCHASE PRICE........................................................11
2.1 DEPOSIT.........................................................11
2.2 BALANCE.........................................................11
2.3 ADJUSTMENT FOR PRORATIONS.......................................11
2.4 INDEPENDENT CONTRACT CONSIDERATION..............................11
3. OPENING OF ESCROW.....................................................11
4. ACTIONS PENDING CLOSING...............................................11
4.1 Property Documents................................................11
4.2 Buyer's Diligence Tests...........................................11
4.3 Buyer's Termination Right.......................................11
4.4 Survey..........................................................11
4.5 Title Inspection................................................11
4.6 Condition of Title at Closing...................................11
5. DESCRIPTION OF PROPERTY...............................................11
5.1 THE IMPROVEMENTS................................................11
5.2 THE REAL PROPERTY...............................................11
5.3 THE PERSONAL PROPERTY...........................................11
5.4 THE INTANGIBLE PROPERTY.........................................11
6. CONDITIONS TO CLOSING.................................................11
6.1 BUYER'S CLOSING CONDITIONS......................................11
6.2 Title...........................................................11
6.3 Seller's Due Performance..........................................11
6.4 Physical Condition of Property....................................11
6.5 Bankruptcy........................................................11
6.6 Leases............................................................11
6.7 Bill of Sale......................................................11
6.8 Non-Foreign Affidavit.............................................11
6.9 FAILURE OF BUYER'S CLOSING CONDITIONS...........................11
6.10 SELLER'S CLOSING CONDITIONS.....................................11
6.11.............................................Buyer's Due Performance11
6.12..........................................................Bankruptcy11
6.13..........................................................Deliveries11
6.14 FAILURE OF SELLER'S CLOSING CONDITIONS..........................11
7.1 CLOSING...............................................................11
7.1 CLOSING DATE....................................................11
7.2 DELIVERIES BY SELLER............................................11
7.3 Deed..............................................................11
7.4 Non-Foreign Affidavit.............................................11
7.5 Assignment of Leases..............................................11
7.6 Bill of Sale......................................................11
7.7 Proof of Authority................................................11
7.8 Other.............................................................11
7.9 DELIVERIES BY BUYER.............................................11
7.10......................................................Purchase Price11
7.11................................................Assignment of Leases11
7.12........................................................Bill of Sale11
7.13..................................................Proof of Authority11
7.14...............................................................Other11
7.15 ACTIONS BY ESCROW AGENT.........................................11
7.16 Funds...........................................................11
7.17 Recording.......................................................11
7.18 Delivery of Documents...........................................11
7.19 Owner's Title Policy............................................11
7.20 PRORATIONS......................................................11
7.21 CLOSING COSTS...................................................11
7.22 DELIVERIES OUTSIDE OF ESCROW....................................11
7.23.................................................Intangible Property11
7.24...................................................Personal Property11
7.25.............................................................Omitted11
7.26...................................................Notice to Tenants11
7.27............................................Service Contracts Notice11
8. SELLER'S REPRESENTATIONS AND WARRANTIES...............................11
8.1 DUE ORGANIZATION................................................11
8.2 SELLER'S AUTHORITY; VALIDITY OF AGREEMENTS......................11
8.3 LEASES..........................................................11
8.4 CONTRACTS.......................................................11
8.5 VIOLATIONS OF LAWS..............................................11
8.6 LITIGATION......................................................11
8.7 ZONING AND CONDEMNATION.........................................11
8.8 SELLER'S KNOWLEDGE..............................................11
8.9 SURVIVAL........................................................11
9. BUYER'S REPRESENTATIONS AND WARRANTIES................................11
9.1 DUE ORGANIZATION................................................11
9.2 BUYER'S AUTHORITY; VALIDITY OF AGREEMENTS.......................11
9.3 SURVIVAL........................................................11
10. ADDITIONAL COVENANTS AND AGREEMENTS...................................11
10.1 AS-IS...........................................................11
10.2 CHANGES IN CONDITIONS...........................................11
11. RISK OF LOSS..........................................................11
11.1 CONDEMNATION....................................................11
11.2 CASUALTY........................................................11
12. REMEDIES..............................................................11
12.1 LIQUIDATED DAMAGES..............................................11
12.2 DEFAULT BY SELLER...............................................11
13. BROKERS...............................................................11
14. MISCELLANEOUS PROVISIONS..............................................11
14.1 GOVERNING LAW...................................................11
14.2 ENTIRE AGREEMENT................................................11
14.3 MODIFICATION; WAIVER............................................11
14.4 NOTICES.........................................................11
14.5 EXPENSES........................................................11
14.6 ASSIGNMENT......................................................11
14.7 SEVERABILITY....................................................11
14.8 SUCCESSORS AND ASSIGNS; THIRD PARTIES...........................11
14.9 COUNTERPARTS....................................................11
14.10 HEADINGS........................................................11
14.11 TIME OF ESSENCE.................................................11
14.12 FURTHER ASSURANCES..............................................11
14.13 NUMBER AND GENDER...............................................11
14.14 CONSTRUCTION....................................................11
14.15 EXHIBITS........................................................11
14.16 ATTORNEYS' FEES.................................................11
14.17 BUSINESS DAYS...................................................11
14.18 EARLY TERMINATION...............................................11
14.19 WAIVER OF KNOWN DEFAULTS........................................11
14.20 SECTION 1031 EXCHANGE...........................................11
15. CERTAIN INTERIM COVENANTS OF SELLER...................................11
ESCROW AGENT:...............................................................11
LIST OF EXHIBITS............................................................11
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this
"Agreement") is made and entered into as of September __, 1999 (the "Execution
Date"), by and between Overlook Apartments Partnership, a Tennessee general
partnership ("Buyer"), and Overlook Associates, Ltd., a Georgia limited
partnership ("Seller"), for the purpose of setting forth the agreement of the
parties and of instructing Chicago Title Insurance Company, a Missouri
corporation ("Escrow Agent"), with respect to the transaction contemplated by
this Agreement.
R E C I T A L S
A. Seller is the owner of an undivided fee simple interest in that certain
parcel of real property located at 3158 Steele Street, in the City of Memphis,
County of Shelby, State of Tennessee, as more particularly described on Exhibit
"A" attached hereto (the "Land Parcel"), comprising a 252 unit multi-family
residential apartment project commonly known as "Overlook Apartments." The Land
Parcel, together with the "Improvements," the balance of the "Real Property,"
the "Personal Property," and the "Intangible Property" (each as hereinafter
defined), are sometimes collectively referred to herein as the "Property."
B. Seller desires to sell, transfer and convey the Property to Buyer, and Buyer
desires to purchase and acquire the Property from Seller, upon and subject to
the terms and conditions set forth in this Agreement.
A G R E E M E N T
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Buyer
and Seller hereby agree, and instruct Escrow Agent, as follows:
PURCHASE AND SALE.
Subject to all of the terms and conditions of this Agreement, Seller
agrees to sell, transfer and convey to Buyer, and Buyer agrees to
purchase and acquire from Seller, a good and marketable fee
simple interest in the Property, upon and subject to the terms
and conditions set forth herein.
PURCHASE PRICE.
The purchase price of the Property (the "Purchase Price") shall equal Two
Million Fifty Thousand Dollars ($2,050,000.00), subject to adjustment as
hereinafter provided. The Purchase Price shall be payable as follows:
Deposit . Concurrently with the "Opening of Escrow" (as hereinafter defined),
Buyer shall deposit into "Escrow" (as hereinafter defined) the sum of Thirty
Thousand Dollars ($30,000.00) (which amount, together with any and all interest
and dividends earned thereon, shall hereinafter be referred to as the "Initial
Deposit"), by wire transfer or by certified or bank check payable to the order
of Escrow Agent. Not later than 5 P.M. C.D.T. on the "Due Diligence Termination
Date" (as hereinafter defined), Buyer shall deposit into Escrow the additional
sum of Thirty Thousand Dollars ($30,000.00) (which sum, together with any and
all interest and dividends earned thereon, shall hereinafter be referred to as
the "Additional Deposit"), by wire transfer or by certified or bank check
payable to the order of Escrow Agent. As used herein, the term "Deposit" shall
mean, collectively, the Initial Deposit and the Additional Deposit (or such
portion thereof that has theretofore been deposited into Escrow). Escrow Agent
shall invest the Deposit in insured money market accounts, certificates of
deposit or United States Treasury Bills as Buyer may instruct from time to time,
provided that such investments are federally issued or insured. At the "Closing"
(as hereinafter defined), the Deposit shall be paid to Seller and credited
against the Purchase Price. In the event that the sale of the Property is not
consummated for any reason, then the Deposit shall be held and disbursed in
accordance with the terms of this Agreement. Seller shall not be responsible
for, nor shall Seller bear the risk of loss of, the Deposit and Seller shall not
be responsible for the rate of return thereon. Notwithstanding any other
provision herein to the contrary, all interest and dividends on the Deposit
shall accrue for the benefit of Buyer, and shall be paid to or for the benefit
of Buyer upon Closing or termination of this Agreement.
Balance . At the Closing, Buyer shall pay to Seller the balance of the Purchase
Price over and above the Deposit, by wire transfer of immediately available
federal funds, net of all prorations and adjustments as provided herein.
Adjustment for Prorations . On the "Closing Date" (as hereinafter defined),
Buyer shall receive as a credit against the Purchase Price an amount equal to
the
sum of all: (a) unrefunded and unapplied security deposits which were paid
by tenants of the Property (collectively, "Tenants") to or for the account of
Seller; (b) expenses and other sums owed by Seller to Tenants for any work or
disputes which occurred prior to the Closing Date (as acknowledged in
any agreement or correspondence executed by Seller or any of Seller's
agents); (c) rentals already received by Seller attributable to the
period from and
after the Closing Date; and (d) the amount, if any, by which prorated
amounts and "Closing Costs" (as hereinafter defined) allocated to Seller
pursuant to
Sections 7.20 and 7.21 hereof exceed prorated amounts and Closing Costs
allocated to Buyer pursuant to Sections 7.20 and 7.21 hereof.
Independent Contract Consideration . Seller and Buyer agree that the amount of
One Hundred Dollars ($100.00) (the "Independent Contract Consideration")
of the
Deposit has been bargained for as consideration for Seller's execution
and delivery of this Agreement and liquidated damage obligations and for
Buyer's right of review, inspection and termination, and is independent
of any other consideration or payment provided for in this Agreement and,
notwithstanding anything to the contrary contained herein, is
non-refundable in all events.
OPENING OF ESCROW.
On or before the third (3rd) "Business Day" (as hereinafter defined) after
the Execution Date, Buyer and Seller shall cause an escrow ("Escrow") to be
opened with Escrow Agent (the "Opening of Escrow") by delivery to Escrow Agent
of a fully executed copy of this Agreement. Escrow Agent shall promptly deliver
to Buyer and Seller written notice of the date of the Opening of Escrow. This
Agreement shall constitute escrow instructions to Escrow Agent as well as the
agreement of the parties. Escrow Agent is hereby appointed and designated to act
as Escrow Agent and instructed to deliver, pursuant to the terms of this
Agreement, the documents and funds to be deposited into Escrow as herein
provided. The parties hereto shall execute such additional escrow instructions
(not inconsistent with this Agreement as determined by counsel for Buyer and
Seller) as Escrow Agent shall deem reasonably necessary for its protection,
including Escrow Agent's general provisions (as may be modified by Buyer, Seller
and Escrow Agent). In the event of any inconsistency between the provisions of
this Agreement and such additional escrow instructions, the provisions of this
Agreement shall govern.
ACTIONS PENDING CLOSING.
Property Documents . Prior to the expiration of the "Due Diligence Period"
(as hereinafter defined), Seller shall make available to Buyer for its
review and
copying, at Buyer's sole cost and expense, during normal business hours
and upon reasonable advance notice to Seller, at the management office
of the
Property in Memphis, Tennessee, true, correct and complete copies of
all contracts, documents, books, records and other materials relating
to the
Property, to the extent that such items exist and are in Seller's
possession (collectively, the "Property Documents"), including, without
limitation, the following items: (i) leases and other occupancy
agreements now in effect at
the Property (collectively, the "Leases"); (ii) as-built plans and
specifications; (iii) structural and mechanical reports; (iv) plans and
maps
(including, without limitation, topographical maps); (v) governmental
permits, approvals and licenses; (vi) appraisals; (vii) title policies;
(viii) surveys; (ix) construction warranties; (x) land studies; (xi)
property tax statements and assessed value notices; (xii) insurance
policies; (xiii)
"Service Contracts" (as hereinafter defined); (xiv) copies of receipts
for all real estate and personal property taxes assessed against the
Property for
the two (2) calendar years preceding the date hereof and the tax bill or
assessment notice for the current year; (xv) operating statement showing the
results of operations of the Property for the two (2) calendar years preceding
the date of the Agreement and current year-to-date interim operating statements;
(xvi) copies of all environmental studies or impact reports, if any in the
possession of Seller, relating to the Property; (xvii) copies of all inspections
or reports, if any in the possession of Seller, to assess modifications required
to insure or achieve compliance with the American With Disabilities Act or any
other federal, state or local handicapped access laws, ordinances or
regulations; and, (xviii) copies of all appraisals of the Property in Seller's
possession or reasonably available to Seller.
In addition to making the foregoing items available at the management office of
the Property in Memphis, Tennessee, all Item Numbers except (i) and (xvii) shall
be delivered by Seller to Buyer on or before the fifth Business Day after the
Execution Date. As a condition to furnishing Buyer with a copy of the foregoing
Property Documents, Buyer acknowledges and agrees that the items are being
provided to it solely as an accommodation and only for informational purposes.
Neither Seller nor any of its representatives, managers, servicers or advisors
(including its attorneys), have made or are making any representation or
warranty, express or implied, as to the accuracy or completeness of the Property
Documents and shall not be liable to Buyer (or to any of its members, partners,
representatives, advisors, successors or assigns) for any loss or damage
resulting from its use of, or reliance on, the Property Documents. In addition,
Buyer further agrees that it (i) shall not (unless otherwise required by law)
provide a copy of any of the Property Documents to any other party, including
without limitation, to any lender, without the prior written consent of Seller,
and (ii) will, upon Seller's request, redeliver the Property Documents and all
copies thereof to Seller.
Buyer's Diligence Tests . At all reasonable times during the thirty (30) day
period commencing on the Execution Date (the "Due Diligence Period"), Buyer, its
agents and representatives shall be entitled at Buyer's sole cost and expense
to: (a) enter onto the Property during normal business hours and upon reasonable
advance notice to Seller, to perform any inspections, investigations, studies
and tests of the Property (including, without limitation, physical, structural,
mechanical, architectural, engineering, soils, geotechnical and environmental
tests that Buyer deems reasonable); (b) cause an environmental assessment of the
Property to be performed, upon reasonable notice to Seller; (c) review all
Property Documents; and (d) investigate such other matters as Buyer may desire.
Buyer's entry onto and inspections of the Property in accordance with the terms
hereof shall not damage the Property in any respect. Any entry by Buyer onto the
Property shall be subject to, and conducted in accordance with, all applicable
laws and the terms of the Leases so as to avoid any interference with the
occupancy of the Property and to avoid any disturbance of any of the Tenants of
the Property. If Buyer or its representatives undertake any borings or other
disturbances of the soil of the Property, the soil shall be re-compacted to its
condition immediately before any such borings or other disturbances were
undertaken, and Buyer shall obtain, at Buyer's sole cost and expense, a
certificate from a licensed soils engineer that certifies that the soil has been
re-compacted to such condition.
Buyer agrees that from the Execution Date through the "Due Diligence Termination
Date" (as hereinafter defined), Buyer shall carry, or cause its agent to carry,
workers' compensation and general liability insurance in the amount of
$1,000,000 per occurrence, which insurance shall name Seller as an additional
insured; upon request, Buyer shall provide Seller with proof of such insurance
prior to commencing Buyer's physical inspections of the Property. Buyer shall
keep the Property free and clear of any mechanic's or materialmen's liens
arising out of any entry onto or inspection of the Property. Buyer shall
indemnify, protect, defend and hold Seller (and Seller's partners, shareholders,
agents, employees and representatives) harmless from and against any and all
claims (including, without limitation, claims for mechanic's liens or
materialmen's liens), causes of action, demands, obligations, losses, damages,
liabilities, judgements, costs and expenses (including, without limitation,
reasonable attorneys' fees, charges and disbursements) (collectively, "Claims")
in connection with or arising out of any inspections carried on by or on behalf
of Buyer pursuant to the terms hereof; provided, however, that Buyer shall not
indemnify Seller for any Claims caused by Seller's gross negligence or willful
misconduct. In the event that this Agreement is terminated for any reason, (i)
Buyer shall repair any damage to the Property caused by its entry thereon and
restore the same to the condition in which it existed prior to such entry and
(ii) Buyer shall deliver to Seller, upon Seller's request and without charge
therefor, the results and copies of any and all inspections, studies, tests,
surveys, or other reports made by or for Buyer with respect to the Property. The
provisions of this Section 4.2 shall survive the Closing or the earlier
termination of this Agreement.
Buyer's Termination Right . Buyer shall have the right at any time on or before
5 P.M. C.D.T. on the last day of the Due Diligence Period (the "Due Diligence
Termination Date") to terminate this Agreement by delivering a written notice of
such termination to Seller and Escrow Agent if Buyer determines in its sole and
absolute discretion that the Property is not acceptable to Buyer, in which case
(a) Escrow Agent shall return the Deposit to Buyer, less the Independent
Contract Consideration (which Escrow Agent shall deliver to Seller), (b) the
parties shall equally share the cancellation charges of Escrow Agent and "Title
Company" (as hereinafter defined), if any, and (c) this Agreement shall
automatically terminate and shall be of no further force or effect and neither
party shall have any further rights or obligations hereunder, other than
pursuant to any provision hereof which by its express terms survives any
termination of this Agreement. In the event that Buyer fails to deliver a
written termination notice to Seller and Escrow Agent on or before the Due
Diligence Termination Date, then Buyer shall be deemed to have unconditionally
waived its termination right under this Paragraph 4.3.
Survey . During the Due Diligence Period, Buyer will obtain an as-built survey
of the Real Property and Improvements from a licensed surveyor reasonably
acceptable to Buyer and Title Company. The survey must be sufficient in form and
content so that the Title Company will waive all matters of survey not expressly
accepted by Buyer. If the survey (a) is for good cause not acceptable to Buyer
or Title Company; or (b) shows the dimensions of the Land to be materially other
than is set forth on Exhibit "A"; or (c) shows easements, encroachments or other
adverse conditions which are not approved by Buyer in its sole discretion, Buyer
shall have the right at any time on or before the Due Diligence Termination Date
to (i) terminate this Agreement whereupon the Deposit, less the Independent
Contract Consideration shall be refunded to Buyer, or (ii) to close this
purchase and sale without reduction in the Purchase Price. If Buyer does not
object in writing to the survey on or before the Due Diligence Termination Date,
it will be deemed to have waived matters of survey existing at the end of the
Due Diligence Period.
Title Inspection . During the Due Diligence Period, Buyer will obtain (i) from
the Chicago Title Insurance Company ("Title Company") a commitment to insure
title to the Property in Buyer for the full amount of the Purchase Price and
(ii) a UCC-11 Search (collectively the "Title Evidence"). If Buyer, in its sole
discretion, shall object to any matter shown in the Title Evidence ("Defect"),
it may give written notice to Seller of such title Defects ("Defect Notice") on
or before the Due Diligence Termination Date.
If Buyer gives to Seller a Defect Notice on or before the Due Diligence
Termination Date, then: within ten (10) Business Days after receipt of the
Defect Notice, Seller shall deliver written notice to Buyer indicating which of
the Defects, if any, that Seller is willing to remove from title on or prior to
Closing ("Seller's Cure Notice"). Seller shall be in material breach of this
Agreement if Seller fails (for any reason) to remove from the title records all
such Defects to which Buyer objects, and which Seller commits to remove pursuant
to Seller's Cure Notice; provided, however, that if Seller in good faith
contests, and promptly proceeds to challenge, the validity of any monetary
obligation set forth in a Defect Notice (other than an obligation to repay any
voluntary debt encumbering the Property), then Seller shall be permitted to
deposit funds with the Title Company sufficient to obtain title insurance over
such contested obligation instead of actually removing such Defect from title at
Closing. If Seller fails to give Seller's Cure Notice to Buyer within such ten
(10) Business Day period, then Seller shall be deemed to have elected not to
remove all Defects from title on or prior to Closing.
Within ten (10) Business Days after Buyer's receipt of Seller's Cure
Notice, Buyer (in its sole discretion) shall elect either (i) to waive its
disapproval of those Defects that Seller has not agreed to remove (whereupon
such Defects shall be deemed Permitted Exceptions hereunder), or (ii) to
terminate this Agreement by giving Seller written notice of such election within
such ten (10) Business Day period, in which event Escrow Agent shall return the
Deposit, less the Independent Contract Consideration, to Buyer, and, thereafter,
the parties shall have no further rights or obligations hereunder except for
obligations which expressly survive the termination of this Agreement. If Buyer
fails to give Seller written notice of its election of (i) or (ii) of the
preceding sentence within such ten (10) Business Day period, then Buyer shall be
deemed to have waived its disapproval of Defects not included in Seller's Cure
Notice (whereupon such Defects shall be deemed Permitted Exceptions hereunder).
Condition of Title at Closing . Upon the Closing, Seller shall sell, transfer
and convey to Buyer fee simple title to the Real Property by a duly executed and
acknowledged limited warranty deed in the form of Exhibit "B" attached hereto
(the "Deed"), subject only to the Permitted Exceptions.
DESCRIPTION OF PROPERTY.
The Improvements . As used herein, the term "Improvements" shall mean all
buildings, improvements, structures and fixtures now or hereafter located on or
in the Land Parcel.
The Real Property . As used herein, the term "Real Property" shall mean,
collectively: (a) the Land Parcel; (b) the Improvements; (c) all apparatus,
equipment and appliances affixed to and used in connection with the operation or
occupancy of the Land Parcel and/or any of the Improvements (such as heating,
air conditioning or mechanical systems and facilities used to provide any
utility services, refrigeration, ventilation, waste disposal or other services)
and now or hereafter located on or in the Land Parcel and/or any of the
Improvements; and (d) all of Seller's rights, privileges and easements
appurtenant to or used in connection with the Land Parcel and/or any of the
Improvements, including, without limitation, all minerals, oil, gas and other
hydrocarbon substances, all development rights, air rights, water, water rights
and water stock relating to the Land Parcel, all strips and gores, streets,
alleys, easements, rights-of-way, public ways, or other rights of Seller
appurtenant, adjacent or connected to the Land Parcel.
The Personal Property . As used herein, the term "Personal Property" shall mean
that certain tangible personal property, equipment and supplies owned by Seller
and situated at the Real Property and used by Seller exclusively in connection
with the use, operation, maintenance or repair of all or any portion of the Real
Property as of the Closing Date, including, without limitation, all of the
personal property described on Exhibit "C" attached hereto.
The Intangible Property . As used herein, the term "Intangible Property" shall
mean that certain intangible property owned by Seller and used by Seller
exclusively in connection with all or any portion of the Real Property and/or
the Personal Property, including, without limitation, all of Seller's right,
title and interest, if any, in and to: (a) the Leases, all contracts identified
on Exhibit "D" attached hereto and not specifically objected to in writing by
Buyer on or before the Due Diligence Termination Date (collectively, the
"Service Contracts"), all books, records, reports, test results, environmental
assessments, if any, as-built plans, specifications and other similar documents
and materials relating to the use, operation, maintenance, repair, construction
or fabrication of all or any portion of the Real Property and/or the Personal
Property; (b) all rights, if any, in and to the name "Overlook Apartments;" (c)
all transferable business licenses, architectural, site, landscaping or other
permits, applications, approvals, authorizations and other entitlements
affecting any portion of the Real Property; and (d) all transferable guarantees,
warranties and utility contracts relating to all or any portion of the Real
Property. Seller shall terminate all contracts identified on Exhibit "D"
attached hereto which are terminable by notice and to which Buyer timely
objects.
CONDITIONS TO CLOSING.
Buyer's Closing Conditions . The obligation of Buyer to complete the transaction
contemplated by this Agreement is subject to the following conditions precedent
(and conditions concurrent, with respect to deliveries to be made by the parties
at the Closing) (the "Buyer's Closing Conditions"), which conditions may be
waived, or the time for satisfaction thereof extended, by Buyer only in a
writing executed by Buyer (provided, however, that Buyer's acceptance of the
Deed shall be deemed to be a waiver of any unsatisfied conditions regardless of
whether Buyer executes a separate written instrument to that effect at the
Closing):
Title . Title Company shall be prepared and irrevocably committed to issue to
Buyer (with an effective date not earlier than the Closing Date), an American
Land Title Association owner's policy of title insurance in favor of Buyer for
the Real Property (a) showing fee title to the Real Property vested in Buyer,
(b) with liability coverage in an amount equal to the Purchase Price, (c) with
those endorsements reasonably requested by Buyer (provided that such
endorsements are available in the State of Tennessee and are paid for by Buyer
in accordance with the terms hereof) and (d) containing no exceptions other than
the Permitted Exceptions (the "Owner's Title Policy").
Seller's Due Performance . All of the representations and warranties of Seller
set forth in this Agreement shall be true, correct and complete in all material
respects as of the Closing Date, and Seller, on or prior to the Closing Date,
shall have complied with and/or performed all of the obligations, covenants and
agreements required on the part of Seller to be complied with or performed
pursuant to the terms of this Agreement.
Physical Condition of Property . Subject to the terms of Section 11 hereof, the
physical condition of the Property shall be substantially the same on the
Closing Date as on the Execution Date, except for reasonable wear and tear and
any damages due to any act of Buyer or Buyer's representatives.
Bankruptcy . No action or proceeding shall have been commenced by or against
Seller under the federal bankruptcy code or any state law for the relief of
debtors or for the enforcement of the rights of creditors, and no attachment,
execution, lien or levy shall have attached to or been issued with respect to
Seller's interest in the Property or any portion thereof.
Leases . At the Closing, Seller shall assign all of its rights and remedies
under the Leases (including, without limitation, its right to any security
deposits and prepaid rent) to Buyer, and Buyer shall assume the obligations of
Seller arising or accruing after Closing with respect thereto, pursuant to an
assignment and assumption of leases and security deposits in the form of Exhibit
"E" attached hereto (the "Assignment of Leases"). The Assignment of Leases shall
include a provision whereby Buyer shall indemnify, protect, defend and hold
Seller harmless from and against any and all Claims with respect to assigned
security deposits actually received or credited to Buyer at Closing.
Bill of Sale . At the Closing, Seller shall transfer to Buyer (and Buyer shall
assume Seller's obligations, if any, with respect to) all of Seller's right,
title and interest in and to the Personal Property and the Intangible Property
(other than the Leases), in each case free of all liens and encumbrances (other
than the Permitted Exceptions), pursuant to a bill of sale, assignment and
assumption in the form of Exhibit "F" attached hereto (the "Bill of Sale").
Non-Foreign Affidavit . At the Closing, Seller shall deliver to Buyer a
non-foreign affidavit in the form of Exhibit "G" attached hereto executed by
Seller (the "Non-Foreign Affidavit").
Failure of Buyer's Closing Conditions . If any of Buyer's Closing Conditions
have not been fulfilled within the applicable time periods, Buyer may:
1.1.1 waive the Buyer's Closing Condition and close Escrow in accordance with
this Agreement, without adjustment or abatement of the Purchase Price;
or
terminate this Agreement by written notice to Seller and Escrow Agent, in
which event Escrow Agent shall return the Deposit to Buyer, less the
Independent
Contract Consideration (which Escrow Agent shall deliver to Seller),
all other documents, instruments and funds delivered into Escrow shall
be
returned to the party that delivered the same into Escrow, Seller shall
pay for all of the cancellation charges of Title Company and Escrow
Agent, if any, and to the extent that the failure of any applicable
Buyer's Closing Condition is caused by a Seller default, Buyer shall be
entitled to pursue its rights and remedies pursuant to the terms of
Section 12.2 hereof.
Seller's Closing Conditions . The obligation of Seller to complete the
transaction contemplated by this Agreement is subject to the following
conditions
precedent (and conditions concurrent, with respect to deliveries to be
made by the parties at the Closing) (the "Seller's Closing Conditions"),
which
conditions may be waived, or the time for satisfaction thereof
extended, by Seller only in a writing executed by Seller:
Buyer's Due Performance . All of the representations and warranties of Buyer set
forth in this Agreement shall be true, correct and complete in all material
respects as of the Closing Date, and Buyer, on or prior to the Closing Date,
shall have complied with and/or performed all of the obligations, covenants and
agreements required on the part of Buyer to be complied with or performed
pursuant to the terms of this Agreement.
Bankruptcy . No action or proceeding shall have been commenced by or against
Buyer under the federal bankruptcy code or any state law for the relief of
debtors or for the enforcement of the rights of creditors.
Deliveries . Buyer shall have delivered to Escrow Agent or Seller, as the case
may be, such documents or instruments as are required to be delivered by Buyer
pursuant to the terms of this Agreement.
Failure of Seller's Closing Conditions . If any of the Seller's Closing
Conditions have not been fulfilled within the applicable time periods, Seller
may:
1.1.1 waive the Seller's Closing Condition and close Escrow in accordance with
this Agreement, without adjustment or abatement of the Purchase Price;
or
terminate this Agreement by written notice to Buyer and Escrow Agent,
in which event (a) Escrow Agent shall deliver the Deposit to Seller
(which Seller
shall retain as liquidated damages, as its sole and exclusive remedy
hereunder, in accordance with the terms of Section 12 hereof), (b)
Escrow
Agent shall return all other documents, instruments and funds delivered
into Escrow to the party that delivered the same into Escrow and (c)
Buyer shall
pay for all of the title examination fees together with any
cancellation charges of Title Company and Escrow Agent, if
any.
CLOSING.
Closing Date . Subject to the provisions of this Agreement, the Closing shall
take place on the thirtieth (30th) day after the Due Diligence Termination Date,
or on such other date as the parties hereto may agree. As used herein, the
following terms shall have the following meanings: (a) the "Closing" shall mean
the recordation of the Deed in the real estate records of Shelby County,
Tennessee (the "Official Records"); and (b) the "Closing Date" shall mean the
date upon which the Closing actually occurs.
Deliveries by Seller . On or before the Closing Date, Seller, at its sole cost
and expense, shall deliver or cause to be delivered into Escrow the following
documents and instruments listed in Section 7.3 - 7.14 hereof, each dated as of
the Closing Date, in addition to all other items and payments required by this
Agreement to be delivered by Seller at the Closing:
Deed . The original executed and acknowledged Deed conveying the Real Property
to Buyer;
Non-Foreign Affidavit . The original executed Non-Foreign Affidavit;
Assignment of Leases.Four (4) original executed counterparts of the Assignment
of Leases;
Bill of Sale . Four (4) original executed counterparts of the Bill of Sale;
Proofof Authority . Such proof of Seller's authority and authorization to enter
into this Agreement and the transaction contemplated hereby, and such proof of
the power and authority of the individual(s) executing or delivering any
instruments, documents or certificates on behalf of Seller to act for and bind
Seller as may be reasonably required by Title Company or Buyer; and
Other . Such other documents and instruments, signed and properly acknowledged
by Seller, if appropriate, as may be reasonably required by Buyer, Title
Company, Escrow Agent or otherwise in order to effectuate the provisions of this
Agreement and the Closing of the transaction contemplated herein.
Deliveries by Buyer . On or before the Closing Date, Buyer, at its sole cost and
expense, shall deliver or cause to be delivered into Escrow the following funds,
documents and instruments, each dated as of the Closing Date, in addition to all
other items and payments required by this Agreement to be delivered by Buyer at
the Closing:
Purchase Price . Cash in an amount equal to the sum of the Purchase Price and
all of the Buyer's Closing Costs (and otherwise sufficient to close the
transaction contemplated herein);
Assignment of Leases . Four (4) original executed counterparts of the Assignment
of Leases;
Bill of Sale . Four (4) original executed counterparts of the Bill of Sale;
Proofof Authority . Such proof of Buyer's authority and authorization to enter
into this Agreement and the transaction contemplated hereby, and such proof of
the power and authority of the individual(s) executing or delivering any
instruments, documents or certificates on behalf of Buyer to act for and bind
Buyer as may be reasonably required by Title Company or Seller; and
Other . Such other documents and instruments, signed and properly acknowledged
by Buyer, if appropriate, as may reasonably be required by Seller, Title
Company, Escrow Agent or otherwise in order to effectuate the provisions of this
Agreement and the Closing of the transaction contemplated herein.
Actions by Escrow Agent . Provided that Escrow Agent shall not have received
written notice from Buyer or Seller of the failure of any condition to the
Closing or of the termination of the Escrow and this Agreement, when Buyer and
Seller have deposited into Escrow the documents and funds required by this
Agreement and Title Company is irrevocably and unconditionally committed to
issue the Owner's Title Policy in accordance with the terms hereof, Escrow Agent
shall, in the order and manner herein below indicated, take the following
actions: Funds. Disburse all funds as follows:
1.1.1 pursuant to the "Closing Statement" (as hereinafter defined), retain for
Escrow Agent's own account all escrow fees and costs, disburse to Title Company
the fees and expenses incurred in connection with the issuance of the Owner's
Title Policy and disburse to any other persons or entities entitled thereto the
amount of any other Closing Costs; disburse to Seller an amount equal to the
Purchase Price, less or plus the net debit or credit to Seller by reason of the
prorations and allocations of Closing Costs provided for herein; and disburse to
the party who deposited the same any remaining funds in the possession of Escrow
Agent after payments pursuant to Sections 7.16.1 and 7.16.2 above have been
completed; Recording . Cause the Deed and any other documents which the parties
hereto may mutually direct to be recorded in the Official Records and obtain
conformed copies thereof for distribution to Buyer and Seller; and Delivery of
Documents . Deliver: (a) to Seller (i) two originals of all documents deposited
into Escrow (other than the Deed and the Non-Foreign Affidavit), (ii) one copy
of the Non-Foreign Affidavit and (iii) one conformed copy of each document
recorded pursuant to the terms hereof; and (b) to Buyer, (i) two originals of
all documents deposited into Escrow (other than the Deed and the Non-Foreign
Affidavit), (ii) the original Non-Foreign Affidavit and (iii) one conformed copy
of each document recorded pursuant to the terms hereof.
Owner's Title Policy . Cause Title Company to
issue to Buyer the Owner's Title
Policy.
Prorations .
1.1.1 Rentals, revenues, and other income, if any, from the Property, taxes,
assessments, improvement bonds, Service Contract fees, utility costs, and other
expenses affecting the Property shall be prorated between Buyer and Seller as of
the Closing Date based on a 365 day year. For purposes of calculating
prorations, Buyer shall be deemed to be title holder of the Property, and
therefore entitled to the income and responsible for the expenses, after 12:01
a.m. Central Standard Time on the Closing Date. Delinquent rentals as of the
Closing Date shall not be prorated, but when paid to Buyer shall be delivered by
Buyer to Seller. All rentals collected on or after the Closing Date shall be
applied first to rental periods on or after the Closing Date and any excess
amount received (less reasonable costs and legal fees incurred in the collection
thereof) shall be remitted to Seller. After the Closing, Buyer shall use
commercially reasonable efforts to collect delinquent rentals on behalf of
Seller, but Buyer shall not be required to take any legal action to recover such
delinquent rentals. All non-delinquent real estate taxes or assessments on the
Property shall be prorated based on the actual current tax bill, but if such tax
bill has not yet been received by Seller by the Closing Date or if supplemental
taxes are assessed after the Closing for the period prior to the Closing, the
parties shall make any necessary adjustment after the Closing by cash payment to
the party entitled thereto so that Seller shall have borne all real property
taxes, including all supplemental taxes, allocable to the period prior to the
Closing and Buyer shall bear all real property taxes, including all supplemental
taxes, allocable to the period from and after the Closing. If any expenses
attributable to the Property and allocable to the period prior to the Closing
are discovered or billed after the Closing, the parties shall make any necessary
adjustment after the Closing by cash payment to the party entitled thereto so
that Seller shall have borne all expenses allocable to the period prior to the
Closing and Buyer shall bear all expenses allocable to the period from and after
the Closing. The provisions of this Section 7.20.1 shall survive the Closing.
Three(3) Business Days prior to the Closing Date, Buyer and Seller shall jointly
prepare and approve a preliminary closing statement (the "Preliminary Closing
Statement") setting forth: (a) the proration amounts allocable to each of the
parties pursuant to Section 7.20 hereof; and (b) the Closing Costs allocable to
each of the parties pursuant to Section 7.21 hereof. On the Closing Date, Buyer
and Seller shall jointly revise the Preliminary Closing Statement and deliver a
final, signed version of a closing statement to each of the parties at the
Closing (the "Closing Statement").
Closing Costs . Each party shall pay its own costs and expenses arising in
connection with the Closing (including, without limitation, its own attorneys'
and advisors' fees, charges and disbursements), except the following costs (the
"Closing Costs"), which shall be allocated between the parties as follows:
1.1.1 all Tennessee transfer and other taxes related to the transfer of the
Property, which shall be paid by Buyer;
1.1.2 Escrow Agent's escrow fees and costs, which shall be paid one-half (1/2)
by Seller and one-half (1/2) by Buyer; the cost of the Survey and any
endorsements to the Owner's Title Policy, which shall be paid by Buyer; the cost
of Owner's Title Policy (with extended coverage) (other than the cost of any
endorsements ordered by Buyer and paid for by Buyer), which shall be paid by
Seller up to an amount not to exceed $4,200.00; all recording fees, other than
fees for releases of existing liens or encumbrances, which shall be paid by
Buyer; and
7.21.6......Any prepayment penalties or fees related to the payoff of any
existing deed of trust or other collateral instruments, which shall be paid by
Seller.
Deliveries Outside of Escrow . Seller shall deliver possession of the Property,
subject only to the Leases and the other Permitted Exceptions, to Buyer upon the
Closing. Further, Seller hereby covenants and agrees to deliver to Buyer, on or
prior to the Closing, the following items:
Intangible Property.The Intangible Property, including, without limitation, the
original Property Documents;
Personal Property . The Personal Property, including, without limitation, any
and all keys, pass cards, remote controls, security codes, unlicensed computer
software and other devices relating to access to the Improvements; and
Omitted.
Notice to Tenants . A letter, duly executed by Seller, dated as of the Closing
Date and addressed to all Tenants, informing such Tenants of the transfer of the
Property and the assignment of the Leases to Buyer, together with an instruction
to pay all amounts due or to become due under the Leases to Buyer (such letter
shall be delivered by Seller to Buyer, and shall not be delivered directly by
Seller to Tenants); and
Service Contracts Notice . A letter to all of the vendors of the Service
Contracts, duly executed by Seller, dated as of the Closing Date and addressed
to the Service Contract vendors, informing such vendors of either the assignment
to Buyer or the termination, as determined pursuant to paragraph 5.4 hereof, of
the Service Contracts.
SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants to and agrees with Buyer, as of the Execution
Date and as of the Closing Date, as follows: Due Organization . Seller is a
limited partnership, duly organized and existing in good standing under the laws
of the State of Tennessee.
Seller's Authority; Validity of Agreements . Seller has full right, power and
authority to sell the Property to Buyer as provided in this Agreement and to
carry out its obligations hereunder. The individual(s) executing this Agreement
and the instruments referenced herein on behalf of Seller have the legal power,
right and actual authority to bind Seller to the terms hereof and thereof. This
Agreement is, and all other instruments, documents and agreements to be executed
and delivered by Seller in connection with this Agreement shall be, duly
authorized, executed and delivered by Seller and shall be valid, binding and
enforceable obligations of Seller (except as enforcement may be limited by
bankruptcy, insolvency or similar laws) and do not, and as of the Closing Date
will not, violate any provisions of any agreement or judicial order to which
Seller is a party or to which Seller or the Property is subject.
Leases. Subject to the terms of Section 10.2 hereof, the schedule attached
hereto as Exhibit "H" is in all material respects a true, correct and complete
list of all of the Leases currently in effect. Other than the Leases (together
with all amendments, modifications and guarantees thereof), Seller has not
directly entered into any leases or subleases of the Property.
Contracts . Subject to the terms of Section 10.2 hereof, except as set forth on
the schedule attached hereto as Exhibit "D", neither Seller nor any of its
agents has executed any service, maintenance, repair, management, supply or
other contracts (including, without limitation, any service contracts) affecting
the Property which would be binding on Buyer subsequent to the Closing.
Violations of Laws . To "Seller's Knowledge" (as hereinafter defined), Seller
has not received any written notices of (a) any material violations of any laws,
ordinances, orders or requirements of any governmental authority, agency or
officer having jurisdiction against or affecting the Property, which have not
previously been complied with, or (b) the failure of Seller to maintain in full
force and effect any governmental licenses, permits or consents which are
required with respect to the Property.
Litigation . To Seller's Knowledge, (a) there are no actions, investigations,
suits or proceedings (other than tax appeals or protests) pending or threatened
that have a material adverse effect on the Property, or the ownership or
operation thereof, and (b) there are no judgments, orders, awards or decrees
currently in effect against Seller with respect to the ownership or operation of
the Property which have not been fully discharged prior to the Execution Date.
Zoningand Condemnation . To Seller's Knowledge, there are no pending proceedings
to alter or restrict the zoning or other use restrictions applicable to the
Property, or to condemn all or any portion of the Property by eminent domain
proceedings or otherwise.
Seller'sKnowledge . As used herein, the term "Seller's Knowledge" shall mean the
actual knowledge, without any investigation or inquiry, of Harry Alcock, Senior
Vice President, or Linda Mills, Regional Property Manager.
Survival . All of the representations, warranties and agreements of Seller set
forth in this Agreement shall be true upon the Execution Date, shall be deemed
to be repeated at and as of the Closing Date (except as otherwise set forth in
writing to Buyer) and shall survive the delivery of the Deed and the Closing for
a period of six (6) months.
BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller, as of the Execution Date and as of the
Closing Date, as follows:
Due Organization . Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Tennessee.
Buyer's Authority; Validity of Agreements . Buyer has full right, power and
authority to purchase and acquire the Property from Seller as provided in this
Agreement and to carry out its obligations hereunder. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Buyer have the legal power, right and actual authority to bind Buyer to the
terms hereof and thereof. This Agreement is, and all instruments, documents and
agreements to be executed and delivered by Buyer in connection with this
Agreement shall be, duly authorized, executed and delivered by Buyer and shall
be valid, binding and enforceable obligations of Buyer (except as enforcement
may be limited by bankruptcy, insolvency or similar laws) and do not, and as of
the Closing Date will not, violate any provision of any agreement or judicial
order to which Buyer is a party or to which Buyer is subject.
Survival . All of the representations, warranties and agreements of Buyer set
forth in this Agreement shall be true upon the Execution Date, shall be deemed
to be repeated at and as of the Closing Date (except as otherwise set forth in
writing to Seller) and shall survive the delivery of the Deed and the Closing
for a period of six (6) months.
ADDITIONAL COVENANTS AND AGREEMENTS.
As-Is. THE PARTIES HEREBY ACKNOWLEDGE AND AGREE AS FOLLOWS: (A) BUYER IS A
SOPHISTICATED PURCHASER WHO IS FAMILIAR WITH THIS TYPE OF PROPERTY; (B) EXCEPT
AS MAY BE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR THE DOCUMENTS REQUIRED TO
BE DELIVERED BY SELLER TO BUYER PURSUANT HERETO, NEITHER SELLER NOR ANY OF ITS
AGENTS, REPRESENTATIVES, BROKERS, OFFICERS, DIRECTORS, SHAREHOLDERS, OR
EMPLOYEES HAS MADE OR WILL MAKE ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PROPERTY; AND (C) EXCEPT AS MAY BE SPECIFICALLY SET FORTH IN THIS AGREEMENT OR
THE DOCUMENTS REQUIRED TO BE DELIVERED BY SELLER TO BUYER PURSUANT HERETO, THE
PROPERTY IS BEING SOLD TO BUYER IN ITS PRESENT "AS IS, WHERE IS" CONDITION "WITH
ALL FAULTS." SUBJECT TO THE TERMS HEREOF, BUYER WILL BE AFFORDED THE OPPORTUNITY
TO MAKE ANY AND ALL INSPECTIONS OF THE PROPERTY AND SUCH RELATED MATTERS AS
BUYER MAY REASONABLY DESIRE AND, ACCORDINGLY, EXCEPT AS MAY BE SPECIFICALLY SET
FORTH IN THIS AGREEMENT OR THE DOCUMENTS REQUIRED TO BE DELIVERED BY SELLER TO
BUYER PURSUANT HERETO, BUYER WILL RELY ON ITS OWN DUE DILIGENCE AND
INVESTIGATIONS IN PURCHASING THE PROPERTY.
Changes in Conditions. If, prior to the Closing, Seller becomes aware that any
representation or warranty set forth in this Agreement which was true and
correct on the Execution Date has become incorrect due to changes in conditions
outside of the control of Seller or the discovery by Seller of information of
which Seller was unaware on the Execution Date, the same shall not constitute a
breach by Seller of any of its representations or warranties set forth herein or
be deemed to be a default by Seller in its obligations under this Agreement, but
Seller shall promptly notify Buyer thereof and the representations and
warranties set forth herein which are to be remade and reaffirmed by Seller at
the Closing shall be supplemented by such new information.
RISK OF LOSS.
Condemnation . If, prior to the Closing, all or any "Material Portion" (as
hereinafter defined) of the Property is taken by condemnation or eminent domain
(or is the subject of a pending or contemplated taking which has not been
consummated), Seller shall immediately notify Buyer of such fact. In such event,
Buyer shall have the option to terminate this Agreement upon written notice to
Seller given not later than thirty (30) days after receipt of such notice from
Seller. Upon such termination, Escrow Agent shall return the Deposit to Buyer,
less the Independent Contract Consideration (which Escrow Agent shall deliver to
Seller), the parties shall equally share the cancellation charges of Escrow
Agent and Title Company, if any, and neither party shall have any further rights
or obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement. Buyer shall have no right
to terminate this Agreement as a result of any taking of any portion of the
Property that is not a Material Portion. If Buyer does not elect or has no right
to terminate this Agreement, Seller shall assign and turn over to Buyer, and
Buyer shall be entitled to receive and keep, all awards for the taking by
condemnation and Buyer shall be deemed to have accepted the Property subject to
the taking without reduction in the Purchase Price. As used herein, the term
"Material Portion" shall mean any portion having a value in excess of
$200,000.00.
Casualty . Prior to the Closing and notwithstanding the pendency of this
Agreement, the entire risk of loss or damage by earthquake, hurricane, tornado,
flood, landslide, fire or other casualty shall be borne and assumed by Seller.
If, from and after the Execution Date and prior to the Closing, any "Material
Damage" (as hereinafter defined) occurs to any portion of the Property as a
result of any earthquake, hurricane, tornado, flood, landslide, fire or other
casualty, Seller shall immediately notify Buyer of such fact. In such event,
Buyer shall have the option to terminate this Agreement in the same manner as
provided in Section 11.1 above upon written notice to Seller given not later
than thirty (30) days after receipt of any such notice from Seller. Buyer shall
have no right to terminate this Agreement as a result of any damage or
destruction of any portion of the Property that does not constitute Material
Damage. If Buyer does not elect or has no right to terminate this Agreement,
Seller shall assign and turn over, and Buyer shall be entitled to receive and
keep, all insurance proceeds payable with respect to such damage or destruction
(which shall then be repaired or not at Buyer's option and cost) and the parties
shall proceed to the Closing pursuant to the terms hereof without modification
of the terms of this Agreement, except that Buyer shall receive a credit at
Closing in the amount of up to $5,000.00 for any actual deductible amounts
required under such insurance policies. If Buyer does not elect or has no right
to terminate this Agreement by reason of any casualty, Buyer shall have the
right to participate in any adjustment of theinsurance claim. As used herein,
the term "Material Damage" shall mean damage or destruction the cost of repair
of which exceeds $200,000.
REMEDIES.
Liquidated Damages . IN THE EVENT THAT THE ESCROW AND THIS TRANSACTION FAIL TO
CLOSE AS A RESULT OF THE DEFAULT OF BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS
UNDER THIS AGREEMENT, BUYER AND SELLER AGREE THAT SELLER'S ACTUAL DAMAGES WOULD
BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX. THE PARTIES THEREFORE AGREE THAT
IN THE EVENT THAT THE ESCROW AND THIS TRANSACTION FAIL TO CLOSE AS A RESULT OF
THE DEFAULT OF BUYER IN THE PERFORMANCE OF ITS OBLIGATIONS HEREUNDER, SELLER, AS
SELLER'S SOLE AND EXCLUSIVE REMEDY, IS ENTITLED TO LIQUIDATED DAMAGES IN THE
AMOUNT OF THE DEPOSIT. IN THE EVENT THAT THE ESCROW FAILS TO CLOSE AS A RESULT
OF BUYER'S DEFAULT, THEN (A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
BUYER AND SELLER HEREUNDER AND THE ESCROW CREATED HEREBY SHALL TERMINATE, (B)
ESCROW AGENT SHALL, AND IS HEREBY AUTHORIZED AND INSTRUCTED TO, RETURN PROMPTLY
TO BUYER AND SELLER ALL DOCUMENTS AND INSTRUMENTS TO THE PARTIES WHO DEPOSITED
THE SAME, (C) ESCROW AGENT SHALL DELIVER THE DEPOSIT TO SELLER PURSUANT TO
SELLER'S INSTRUCTIONS, AND THE SAME SHALL BE THE FULL, AGREED AND LIQUIDATED
DAMAGES, AND (D) ALL TITLE FEES, CHARGES AND EXPENSES AND ESCROW CANCELLATION
CHARGES, IF ANY, SHALL BE CHARGED TO BUYER; PROVIDED, HOWEVER, THAT THE
FOREGOING SHALL NOT LIMIT SELLER'S RIGHTS OR REMEDIES WITH RESPECT TO (1) THE
OBLIGATIONS OF BUYER UNDER SECTIONS 4, 13 AND 14.16 HEREOF AND (2) THOSE RIGHTS
AND OBLIGATIONS THAT, BY THEIR TERMS, SURVIVE THE TERMINATION OF THIS AGREEMENT.
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE PROVISIONS
OF THIS SECTION 12, AND BY THEIR EXECUTION OF THIS AGREEMENT AGREE TO BE BOUND
BY ITS TERMS.
Default by Seller . IN THE EVENT THAT THE CLOSING FAILS TO OCCUR AS A RESULT OF
THE DEFAULT OF SELLER IN THE PERFORMANCE OF ITS OBLIGATIONS UNDER THIS
AGREEMENT, THEN, UPON NOTICE BY BUYER TO SELLER AND ESCROW AGENT TO THAT EFFECT,
(A) ESCROW AGENT SHALL RETURN THE DEPOSIT TO BUYER, LESS THE INDEPENDENT
CONTRACT CONSIDERATION (WHICH ESCROW AGENT SHALL DELIVER TO SELLER), AND (B)
BUYER SHALL, AS ITS SOLE REMEDY, ELECT TO EITHER (I) TERMINATE THIS AGREEMENT,
IN WHICH EVENT SELLER SHALL REIMBURSE BUYER FOR ITS REASONABLE OUT-OF-POCKET
EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES, CHARGES AND
DISBURSEMENTS) INCURRED IN CONNECTION WITH THE NEGOTIATION OF THIS AGREEMENT AND
BUYER'S DUE DILIGENCE EFFORTS (PROVIDED THAT THE AMOUNT OF SUCH REIMBURSEMENT
SHALL NOT EXCEED $10,000.00) OR (II) SEEK THE SPECIFIC PERFORMANCE OF THIS
AGREEMENT. NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, SELLER
SHALL NOT BE IN DEFAULT WITH RESPECT TO ANY OF ITS OBLIGATIONS HEREUNDER UNLESS
AND UNTIL (Y) IT RECEIVES WRITTEN NOTICE FROM BUYER SPECIFYING SUCH DEFAULT AND
(Z) IT FAILS TO CURE SUCH DEFAULT WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT OF
SUCH NOTICE.
BROKERS
Buyer and Seller each hereby represent, warrant to and agree with each
other that it has not had, and shall not have, any dealings with any third party
to whom the payment of any broker's fee, finder's fee, commission or other
similar compensation ("Commission") shall or may become due or payable in
connection with the transaction contemplated hereby, other than CB Richard
Ellis, 5851 Ridge Bend Road, Memphis, Tennessee (the "Broker"). Seller hereby
agrees to pay any Commission due and payable to the Broker in connection with
the transaction contemplated hereby pursuant to its separate agreement with the
Broker. Seller shall indemnify, defend, protect and hold Buyer harmless from and
against any and all Claims incurred by Buyer by reason of any breach or
inaccuracy of the representation, warranty and agreement of Seller contained in
this Section 13. Buyer shall indemnify, defend, protect and hold Seller harmless
from and against any and all Claims incurred by Seller by reason of any breach
or inaccuracy of the representation, warranty and agreement of Buyer contained
in this Section 13. The provisions of this Section 13 shall survive the Closing
or earlier termination of this Agreement.
MISCELLANEOUS PROVISIONS.
Governing Law . This Agreement and the legal relations between the parties
hereto shall be governed by and construed and enforced in accordance with the
laws of the State of Tennessee, without regard to its principles of conflicts of
law.
Entire Agreement . This Agreement, including the exhibits attached hereto,
constitutes the entire agreement between Buyer and Seller pertaining to the
subject matter hereof and supersedes all prior agreements, understandings,
letters of intent, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements,
express or implied, made to either party by the other party in connection with
the subject matter hereof except as specifically set forth herein or in the
documents delivered pursuant hereto or in connection herewith.
Modification; Waiver . No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any provision of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
Notices . All notices, consents, requests, reports, demands or other
communications hereunder (collectively, "Notices") shall be in writing and may
be given personally, by registered or certified mail, by telecopy or by Federal
Express (or other reputable overnight delivery service) as follows:
To Buyer: ......Overlook Apartments Partnership
......Post Office Box 40088
Memphis, Tennessee 38174-0087
Attention: John K. Burnette, Jr.
......Telephone: (901) 213-3555
......Telecopy: (901) 213-9097
With A Copy To: ......R. Hunter Humphreys, Esq.
......Glankler Brown, PLLC
Suite 1700
One Commerce Square
Memphis, Tennessee 38103
Telephone: (901) 525-1322
......Telecopy: (901) 525-2389
To Seller: Overlook Associates, Ltd.
c/o AIMCO Properties, L.P.
......1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Harry Alcock
Telephone: (303) 759-8600
Telecopy: (303) 759-3226
and to: ...... Overlook Associates, Ltd.
c/o AIMCO Properties, L.P.
18350 Mt. Langley Avenue, Suite 220
Fountain Valley, California 92708
Attention: Mr. Peter K. Kompaniez
Telephone: (714) 593-1723
Telecopy: (714) 593-1603
With A Copy To: ......Powell, Goldstein, Frazer & Murphy LLP
Suite 1600
191 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Gregory Chait, Esq.
Telephone: (404) 572-6600
Telecopy: (404) 572-6999
To Escrow Agent: ......Chicago Title Insurance Company
6060 Poplar Avenue
......Suite LL37
Memphis, TN 38119
Attention: Bernie Norris
Telephone: (901) 821-0303
Telecopy: (901) 821-0400
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given when received. All Notices given by telecopy shall be followed
by the delivery of a hard copy of such Notice, provided that such Notice shall
be deemed to have been given when received by telecopy.
Expenses . Subject to the provision for payment of the Closing Costs in
accordance with the terms of Section 7.6 hereof and any other provision of this
Agreement, whether or not the transaction contemplated by this Agreement shall
be consummated, all fees and expenses incurred by any party hereto in connection
with this Agreement shall be borne by such party.
Assignment . Except for sole assignment of all of Buyer's interest under this
Agreement to a limited liability partnership or limited liability company
controlled by David L. Shores and John K. Burnette, Jr., neither all nor any
portion of either party's interest under this Agreement may be sold, assigned,
encumbered, conveyed, or otherwise transferred, whether directly or indirectly,
voluntarily or involuntarily, or by operation of law or otherwise (including,
without limitation, by a transfer of interests in such party) (collectively, a
"Transfer"), without the prior written consent of the other party hereto, which
consent may be granted or denied in its sole and absolute discretion. Any
attempted Transfer without such consent shall be null and void. No Transfer,
whether with or without consent, shall operate to release the party having the
right to Transfer or requesting a Transfer or alter such party's primary
liability to perform its obligations under this Agreement.
Severability . Any provision or part of this Agreement which is invalid or
unenforceable in any situation in any jurisdiction shall, as to such situation
and such jurisdiction, be ineffective only to the extent of such invalidity and
shall not affect the enforceability of the remaining provisions hereof or the
validity or enforceability of any such provision in any other situation or in
any other jurisdiction.
Successors and Assigns; Third Parties . Subject to and without waiver of the
provisions of Section 14.6 hereof, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors and assigns. Except as specifically
set forth or referred to herein, nothing herein expressed or implied is intended
or shall be construed to confer upon or give to any person or entity, other than
the parties hereto and their successors or permitted assigns, any rights or
remedies under or by reason of this Agreement.
Counterparts . This Agreement may be executed in as many counterparts as may be
deemed necessary and convenient, and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute one and the same instrument.
Headings . The Section headings of this Agreement are for convenience of
reference only and shall not be deemed to modify, explain, restrict, alter or
affect the meaning or interpretation of any provision hereof.
Time of Essence . TIME IS AND SHALL BE OF THE ESSENCE
WITH RESPECT TO ALL MATTERS CONTEMPLATED BY THIS
AGREEMENT.
Further Assurances . In addition to the actions recited herein and contemplated
to be performed, executed, and/or delivered by Seller and Buyer, Seller and
Buyer agree to perform, execute and/or deliver or cause to be performed,
executed and/or delivered at the Closing or after the Closing any and all such
further acts, instruments, deeds and assurances as may be reasonably required to
consummate the transaction contemplated hereby.
Numberand Gender . Whenever the singular number is used, and when required by
the context, the same includes the plural, and the masculine gender includes the
feminine and neuter genders.
Construction . This Agreement shall not be construed more strictly against one
party hereto than against any other party hereto merely by virtue of the fact
that it may have been prepared by counsel for one of the parties.
Exhibits . All exhibits attached hereto are hereby incorporated by reference as
though set out in full herein.
Attorneys' Fees . In the event that either party hereto brings an action or
proceeding against the other party to enforce or interpret any of the covenants,
conditions, agreements or provisions of this Agreement, the prevailing party in
such action or proceeding shall be entitled to recover all costs and expenses of
such action or proceeding, including, without limitation, attorneys' fees,
charges, disbursements and the fees and costs of expert witnesses.
Business Days . As used herein, the term "Business Day" shall mean a day that is
not a Saturday, Sunday or legal holiday. In the event that the date for the
performance of any covenant or obligation under this Agreement shall fall on a
Saturday, Sunday or legal holiday, the date for performance thereof shall be
extended to the next Business Day.
Early Termination . In the event that this Agreement is terminated pursuant to
the terms hereof, this Agreement and all of the provisions hereof shall be of no
further force or effect and neither party shall have any further rights or
obligations hereunder, other than pursuant to any provision hereof which
expressly survives the termination of this Agreement.
Waiver of Known Defaults . Notwithstanding anything to the contrary contained
herein, in the event that either party hereto has actual knowledge of the
default of the other party (a "Known Default"), but nonetheless elects to
consummate the transaction contemplated hereby and proceeds to Closing, then the
rights and remedies of the non-defaulting party shall be waived with respect to
any such Known Default upon the Closing and the defaulting party shall have no
liability with respect thereto.
Section 1031 Exchange . Seller may consummate the sale of the Property as part
of a like-kind exchange (an "Exchange") intended to qualify under ss. 1031 of
the Internal Revenue Code of 1986, as amended, provided that: (a) the Closing
shall neither be delayed nor affected by reason of an Exchange; (b) Seller shall
effect an Exchange through an assignment of this Agreement, and its rights under
this Agreement, to a qualified intermediary; and (c) Buyer shall not be required
to take an assignment of the agreement relating to the exchange property, be
required to acquire or hold title to any real property or incur any cost or
expense for purposes of consummating an Exchange.
15. Certain Interim Covenants Of Seller.. Until the Closing Date or the sooner
termination of this Agreement:
15.1 Seller shall maintain the Property in the same manner as prior
hereto pursuant to its normal course of business.
15.2 Except for (i) service contracts Seller enters into in the ordinary
course of business upon terms which are commercially reasonable for
similar properties in comparable locations, or (ii) service
contracts which are cancelable upon thirty (30) days prior written
notice, Seller shall not enter into any additional service contracts
or other agreements affecting the Property without the prior consent
of Buyer. In no event shall Seller enter into additional Tenant
Leases which include rent concessions for any period after Closing
or provide for rents at lesser amounts or for less favorable terms
than are available to current tenants of similar rental space in the
Property without Buyer's prior written consent.
15.3 Seller shall maintain its existing insurance policies for the
Property, including casualty and all risk coverage in an amount
equal to replacement value, through the Closing Date.
15.4 Seller shall (a) make all payments of interest and principal and, if
applicable, tax escrow, insurance escrow and other amounts required
under any existing encumbrances coming due thereunder prior to the
Closing, in accordance with the terms thereof, and (b) otherwise
comply with all of the terms and provisions of the existing
encumbrances, and shall not seek or accept any waivers or extensions
of time for payment or performance thereunder.
[EXECUTION ON FOLLOWING PAGE]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
...... BUYER:
OVERLOOK APARTMENTS PARTNERSHIP,
A Tennessee general partnership,
......
By:
...... John K. Burnette, Managing Partner
SELLER:
OVERLOOK ASSOCIATES, LTD.,
...... a Georgia limited partnership
By: CCP/IV Residential GP, L.L.C., a South
Carolina limited liability company,
its general partner
By: _
Name: Harry Alcock
Title: Senior Vice-President
ESCROW AGENT:
The undersigned Escrow Agent hereby accepts the foregoing Purchase and Sale
Agreement and Joint Escrow Instructions and agrees to act as Escrow Agent under
this Agreement in strict accordance with its terms.
CHICAGO TITLE INSURANCE COMPANY
By: _______________________________
Name:
Title:
LIST OF EXHIBITS
EXHIBIT "A" ......LAND PARCEL
EXHIBIT "B" DEED
EXHIBIT "C" PERSONAL PROPERTY
EXHIBIT "D" ......SCHEDULE OF SERVICE CONTRACTS
EXHIBIT "E" ......ASSIGNMENT OF LEASES
EXHIBIT "F" ......BILL OF SALE
EXHIBIT "G" ......NON-FOREIGN AFFIDAVIT
EXHIBIT "H" SCHEDULE OF LEASES
- --------------------------------------------------------------------------------
EXHIBIT "A"
THIS INSTRUMENT PREPARED BY Tax Parcel No.:
AND PLEASE RETURN TO:
Jonathan Shils, Esquire
Powell, Goldstein, Frazer & Murphy
Sixteenth Floor
191 Peachtree Street, N.E.
Atlanta, GA 30303
SPECIAL WARRANTY DEED
THIS INDENTURE, made and entered into this ___ day of __________, 1999, by
and between OVERLOOK APARTMENTS ASSOCIATES, LTD., a Georgia limited partnership
(f/k/a Overlook Associates, Ltd., a Georgia limited partnership), party of the
first part, hereinafter called "Grantor,": and OVERLOOK APARTMENTS PARTNERSHIP,
a Tennessee general partnership, party of the second part, hereinafter called
"Grantee";
W I T N E S S E T H:
That for and in consideration of Ten Dollars ($10.00) cash in hand paid,
and other good and valuable considerations, the receipt and sufficiency of which
are hereby acknowledged, Grantor has bargained and sold, and does hereby
bargain, sell, convey and confirm unto the said Grantee the real estate,
situated and being in Shelby County, Tennessee, and being more particularly
described in Exhibit "A," attached hereto and made a part hereof by reference.
TO HAVE AND TO HOLD the aforesaid real estate together with all the
appurtenances and hereditaments thereunto belonging or in anywise appertaining
unto the said Grantee, its successors and assigns in fee simple forever.
This conveyance is made subject to those liens, easements, encumbrances
and exceptions (collectively, the "Permitted Exceptions") listed and identified
in Exhibit "B," attached hereto.
Subject always to the Permitted Exceptions, Grantor will warrant and
forever defend the title and quiet possession to the aforesaid real estate
against the lawful claims of all persons claiming the same by, through or under
it, but not further or otherwise.
IN WITNESS WHEREOF, Grantor has caused this instrument to be executed by
its duly-authorized officer on this the day and year first above written.
Overlook Apartments Associates, Ltd.,
a Georgia limited partnership
By: CCP/IV Residential GP, L.L.C.,
a South Carolina limited liability
company, its general partner
By: _____________________
Harry Alcock
Senior Vice-President
[Execution Continued on Following Page]
STATE OF
COUNTY OF
Before me, ___________________________, a Notary Public in and for the
State and County aforesaid, personally appeared Harry Alcock, with whom I am
personally acquainted (or proved to me on the basis of satisfactory evidence),
and who, upon oath, acknowledged himself to be the Senior Vice-President of
CCP/IV Residential GP, L.L.C., a South Carolina limited liability company, the
general partner of Overlook Apartments Associates, Ltd., a Georgia limited
partnership, the within-named bargainer, and that he as such officer executed
the foregoing instrument for the purposes therein contained, by signing his name
on behalf of the company as such officer.
WITNESS my hand and seal at office, on this _____ day of ____________,
1999.
Notary Public
My Commission Expires:_________________
RECORDING DATA ONLY
Property Address: State Tax: $
Register's Fee: 1.00
Document Fee: 2.00
Recording Fee: _____
Total: $
Mail Tax Bills To Overlook Apartments Partnership
of taxes): T.G.
I hereby swear of affirm that, to the best of my knowledge, information,
and belief, the actual consideration for this transfer or value of the property
transferred, whichever is greater, is _________________ Dollars ($____________),
which amount is equal to or greater than the amount which the property
transferred would command at a fair and voluntary sale.
Affiant
SUBSCRIBED and SWORN TO before me this ___ day of ___________, 1999.
Notary Public
My commission expires:
EXHIBIT "A"
TO
SPECIAL WARRANTY DEED
EXHIBIT "C"
PERSONAL PROPERTY
See attached Personal Property inventory.
EXHIBIT "D"
SCHEDULE OF SERVICE CONTRACTS
1. Solon Automated Services, Inc. (see attached lease)
2. Executive Protection Service (see attached Agreement for Security Service)
3. Memphis CATV, Inc. (see attached Agreement)
ASSIGNMENT OF LEASES AND SECURITY DEPOSITS
ASSIGNMENT OF LEASES AND SECURITY DEPOSITS. THIS ASSIGNMENT OF LEASES AND
SECURITY DEPOSITS ("Assignment") is made and entered into as of the ___ day of
December, 1999, by and between OVERLOOK APARTMENTS ASSOCIATES, LTD., a Georgia
limited partnership (f/k/a Overlook Associates, Ltd., a Georgia limited
partnership) ("Assignor"), and OVERLOOK APARTMENTS PARTNERSHIP, a Tennessee
general partnership ("Assignee").
R E C I T A L S
WHEREAS, Assignor, as landlord, has entered into those certain leases
identified on Exhibit "A" attached hereto and incorporated herein by reference
(collectively, together with all amendments, modifications, supplements,
restatements and guarantees thereof, the "Leases"), for that certain property
located in the City of Memphis, County of Shelby, State of Tennessee;
WHEREAS, Assignee and Assignor have entered into that certain Purchase and
Sale Agreement and Joint Escrow Instructions, dated as of September 14, 1999,
together with any amendments thereto (the "Purchase Agreement"); and
WHEREAS, the Purchase Agreement requires Assignor and Assignee to execute
this Assignment.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Assignor and Assignee hereby agree
as follows:
A G R E E M E N T
1. Capitalized Terms. Unless the context otherwise requires, all capitalized
terms used, but not otherwise defined herein, shall have the meanings set
forth for the same in the Purchase Agreement.
2. Assignment and Assumption. Assignor hereby irrevocably assigns, sets over,
transfers and conveys to Assignee all of Assignor's right, title and
interest in and to (a) the Leases and (b) all unrefunded and unapplied
security deposits made under the Leases, in the amounts set forth on
Exhibit "A" hereto together with all accrued interest, if and to the extent
required to be paid to tenants on such security deposits pursuant to the
terms of the Leases (collectively, the "Security Deposits"). Assignee
hereby accepts this Assignment and the rights granted herein, and Assignee
hereby expressly assumes, for itself and its successors, assigns and legal
representatives, the Leases and the Security Deposits and all of the
obligations and liabilities, fixed and contingent, of Assignor thereunder
accruing from and after the date hereof with respect to the Leases and the
Security Deposits and agrees to (i) be fully bound by all of the terms,
covenants, agreements, provisions, conditions, obligations and liability of
Assignor thereunder, which accrue from and after the date hereof, and (ii)
keep, perform and observe all of the covenants and conditions contained
therein on the part of Assignor to be kept, performed and observed, from
and after the date hereof.
3. Indemnification. Assignee shall indemnify, protect, defend and hold
harmless Assignor from and against any and all Claims incurred by Assignor
with respect to the Security Deposits assigned herein. For a period of six
(6) months from the date hereof, Assignor shall indemnify, protect, defend
and hold harmless Assignee from and against any and all Claims incurred by
Assignee arising or accruing prior to the date hereof, including, without
limitation, Claims for Security Deposits not delivered or credited to
Assignee at Closing.
4. General Provisions.
a. Successors. This Assignment shall inure to the benefit of, and be binding
upon, the parties hereto and their respective successors and assigns.
b. Counterparts. This Assignment may be executed in as many counterparts as
may be deemed necessary and convenient, and by the different parties hereto
on separate counterparts, each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same
instrument.
c. Governing Law. This Assignment and the legal relations between the parties
hereto shall be governed by and construed and enforced in accordance with
the laws of the State of Tennessee, without regard to its principles of
conflicts of law.
[EXECUTION ON FOLLOWING PAGE]
IN WITNESS WHEREOF, this Assignment was made and executed as of the date
first above written.
ASSIGNEE:
OVERLOOK APARTMENTS PARTNERSHIP, a Tennessee general
partnership,
By: _______________________________
John K. Burnette, Managing Partner
ASSIGNOR:
OVERLOOK APARTMENTS ASSOCIATES, LTD.,
a Georgia limited partnership
By: CCP/IV Residential GP, L.L.C., a South Carolina
limited liability company,
its general partner
By: __________________________
Name: Harry Alcock
Title: Senior Vice-President
EXHIBIT "A"
SCHEDULE OF LEASES
See attached Rent Roll as of December _____, 1999.
BILL OF SALE, ASSIGNMENT AND ASSUMPTION
THIS BILL OF SALE, ASSIGNMENT AND ASSUMPTION ("Bill of Sale") is
made and entered into as of the ____ day of December, 1999, by and between
OVERLOOK APARTMENTS ASSOCIATES, LTD., a Georgia limited partnership (f/k/a
Overlook Associates, Ltd., a Georgia limited partnership) ("Seller"), and
OVERLOOK APARTMENTS PARTNERSHIP, a Tennessee general partnership ("Buyer").
R E C I T A L S
WHEREAS, Seller is the owner of that certain real property located
in the City of Memphis, County of Shelby, State of Tennessee (the "Real
Property"), as more particularly described on Exhibit "A" attached hereto and
incorporated herein by reference;
WHEREAS, Seller and Buyer have entered into that certain Purchase
and Sale Agreement and Joint Escrow Instructions, dated as of September 14, 1999
(the "Purchase Agreement"), with respect to, among other things, the acquisition
of the "Personal Property" and the "Intangible Property" (each as defined
below), and certain other property; and
WHEREAS, the Purchase Agreement requires Seller to convey all of
Seller's right, title and interest in, to and under the Personal Property and
the Intangible Property to Buyer.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller hereby agrees as follows:
A G R E E M E N T
1. Unless the context otherwise requires, all capitalized terms used, but not
otherwise defined herein, shall have the meanings set forth for the same
in the Purchase Agreement.
2. Seller does hereby unconditionally, absolutely, and irrevocably grant,
bargain, sell, transfer, assign, convey, set over and deliver unto Buyer
all of Seller's right, title and interest, if any, in and to the
following, and Buyer does hereby expressly assume, for itself and its
successors, assigns and legal representatives, all of Seller's obligations
and liabilities, if any, fixed and contingent, arising under the
following:
a. that certain tangible personal property, machinery, equipment
and supplies owned by Seller and situated at the Real Property
and used by Seller exclusively in connection with the use,
operation, maintenance or repair of all or any portion of the
Real Property as of the Closing Date, including, without
limitation, all of the personal property described on [Exhibit
"C"] attached to the Purchase Agreement (collectively, the
"Personal Property"); and
b. that certain intangible property owned by Seller and used by Seller
exclusively in connection with all or any portion of the Real Property
and/or the Personal Property, including, without limitation, all of
Seller's right, title and interest, if any, in and to: (i) the Service
Contracts, all books, records, reports, test results, environmental
assessments, if any, as-built plans, specifications and other similar
documents and materials relating to the use, operation, maintenance,
repair, construction or fabrication of all or any portion of the Real
Property and/or the Personal Property; (ii) all rights, if any, in and to
the name "Overlook Apartments;" (iii) all transferable business licenses,
architectural, site, landscaping or other permits, applications, approvals,
authorizations and other entitlements affecting all or any portion of the
Real Property; and (iv) all transferable guarantees, warranties and utility
contracts relating to all or any portion of the Real Property
(collectively, the "Intangible Property" and, together with the Personal
Property, the "Property").
3. Seller represents and warrants that it has good and marketable title to
the Property and that Seller has full right, power and authority to sell
the Property to Buyer.
4. This Bill of Sale shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and assigns.
5. This Bill of Sale may be executed in as many counterparts as may be deemed
necessary and convenient, and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an
original, but all such counterparts shall constitute one and the same
instrument.
6. This Bill of Sale and the legal relations between the parties hereto shall
be governed by and construed and enforced in accordance with the laws of
the State of Tennessee, without regard to its principles of conflicts of
law.
[EXECUTION ON FOLLOWING PAGE]
IN WITNESS WHEREOF, this Bill of Sale was made and executed as of the date
first above written.
BUYER:
OVERLOOK APARTMENTS PARTNERSHIP,
A Tennessee general partnership,
By: _____________________________,
John K. Burnette, Managing Partner
SELLER:
OVERLOOK APARTMENTS ASSOCIATES, LTD.,
a Georgia limited partnership
By: CCP/IV Residential GP, L.L.C., a South
Carolina limited liability company,
its general partner
By: __________________________
Name: Harry Alcock
Title: Senior Vice-President
- --------------------------------------------------------------------------------
NON-FOREIGN AFFIDAVIT
1. Section 1445 of the Internal Revenue Code of 1986, as amended (the "IRC"),
provides that a transferee of a United States real property interest must
withhold tax if the transferor is a foreign person.
2. In order to inform Overlook Apartments Partnership, a Tennessee general
partnership (the "Transferee"), that withholding of tax is not required
upon the disposition by OVERLOOK APARTMENTS ASSOCIATES, LTD., a Georgia
limited partnership (f/k/a Overlook Associates, Ltd., a Georgia limited
partnership); (the "Transferor"), of the United States real property more
particularly described on Exhibit "A" attached hereto and incorporated
herein by reference (the "Property"), the undersigned Transferor certifies
and declares by means of this certification, the following:
(a) The Transferor is not a foreign person, foreign corporation, foreign
partnership, foreign trust or foreign estate (as such terms are defined in
the IRC and the Income Tax Regulations).
(b) The Transferor is a Georgia limited partnership.
(c) Record title to the Property is in the name of the Transferor.
(d) The Federal Taxpayer Identification Number for the Transferor is
(e) The address for the Transferor is:
Overlook Apartments Associates, Ltd.
c/o AIMCO Properties, L.P.
2000 S. Colorado Blvd., Suite 2-1000
Denver, Colorado 80222
3. The Transferor understands that this certification may be disclosed
to the Internal Revenue Service by the Transferee and that any false
statement contained in this certification may be punished by fine,
imprisonment or both.
Under penalties of perjury, the Transferor declares that it has carefully
examined this certification and it is true, correct and complete.
Executed this _____ day of December, 1999 at Denver, Colorado.
TRANSFEROR:
OVERLOOK APARTMENTS ASSOCIATES, LTD.,
a Georgia limited partnership
By: CCP/IV Residential GP, L.L.C., a South Carolina
limited liability company,
its general partner
By: __________________________
Name: Harry Alcock
Title: Senior Vice-President
Exhibit "A"
LEGAL DESCRIPTION
EXHIBIT "H"
SCHEDULE OF LEASES
See attached Rent Roll as of December 1, 1999.
EXHIBIT 10.78
FHLMC# 002727714
MULTIFAMILY NOTE
(MULTISTATE)
- --------------------------------------------------------------------------------
US $4,775,000.00 As of February 2, 2000
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of ARCS COMMERCIAL MORTGAGE CO.,
L.P., a California limited partnership, the principal sum of FOUR MILLION SEVEN
HUNDRED SEVENTY-FIVE THOUSAND AND 00/100 Dollars (US $4,775,000.00), with
interest on the unpaid principal balance at the annual rate of
__________________ percent (____%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable
at 26901 Agoura Road, Suite 200, Calabasas Hills, California 91301, or such
other place as may be designated by written notice to Borrower from or on behalf
of Lender.
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of
___________________________________________________________________________
Dollars (US $__________________________), shall be payable on the first day of
each month beginning on April 1, 2000, until the entire unpaid principal balance
evidenced by this Note is fully paid. Any accrued interest remaining past due
for 30 days or more shall be added to and become part of the unpaid principal
balance and shall bear interest at the rate or rates specified in this Note, and
any reference below to "accrued interest" shall refer to accrued interest which
has not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on March 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. Application of Payments. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Late Charge. If any monthly amount payable under this Note or under the
Security Instrument or any other Loan Document is not received by Lender within
TEN (10) days after the amount is due, Borrower shall pay to Lender, immediately
and without demand by Lender, a late charge equal to FIVE (5%) percent of such
amount. Borrower acknowledges that its failure to make timely payments will
cause Lender to incur additional expenses in servicing and processing the loan
evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8.
8. Default Rate. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the Loan, that, during the time that any monthly
installment under this Note is delinquent for more than 30 days, Lender will
incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than 30 days or any other
Event of Default has occurred and is continuing, Lender's risk of nonpayment of
this Note will be materially increased and Lender is entitled to be compensated
for such increased risk. Borrower agrees that the increase in the rate of
interest payable under this Note to the Default Rate represents a fair and
reasonable estimate, taking into account all circumstances existing on the date
of this Note, of the additional costs and expenses Lender will incur by reason
of the Borrower's delinquent payment and the additional compensation Lender is
entitled to receive for the increased risks of nonpayment associated with a
delinquent loan.
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to Zero percent (0%) of the ORIGINAL principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.
(e) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower
shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on the last Business Day of a calendar month if Borrower
has given Lender at least 30 days prior notice of its intention to make such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "Business Day" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Borrower shall
not have the option to voluntarily prepay less than all of the unpaid principal
balance.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note prior
to the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than
ONE HUNDRED EIGHTY (180) days before the Maturity Date, or (B) any prepayment
occurring as a result of the application of any insurance proceeds or
condemnation award under the Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Loan Charges. If any applicable law limiting the amount of interest or
other charges permitted to be collected from Borrower in connection with the
Loan is interpreted so that any interest or other charge provided for in any
Loan Document, whether considered separately or together with other charges
provided for in any other Loan Document, violates that law, and Borrower is
entitled to the benefit of that law, that interest or charge is hereby reduced
to the extent necessary to eliminate that violation. The amounts, if any,
previously paid to Lender in excess of the permitted amounts shall be applied by
Lender to reduce the unpaid principal balance of this Note. For the purpose of
determining whether any applicable law limiting the amount of interest or other
charges permitted to be collected from Borrower has been violated, all
Indebtedness that constitutes interest, as well as all other charges made in
connection with the Indebtedness that constitute interest, shall be deemed to be
allocated and spread ratably over the stated term of the Note. Unless otherwise
required by applicable law, such allocation and spreading shall be effected in
such a manner that the rate of interest so computed is uniform throughout the
stated term of the Note.
15. Commercial Purpose. Borrower represents that the Indebtedness is being
incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not
Business Days.
17. Governing Law. This Note shall be governed by the law of the jurisdiction
in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for convenience
only and shall be disregarded in construing this Note.
19. Notices. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.
20. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
21. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X | Schedule A Prepayment Premium (required)
| X | Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Note or has
caused this Note to be signed and delivered by its duly authorized
representative.
APARTMENT ASSOCIATES, LTD., a
Texas limited partnership
By: CCP/IV APARTMENTS GP, L.L.C., a
South Carolina limited liability company,
Its General Partner
By: CONSOLIDATED CAPITAL PROPERTIES IV, a
California limited partnership, Its Sole
and Managing Member
By: CONCAP EQUITIES, INC., a Delaware corporation,
Its General Partner
By:
Name: Patti K. Fielding
Title: Vice President
75-2470069
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF
WITHOUT RECOURSE, AS OF THE 2ND DAY OF FEBRUARY, 2000.
ARCS COMMERCIAL MORTGAGE CO., L.P.,
a California limited partnership
By: ACMC REALTY, INC., a
California corporation, Its General Partner
By:
Name: Steven D. Heller
Title: Senior Vice President
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date
that is ONE HUNDRED EIGHTY (180) months after the first day of the first
calendar month following the date of this Note (the "Yield Maintenance Period"),
the prepayment premium shall be the greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest
rate of the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the
date on which the prepayment is made; in any other case, the
date on which Lender accelerates the unpaid principal balance of the
Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
______% U.S. Treasury Security due ______________________, as
reported in The Wall Street Journal, expressed as a decimal
calculated to five digits. In the event that no yield is published
on the applicable date for the Treasury Security used to determine
the Assumed Reinvestment Rate, Lender, in its discretion, shall
select the non-callable Treasury Security maturing in the same year
as the Treasury Security specified above with the lowest yield
published in The Wall Street Journal as of the applicable date. If
the publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than ONE HUNDRED EIGHTY (180) days before the
Maturity Date, the prepayment premium shall be 1.0% of the unpaid principal
balance of this Note.
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby deleted and
replaced with the following:
So long as (a) any monthly installment under this Note remains past due
for more than thirty (30) days or (b) any other event of Default has
occurred and is continuing, interest under this Note shall accrue on the
unpaid principal balance from the earlier of the due date of the first
unpaid monthly installment or the occurrence of such other Event of
Default, as applicable, at a rate (the "Default Rate") equal to the lesser
of (1) the maximum interest rate which may be collected from Borrower
under applicable law or (2) the greater of (i) three percent (3%) above
the Interest Rate or (ii) four percent (4.0%) above the then-prevailing
Prime Rate. As used herein, the term "Prime Rate" shall mean the rate of
interest announced by The Wall Street Journal from time to time as the
"Prime Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraphs
(4) and (5):
(4) failure by Borrower to pay the amount of the water and sewer charges,
taxes, fire, hazard or other insurance premiums, ground rents in
accordance with the terms of the Security Instrument.
EXHIBIT 10.79
MULTIFAMILY NOTE
(TEXAS)
FHLMC #: 002728532
US $4,710,000.00 February 23, 2000
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of ARCS Commercial Mortgage Co.,
L.P., a California limited partnership, the principal sum of Four Million Seven
Hundred Ten Thousand Dollars and no/100's (US $4,710,000.00), with interest on
the unpaid principal balance at the annual rate of Eight and 25/100's percent
(8.25%).
1. Defined Terms. As used in this Note, (i) the term "Lender" means the
holder of this Note, and (ii) the term "Indebtedness" means the principal of,
interest on, or any other amounts due at any time under, this Note, the Security
Instrument or any other Loan Document, including prepayment premiums, late
charges, default interest, and advances to protect the security of the Security
Instrument under Section 12 of the Security Instrument. "Event of Default" and
other capitalized terms used but not defined in this Note shall have the
meanings given to such terms in the Security Instrument.
2. Address for Payment. All payments due under this Note shall be payable
at 26901 Agoura Road, Suite 200, Calabasas Hills, CA 91301, or such other place
as may be designated by written notice to Borrower from or on behalf of Lender.
3. Payment of Principal and Interest. Principal and interest shall be
paid as follows:
(a) Unless disbursement of principal is made by Lender to Borrower on the
first day of the month, interest for the period beginning on the date of
disbursement and ending on and including the last day of the month in which such
disbursement is made shall be payable simultaneously with the execution of this
Note. Interest under this Note shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Forty Thousand One Hundred Thirty Two Thousand Dollars and
29/100's (US $40,132.29), shall be payable on the first day of each month
beginning on April 1, 2000, until the entire unpaid principal balance evidenced
by this Note is fully paid. Any accrued interest remaining past due for 30 days
or more shall be added to and become part of the unpaid principal balance and
shall bear interest at the rate or rates specified in this Note, and any
reference below to "accrued interest" shall refer to accrued interest which has
not become part of the unpaid principal balance. Any remaining principal and
interest shall be due and payable on March 1, 2020 or on any earlier date on
which the unpaid principal balance of this Note becomes due and payable, by
acceleration or otherwise (the "Maturity Date"). The unpaid principal balance
shall continue to bear interest after the Maturity Date at the Default Rate set
forth in this Note until and including the date on which it is paid in full.
(c) Any regularly scheduled monthly installment of principal and interest
that is received by Lender before the date it is due shall be deemed to have
been received on the due date solely for the purpose of calculating interest
due.
4. Application of Payments. If at any time Lender receives, from Borrower
or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction.
5. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
6. Acceleration. If an Event of Default has occurred and is continuing,
the entire unpaid principal balance, any accrued interest, the prepayment
premium payable under Paragraph 10, if any, and all other amounts payable under
this Note and any other Loan Document shall at once become due and payable, at
the option of Lender, without any prior notice to Borrower. Lender may exercise
this option to accelerate regardless of any prior forbearance.
7. Default Rate. So long as (a) any monthly installment under this Note
remains past due for 30 days or more, or (b) any other Event of Default has
occurred and is continuing, interest under this Note shall accrue on the unpaid
principal balance from the earlier of the due date of the first unpaid monthly
installment or the occurrence of such other Event of Default, as applicable, at
a rate (the "Default Rate") equal to the lesser of 4 percentage points above the
rate stated in the first paragraph of this Note or the maximum interest rate
which may be collected from Borrower under applicable law. If the unpaid
principal balance and all accrued interest are not paid in full on the Maturity
Date, the unpaid principal balance and all accrued interest shall bear interest
from the Maturity Date at the Default Rate. Borrower also acknowledges that its
failure to make timely payments will cause Lender to incur additional expenses
in servicing and processing the loan evidenced by this Note (the "Loan"), that,
during the time that any monthly installment under this Note is delinquent for
more than 30 days, Lender will incur additional costs and expenses arising from
its loss of the use of the money due and from the adverse impact on Lender's
ability to meet its other obligations and to take advantage of other investment
opportunities, and that it is extremely difficult and impractical to determine
those additional costs and expenses. Borrower also acknowledges that, during the
time that any monthly installment under this Note is delinquent for more than 30
days or any other Event of Default has occurred and is continuing, Lender's risk
of nonpayment of this Note will be materially increased and Lender is entitled
to be compensated for such increased risk. Borrower agrees that the increase in
the rate of interest payable under this Note to the Default Rate represents a
fair and reasonable estimate, taking into account all circumstances existing on
the date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan.
8. Loan Charges. Borrower and Lender intend at all times to comply with
the law of the State of Texas governing the maximum rate or amount of interest
payable on or in connection with this Note and the Indebtedness (or applicable
United States federal law to the extent that it permits Lender to contract for,
charge, take, reserve or receive a greater amount of interest than under Texas
law). If the applicable law is ever judicially interpreted so as to render
usurious any amount payable under this Note or under any other Loan Document, or
contracted for, charged, taken, reserved or received with respect to the
Indebtedness, or of acceleration of the maturity of this Note, or if any
prepayment by Borrower results in Borrower having paid any interest in excess of
that permitted by any applicable law, then Borrower and Lender expressly intend
that all excess amounts collected by Lender shall be applied to reduce the
unpaid principal balance of this Note (or, if this Note has been or would
thereby be paid in full, shall be refunded to Borrower), and the provisions of
this Note, the Security Instrument and any other Loan Documents immediately
shall be deemed reformed and the amounts thereafter collectible under this Note
or any other Loan Document reduced, without the necessity of the execution of
any new documents, so as to comply with any applicable law, but so as to permit
the recovery of the fullest amount otherwise payable under this Note or any
other Loan Document. The right to accelerate the maturity of this Note does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and Lender does not intend to collect any
unearned interest in the event of acceleration. All sums paid or agreed to be
paid to Lender for the use, forbearance or detention of the Indebtedness shall,
to the extent permitted by any applicable law, be amortized, prorated, allocated
and spread throughout the full term of the Indebtedness until payment in full so
that the rate or amount of interest on account of the Indebtedness does not
exceed the applicable usury ceiling. Notwithstanding any provision contained in
this Note, the Security Instrument or any other Loan Document that permits the
compounding of interest, including any provision by which any accrued interest
is added to the principal amount of this Note, the total amount of interest that
Borrower is obligated to pay and Lender is entitled to receive with respect to
the Indebtedness shall not exceed the amount calculated on a simple (i.e.,
noncompounded) interest basis at the maximum rate on principal amounts actually
advanced to or for the account of Borrower, including all current and prior
advances and any advances made pursuant to the Security Instrument or other Loan
Documents (such as for the payment of taxes, insurance premiums and similar
expenses or costs).
9. Limits on Personal Liability.
(a) Except as otherwise provided in this Paragraph 9, Borrower shall have
no personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower.
(b) Borrower shall be personally liable to Lender for the repayment of a
portion of the Indebtedness equal to Zero percent (0%) of the unpaid principal
balance of this Note, plus any other amounts for which Borrower has personal
liability under this Paragraph 9.
(c) In addition to Borrower's personal liability under Paragraph 9(b),
Borrower shall be personally liable to Lender for the repayment of a further
portion of the Indebtedness equal to any loss or damage suffered by Lender as a
result of (1) failure of Borrower to pay to Lender upon demand after an Event of
Default all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports.
(d) For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability.
(e) Borrower shall become personally liable to Lender for the repayment of
all of the Indebtedness upon the occurrence of any of the following Events of
Default: (1) Borrower's acquisition of any property or operation of any business
not permitted by Section 33 of the Security Instrument; (2) a Transfer
(including, but not limited to, a lien or encumbrance) that is an Event of
Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender.
(f) In addition to any personal liability for the Indebtedness, Borrower
shall be personally liable to Lender for (1) the performance of all of
Borrower's obligations under Section 18 of the Security Instrument (relating to
environmental matters); (2) the costs of any audit under Section 14(d) of the
Security Instrument; and (3) any costs and expenses incurred by Lender in
connection with the collection of any amount for which Borrower is personally
liable under this Paragraph 9, including fees and out of pocket expenses of
attorneys and expert witnesses and the costs of conducting any independent audit
of Borrower's books and records to determine the amount for which Borrower has
personal liability.
(g) To the extent that Borrower has personal liability under this
Paragraph 9, Lender may exercise its rights against Borrower personally without
regard to whether Lender has exercised any rights against the Mortgaged Property
or any other security, or pursued any rights against any guarantor, or pursued
any other rights available to Lender under this Note, the Security Instrument,
any other Loan Document or applicable law. For purposes of this Paragraph 9, the
term "Mortgaged Property" shall not include any funds that (1) have been applied
by Borrower as required or permitted by the Security Instrument prior to the
occurrence of an Event of Default or (2) Borrower was unable to apply as
required or permitted by the Security Instrument because of a bankruptcy,
receivership, or similar judicial proceeding.
10. Voluntary and Involuntary Prepayments.
(a) A prepayment premium shall be payable in connection with any
prepayment made under this Note as provided below:
(1) Borrower may voluntarily prepay all of the unpaid principal
balance of this Note on the last Business Day of a calendar month if Borrower
has given Lender at least 30 days prior notice of its intention to make such
prepayment. Such prepayment shall be made by paying (A) the amount of principal
being prepaid, (B) all accrued interest, (C) all other sums due Lender at the
time of such prepayment, and (D) the prepayment premium calculated pursuant to
Schedule A. For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "Business Day" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Borrower shall
not have the option to voluntarily prepay less than all of the unpaid principal
balance.
(2) Upon Lender's exercise of any right of acceleration under this
Note, Borrower shall pay to Lender, in addition to the entire unpaid principal
balance of this Note outstanding at the time of the acceleration, (A) all
accrued interest and all other sums due Lender, and (B) the prepayment premium
calculated pursuant to Schedule A.
(3) Any application by Lender of any collateral or other security to
the repayment of any portion of the unpaid principal balance of this Note prior
to the Maturity Date and in the absence of acceleration shall be deemed to be a
partial prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium. The amount of any such partial prepayment shall be computed
so as to provide to Lender a prepayment premium computed pursuant to Schedule A
without Borrower having to pay out-of-pocket any additional amounts.
(b) Notwithstanding the provisions of Paragraph 10(a), no prepayment
premium shall be payable with respect to (A) any prepayment made no more than 90
days before the Maturity Date, or (B) any prepayment occurring as a result of
the application of any insurance proceeds or condemnation award under the
Security Instrument.
(c) Schedule A is hereby incorporated by reference into this Note.
(d) Any permitted or required prepayment of less than the unpaid principal
balance of this Note shall not extend or postpone the due date of any subsequent
monthly installments or change the amount of such installments, unless Lender
agrees otherwise in writing.
(e) Borrower recognizes that any prepayment of the unpaid principal
balance of this Note, whether voluntary or involuntary or resulting from a
default by Borrower, will result in Lender's incurring loss, including
reinvestment loss, additional expense and frustration or impairment of Lender's
ability to meet its commitments to third parties. Borrower agrees to pay to
Lender upon demand damages for the detriment caused by any prepayment, and
agrees that it is extremely difficult and impractical to ascertain the extent of
such damages. Borrower therefore acknowledges and agrees that the formula for
calculating prepayment premiums set forth on Schedule A represents a reasonable
estimate of the damages Lender will incur because of a prepayment.
(f) Borrower further acknowledges that the prepayment premium provisions
of this Note are a material part of the consideration for the Loan, and
acknowledges that the terms of this Note are in other respects more favorable to
Borrower as a result of the Borrower's voluntary agreement to the prepayment
premium provisions.
11. Costs and Expenses. Borrower shall pay all expenses and costs,
including fees and out-of-pocket expenses of attorneys and expert witnesses and
costs of investigation, incurred by Lender as a result of any default under this
Note or in connection with efforts to collect any amount due under this Note, or
to enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
12. Forbearance. Any forbearance by Lender in exercising any right or
remedy under this Note, the Security Instrument, or any other Loan Document or
otherwise afforded by applicable law, shall not be a waiver of or preclude the
exercise of that or any other right or remedy. The acceptance by Lender of any
payment after the due date of such payment, or in an amount which is less than
the required payment, shall not be a waiver of Lender's right to require prompt
payment when due of all other payments or to exercise any right or remedy with
respect to any failure to make prompt payment. Enforcement by Lender of any
security for Borrower's obligations under this Note shall not constitute an
election by Lender of remedies so as to preclude the exercise of any other right
or remedy available to Lender.
13. Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
14. Commercial Purpose. Borrower represents that the Indebtedness is
being incurred by Borrower solely for the purpose of carrying on a business or
commercial enterprise, and not for personal, family or household purposes.
15. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not
Business Days.
16. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
17. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
18. Notices. All notices, demands and other communications required or
permitted to be given by Lender to Borrower pursuant to this Note shall be
given in accordance with Section 31 of the Security Instrument.
19. Consent to Jurisdiction and Venue. Borrower agrees that any
controversy arising under or in relation to this Note shall be litigated
exclusively in the jurisdiction in which the Land is located (the "Property
Jurisdiction"). The state and federal courts and authorities with jurisdiction
in the Property Jurisdiction shall have exclusive jurisdiction over all
controversies which shall arise under or in relation to this Note. Borrower
irrevocably consents to service, jurisdiction, and venue of such courts for any
such litigation and waives any other venue to which it might be entitled by
virtue of domicile, habitual residence or otherwise.
20. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) AGREES NOT TO
ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS NOTE OR THE
RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER THAT IS TRIABLE OF RIGHT
BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE
TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF
RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND
VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED SCHEDULES. The following Schedules are attached to this Note:
|X | Schedule A Prepayment Premium (required)
| | Schedule B Modifications to Multifamily Note
IN WITNESS WHEREOF, Borrower has signed and delivered this Instrument or
has caused this Instrument to be signed and delivered by its duly authorized
representative.
ConCap Citadel Associates, Ltd,
a Texas limited partnership
By: CCP/IV Citadel GP, LLC
Its: General Partner
By: Consolidated Capital Properties IV
Its: Sole Managing Member
By: ConCap Equities, Inc.,
Its: General Partner
By: ________________________
Its: ________________________
Borrower's Tax ID Number: __________
PAY TO THE ORDER OF
WITHOUT RECOURSE
ARCS Commercial Mortgage Co., L. P.,
a California limited partnership
By: ACMC Realty, Inc.,
a California corporation
Its: General Partner
By: _________________________
Kathy Millhouse
Its: Senior Vice President
SCHEDULE A
PREPAYMENT PREMIUM
Any prepayment premium payable under Paragraph 10 of this Note shall be computed
as follows:
(a) If the prepayment is made between the date of this Note and the date
that is 180 months after the first day of the first calendar month following the
date of this Note (the "Yield Maintenance Period"), the prepayment premium shall
be the greater of:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid,
by
(B) the excess (if any) of the Monthly Note Rate over the Assumed
Reinvestment Rate,
by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
the Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in any other case, the date on which
Lender accelerates the unpaid principal balance of the Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(b) If the prepayment is made after the expiration of the Yield
Maintenance Period but more than 180 days before the Maturity Date, the
prepayment premium shall be 1.0% of the unpaid principal balance of this Note.
SCHEDULE B
MODIFICATIONS TO MULTIFAMILY NOTE
1. The first sentence of 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents in accordance with the terms of the Security Instrument.