March 30, 2000
United States
Securities and Exchange Commission
Washington, D.C. 20549
RE: Consolidated Capital Institutional Properties/3
Form 10-K
File No. 0-14187
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, D.C. 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 UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [No Fee Required]
For the transition period from ________ to ________
Commission file number 0-14187
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
(Exact name of registrant as specified in its charter)
California 94-2940208
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
Registrant's telephone number, including area code (864) 239-1000
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Limited Partnership Units
(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 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 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 Institutional Properties/3 (the "Registrant" or
"Partnership") was organized on May 23, 1984, as a limited partnership under the
California Uniform Limited Partnership Act. Commencing July 23, 1985, the
Partnership offered, pursuant to a Registration Statement filed with the
Securities and Exchange Commission ("SEC"), 800,000 Units of Limited Partnership
Interests (the "Units") at a purchase price of $250 per unit. 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 terminated on May 15, 1987, with 383,033 units sold for an
aggregate of $95,758,250. Since its initial offering, the Registrant has not
received, nor are limited partners required to make, additional capital
contributions.
The general partner of the Partnership is ConCap Equities, Inc. ("CEI" or the
"General Partner"), a Delaware corporation. The General Partner is a subsidiary
of Apartment Investment and Management Company ("AIMCO"). The Partnership
Agreement provides that the Partnership is to terminate on December 31, 2015
unless terminated prior to such date.
The Partnership is engaged in the business of operating and holding real estate
properties for investment. The Partnership was formed, for the benefit of its
Limited Partners (herein so called and together with the General Partner shall
be called the "Partners"), to lend funds to ConCap Equity Partners/3, ConCap
Equity Partners/4, and ConCap Equity Partners/5 ("EP/3", "EP/4" and "EP/5",
respectively). EP/3, EP/4 and EP/5 represent California limited partnerships in
which certain of the partners were former shareholders and former management of
Consolidated Capital Equities Corporation ("CCEC"), the former corporate general
partner of the Partnership.
Through December 31, 1994, the Partnership had made twelve specific loans
against a Master Loan agreement and advanced a total of $67,300,000 (the "Master
Loan"). EP/3 used $17,300,000 of the loaned funds to purchase two apartment
complexes and one office building. EP/4 used $34,700,000 of the loaned funds to
purchase four apartment complexes and one office building, which was
subsequently sold in 1989. EP/5 used $15,300,000 of the loaned funds to purchase
two apartment complexes and two office buildings. Through a series of
transactions, the Partnership has acquired all of EP/3, EP/4 and EP/5's
properties in full settlement of their liability under the Master Loan. For a
brief description of the properties owned by the Partnership refer to "Item 2.
Description of Properties".
Prior to 1989, the Partnership had loaned $17,300,000 to EP/3, $34,700,000 to
EP/4 and $15,300,000 to EP/5, subject to non-recourse notes with participation
interests (collectively referred to as the "Master Loan"), pursuant to a Master
Loan Agreement dated February 26, 1986, between the Partnership and EP/3, EP/4
and EP/5. The Partnership secured the Master Loan with deeds of trust or
mortgages on real properties and by the assignment and pledge of promissory
notes from the partners of EP/3, EP/4 and EP/5. In November 1994, the
Partnership entered into an agreement with EP/3 whereby one property was deeded
in lieu of foreclosure to the Partnership and foreclosure proceedings were
instituted by the Partnership on the other asset which collateralized the Master
Loan. The Partnership assumed a note payable of approximately $1,200,000 in
exchange for full settlement of EP/3's liability under the Master Loan. During
1992, the Partnership foreclosed on the last remaining EP/4 apartment complex in
full settlement of EP/4's liability under the Master Loan. Previously, the
Partnership foreclosed on three of EP/4's apartment complexes and EP/4's
interest in one note receivable secured by the office building sold in 1989, and
acquired EP/5's two apartment complexes and two office buildings through a
transfer of ownership in full settlement of EP/5's liability under the Master
Loan.
During 1993, the major tenant who occupied 95% of the Sutter D Office Building,
one of the three EP/3 properties collateralizing the Master Loan, did not renew
its lease and vacated the building. EP/3 was unable to replace the tenant under
terms that were economically viable for the property and defaulted on the
approximately $2,100,000 third party mortgage debt secured by the Sutter D
Office Building. During 1994, the Sutter D Office Building serving as collateral
for the Master Loan was posted for foreclosure by the first lienholder. This
foreclosure had no gain or loss effect to the Partnership.
In November 1994, the Partnership entered into a settlement with EP/3 whereby
the Williamsburg Manor Apartments were deeded in lieu of foreclosure to the
Partnership and foreclosure proceedings were initiated by the Partnership on the
Sandpiper I and II Apartments, the remaining properties collateralizing the
Master Loan. The Partnership also assumed a note payable of approximately
$1,200,000 in exchange for full settlement of EP/3's liability for the Master
Loan and recognized a net loss of approximately $413,000 on the settlement of
the Master Loan at December 31, 1994.
As a result of the fact that: (1) EP/3 had no equity in the Sandpiper I & II
Apartments, considering the then estimated fair value of the property; (2)
proceeds for repayment of the portion of the Master Loan collateralized by the
Sandpiper I & II Apartments were expected to come only from the operations or
sale of the property; and (3) EP/3 effectively abandoned control of the
Sandpiper I & II Apartments when EP/3 and the Partnership executed the
settlement agreement in November 1994, whereby EP/3 agreed to transfer to the
Partnership the full and unrestricted right to possession, management, and
control of the property and not to contest, hinder or delay a judicial
foreclosure action initiated by the Partnership, the Partnership deemed the
Sandpiper I & II Apartments in-substance foreclosed at November 30, 1994.
Foreclosure proceedings were initiated in 1994 and completed in 1995. As a
result of the transactions described above, the Master Loan was settled in full
during 1994.
Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
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 ("Chapter 11"). 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 this solicitation, the Limited Partners also approved an amendment to
the Partnership Agreement to limit changes of control of the Partnership.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of Insignia
Financial Group, Inc. ("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 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. As
of December 31, 1999, Insignia Properties Trust, an affiliate of AIMCO, owned
100% of the outstanding stock of CEI.
At December 31, 1999, the Partnership owned seven apartment complexes located in
Florida, North Carolina, Washington, Michigan, Utah and Colorado, which range in
age from 14 to 31 years old. The Partnership's remaining two commercial
complexes were sold during 1999.
The Registrant has no employees. Management and administrative services are
provided by the General Partner and by agents retained by the General Partner.
An affiliate of the General Partner has been providing such property management
services.
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 General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Partnership'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.
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.
Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust 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 - Note L" and is an integral part of the Form
10-K.
Item 2. Description of Properties
The following table sets forth the Registrant's investment in properties:
Date of
Property Purchase Type of Ownership Use
Cedar Rim 4/12/91 Fee ownership subject to Apartment
New Castle, Washington first mortgage. 104 units
Hidden Cove by the Lake 3/23/90 Fee ownership subject to Apartment
Belleville, Michigan first mortgage. 120 units
Lamplighter Park 4/12/91 Fee ownership subject to Apartment
Bellevue, Washington first mortgage. 174 units
Park Capital 4/13/90 Fee ownership subject to Apartment
Salt Lake City, Utah first mortgage. 135 units
Tamarac Village 6/10/92 Fee ownership subject to Apartment
I,II,III and IV first mortgage. 564 units
Denver, Colorado
Williamsburg Manor 11/30/94 Fee ownership subject to Apartment
Cary, North Carolina first mortgage. 183 units
Sandpiper I & II 11/30/94 Fee ownership subject to Apartment
St. Petersburg, Florida first mortgage. 276 units
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)
Cedar Rim $ 5,100 $ 2,170 3-20 yrs S/L $ 4,590
Hidden Cove 5,881 2,701 3-20 yrs S/L 4,445
Lamplighter Park 8,225 2,658 3-20 yrs S/L 6,664
Park Capital 3,191 1,524 5-20 yrs S/L 2,327
Tamarac Village 15,300 4,958 5-20 yrs S/L 11,862
Williamsburg Manor 7,225 1,512 5-22 yrs S/L 6,045
Sandpiper I & II 8,506 1,686 5-22 yrs S/L 7,183
$53,428 $17,209 $43,116
See "Note A" of the Notes to Financial Statements included in "Item 8" for a
description of the Partnership's depreciation policy and "Note N - 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 Maturity Due At
Property 1999 Rate Date Maturity (1)
(in thousands) (in thousands)
Cedar Rim $ 2,000 7.33% 11/01/03 $ 2,000
Hidden Cove 2,200 7.33% 11/01/03 2,200
Lamplighter Park 3,500 7.33% 11/01/03 3,500
Park Capital 2,725 6.95% 12/01/05 2,725
Tamarac Village 9,400 7.33% 11/01/03 9,400
Williamsburg Manor 4,150 6.95% 12/01/05 4,150
Sandpiper I & II 3,950 6.95% 12/01/05 3,950
$ 27,925 $ 27,925
(1) See "Item 8. Financial Statements and Supplementary Data - Note G" for
information with respect to the Registrant's ability to prepay the loans
and other specific details about the loans.
Schedule of Rental Rates and Occupancy
Average annual rental rates and occupancy for 1999 and 1998 for each property
were as follows:
Average Annual
Rental Rate Average Annual
(per unit) Occupancy
Property 1999 1998 1999 1998
Cedar Rim $10,888 $10,262 93% 94%
Hidden Cove 8,618 8,412 91% 91%
Lamplighter Park 9,815 9,436 96% 96%
Park Capital 8,075 7,985 97% 93%
Tamarac Village 7,537 7,239 97% 96%
Williamsburg Manor 9,112 8,912 95% 95%
Sandpiper I & II 7,551 7,342 94% 95%
The General Partner attributes the occupancy increase at Park Capital to
increased marketing efforts and improved curbside appearance.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. The Partnership's 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. The multifamily residential
properties' lease terms are for 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.
Schedule of Real Estate Taxes and Rates
Real estate taxes and rates for each property were as follows:
1999 1999
Taxes Rate
(in thousands)
Cedar Rim $ 81 1.30%
Hidden Cove 69 4.67%
Lamplighter Park 83 1.11%
Park Capital 42 .82%
Tamarac Village 150 .79%
Williamsburg Manor 81 1.32%
Sandpiper I & II 188 2.44%
Capital Improvements
Cedar Rim
During 1999, the Partnership completed approximately $110,000 of capital
improvements at the property, consisting primarily of carpet and vinyl
replacements, interior decorating, building structural improvements, and
appliances. These improvements were funded primarily from the property's
replacement 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 $31,200.
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.
Hidden Cove by the Lake
During 1999, the Partnership spent approximately $551,000 on capital
improvements, consisting primarily of building structural improvements. These
improvements were primarily associated with an unbudgeted casualty event. It is
anticipated that most of these expenditures will be covered by insurance. In
addition, spending included air conditioning units, carpet and vinyl
replacement, major landscaping, and appliances. These improvements were funded
from the property's replacement 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.
Lamplighter Park
In 1999, the Partnership spent approximately $111,000 on capital improvements,
consisting primarily of carpet and vinyl replacement, heating improvements,
plumbing upgrades, major landscaping, pool upgrades, and other structural
improvements. These improvements were funded from replacement 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 $52,200. 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.
Park Capital
In 1999, the Partnership spent approximately $178,000 on capital improvements
consisting primarily of carpet and vinyl replacement, parking lot enhancements,
structural improvements, and plumbing upgrades. These improvements were funded
from replacement 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 $40,500.
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.
Tamarac Village
During 1999, the Partnership spent approximately $401,000 on capital
improvements consisting primarily of carpet and vinyl replacement, outside
lighting, parking lot enhancements, roof replacement, structural improvements,
appliances, major landscaping, and air conditioning unit replacement. These
expenditures were funded from replacement 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 $169,200. 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.
Williamsburg Manor
In 1999, the Partnership spent approximately $154,000 on capital improvements
consisting primarily of carpet and vinyl replacement, parking lot enhancements,
and countertop replacement. These expenditures were funded from replacement
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 $54,900. 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.
Sandpiper I and II
In 1999, the Partnership spent approximately $476,000 on capital improvements
consisting primarily of exterior painting, carpet and vinyl replacement, parking
lot enhancements, pool upgrades, roof replacement, cabinet replacement, and
major landscaping. These expenditures 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 $82,800. 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.
Corporate Center
During the year ended December 31, 1999, the Partnership completed approximately
$51,000 of capital improvements at the property, consisting primarily of air
conditioning units and tenant improvements. These improvements were funded from
operating cash flow. This property was sold October 4, 1999.
South City Business Center
During the year ended December 31, 1999, the Partnership completed approximately
$45,000 on capital improvements at the property, consisting primarily of tenant
improvements. These improvements were funded from operating cash flow. This
property was sold June 18, 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
During the quarter ended December 31, 1999, no matter was submitted to a vote of
the Unit holders through the solicitation of proxies or otherwise.
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholders Matters
The Partnership, a publicly held limited partnership, sold 383,033 limited
partnership units aggregating $95,758,250. The Partnership currently has 11,082
holders of record of Limited Partnership Units owning an aggregate of 383,033
units. Affiliates of the General Partner owned 176,647.7 units or 46.118% at
December 31, 1999. No public trading market has developed for the Units, and it
is not anticipated that such a market will develop in the future.
The following table sets forth the distributions made by the Partnership for the
years ended December 31, 1997, 1998 and 1999, as well as for the subsequent
period from January 1, 2000 to January 31, 2000 (see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations" for
further details).
Distributions
Per Limited
Aggregate Partnership Unit
(in thousands)
01/01/97 - 12/31/97 $14,007 (1) $36.13
01/01/98 - 12/31/98 $ 1,980 (2) $ 5.12
01/01/99 - 12/31/99 $23,619 (3) $61.05
01/01/00 - 01/31/00 $ 1,500 (2) $ 3.88
(1) Consists of $2,438,000 of cash from operations and $11,569,000 of cash
from previously undistributed surplus funds from a 1996 refinancing.
(2) Distribution was made from cash from operations.
(3) Consists of $7,359,000 of cash from operations and $16,260,000 of cash
from property sales during 1998 and 1999.
Future cash distributions will depend on the levels of cash generated from
operations, timing of debt maturities, refinancings, and/or property sales and
the availability of cash reserves as discussed in "Note H - Commitment" in "Item
8" of this Form 10-K. 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 further distributions to its partners in 2000 or subsequent periods.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for a description of restrictions on the payment of
distributions as a result of certain reserve requirements.
Several tender offers were made by various parties, including affiliates of the
General Partner, during the years ended December 31, 1999, 1998, 1997. As a
result of these tender offers, AIMCO and its affiliates currently own 176,647.70
limited partnership units in the Partnership representing 46.118% 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. This summary should be read in conjunction with the Partnership's
financial statements and notes thereto appearing in "Item 8.
Financial Statements and Supplementary Data."
FOR THE YEARS ENDED DECEMBER 31,
STATEMENTS OF OPERATIONS 1999 (2) 1998 (1) 1997 1996 1995
(in thousands, except unit data)
Revenues $ 13,116 $ 19,240 $ 13,467 $ 12,454 $ 11,959
Total expenses (10,657) (11,534) (11,933) (11,653) (13,640)
Income (loss) before
extraordinary item and
discontinued operations 2,459 7,706 1,534 801 (1,681)
Extraordinary item -- (325) -- -- (18)
Income from discontinued
operations 84 502 402 352 75
Gain on sale of discontinued
operations 4,210 -- -- -- --
Net income (loss) $ 6,753 $ 7,883 $ 1,936 $ 1,153 $ (1,624)
Net income (loss) per
Limited Partnership Unit:
Income (loss) before
extraordinary item and
discontinued operations $ 6.35 $ 19.91 $ 3.96 $ 2.07 $ (4.34)
Extraordinary item -- (.84) -- -- (.05)
Income from discontinued
operations .22 1.30 1.04 .91 .19
Gain on sale of discontinued
operations 10.88 -- -- -- --
Net income (loss) $ 17.45 $ 20.37 $ 5.00 $ 2.98 $ (4.20)
Distributions per Limited
Partnership Unit $ 61.05 $ 5.12 $ 36.13 $ 18.98 $ 9.42
Limited Partnership Units
outstanding 383,033 383,033 383,033 383,033 383,033
As of December 31,
Balance Sheets 1999 1998 1997 1996 1995
(in thousands)
Total assets $43,678 $60,779 $57,086 $69,537 $62,863
Notes payable $27,925 $27,925 $30,525 $30,525 $17,995
(1) See "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" for discussion of sale of City Heights.
(2) See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations" for discussion of sale of South
City Business Center and Corporate Center.
Item 7. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
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
disclosures 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
operations. 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.
This item should be read in conjunction with the financial statements and other
items contained elsewhere in this report.
Results of Operations
1999 Compared with 1998
The Partnership had net income of approximately $6,753,000 for the year ended
December 31, 1999, compared to approximately $7,883,000 for the year ended
December 31, 1998. The decrease in net income for the year ended December 31,
1999 is primarily attributable to a larger gain on the sale of properties during
1998 than during 1999 (see discussion below).
As the result of the sale of South City Business Center and Corporate Center in
1999, as discussed below, the results of operations of these two commercial
properties were classified as "Income from discontinued operations" on the
statements of operations. The decrease in income from discontinued operations
for the year ended December 31, 1999 is primarily due to the sale of South City
in July which resulted in only six months of operations for 1999 compared to a
full year in 1998 and only nine months of operations for Corporate Center for
1999 compared to a full year in 1998.
Excluding the results of the discontinued operations discussed above, the
Partnership had income from continuing operations before the extraordinary item
of approximately $2,459,000 for the year ended December 31, 1999, compared to
approximately $7,706,000 for the year ended December 31, 1998. The decrease in
net income is primarily attributable to the gain on the sale of City Heights
Apartments in November 1998 as discussed below.
Excluding the operations of and gain on sale of City Heights Apartments, the
Partnership had income of approximately $2,479,000 for the year ended December
31, 1999, compared to approximately $1,985,000 for the year ended December 31,
1998. The increase in income is due to increased total revenues and decreased
total expenses. Total revenues increased due to an increase in rental income.
Rental income increased due to increased average rental rates at all of the
Partnership's properties which was partially offset by increased concession
costs at Williamsburg, Sandpiper I& II and Cedar Rim. Decreased occupancy at
Cedar Rim and Sandpiper I & II was offset by increased occupancy at Park Capital
and Tamarac Village.
Total expenses decreased due primarily to decreased operating expenses which
were partially offset by increased depreciation expense, property tax expense
and general and administrative expense. Operating expenses decreased primarily
due to decreased maintenance expenses at most of the Partnership's properties,
decreased property insurance expense at all the Partnership's properties due to
a change in insurance carriers late in 1998, and reduced employee payroll costs
at Williamsburg, Sandpiper I & II, and Park Capital. These decreases were
partially offset by increased water charges primarily at Tamarac and increased
property management fees at most of the Partnership's properties. Depreciation
expense increased due to capital improvements completed during the past twelve
months which are now being depreciated. Property tax expense increased primarily
due to a refund received during 1998 at Cedar Rim of taxes paid in prior years,
and an increase in assessed value for 1999 at Tamarac Village and Cedar Rim.
General and administrative expenses increased due primarily to increased legal
expenses due to the settlement of a lawsuit as disclosed in the Partnership's
Annual Report on Form 10-K for the fiscal year ended December 31, 1998 and
increased professional fees, partially offset by reduced printing and mailing
costs. Included in general and administrative expenses at December 31, 1999,
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 included.
In November 1998, City Heights Apartments, located in Seattle, Washington, was
sold to an unaffiliated party for $9,300,000. After payoff of the debt and
payment of closing expenses, the net sales proceeds received by the Partnership
was approximately $5,787,000. The proceeds were distributed to the partners in
January 1999. For financial statement purposes, the sale resulted in a gain of
approximately $5,482,000 for the year ended December 31, 1998. The Partnership
also recorded an extraordinary loss on early extinguishment of debt of
approximately $325,000 for the year ended December 31, 1998 as the result of the
payment of prepayment penalties and the write-off of the remaining unamortized
loan costs. During the year ended December 31, 1999, a loss of approximately
$192,000 was recorded due to the write-off of an uncollectible receivable
established at the time of the sale.
In June 1999, South City Business Center, located in Chula Vista, California,
was sold to an unaffiliated party for $6,962,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$6,569,000. For financial statement purposes, the sale resulted in a gain of
approximately $2,296,000.
In October 1999, Corporate Center, located in Tampa, Florida, was sold to an
unaffiliated party for $4,175,000. After payment of closing expenses, the net
sales proceeds received by the Partnership were approximately $3,884,000. For
financial statement purposes, the sale resulted in a gain of approximately
$1,914,000. South City Business Center and Corporate Center were the last
commercial properties in the commercial segment of the Partnership. The income
of the properties has been classified as "Income from discontinued operations"
for the years ended December 31, 1999, 1998, and 1997.
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 income by approximately $226,000 ($0.58 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.
1998 Compared with 1997
The Partnership had net income of approximately $7,883,000 for the year ended
December 31, 1998 compared to approximately $1,936,000 for the year ended
December 31, 1997. The increase in net income is primarily attributable to an
increase in total revenues and to a lesser extent, a decrease in total expenses.
The increase in net income was offset by an extraordinary loss on early
extinguishment of debt as a result of the sale of City Heights. Total revenues
increased primarily due to a gain realized on the sale of City Heights in
November 1998 and to a lesser extent, increased rental revenue. Rental revenue
increased as a result of improved occupancy at Lamplighter Park and Tamarac
Village as well as increased rental rates at most of the Partnership's
investment properties, which more than offset decreases in occupancy at Cedar
Rim, Park Capital, and Williamsburg Manor. These increases in revenue were
partially offset by a decrease in other income. Other income decreased as a
result of reduced interest income due to lower average cash balances resulting
from larger distributions paid to the partners in 1997. Total expenses decreased
primarily as a result of a decrease in operating expenses, partially offset by
increases in general and administrative expenses and depreciation expense.
Operating expenses decreased primarily due to a reduction in major repairs and
maintenance expenses at Tamarac Village, Park Capital, City Heights and
Williamsburg Manor. Depreciation expense increased due to the increase in the
depreciable asset base at several of the Partnership's properties from capital
additions of approximately $1,590,000 and $1,692,000 during 1998 and 1997,
respectively. General and administrative expenses increased due primarily to
increased printing and mailing costs related to correspondence with the limited
partners.
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.
Liquidity and Capital Resources
At December 31, 1999, the Partnership held cash and cash equivalents of
approximately $5,451,000 compared to approximately $14,189,000 at December 31,
1998. The decrease in cash and cash equivalents for the year ended December 31,
1999, from the Partnership's year ended December 31, 1998, was approximately
$8,738,000 and is due to approximately $23,619,000 used in financing activities,
which was partially offset by approximately $5,842,000 of cash provided by
operating activities and approximately $9,039,000 of cash provided by investing
activities. Cash used in financing activities consisted of distributions to the
partners. Cash provided by investing activities consisted of proceeds from the
sales of South City Business Center and Corporate Center, and to a lesser
extent, net receipts from restricted escrows, partially offset by property
improvements and replacements.
At December 31, 1998, the Partnership held cash and cash equivalents of
approximately $14,189,000 compared to approximately $5,054,000 at December 31,
1997. The increase in cash and cash equivalents is due to $6,117,000 provided by
operating activities and $7,857,000 provided by investing activities, which was
partially offset by $4,839,000 used in financing activities. Cash provided by
investing activities consisted of sale proceeds from the sale of City Heights,
proceeds from an investment that matured in May of 1998 and withdrawals from
escrow accounts maintained by the mortgage lender offset by property
improvements and replacements. Cash used in financing activities consisted of
the payoff of mortgage debt at City Heights as a result of the sale, prepayment
penalties incurred to extinguish City Height's debt and distributions to
partners.
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 Registrant 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
$466,800. 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 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 required,
the Registrant's distributable cash flow, if any, may be adversely affected.
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital
as defined by the Partnership Agreement. In the event expenditures are made from
this reserve, operating revenue shall be allocated to such reserve to the extent
necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totaling approximately $5.5 million, were greater
than the reserve requirement of approximately $2.6 million.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of $27,925,000 has maturity dates ranging from 2003 to 2005. 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 Registrant may risk losing such properties
through foreclosure.
During the year ended December 31, 1999, the Partnership declared and paid
distributions in the amount of approximately $7,359,000 (approximately
$7,286,000 to the limited partners or $19.02 per limited partnership unit) from
operations and approximately $16,260,000 (approximately $16,097,000 to the
limited partners or $42.03 per limited partnership unit) from sales proceeds
from the sales of City Heights, South City Business Center, and Corporate
Center. Subsequent to December 31, 1999, the Partnership declared and paid a
distribution from operations of approximately $1,500,000 (approximately
$1,485,000 to the limited partners or $3.88 per limited partnership unit).
During the year ended December 31, 1998, the Partnership declared and paid
distributions in the amount of approximately $1,980,000 (approximately
$1,960,000 to the limited partners or $5.12 per limited partnership unit) from
operations. During the year ended December 31, 1997, the Partnership declared
and paid distributions in the amount of approximately $2,438,000 (approximately
$2,414,000 to the limited partners or $6.30 per limited partnership unit) from
operations and approximately $11,569,000 (approximately $11,428,000 to the
limited partners or $29.83 per limited partnership unit) from surplus funds.
Future cash distributions will depend on the levels of cash generated from
operations, timing of debt maturities, refinancings, and/or property sales, and
the availability of cash reserves. 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 further distributions to its partners in the year
2000 or subsequent periods.
Tender Offers
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 176,647.70
limited partnership units in the Partnership representing 46.118% 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. Quantitative and Qualitative Disclosures About Market Risk
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
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 rates 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 Partnership's debt approximates its carrying amount as of December
31, 1999.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2000 $ -- --
2001 -- --
2002 -- --
2003 17,100 7.33%
2004 -- --
Thereafter 10,825 6.95%
Total $27,925 7.18%
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Balance Sheets - December 31, 1999 and 1998
Statements of Operations - Years ended December 31, 1999, 1998, and 1997
Statements of Changes in Partners' (Deficit) Capital - Years ended December 31,
1999, 1998 and 1997
Statements of Cash Flows - Years ended December 31, 1999, 1998, and 1997
Notes to Financial Statements
Schedules are not submitted because either they are not applicable or the
information required is included in the Financial Statements, including the
notes thereto.
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Institutional Properties/3
We have audited the accompanying balance sheets of Consolidated Capital
Institutional Properties/3 as of December 31, 1999 and 1998, and the related
statements of operations, changes in partners' (deficit) capital 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 financial position of Consolidated Capital
Institutional Properties/3 as of December 31, 1999 and 1998, and the 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 N to the 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 INSTITUTIONAL PROPERTIES/3
BALANCE SHEETS
(in thousands, except unit data)
Years ended December 31,
1999 1998
Assets
Cash and cash equivalents $ 5,451 $ 14,189
Receivables and deposits (net of allowance of $93) 553 1,266
Restricted escrows 868 1,440
Other assets 587 753
Investment properties: (Notes A, G, and J)
Land 8,641 11,428
Buildings and related personal property 44,787 48,210
53,428 59,638
Less accumulated depreciation (17,209) (16,507)
36,219 43,131
$ 43,678 $ 60,779
Liabilities and Partners' (Deficit) Capital
Liabilities
Accounts payable $ 448 $ 161
Due to general partner 125 465
Tenant security deposit liabilities 281 435
Accrued property taxes 187 254
Other liabilities 450 411
Mortgage notes payable (Note G) 27,925 27,925
29,416 29,651
Partners' (Deficit) Capital
General partner (698) (530)
Limited partners (383,033 units outstanding) 14,960 31,658
14,262 31,128
$ 43,678 $ 60,779
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF OPERATIONS
(in thousands, except unit data)
For the Years Ended December 31,
1999 1998 1997
Revenues: (restated) (restated)
Rental income $12,078 $12,670 $12,245
Other income 1,038 1,088 1,222
Gain on sale of investment property (Note E) -- 5,482 --
Total revenues 13,116 19,240 13,467
Expenses:
Operating 4,356 5,262 5,811
General and administrative 633 600 501
Depreciation 2,662 2,684 2,559
Interest 2,095 2,295 2,316
Property taxes 719 693 746
Loss on sale of investment property (Note E) 192 -- --
Total expenses 10,657 11,534 11,933
Income before extraordinary item and discontinued
operations 2,459 7,706 1,534
Extraordinary loss on early extinguishment of
debt (Note E) -- (325) --
Income from discontinued operations 84 502 402
Gain on sale of discontinued operations (Note F) 4,210 -- --
Net income $ 6,753 $ 7,883 $ 1,936
Net income allocated to general partner (1%) $ 68 $ 79 $ 19
Net income allocated to limited partner (99%) 6,685 7,804 1,917
$ 6,753 $ 7,883 $ 1,936
Per limited partnership unit:
Income before extraordinary item and
discontinued operations $ 6.35 $ 19.91 $ 3.96
Extraordinary item -- (.84) --
Income from discontinued operations .22 1.30 1.04
Gain on sale of discontinued operations 10.88 -- --
Net income $ 17.45 $ 20.37 $ 5.00
Distributions per limited partnership unit $ 61.05 $ 5.12 $ 36.13
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CHANGES IN PARTNERS' (DEFICIT) CAPITAL
For the Years Ended December 31, 1999, 1998, and 1997
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 383,033 $ 1 $ 95,758 $ 95,759
Partners' (deficit) capital at
December 31, 1996 383,033 $ (443) $ 37,739 $ 37,296
Net income for the year ended
December 31, 1997 -- 19 1,917 1,936
Distributions to partners -- (165) (13,842) (14,007)
Partners' (deficit) capital at
December 31, 1997 383,033 (589) 25,814 25,225
Net income for the year ended
December 31, 1998 -- 79 7,804 7,883
Distribution to partners -- (20) (1,960) (1,980)
Partners' (deficit) capital at
December 31, 1998 383,033 (530) 31,658 31,128
Net income for the year ended
December 31, 1999 -- 68 6,685 6,753
Distributions to partners -- (236) (23,383) (23,619)
Partners' (deficit) capital at
December 31, 1999 383,033 $ (698) $ 14,960 $ 14,262
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS
(in thousands)
For the Years Ended December 31,
1999 1998 1997
Cash flows from operating activities:
Net income $ 6,753 $ 7,883 $ 1,936
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 2,855 2,988 2,852
Amortization of lease commissions and loan
costs 117 159 146
Loss on casualty event -- -- 8
Loss on disposal of property -- 58 41
Loss on sale of investment property 192 -- --
Gain on sale of investment property (4,210) (5,482) --
Extraordinary loss on extinguishment of debt -- 325 --
Changes in accounts:
Receivables and deposits 521 (205) 236
Other assets (60) 1 (60)
Accounts payable 196 (11) (408)
Due to affiliate (340) 465 --
Tenant security deposit liabilities (154) (25) 26
Accrued property taxes (67) (10) 81
Other liabilities 39 (29) (79)
Net cash provided by operating
activities 5,842 6,117 4,779
Cash flows from investing activities:
Property improvements and replacements (1,986) (1,590) (1,692)
Net receipts from restricted escrows 572 701 33
Proceeds from sale of investment property 10,453 8,646 --
Proceeds from sale of investments -- 100 --
Net insurance proceeds from casualty events -- -- 126
Dividends received -- -- 4
Net cash provided by (used in) investing
activities 9,039 7,857 (1,529)
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
STATEMENTS OF CASH FLOWS
(in thousands)
For the Years Ended December 31,
1999 1998 1997
Cash flows from financing activities:
Repayment of mortgage notes payable $ -- $ (2,600) $ --
Loan costs paid -- -- (2)
Debt extinguishment costs -- (259) --
Distributions to partners (23,619) (1,980) (14,007)
Net cash used in financing activities (23,619) (4,839) (14,009)
Net (decrease) increase in cash and cash
equivalents (8,738) 9,135 (10,759)
Cash and cash equivalents at beginning of year 14,189 5,054 15,813
Cash and cash equivalents at end of year $ 5,451 $ 14,189 $ 5,054
Supplemental disclosure of cash flow information:
Cash paid for interest $ 2,006 $ 2,193 $ 2,196
At December 31, 1999, property improvements and replacements and accounts
payable were adjusted by $91,000 for non-cash activity.
At December 31, 1998, in connection with a fire at Lake Villa Apartments,
property improvements and replacements and receivables and deposits were
adjusted by $101,000 for non-cash activity.
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note A - Organization of Significant Accounting Policies
Organization
Consolidated Capital Institutional Properties/3 (the "Partnership" or the
"Registrant"), a California limited partnership, was formed on May 23, 1984, to
lend funds through non-recourse notes with participation interests (the "Master
Loan"). The loans were made to, and the real properties that secure the Master
Loan were purchased and owned by, ConCap Equity Partners/3, ConCap Equity
Partners/4, and ConCap Equity Partners/5, ("EP/3", "EP/4", and "EP/5",
respectively), California limited partnerships, in which certain of the partners
were former shareholders and former management of Consolidated Capital Equities
Corporation ("CCEC"). The Partnership entered into a Master Loan Agreement with
EP/3, EP/4, and EP/5, pursuant to which the aggregate principal would not exceed
the net amount raised by the Partnership's offering of approximately
$96,000,000.
Upon the Partnership's formation in 1984, CCEC, a Colorado corporation, was the
corporate general partner. In December 1988, CCEC filed for reorganization under
Chapter 11 of the United States Bankruptcy Code ("Chapter 11"). In 1990, as part
of CCEC's reorganization plan, ConCap Equities, Inc., a Delaware corporation
(the "General Partner" or "CEI") acquired CCEC's general partner interests in
the Partnership and in 15 other affiliated public limited partnerships and
replaced CCEC as managing general partner in all 16 partnerships. The General
Partner is a subsidiary of Apartment Investment and Management Company
("AIMCO"). See "Note B - Transfer of Control". 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, 2015
unless terminated prior to such date.
Prior to December 1994, all of CEI's outstanding stock was owned by GII Realty,
Inc. In December 1994, the parent of GII Realty, Inc., entered into a
transaction (the "Insignia Transaction") in which an affiliate of Insignia
Financial Group, Inc. ("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 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. As
of December 31, 1999, Insignia Properties Trust, an affiliate of AIMCO owned
100% of the outstanding stock of CEI. At December 31, 1999, affiliates of AIMCO,
owned 176,647.70 Units of the Partnership.
The Partnership operates seven apartment properties located throughout the
United States.
Cash and Cash Equivalents
Includes cash on hand and 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 $1,107,000 at December 31, 1999 that are
maintained by the affiliated management company on behalf of affiliated entities
in a cash concentration account.
Tenant Security Deposits
The Partnership requires security deposits from lessees for the duration of the
lease, and such deposits are included in receivables and deposits. The security
deposits are refunded when the tenant vacates, provided the tenant has not
damaged its space and is current on its rental payments.
Restricted Escrows
As a result of the refinancing of Williamsburg Manor, Sandpiper I & II and Park
Capital in 1995 and Lamplighter Park, Tamarac Village, Hidden Cove and Cedar Rim
in 1996, the following reserves were established:
Capital Improvement Reserve - As part of the refinancings, the properties
deposited $1,416,000 in 1996 and $843,000 in 1995 with the mortgage
companies to establish a Capital Reserve designated for certain capital
improvements. At December 31, 1999, all of the funds had been withdrawn
from this reserve. At December 31, 1998 and 1997, this reserve totaled
approximately $593,000 and $1,400,000, respectively.
Replacement Reserve - As a result of the refinancings, each property makes
monthly deposits to establish and maintain a Replacement Reserve
designated for repairs and replacements at the properties. At December 31,
1999, 1998, and 1997, this reserve totaled approximately $868,000,
$848,000, and $741,000, respectively.
Investment Properties
Investment properties consist of seven apartment complexes and 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
for 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. Costs of investment
properties that have been permanently impaired have been written down to
appraised value. No adjustments for impairment of value were recorded in the
years ended December 31, 1999, 1998, or 1997.
Depreciation
Depreciation is provided by the straight-line method over the estimated lives of
the apartment properties and related personal property. For Federal income tax
purposes, the accelerated cost recovery method is used (1) for real property
over 15 years for additions prior to March 16, 1984, 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 modified accelerated cost
recovery method is used for depreciation of (1) real property over 27 1/2 years
and (2) personal property additions over 5 years.
Effective January 1, 1999, the Partnership changed its method of accounting to
capitalize the costs of exterior painting and major landscaping (Note N).
Leases
The Partnership leases its residential properties under short-term operating
leases. Lease terms are generally one year or less in duration. The Partnership
recognizes income as earned on its leases. In addition, the General Partner's
policy is to offer rental concessions during periods of declining occupancy or
in response to heavy competition from other similar complexes in the area.
Concessions are charged against rental income as incurred.
Deferred Costs
At December 31, 1999 and 1998, loan costs of approximately $846,000, less
accumulated amortization of approximately $349,000 and $261,000, respectively,
are included in other assets. Loan costs are amortized on a straight-line basis
over the life of the loans.
Leasing commissions were deferred and amortized over the lives of the related
leases. At December 31, 1998, a total of approximately $189,000 less accumulated
amortization of $96,000, respectively, was included in other assets. There were
no leasing commissions at December 31, 1999 due to the sale of both commercial
properties during 1999.
Allocation of Net Income and Net Loss
The Partnership Agreement provides for net income and net losses for both
financial and tax reporting purposes to be allocated 99% to the Limited Partners
and 1% to the General Partner.
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.
Use 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.
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 L").
Advertising
The Partnership expenses the costs of advertising as incurred. Advertising
expense for the residential properties, included in operating expenses, was
$238,000, $238,000, and $237,000 during the years ended December 31, 1999, 1998,
and 1997, respectively.
Reclassifications
Certain reclassifications have been made to the 1998 and 1997 information to
conform to the 1999 presentation.
Note B - Transfer of Control
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia and Insignia Properties Trust 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 - Related Party Transactions
The Partnership has no employees and is dependent on the General Partner and/or
its affiliates for the management and administration of all Partnership
activities. The limited partnership agreement ("Partnership Agreement") provides
for payments to affiliates for property management services based on a
percentage of revenue. The Partnership Agreement also provides for reimbursement
to the General Partner and its affiliates for costs incurred in connection with
the administration of Partnership activities.
The following amounts were paid or accrued to the General Partner and affiliates
during each of the years ended December 31, 1999, 1998, and 1997:
1999 1998 1997
(in thousands)
Property management fees (included in
operating expenses) $646 $748 $ 737
Reimbursement for services of affiliates
(included in investment properties,
general and administrative expenses,
and operating expenses) 342 384 374
Real estate brokerage commissions
(included in gain on sale of investment
property) 334 465 --
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 the
Partnership's residential properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$646,000, $678,000 and $648,000 for management fees for the years ended December
31, 1999, 1998 and 1997, respectively. For the nine months ended September 30,
1998 and the year ended December 31, 1997, affiliates of the General Partner
were entitled to receive varying percentages of gross receipts from all of the
Partnership's commercial properties for providing property management services.
The Partnership paid to such affiliates approximately $70,000 and $89,000 for
the nine months ended September 30, 1998 and the year ended December 31, 1997,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger (See "Note B - Transfer of Control") these services for the commercial
properties were provided by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $342,000, $384,000 and
$374,000 for the years ended December 31, 1999, 1998 and 1997, respectively.
For acting as real estate broker in connection with the sale of South City
Business Center, the General Partner was paid a real estate commission of
approximately $209,000 during the year ended December 31, 1999. For acting as
real estate broker in connection with the sale of Corporate Center, the General
Partner earned a real estate commission of approximately $125,000. (See "Note F
- - Sale of Discontinued Operations" for additional information about the sales.)
For acting as real estate broker in connection with the sale of City Heights in
November 1998, the General Partner earned a real estate commission of
approximately $465,000. The commission was accrued at December 31, 1998, and was
paid during the first quarter of 1999. No similar commissions were earned during
the year ended December 31, 1997.
Additionally, the Partnership paid approximately $41,000 and $36,000 during the
years ended December 31, 1998 and 1997, respectively, to an affiliate of the
General Partner for lease commissions at the Partnership's commercial
properties. These lease commissions are included in other assets and are
amortized over the terms of the respective leases. Effective October 1, 1998,
lease commissions were paid to an unrelated party (see "Note B - Transfer of
Control").
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 176,647.70
limited partnership units in the Partnership representing 46.118% 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 - Casualty Events
In October 1996, a fire damaged twelve units at the Lamplighter Park Apartments.
The unit where the fire started suffered extensive damage, and as a result, the
asset and related accumulated depreciation were written off in 1996. At December
31, 1996, an insurance proceeds receivable was recorded, as well as a
miscellaneous payable representing the estimated cost of restoring the damaged
units. The net gain recognized in 1996 relating to this fire was approximately
$114,000. In 1997, the restoration was completed, and additional unanticipated
charges were incurred. The net effect of these charges was a casualty loss of
approximately $24,000 being recognized in 1997 relating to the 1996 fire. The
1997 loss is included in operating expense on the Partnership's statement of
operations.
In 1997, a fire at Hidden Cove by the Lake Apartments damaged ten units in one
building at the complex. The units affected suffered primarily smoke and water
damages, and the restoration was completed in the second quarter of 1997. A
casualty gain of approximately $16,000 was recognized in 1997 as a result of
this fire and is included as an offset to operating expense.
In June 1998, another fire occurred at Hidden Cove by the Lake Apartments, which
caused major damage to three units in one building of the complex, and as a
result, the building and its related accumulated depreciation were written off.
The restoration was completed in 1999. No loss was recognized related to the
fire as the casualty is covered by insurance and the proceeds equaled the net
book value of the destroyed units.
During the fourth quarter of 1998, there was a hail storm at Tamarac Village
which caused roof damage to the buildings. The damage was repaired during 1999.
No loss was recognized related to the hail storm damage as the expenditures have
been offset by insurance proceeds.
An ice storm occurred at Hidden Cove by the Lake Apartments in January 1999,
which damaged 52 units. The damage was repaired during 1999. No loss was
recognized related to the ice storm damage as the expenditures have been offset
by insurance proceeds.
Note E - Sale of Investment Property
In November 1998, City Heights Apartments, located in Seattle, Washington, was
sold to an unaffiliated party for $9,300,000. After payoff of the debt and
payment of closing expenses, the net sales proceeds received by the Partnership
were approximately $5,787,000 for the year ended December 31, 1998. The proceeds
were distributed to the partners in January 1999. For financial statement
purposes, the sale resulted in a gain of approximately $5,482,000 for the year
ended December 31, 1998. The Partnership also recorded an extraordinary loss on
early extinguishment of debt of approximately $325,000 for the year ended
December 31, 1998 as the result of payment of prepayment penalties and the
write-off of the remaining unamortized loan costs. During the year ended
December 31, 1999, a loss of approximately $192,000 was recorded due to the
write-off of an uncollectible receivable related to this property.
Note F - Sale of Discontinued Operations
In June 1999, South City Business Center, located in Chula Vista, California,
was sold to an unaffiliated party for $6,962,000. After payment of closing
expenses, the net sales proceeds received by the Partnership were approximately
$6,569,000. For financial statement purposes, the sale resulted in a gain of
approximately $2,296,000.
In October 1999, Corporate Center, located in Tampa, Florida, was sold to an
unaffiliated party for $4,175,000. After payment of closing expenses, the net
sales proceeds received by the Partnership were approximately $3,884,000. For
financial statement purposes, the sale resulted in a gain of approximately
$1,914,000.
The following pro-forma information reflects the operations of the Partnership
for the year ended December 31, 1999, as if Corporate Center, South City
Business Center, and City Heights, which was sold in November 1998, had been
sold January 1, 1998.
1999 1998
(in thousands, except per unit data)
Revenues $13,131 $12,713
Net income 2,479 1,985
Income per limited partnership unit 6.41 5.13
South City Business Center and Corporate Center were the last commercial
properties in the commercial segment of the Partnership. Due to the sale of the
properties, the income of both of the properties has been classified as "Income
from discontinued operations" for the years ended December 31, 1999, 1998, and
1997. Revenues of these properties were approximately $845,000, $1,725,000, and
$1,645,000 for 1999, 1998, and 1997, respectively. Income from operations of
these properties were approximately $84,000, $502,000, and $402,000 for 1999,
1998, and 1997, respectively.
Note G - Mortgage Notes Payable
Notes payable at December 31, 1999, consist of the following:
Principal Monthly Principal
Balance At Payment Stated Balance
December 31, Interest Interest Maturity Due At
1999 Only Rate Date Maturity
Property (in thousands) (in thousands)
Cedar Rim $ 2,000 $ 12 7.33% 11/01/03 $ 2,000
Hidden Cove 2,200 14 7.33% 11/01/03 2,200
Lamplighter Park 3,500 21 7.33% 11/01/03 3,500
Park Capital 2,725 16 6.95% 12/01/05 2,725
Tamarac Village 9,400 57 7.33% 11/01/03 9,400
Williamsburg Manor 4,150 24 6.95% 12/01/05 4,150
Sandpiper I & II 3,950 23 6.95% 12/01/05 3,950
$27,925 $ 167 $27,925
The mortgage notes payable are non-recourse and are secured by pledge of the
respective properties. Also, all notes require prepayment penalties if repaid
prior to maturity and prohibit resale of the properties subject to existing
indebtedness.
Note H - Commitment
The Partnership is required by the Partnership Agreement to maintain working
capital reserves for contingencies of not less than 5% of Net Invested Capital,
as defined in the Partnership Agreement. In the event expenditures are made from
this reserve, operating revenue shall be allocated to such reserve to the extent
necessary to maintain the foregoing level. Reserves, including cash and
securities available for sale, totaling approximately $5.5 million were greater
than the reserve requirement of approximately $2.6 million at December 31, 1999.
Note I - Distributions
The Partnership paid distributions of cash generated from operations of
approximately $7,359,000 (approximately $7,286,000 to the limited partners or
$19.02 per limited partnership unit) and approximately $16,260,000
(approximately $16,097,000 to the limited partners or $42.03 per limited
partnership unit) from surplus funds from the sales of City Heights, South City
Business Center, and Corporate Center during the year ended December 31, 1999.
Subsequent to December 31, 1999, the Partnership declared and paid a
distribution from operations of approximately $1,500,000 (approximately
$1,485,000 to the limited partners or $3.88 per limited partnership unit). The
Partnership paid distributions of cash generated from operations of
approximately $1,980,000 (approximately $1,960,000 to the limited partners or
$5.12 per limited partnership unit) during the year ended December 31, 1998. The
Partnership paid distributions of cash generated from operations of
approximately $2,438,000 (approximately $2,414,000 to the limited partners or
$6.30 per limited partnership unit) and approximately $11,569,000 (approximately
$11,428,000 to the limited partners or $29.83 per limited partnership unit) from
surplus funds during the year ended December 31, 1997.
Note J - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Cost
and Related Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
Cedar Rim $ 2,000 $ 778 $ 4,322 $ --
Hidden Cove by the Lake 2,200 184 4,416 1,281
Lamplighter Park 3,500 2,458 5,167 600
Park Capital 2,725 280 2,100 811
Tamarac Village I, II, 9,400 2,464 10,536 2,300
III & IV
Williamsburg Manor 4,150 1,281 5,124 820
Sandpiper I & II 3,950 1,463 5,851 1,192
Totals $27,925 $ 8,908 $37,516 $ 7,004
Gross Amount At Which
Carried
At December 31, 1999
(in thousands)
Buildings
And
Related Date of
Personal Accumulated Construc- Date Depreciable
Description Land Property Total Depreciation tion Acquired Life-Years
(in thousands)
Cedar Rim $ 618 $ 4,482 $ 5,100 $ 2,170 1980 04/12/91 3-20
Hidden Cove 184 5,697 5,881 2,701 1972 03/23/90 3-20
Lamplighter Park 2,351 5,874 8,225 2,658 1968 04/12/91 3-20
Park Capitol 280 2,911 3,191 1,524 1974 04/13/90 5-20
Tamarac Village 2,464 12,836 15,300 4,958 1978 06/10/92 5-20
Williamsburg Manor 1,281 5,944 7,225 1,512 1970 11/30/94 5-22
Sandpiper I & II 1,463 7,043 8,506 1,686 1976/1985 11/30/94 5-22
$ 8,641 $44,787 $53,428 $17,209
Reconciliation of "Investment Properties and Accumulated Depreciation":
For the Years Ended December 31,
1999 1998 1997
(in thousands)
Investment Properties:
Balance at beginning of year $59,638 $63,326 $61,821
Additions 2,077 1,590 1,558
Sale of investment property -- (5,028) --
Sale of discontinued operations (8,287) -- --
Disposal of property -- (250) (53)
Balance at end of year $53,428 $59,638 $63,326
Accumulated Depreciation:
Balance at beginning of year $16,507 $15,474 $12,634
Additions charged to expense 2,855 2,988 2,852
Sale of investment property -- (1,864) --
Sale of discontinued operations (2,153) -- --
Disposal of property -- (91) (12)
Balance at end of year $17,209 $16,507 $15,474
The aggregate cost for Federal income tax purposes is:
1999 $43,116
1998 $50,958
1997 $56,544
Note K - Income Taxes
The Partnership has received a ruling from the Internal Revenue Service that it
will be classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the 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 of reported net income and Federal taxable
income (in thousands, except unit data):
1999 1998 1997
Net income as reported $ 6,753 $ 7,883 $ 1,936
Add (deduct):
Gain on sale of investment property (1,966) (1,523) --
Fixed asset write-offs and casualty gain (212) 57 25
Depreciation differences 541 499 568
Change in prepaid rental income 23 (71) 240
Other 122 19 99
Federal taxable income $ 5,261 $ 6,864 $ 2,868
Federal taxable income per limited
partnership unit $ 13.60 $ 17.74 $ 7.41
The tax basis of the Partnership's assets and liabilities is approximately
$18,433,000 greater than the assets and liabilities as reported in the financial
statements.
Note L - Segment Reporting
Description of the types of products and services from which each reportable
segment derives its revenues: The Partnership had two reportable segments:
residential properties and commercial properties. The Partnership's residential
property segment consists of seven apartment complexes in Colorado, Florida,
Michigan, North Carolina, Utah, and Washington (2). The Partnership rents
apartment units to tenants for terms that are typically twelve months or less.
The commercial property segment consisted of two business parks, one located in
Florida and one in California. These properties leased space to a variety of
businesses at terms ranging from month to month to ten years. On October 4,
1999, the final commercial property held by the Partnership was sold to an
unrelated party. Therefore, the commercial segment is reflected as discontinued
operations (see "Note F - Sale of Discontinued Operations" for further
discussion regarding the commercial sales).
Measurement of segment profit or loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segments: The
Partnership's reportable segments are investment properties that offer different
products and services. The reportable segments are each managed separately
because they provide distinct services with different types of products and
customers.
Segment information for the years 1999, 1998 and 1997 is shown in the tables
below. The "Other" column includes partnership administration related items and
income and expense not allocated to the reportable segments (in thousands).
1999 Residential Commercial Other Totals
(discontinued)
Rental income $12,078 $ -- $ -- $12,078
Other income 763 -- 275 1,038
Interest expense 2,095 -- -- 2,095
Depreciation 2,662 -- -- 2,662
General and administrative expenses -- -- 633 633
Loss on sale of investment property (192) -- -- (192)
Gain on sale of discontinued
operations -- 4,210 -- 4,210
Income from discontinued operations -- 84 -- 84
Segment profit (loss) 2,817 4,294 (358) 6,753
Total assets 28,523 152 15,003 43,678
Capital expenditures for investment
properties 1,981 96 -- 2,077
1998 Residential Commercial Other Totals
(discontinued)
Rental income $12,670 $ -- $ -- $12,670
Other income 767 -- 321 1,088
Interest expense 2,295 -- -- 2,295
Depreciation 2,684 -- -- 2,684
General and administrative expenses -- -- 600 600
Gain on sale of investment property 5,482 -- -- 5,482
Loss on extraordinary item (325) -- -- (325)
Income from discontinued operations -- 502 -- 502
Segment profit (loss) 7,660 502 (279) 7,883
Total assets 28,063 6,855 25,861 60,779
Capital expenditures for investment
properties 1,359 231 -- 1,590
1997 Residential Commercial Other Totals
(discontinued)
Rental income $12,245 $ -- $ -- $12,245
Other income 776 -- 446 1,222
Interest expense 2,316 -- -- 2,316
Depreciation 2,559 -- -- 2,559
General and administrative expenses -- -- 501 501
Income from discontinued operations -- 402 -- 402
Segment profit (loss) 1,589 402 (55) 1,936
Total assets 32,633 6,775 17,678 57,086
Capital expenditures for investment
properties 1,538 154 -- 1,692
Note M - 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 N - 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 income by approximately $226,000 ($0.58 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.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Consolidated Capital Institutional Properties/3 (the "Partnership" or the
"Registrant") has no officers or directors. ConCap Equities, Inc. ("CEI" or the
"General Partner") manages and controls the Registrant 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 with CEI presently held by them are set
forth below. There are no family relationships between or among any officers or
directors.
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 Properties, L.P. and its joint filers failed to timely file a Form 3 with
respect to its acquisition of Units and 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 or officers of the General Partner received any
remuneration from the Registrant.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 1999, no person was known to CEI to
own of record or beneficially more than 5 percent of the Units of the
Partnership:
Name and address Number of Units Percent of Total
Insignia Properties, L.P. 44,867.7 11.714%
(an affiliate of AIMCO)
Madison River Properties LLC 46,747.4 12.205%
(an affiliate of AIMCO)
Cooper River Properties LLC 28,039.3 7.320%
(an affiliate of AIMCO)
AIMCO Properties, L.P. 56,993.3 14.879%
(an affiliate of AIMCO)
Insignia Properties L.P., Cooper River Properties LLC and Madison River
Properties LLC are indirectly ultimately owned by AIMCO. Their business
address is 55 Beattie Place, Greenville, South Carolina 29602. AIMCO
Properties, L.P., is also indirectly ultimately controlled by AIMCO. Its
business address is 2000 South Colorado Boulevard, Denver, Colorado 80222.
Beneficial Owners of Management
Except as described in Item 12 above, neither CEI nor any of the directors,
officers or associates of CEI own any Units of the Partnership of record or
beneficially.
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 5 percent of its common stock:
Name and address Number of CEI Shares Percent of Total
Insignia Properties, L.P. 100,000 100%
55 Beattie Place
Greenville, SC 29602
Insignia Properties, L.P. is an affiliate of AIMCO (see "Item 1. Description
of Business").
Item 13. Certain Relationships and Related Transactions
The Partnership has no employees and is dependent on the General Partner and/or
its affiliates for the management and administration of all Partnership
activities. The limited partnership agreement ("Partnership Agreement") provides
for payments to affiliates for property management services based on a
percentage of revenue. The Partnership Agreement also provides for reimbursement
to the General Partner and its affiliates for costs incurred in connection with
the administration of Partnership activities.
The following amounts were paid or accrued to the General Partner and affiliates
during each of the years ended December 31, 1999, 1998 and 1997:
1999 1998 1997
(in thousands)
Property management fees $646 $748 $737
Reimbursements for services of affiliates 342 384 374
Real estate brokerage commissions 334 465 --
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 the
Partnership's residential properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$646,000, $678,000 and $648,000 for management fees for the years ended December
31, 1999, 1998, and 1997, respectively. For the nine months ended September 30,
1998 and the year ended December 31, 1997, affiliates of the General Partner
were entitled to receive varying percentages of gross receipts from all of the
Partnership's commercial properties for providing property management services.
The Partnership paid to such affiliates approximately $70,000 and $89,000 for
the nine months ended September 30, 1998 and the year ended December 31, 1997,
respectively. Effective October 1, 1998 (the effective date of the Insignia
Merger, see "Item 8. Financial Statements and Supplementary Data, Note B -
Transfer of Control") these services for the commercial properties were provided
by an unrelated party.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $342,000, $384,000 and
$374,000 for the years ended December 31, 1999, 1998, and 1997, respectively.
For acting as real estate broker in connection with the sale of South City
Business Center, the General Partner was paid a real estate commission of
approximately $209,000 during the year ended December 31, 1999. For acting as
real estate broker in connection with the sale of Corporate Center, the General
Partner earned a real estate commission of approximately $125,000. For acting as
real estate broker in connection with the sale of City Heights in November 1998,
the General Partner earned a real estate commission of $465,000. The commission
was accrued at December 31, 1998 and was paid during the first quarter of 1999.
No similar commissions were earned during the year ended December 31, 1997.
Additionally, the Partnership paid approximately $41,000 and $36,000 during the
years ended December 31, 1998 and 1997, respectively, to an affiliate of the
General Partner for lease commissions at the Partnership's commercial
properties. These lease commissions are included in other assets and are
amortized over the terms of the respective leases. Effective October 1, 1998
lease commissions were paid to an unrelated party (see "Item 8. Financial
Statements and Supplementary Data, Note B - Transfer of Control").
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 176,647.70
limited partnership units in the Partnership representing 46.118% 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.
PART IV
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
Balance Sheets as of December 31, 1999 and 1998
Statements of Operations for the Years Ended December 31, 1999,
1998 and 1997
Statements of Changes in Partners' (Deficit) Capital for the Years
Ended December 31, 1999, 1998, and 1997
Statements of Cash Flows for the Years Ended December 31, 1999,
1998, and 1997
Notes to Financial Statements
2. Schedules
All other schedules are omitted because they are not required, are
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, 1998, by and between AIMCO and IPT incorporated
by reference to Current Report on Form 8-K dated
October 1, 1998.
3 Certificates of Limited Partnership, as amended.
10.3 Participating Note Master Loan Agreement
(Incorporated by reference to Registration
Statement of Partnership (File No. 2-97664)
filed July 23, 1985).
10.4 Participating Note Security Agreement
(Incorporated by reference to Registration
Statement of Partnership (File No. 2-97664)
filed July 23, 1985).
10.5 Form of Deed of Trust and Rider (Incorporated
by reference to Registration Statement of
Partnership (File No. 2-97664) filed July
23,1985).
10.6 Several Promissory Notes (Incorporated by
reference to Registration Statement of
Partnership (File No. 2-97664) filed July 23,
1985).
10.7 Property Management Agreement No. 101 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).
10.8 Property Management Agreement No. 301 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. 315 dated
April 12, 1991, by and between the Partnership
and CCMLP. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended
December 31, 1991).
10.10 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).
10.11 Assignment and Assumption 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).
10.12 Assignment and 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).
10.13 Assignment and Agreement as to Certain Property
Management Services dated April 12, 1991, by and
between CCMLP and ConCap Capital Company
(Incorporated by reference to the 1991 Annual
Report on Form 10-K for the year ended December
31, 1991).
10.14 Assignment and 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 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).
10.16 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and Metro ConCap, Inc.
(Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1991).
10.17 Construction Management Cost Reimbursement
Agreement dated April 12, 1991, by and between the
Partnership and Metro ConCap, Inc. (Incorporated
by reference to the Annual Report on Form 10-K for
the year ended December 31, 1991).
10.18 Construction Management Cost Reimbursement
Agreement dated January 1, 1991, by and between
the Partnership and The Hayman Company.
(Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1991).
10.19 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).
10.20 Assignment and Assumption Agreement 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).
10.21 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).
10.22 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).
10.23 Assignment and Assumption Agreement (Financial
Services 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).
10.24 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 assumed the Financial Services
Agreement. (Incorporated by reference to the
Annual Report on Form 10-K for the year ended
December 31, 1991).
10.25 Joint Application for Approval of Settlement
Agreement dated August 10, 1990, between James W.
Cunningham (EP/4's Trustee) and the Partnership
(Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30,
1990).
10.26 Property Management Agreement No. 415 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).
10.27 Assignment and Assumption Agreement (Property
Management Agreement No. 415) 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).
10.28 Assignment and Agreement as to Certain Property
Management Services as related to Property
Management Agreement No. 415 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).
10.29 Property Management Agreement No. 425 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).
10.30 Assignment and Assumption Agreement (Property
Management Agreement No. 425) 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).
10.31 Assignment and Agreement as to Certain Property
Management Services as related to Property
Management Agreement No. 425 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).
10.32 Property Management Agreement No. 509 dated
June 1, 1993, by and between the Partnership
and Coventry Properties, Inc.
10.33 Assignment and Assumption Agreement as to
Certain Property Management Services dated
November 17, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
10.34 Multifamily Note dated November 30, 1995 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1995).
10.35 Multifamily Note dated November 30, 1995 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1995).
10.36 Multifamily Note dated November 30, 1995 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1995).
10.37 Multifamily Note dated November 1, 1996 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1996).
10.38 Multifamily Note dated November 1, 1996 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1996).
10.39 Multifamily Note dated November 1, 1996 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1996).
10.40 Multifamily Note dated November 1, 1996 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1996).
10.41 Multifamily Note dated November 1, 1996 between
CCIP/3, a California limited partnership, and
Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings
Inc. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1996).
10.42 Purchase and Sale Contract between Registrant
and Eastgate Technology Partnership, L.P., a
California limited partnership, dated April 30,
1999. (Incorporated by reference to the Current
Report on Form 8-K dated June 18, 1999.)
10.43 Amendment to Purchase and Sale Contract between
Registrant and Eastgate Technology Partners,
L.P., dated May 28, 1999. (Incorporated by
reference to the Current Report on Form 8-K
dated June 18, 1999.)
10.44 Purchase and Sale Contract between Registrant
and FR Acquisitions, Inc., a Maryland
corporation, dated June 15, 1999.
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1999.)
10.45 Amendment to Purchase and Sale Contract between
Registrant and FR Acquisitions, Inc., a
Maryland corporation, dated August 31, 1999.
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1999.)
10.46 Second Amendment to Purchase and Sale Contract
between Registrant and FR Acquisitions, Inc., a
Maryland corporation, dated September 16, 1999.
(Incorporated by reference to the Annual Report
on Form 10-K for the year ended December 31,
1999.)
10.47 Third Amendment to Purchase and Sale Contract
between Registrant and FR Acquisitions, Inc., a
Maryland corporation, dated September 27,
1999. (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December
31, 1999.)
11 Statement regarding computation of Net Income per
Limited Partnership Unit (Incorporated by
reference to Note 8 of Item 8 - Financial
Statements of this Form 10-K).
16 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).
18 Independent Accountants' Preferability Letter
for Change in Accounting Principle.
27 Financial Data Schedule.
28.1 Fee Owner's General Partnership Agreement
(Incorporated by reference to Registration
Statement of Partnership (File No. 2-97664)
filed July 23, 1985).
28.2 Fee Owner's Certificate of Partnership
(Incorporated by reference to Registration
Statement of Partnership (File No. 2-97664)
filed July 23, 1985).
(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 INSTITUTIONAL PROPERTIES/3
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:
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 Executive Vice President Date:
Patrick J. Foye and Director
/s/Martha L. Long Senior Vice President Date:
Martha L. Long and Controller
Exhibit 18
February 7, 2000
Mr. Patrick J. Foye
Executive Vice President
Concap Equities, Inc.
General Partner of Consolidated Capital Institutional Properties/3
55 Beattie Place
P.O. Box 1089
Greenville, South Carolina 29602
Dear Mr. Foye:
Note N of Notes to the Financial Statements of Consolidated Capital
Institutional Properties/3 included in its Form 10-KSB 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 10.44
PURCHASE AND SALE CONTRACT
BETWEEN
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3,
a California limited partnership
AS SELLER
AND
FR ACQUISITIONS, INC., a Maryland corporation
AS PURCHASER
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINED TERMS......................................................1
ARTICLE 2 PURCHASE AND SALE OF PROPERTY......................................4
ARTICLE 3 PURCHASE PRICE & DEPOSIT...........................................4
ARTICLE 4 INTENTIONALLY OMITTED..............................................5
ARTICLE 5 FEASIBILITY PERIOD.................................................5
ARTICLE 6 TITLE..............................................................7
ARTICLE 7 CLOSING...........................................................11
ARTICLE 8 REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLER AND PURCHASER............................................16
ARTICLE 9 CONDITIONS PRECEDENT TO CLOSING...................................20
ARTICLE 10 BROKERAGE........................................................22
ARTICLE 11 POSSESSION.......................................................22
ARTICLE 12 DEFAULTS AND REMEDIES............................................22
ARTICLE 13 RISK OF LOSS OF CASUALTY.........................................23
ARTICLE 14 ESTOPPEL CERTIFICATES AND SUBORDINATION NONDISTURBANCE
AND ATTORNMENT AGREEMENTS.......................................24
ARTICLE 15 EMINENT DOMAIN...................................................24
ARTICLE 16 COVENANTS OF SELLER..............................................25
ARTICLE 17 MISCELLANEOUS....................................................26
EXHIBIT A - LEGAL DESCRIPTION EXHIBIT B - FORM OF ESCROW AGREEMENT EXHIBIT C -
SELLER'S DELIVERIES EXHIBIT D - SURVEY CERTIFICATION EXHIBIT E - FORM OF
TENANT NOTICE LETTER EXHIBIT F - FORM OF ESTOPPEL CERTIFICATE
EXHIBIT G - 8-K REQUIREMENTS
EXHIBIT H - FORM OF AUDIT LETTER
EXHIBIT I - EXCLUDED PERMITS
EXHIBIT J - EQUIPMENT
EXHIBIT K - LEASING COMMISSIONS PAYABLE
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT ("Purchase Contract") is entered into as
of the ____ day of June, 1999 (the "Effective Date") by and among CONSOLIDATED
CAPITAL INSTITUTIONAL PROPERTIES/3, a California limited partnership, having an
address at c/o Gary Carman, Esq., Broad and Cassel, 201 S. Biscayne Boulevard,
Suite 3000, Miami, Florida 33131 ("Seller") and FR ACQUISITIONS, INC., a
Maryland corporation, having a principal address at 311 South Wacker Drive,
Suite 400, Chicago, Illinois 60606 ("Purchaser").
NOW, THEREFORE WITNESSETH: That for and in consideration of mutual
covenants and agreements herein after set forth, Seller and Purchaser hereby
agree as follows:
RECITALS
R-1...Seller holds legal title to a parcel of real estate more particularly
described in Exhibit A attached hereto and made a part hereof located in
Hillsborough County, Florida on each of which improvements have been
constructed.
R-2...Purchaser desires to purchase and Seller has agreed to sell such land,
improvements and certain associated property, defined below as the "Property" on
the terms and conditions set forth below, (which terms and conditions shall
control in the event of any conflict with these Recitals), such that on the
Closing Date as defined in this Purchase Contract the Property will be conveyed
by special warranty or equivalent deed to FR Acquisitions, Inc.;
R-3...Purchaser has agreed to pay to Seller the Purchase Price for the Property,
and Seller has agreed to sell the Property to Purchaser on the terms and
conditions set forth below.
ARTICLE 1.
DEFINED TERMS
1.1. Terms with initial capital letters in this Purchase Contract shall have
the meanings set forth in this Article 1 below.
1.1.1. "Business Day" means any day other than a Saturday or
Sunday or Federal holiday or legal holiday in the County of
Hillsborough, State of Florida.
1.1.2."Closing" means the consummation of the purchase and sale and
related transactions contemplated by this Purchase Contract in
accordance with the terms and conditions of this Purchase Contract.
1.1.3."Closing Date" means the date on which date the Closing of the
conveyance of the Property is required to be held under the terms
and conditions of this Purchase Contract and on which date full
payment of the Purchase Price for the Property shall have been paid
to and received by Seller in immediately available U.S. funds. The
Closing Date shall be not later than fifteen (15) days following
conclusion of the Feasibility Period.
1.1.4."Commercial Lease(s)" means the interest of Seller in and to all
leases, subleases and other occupancy agreements, whether or not of
record, which provide for the use or occupancy of space or
facilities on or relating to the Property and which are in force as
of the Effective Date for the applicable Property.
1.1.5. "Purchase Contract" means this Purchase and Sale Purchase
Contract by and between Seller and Purchaser.
1.1.6."Excluded Permits" means those Permits which, under applicable law,
are nontransferable and such other Permits as may be designated as
Excluded Permits on Exhibit I, if any, attached hereto.
1.1.7."Fixtures and Tangible Personal Property" means all fixtures,
furniture, furnishings, fittings, equipment, machinery, apparatus,
appliances and other articles of personal property now located on
the Land or in the Improvements as of the date of this Purchase
Contract and used or usable in connection with any present or future
occupation or operation of all or any part of the Property. The term
"Fixtures and Tangible Personal Property" does not include (i)
equipment leased by Seller and the interest of Seller in any
equipment provided to the Property for use, but not owned or leased
by Seller, or (ii) property owned or leased by Tenants and guests,
employees or other persons furnishing goods or services to the
Property or (iii) property and equipment owned by Seller, which in
the ordinary course of business of the Property is not used
exclusively for the business, operation or management of the
Property or (iv) the property and equipment, if any, expressly
identified in Exhibit J.
1.1.8."Land" means all of that certain tract of land located in
Hillsborough County, Florida commonly known as the Corporate Center,
6702-6712 Benjamin Road, Tampa, Florida more particularly described
in Exhibit A attached hereto and made a part hereof and all rights,
privileges and appurtenances pertaining thereto.
1.1.9."Property" means the Land and Improvements described in the
Recitals and all rights of Seller relating to the Land and the
Improvements, including without limitation, any rights, title and
interest of Seller, if any, in and to (i) any strips and gores
adjacent to the Land and any land lying in the bed of any street,
road, or avenue opened or proposed, in front of or adjoining the
Land, to the center line thereof; (ii) any unpaid award for any
taking by condemnation or any damage to the Property by reason of a
change of grade of any street or highway; (iii) all of the
easements, rights, privileges, and appurtenances belonging or in any
way appertaining to the Property; together with all Fixtures and
Tangible Personal Property, the right, if any and only to the extent
transferable, of Seller issued to Property Contracts and Commercial
Leases, Permits other than Excluded Permits and the Miscellaneous
Property Assets owned by Seller which are located on the Property
and used in its operation.
1.1.10. "Property Contracts" means all purchase orders, maintenance,
service, or utility contracts and similar contracts, which relate to
the ownership, maintenance, construction or repair and/or operation
of the Property and which Purchaser expressly elects to assume, in
writing, during the Feasibility Period.
1.1.11. "Improvements" means all buildings and improvements,
located on the Land containing approximately 107,670 gross square
feet of office/warehouse facility.
1.1.12. "Miscellaneous Property Assets" means all contract rights, leases,
concessions, warranties, plans, drawings and other items of
intangible personal property relating to the ownership or operation
of the Property and owned by Seller, excluding, however, (i)
receivables, (ii) Property Contracts, (iii) Commercial Leases, (iv)
Permits, (v) cash or other funds, whether in petty cash or house
"banks," or on deposit in bank accounts or in transit for deposit,
(vi) refunds, rebates or other claims, or any interest thereon, for
periods or events occurring prior to the Closing Date, (vii) utility
and similar deposits, (viii) insurance or other prepaid Items or
(ix) books and records, except to the extent that Seller receives a
credit on the Closing Statement for any such item.
1.1.13. "Permits" means all licenses and permits granted by governmental
authorities having jurisdiction over the Property in respect of the
matter to which the applicable license or permit applies and owned
by Seller or used in or relating to the ownership, occupancy or
operation of the Property or any part thereof not subject to a
Commercial Lease.
1.1.14. "Permitted Exceptions" means those exceptions or conditions
permitted to encumber the title to the Property in accordance
with the provisions of Section 6.2.
1.1.15. "Purchase Price" means the total consideration to be paid
by Purchaser to Seller for the purchase of the Property.
1.1.16. "Survey" shall have the meaning ascribed thereto in Section
6.12.
1.1.17. "Tenant" means any person or entity entitled to occupy any
portion of the Property under a Commercial Lease.
1.1.18. "Title Commitment" or "Title Commitments" shall have the
meaning ascribed thereto in Section 6.1.
1.1.19. "Title Insurer" shall have the meaning set forth in Section
6.1.
ARTICLE 2.
PURCHASE AND SALE OF PROPERTY
2.1. Seller agrees to sell and convey the Property to Purchaser and Purchaser
agrees to purchase the Property from Seller, in accordance with the terms
and conditions set forth in this Purchase Contract.
ARTICLE 3.
PURCHASE PRICE & DEPOSIT
3.1. The total purchase price ("Purchase Price") for the Property shall be Four
Million Three Hundred Six Thousand and No/100 Dollars ($4,306,000.00),
which shall be paid by Purchaser, as follows:
3.1.1.Within five (5) days of the date hereof, Purchaser shall deliver to
Broad and Cassel (Attorneys and agent for Chicago Title Insurance
Company) 201 South Biscayne Boulevard, Suite 3000, Miami, Florida
33131 ("Escrow Agent") a deposit in the sum of Forty Thousand and
No/100 Dollars ($40,000.00) in cash(such sum being hereinafter
referred to and held as the "Deposit"). Purchaser and Seller each
approve the form of Escrow Agreement attached as Exhibit B.
3.1.2.The Escrow Agent shall hold the Deposit and make delivery of the
Deposit to the party entitled thereto under the terms hereof. Escrow
Agent shall invest the Deposit in such short-term, money market
funds or accounts, bank certificates of deposit or bank repurchase
agreements as directed by Purchaser and all interest and income
thereon shall become part of the Deposit and shall be remitted to
the party entitled to the Deposit, as set forth below. In the event
of Closing, interest shall be credited toward payment of the
Purchase Price.
3.1.3.If the sale of the Property is closed by the date fixed therefor
(or any extension date provided for by the mutual written consent of
the parties hereto, given or withheld in their respective sole
discretion), monies held as the Deposit shall be applied (and paid
over to the Seller) at Closing. If the sale of the Property is not
closed by the date fixed therefor (or any such extension date) owing
to failure of satisfaction of a condition precedent to Purchaser's
obligations, the Deposit shall be returned and refunded to
Purchaser, and neither party shall have any further liability
hereunder, subject to and except for Purchaser's liability under
Section 5.3.
3.1.4.If the sale of the Property is not closed by the date fixed
therefor (or any such extension date) owing to failure of
performance by Seller or the failure of a condition precedent,
Purchaser shall be entitled to the remedies set forth in ARTICLE 12
hereof. If the sale of the Property is not closed by the date fixed
therefor (or any such extension date) owing to failure of
performance by Purchaser (other than as a result of the failure of a
condition precedent), the Deposit shall be forfeited by Purchaser
and the sum thereof shall go to Seller forthwith as liquidated
damages for the lost opportunity costs and transaction expenses
incurred by Seller, as more fully set forth in ARTICLE 12 below.
ARTICLE 4.
INTENTIONALLY OMITTED
ARTICLE 5.
FEASIBILITY PERIOD
5.1. Subject to the terms of Section 5.3 below, for forty-five (45) calendar
days following the Effective Date (the "Feasibility Period"), Purchaser,
and its agents, contractors, engineers, surveyors, attorneys, and
employees ("Consultants") shall have the right from time to time to enter
onto the Property:
5.1.1.To conduct and make any and all customary physical and regulatory
studies, tests, examinations and inspections, or investigations of
or concerning the Property (including without limitation,
environmental, engineering and feasibility studies, evaluation of
drainage and flood plain, soil tests for bearing capacity and
percolation and surveys, including topographical surveys, and
investigation of all zoning, code requirements applicable to the
Property).
5.1.2.To confirm any and all matters which Purchaser may reasonably
desire to confirm with respect to title, lease and tenant
information, and books and records concerning the Property.
5.1.3. To interview any Tenant of the Property with respect to its
current and prospective occupancy of the Property.
5.1.4. To ascertain and confirm the suitability of the property
for Purchaser's intended use of the Property.
5.1.5.Seller covenants and agrees that it will cooperate with Purchaser
in Purchaser's investigations and inspections and that it shall
within five (5) business days after the Effective Date deliver to
Purchaser copies of all of the documents, contracts, information and
exhibits pertinent to this transaction including, without
limitation, documents listed on Exhibit C attached hereto which are
in Seller's possession and control which relate to the Property
(collectively, the "Seller's Deliveries"). Purchaser covenants and
agrees that it shall conduct its investigations and inspections in
such a manner so as not to disrupt the existing tenants or the
operation of the Property.
5.2. (a) Should the results of any Phase I environmental study undertaken
pursuant to Section 5.1.1 above warrant or indicate, in Purchaser's sole
discretion, the undertaking of a Phase II environmental investigation,
then the Feasibility Period shall be extended by thirty (30) days,
provided Purchaser has given Seller Notice of such election prior to the
expiration of the Feasibility Period.
(b) Should the results of any of the matters referred to in Sections
5.1.1, 5.1.2 and 5.1.3 above appear unsatisfactory to Purchaser, in its
sole discretion, for any reason, then Purchaser shall have the right to
terminate this Purchase Contract by giving written Notice to that effect
to Seller and Escrow Agent on or before 5:00 p.m. EST on the date of
expiration of the Feasibility Period. If Purchaser exercises such right to
terminate, this Purchase Contract shall terminate and be of no further
force and effect, subject to and except for Purchaser's liability under
Section 5.3, and Escrow Agent shall promptly return the Deposit to
Purchaser. If Purchaser fails to provide Seller with written Notice of
cancellation prior to the end of the Feasibility Period in strict
accordance with the Notice provisions of this Purchase Contract, this
Purchase Contract shall remain in full force and effect and Purchaser's
obligation to purchase the Property shall be non-contingent and
unconditional except only for satisfaction of the conditions expressly
stated in this Purchase Contract.
5.3. Purchaser shall indemnify and hold Seller harmless for any actions taken
by Purchaser and its Consultants on the Property. Purchaser shall
indemnify, defend (with attorneys selected by Seller) and hold Seller
harmless from any and all claims, damages, costs and liability which may
arise due to such entries, surveys, tests, investigations and the like.
Seller shall have the right to reasonably disapprove any and all entries,
surveys, tests, investigations and the like that in their reasonable
judgment could result in any injury to the Property or breach of any
agreement, or expose Seller to any liability, costs, liens or violations
of applicable law, or otherwise adversely affect the Property or Seller's
interest therein. No consent by the Seller to any such activity shall be
deemed to constitute a waiver by Seller or assumption of liability or risk
by Seller. To the extent that Purchaser alters the physical condition of
the Property in connection with the exercise of its rights pursuant to
this Article 5, Purchaser hereby agrees to restore the Property to the
same condition existing immediately prior to Purchaser's exercise of its
rights pursuant to this ARTICLE 5 at Purchaser's sole cost and expense.
Purchaser (or Purchaser's Consultants) shall maintain casualty insurance
and comprehensive public liability insurance with broad form contractual
and personal injury liability endorsements with respect to the Property
and Purchaser's activities carried on therein, in commercially reasonable
amounts (including deductible amounts) with duly licensed insurance
carriers and naming Seller as an Additional Insured. The provisions of
this Section 5.3 shall survive the Closing or termination of this Purchase
Contract.
5.4. Purchaser shall not permit any mechanic's or materialman's liens or any
other liens to attach to the Property by reason of the performance of any
work or the purchase of any materials by Purchaser or any other party in
connection with any studies or tests conducted by or for Purchaser.
Purchaser shall give Notice to Seller a reasonable time prior to entry
onto the Property and shall permit Seller to have a representative present
during all investigations and inspections conducted with respect to the
Property. Purchaser shall take all reasonable actions and implement
commercially reasonable protections to ensure that all actions taken in
connection with the investigations and inspections of the Property, and
all equipment, materials and substances generated, used or brought onto
the Property pose no material threat to the safety of persons or the
environment and cause no damage to the Property or other property of
Seller or other persons. All information made available by Seller to
Purchaser in accordance with this Purchase Contract or obtained by
Purchaser in the course of its investigations shall be treated as
confidential information by Purchaser, and, prior to the purchase of the
Property by Purchaser, Purchaser shall use its best efforts to prevent its
agents and employees from divulging such information to any unrelated
third parties except as reasonably necessary to third parties engaged by
Purchaser for the limited purpose of analyzing and investigating such
information for the purpose of consummating the transaction contemplated
by this Purchase Contract, including Purchaser's consultants, attorneys
and representatives, prospective lenders and engineers.
ARTICLE 6
TITLE
6.1. Seller shall promptly, and in any event within fifteen (15) days after the
Effective Date, secure and forward to Purchaser a commitment for title
insurance for the Property in an amount equal to the Purchase Price
("Title Commitment") issued by Broad and Cassel, as an agent for Chicago
Title Insurance Company ("Title Insurer") for an owner's title insurance
policy on the most recent standard American Land Title Association ALTA
Policy form (the "Title Policy"), together with legible copies of all
instruments identified as exceptions therein. The Title Policy shall have
all standard and general printed exception deleted so as to afford full
"extended form coverage," and shall further include, to the extent
available in Florida, a tax parcel endorsement, a "Fairway" endorsement,
an access endorsement, a survey endorsement, a plat act or subdivision
endorsement, and any other Property specific endorsements, if any, which
may be reasonably requested by Purchaser (collectively, the
"Endorsements"). Seller agrees that it shall be solely responsible for
payment of all costs relating to procurement of the Title Commitment and
the Title Policy, including, without limitation, the cost of the
Endorsements.
6.2. The conveyance of the Land and Improvements by special warranty or
equivalent deed pursuant to this Purchase Contract shall be subject to the
following, all of which shall be deemed "Permitted Exceptions" and
Purchaser agrees to accept the deed and title subject thereto:
6.2.1.All claims, liens, encumbrances, restrictions, covenants,
easements, exceptions, conditions or other matters shown on the
Title Commitment or the Survey (collectively, "Title Exceptions")
and not objected to by Purchaser in writing during the Feasibility
Period; and
6.2.2. All Commercial Leases and any other occupancy, residency,
lease, tenancy and similar agreements entered into by Seller
after the Effective Date and approved by Purchaser pursuant to
the terms of this Purchase Contract; and
6.2.3. All Property Contracts and any other contracts entered into
by Seller after the Effective Date and approved by Purchaser
pursuant to the terms of this Purchase Contract; and
6.2.4. Real estate and property taxes to the extent not due and
payable; and
6.3. Except as provided in Section 6.6 below, the existence of mortgages,
liens, or encumbrances shall not be objections to title, provided that
properly executed instruments in recordable form necessary to satisfy and
remove the same of record are delivered to the Purchaser at Closing or, in
the alternative, with respect to any mortgage or deed of trust liens, that
payoff letters from the holder of the mortgage or deed of trust liens
shall have been delivered to and accepted by the Title Insurer (sufficient
to remove the same from the policy issued at Closing), together in either
case, with recording and/or filing fees.
6.4. Unpaid liens for taxes, charges, and assessments shall not be objections
to title, but the amount thereof plus interest and penalties thereon shall
be deducted from the Purchase Price to be paid for the applicable Property
hereunder and allowed to Purchaser, subject to the provisions for
apportionment of taxes and charges contained herein.
6.5. Unpaid franchise or business corporation taxes of any corporations in the
chain of title shall not be an objection to title, provided that the Title
Insurer agrees to insure against collection out of the Property or
otherwise against Purchaser or its affiliates, and provided further that
the Title Insurer agrees to omit such taxes as exceptions to coverage with
respect to any lender's mortgagee insurance policy.
6.6. Notwithstanding anything contained in this ARTICLE 6 to the contrary,
Seller shall be unconditionally obligated to take all steps; spend all
necessary funds; institute and prosecute any action or proceedings; and
otherwise take any and all steps and measures to cure or remove the
following Title Exceptions (the "Mandatory Cure Items"), whether described
in the Title Commitment or on the Survey, or first arising or first
disclosed to Purchaser after the date of the Title Commitment or Survey,
as the case may be: (a) liens securing a mortgage, deed of trust or trust
deed; (b) any Title Exception arising as a result of, due to, or because
of, any willful or intentional act or omission of any or all of Seller,
its members, partners or shareholders and the officers, directors,
employees, agents or duly authorized managing agent of any or all of
Seller, its members, partners or shareholders (collectively "Seller
Parties"), which act or omission occurs after the earlier of (i) the
effective date of the applicable item of Title Commitment and (ii) the
Effective Date; (c) judgment liens against any or all of Seller and the
Seller Parties; tax liens; and broker's liens; and (d) any mechanics liens
that are based upon a written agreement between either (x) the claimant (a
"Contract Claimant") and any or all of Seller and the Seller Parties, or
(y) the Contract Claimant and any other contractor, supplier or
materialman with which any or all of Seller and the Seller Parties has a
written agreement. Prior to Closing, such Mandatory Cure Items shall be
cured or removed (by endorsement or otherwise in form and substance
reasonably acceptable to Purchaser) from the Title Commitment by Seller.
Notwithstanding anything to the contrary set forth herein, if, prior to
Closing, Seller fails to so cure or remove (or insure over, in a form and
substance reasonably acceptable to Purchaser) all Mandatory Cure Items,
then Purchaser may either (1) terminate this Purchase Contract by written
Notice to Seller, in which event the deposit shall be returned to
Purchaser; or (2) proceed to close with title to the Property as it then
is, with the right to deduct from the Purchase Price a sum equal to the
aggregate amount necessary to cure or remove (by endorsement or otherwise,
as reasonably determined by Purchaser, acting in good faith) the Mandatory
Cure Items; provided, however, that if such items are cured or removed by
endorsements, the form and substance of such endorsements must be
reasonably satisfactory to Purchaser.
6.7. If on the Closing Date there shall be conditional bills of sale or Uniform
Commercial Code financing statements that were filed on a day more than
Five (5) years prior to such Closing, and such financing statements have
not been extended by the filing of UCC-3 continuation statements within
the past Five (5) years prior to such Closing, such financing statements
shall not be deemed to be an objection to title.
6.8. If any Title Exception first arises, or is first disclosed to Purchaser,
after the expiration of the Feasibility Period, and renders title
unacceptable to Purchaser, or if on the Closing Date, the state of title
is other than in accordance with the requirements set forth in this
Purchase Contract or if any condition to be fulfilled by Seller shall not
be satisfied, Purchaser shall provide Seller with written Notice thereof
at such time, or such title objection or unfulfilled condition shall be
deemed waived by Purchaser in which case Purchaser and Seller shall
proceed to consummate the Closing on the Closing Date. If Purchaser timely
gives Seller such Notice, Seller at its sole option and within seven (7)
calendar days following receipt of such Notice may elect to cure such
objection or unfulfilled condition for up to sixty (60) calendar days
provided that Seller continues to diligently pursue such cure. Should
Seller be able to cure such title objection or condition, or should Seller
be able to cause title insurance over the same by the Closing Date or any
postponed Closing Date, or should Purchaser waive such objection or
condition within such period for cure, then the Closing shall take place
on or before fifteen (15) calendar days after Notice of such cure or
waiver.
6.9. If Seller is unable or unwilling, in its sole discretion or opinion, to
eliminate, cause the Title Insurer to insure over, or otherwise satisfy
(to Purchaser's reasonable satisfaction) any Title Exception objected to
by Purchaser in writing during the Feasibility Period, Seller shall give
Purchaser written Notice thereof ("Seller's Title Response Notice") within
seven (7) calendar days following Purchaser's delivery of its Notice of
Objection to Seller. If Purchaser does not waive such objection by written
Notice delivered to Seller and the Title Insurer issuing the Title
Commitment on or before Seven (7) calendar days following the date Seller
gives such Notice, then this Purchase Contract shall automatically
terminate, and the parties hereto shall have no further obligations to
each other; provided, however, if Seller fails to timely deliver a
Seller's Title Response Notice, or if Seller's Title Response Notice does
not include all of the Title Exceptions objected to by Purchaser during
the feasibility period, Seller shall be unconditionally obligated to take
all steps; spend all necessary funds; institute and prosecute any action
or proceedings; and otherwise take any and all steps or measures to cure
or remove any Title Exception objected to by Purchaser during the
feasibility period and not included in Seller's Title Response Notice.
6.10. Seller covenants that it will not voluntarily create or cause any lien or
encumbrance (other than Commercial Leases and Property Contracts as
permitted in ARTICLE 15) to attach to the Property between the date of
this Purchase Contract and the Closing Date; any such monetary lien or
encumbrance so attaching by voluntary act or omission of Seller shall be
discharged by the Seller at or prior to Closing on the Closing Date or any
postponed Closing Date. Except as expressly provided above, Seller shall
not be required to undertake efforts to remove any other lien,
encumbrance, security interest, exception, objection or other matter, to
make any expenditure of money or institute litigation or any other
judicial or administrative proceeding and Seller may elect not to
discharge the same.
6.11. Purchaser shall not have any right to terminate this Purchase Contract or
object to any lien, encumbrance, exception or other matter that is a
Permitted Exception or that has been waived or deemed to have been waived
by Purchaser.
6.12. Purchaser, at Seller's sole cost and expense, promptly shall cause to be
prepared a survey for the Property ("Survey") to be delivered to Purchaser
and Seller within the Feasibility Period. The Survey (i) shall be prepared
in accordance with and shall comply with the minimum requirements of the
ALTA; (ii) shall be in a form, and shall be certified as of a date
satisfactory to Title Insurer to enable Title Insurer to delete standard
survey exceptions from the title insurance policy to be issued pursuant to
the Title Commitments, except for any Permitted Exceptions; (iii) shall
specifically show all improvements, recorded easements to the extent
locatable, set back lines, and such other matters shown as exceptions by
the Title Commitments; (iv) shall specifically show the right of way for
all adjacent public streets; (v) shall specifically disclose whether (and,
if so, what part of) any of the Property is in an area designated as
requiring flood insurance under applicable federal laws regulating
lenders; (vi) shall contain a perimeter legal description of the Property
which may be used in the special warranty deed; (vii) shall be certified
to Purchaser, Purchaser's lender (if any), Seller and Title Insurer as
being true and correct; and (viii) shall certify that the legal
description set forth therein describes the same, and comprises all of,
the real estate comprising the Property to be purchased by Purchaser
pursuant to the terms of this Purchase Contract and (ix) shall contain the
certification attached hereto as Exhibit D. In the event the perimeter
legal description of the Property contained in the Survey differs from
that contained in the deed or deeds by which Seller took title to the
Property, the latter description shall be used in the special warranty
deed delivered to Purchaser at Closing, and the Survey legal shall be used
in a quitclaim deed to the Property which also shall be delivered to
Purchaser at Closing.
6.12.1. Should such Survey disclose conditions that give rise to a Title
Exception other than a Permitted Exception, Purchaser shall have the
right to object thereto within the Feasibility Period in accordance
with the procedures set forth in ARTICLE 5 and ARTICLE 6 of this
Purchase Contract.
6.12.2. Seller agrees to make payment in full of all costs of obtaining
Surveys required by this Purchase Contract on or before Closing or
termination of this Purchase Contract.
ARTICLE 7
CLOSING
7.1. Dates, Places Of Closing, Prorations, and Delinquent Rent.
7.1.1.The Closing shall take place in the offices of Broad and Cassel,
201 S. Biscayne Boulevard, Suite 3000, Miami, Florida 33131 or such
other place as the parties shall mutually agree upon at a time
mutually agreed upon on the Closing Date. If requested by; either
Purchaser or Seller, the parties shall conduct closing through a
pre-closing, an escrow or other arrangement reasonably requested by
Seller or Purchaser, whereby neither the Seller nor the Purchaser
need not be physically present at the Closing and may deliver
documents by overnight air courier or other means.
7.1.2 All normal and customarily proratable items, including, without
limitation, Rents (as defined below), operating expenses, personal
property taxes, other operating expenses and fees, shall be prorated
as of the Closing Date, Seller being charged and credited for all of
same attributable to the period up to the Closing Date (and credited
for any amounts paid by Seller attributable to the period on or
after the Closing Date) and Purchaser being responsible for, and
credited or charged, as the case may be, for all of same
attributable to the period on and after the Closing Date; provided,
however, that Rents applicable to the month in which the Closing
occurs shall only be prorated to the extent that Seller has actually
collected such Rents prior to the Closing Date. The full amount of
all security deposits required to be held under the Commercial
Leases, if any, shall be transferred by Seller to Purchaser at the
Closing. Purchaser shall assume at Closing the obligation to pay any
accrued but unpaid tenant improvement allowances and leasing
commissions, together with any payments due parties to other
agreements affecting the Property which survive Closing, provided
the same are identified on Exhibit K to this Contract. Seller shall
remain obligated to pay any and all tenant improvement allowances
and leasing commissions which are not identified on Exhibit K. Any
real estate ad valorem or similar taxes for the Property payable in
the year of Closing, or any installment of assessments payable in
installments which installment is payable in the year of Closing,
shall be prorated to the date of Closing, based upon actual days
involved. The proration of real property taxes or installments of
assessments shall be based upon the assessed valuation and tax rate
figures for the year in which the Closing occurs to the extent the
same are available; provided, that in the event that actual figures
(whether for the assessed value of the Property or for the tax rate)
for the year of Closing are not available at the Closing Date, the
proration shall be made using figures from the preceding year. The
proration shall be final and unadjustable except as provided in the
following paragraph. For purposes of this Section 7.1.2. and Section
7.1.3. and 7.1.4. the terms "Rent" and "Rents" shall include,
without limitation, base rents, additional rents, percentage rents
and common area maintenance charges. The provisions of this Section
7.1.2. shall apply during the Proration Period (as defined below).
7.1.3.If any of the items subject to proration hereunder cannot be
prorated at the Closing because the information necessary to compute
such proration is unavailable, or if any errors or omissions in
computing prorations at the Closing are discovered subsequent to the
Closing, then such item shall be reapportioned and such errors and
omissions corrected as soon as practicable after the Closing Date
and the proper party reimbursed, which obligation shall survive the
Closing for a period (the "Proration Period") from the Closing Date
until one (1) year after the Closing Date. Neither party hereto
shall have the right to require a recomputation of a Closing
proration or a correction of an error or omission in a Closing
proration unless within the Proration Period one of the parties
hereto (i) has obtained the previously unavailable information or
has discovered the error or omission, and (ii) has given Notice
thereof to the other party together with a copy of its good faith
recomputation of the proration and copies of all substantiating
information used in such recomputation. The failure of a party to
obtain any previously unavailable information or discover an error
or omission with respect to an item subject to proration hereunder
and to give Notice thereof as provided above within the Proration
Period shall be deemed a waiver of its right to cause a
recomputation or a correction of an error or omission with respect
to such item after the Closing Date. Any Rents that have accrued,
but have not yet been paid shall be prorated in accordance with
estimates based upon the prior years' information (or reasonable
estimates of Seller if no such prior years' information is
available), and shall be subsequently readjusted and reapportioned
upon receipt. Purchaser shall pay Seller for Rents that have
accrued, but are not yet due and payable, at Closing.
7.1.4.If on the Closing Date any Tenant is in arrears in any Rent payment
under any Tenant lease (the "Delinquent Rent"), any Delinquent Rent
received by Purchaser and Seller from such Tenant after the Closing
shall be applied to amounts due and payable by such Tenant during
the following periods in the following order of priority: (i) first,
to the period of time after the Closing Date, and (ii) second, to
the period of time before the Closing Date. If Delinquent Rent or
any portion thereof received by Seller or Purchaser after the
Closing are due and payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any
reasonable attorneys' fees and costs and expenses expended in
connection with the collection thereof, shall be promptly paid to
the other party. After the Closing, Seller shall continue to have
the right, but not the obligation, in its own name, to demand
payment of and to collect Delinquent Rent owed to Seller by any
Tenant, which right shall include, without limitation, the right to
continue or commence legal actions or proceedings against any Tenant
(provided, that Seller shall not commence any legal actions or
proceedings against any Tenant which continues as a Tenant at the
Property after Closing without the prior consent of Purchaser, which
will not be unreasonably withheld or delayed), and the delivery of
the Assignment as defined in Section 7.2.1.5 shall not constitute a
waiver by Seller of such right. Purchaser agrees to reasonably
cooperate with Seller, at no cost or liability to Purchaser, in
connection with all efforts by Seller to collect such Delinquent
Rent and to take reasonable steps, whether before or after the
Closing Date, as may be necessary to carry out the intention of the
foregoing, including, without limitation, the delivery to Seller,
upon demand, of any relevant books and records (including, without
limitation, rent statements, receipted bills and copies of tenant
checks used in payment of such rent); provided, however, that (i) in
no event may Seller bring any action to evict any Tenant from the
Property and (ii) Purchaser's obligation to reasonably cooperate
with Seller pursuant to this sentence shall not obligate Purchaser
to commence any legal actions or proceedings against any Tenant,
terminate any Tenant lease with an existing Tenant or evict any
existing Tenant from the Property. The provisions of this Section
7.1.4. shall apply during the Proration Period.
7.1.5.State of Florida Sales Tax. Prior to or at Closing, Seller shall
pay or have paid any and all sales tax imposed by the State of
Florida ("Sales Tax") due and owing on lease receipts for the period
prior to the month in which Closing occurs. The Sales Tax payable
for the month in which Closing occurs shall be prorated such that
Purchaser receives a credit for such Sales Tax from Seller for the
pro rata portion of such month prior to Closing, whereupon Purchaser
shall be obligated to pay the Sales Tax for the month of Closing.
Sales Tax for the month in which Closing occurs shall be prorated on
the basis of the most currently available schedule of rent receipts
for the Property. Alternatively, Seller may deliver an affidavit (in
form reasonably acceptable to Purchaser) for the benefit of
Purchaser as to the absence of any unpaid Sales Tax, which affidavit
shall contain an indemnity from Seller for the benefit of Purchaser
against any and all liability for unpaid Sales Tax. At Closing, the
total amount of any unpaid Sales Tax shall be deducted from the net
proceeds of sale payable to Seller and either (i) paid directly to
the applicable taxing authority or (ii) withheld for the benefit of
Purchaser. The provisions of this Section 7.1.5 shall survive
Closing and the delivery of any conveyance documentation
7.2. Items To Be Delivered Prior To Or At Closing.
7.2.1. Seller. At Closing, Seller shall deliver to Purchaser,
each of the following items, as applicable:
7.2.1.1. Special warranty deed in favor of Purchaser or permitted
assignee. The acceptance of the deed at Closing, shall be
deemed to be full performance of, and discharge of, every
agreement and obligation on Seller's part to be performed
under this Purchase Contract, except for those that this
Purchase Contract specifically provides shall survive
Closing.
7.2.1.2. The Title Policy (or a "marked up" Title Commitment) issued
by the Title Insurer, dated as of the date of the
recordation of the special warranty deed in the amount of
the Purchase Price, with the Endorsements, and otherwise in
accordance with the provision of ARTICLE 6 of this Purchase
Contract.
7.2.1.3. An Assignment of all of Seller's right, title and interest
to all Property Contracts, Commercial Leases, and Permits
(other than Excluded Permits). Purchaser shall countersign
the same so as to effect an assumption by Purchaser,
including, without limitation, of Seller's obligations
thereunder. Such Assignment shall include (i) the agreement
of Seller to indemnify, protect, defend and hold Purchaser
harmless from and against any and all claims, damages,
issues, suits proceedings, costs and expenses (including
without limitation reasonable attorneys fees) in connection
with the Commercial Leases and Property Contracts and
relating to the period of time prior to closing and (ii)
the corresponding agreement of Purchaser to indemnify
Seller for claims arising in connection with the Commercial
Leases and Property Contracts and relating to the period of
time after the Closing.
7.2.1.4. A Bill of Sale without recourse or warranty conveying
the Fixtures and Tangible Personal Property to Purchaser.
7.2.1.5 An Assignment (to the extent assignable and in force and
effect) without recourse or warranty of all of Seller's
right, title and interest in and to the Miscellaneous
Property Assets, subject to any required consents.
7.2.1.6. A closing statement executed by Seller.
7.2.1.7. The Estoppel Certificates and Subordination Agreements
in conformity with ARTICLE 14 hereof.
7.2.1.8. A vendor's affidavit or at Seller's option an indemnity, as
applicable, in the customary form reasonably acceptable to
Seller to enable Title Insurer to delete the standard
exceptions, (other than matters constituting any Permitted
Exceptions to the Title Policy set forth in this Purchase
Contract and matters which are to be completed or performed
post-Closing) to be issued pursuant to the Title
Commitment; and
7.2.1.9. Letters to be sent by certified mail, return receipt
requested, and executed by Seller and, if applicable, its
management agent, and Purchaser or an affiliate of
Purchaser addressed to all tenants (with the return receipt
addressed to Mary Covaci at the address of Purchaser), in
the form of Exhibit E attached hereto.
7.2.1.10.A certification of Seller's non-foreign status pursuant to
Section 1445 of the Internal Revenue Code of 1986, as
amended.
7.2.1.11.Seller's affidavit confirming that the sale of the
Property to Purchaser hereunder is not subject to, and does
not subject Purchaser to, liability for income tax, retail
sales tax or bulk sales obligations under the applicable
law of the state in which the Property is located.
7.2.1.12.A certificate, signed by Seller, certifying to the
Purchaser that the representations and warranties of Seller
contained in this Purchase Contract are true and correct as
of the Closing Date; and that all covenants required to be
performed by Seller prior to the Closing Date have been
performed, in all material respects.
7.2.1.13.Except for the items expressly listed above to be
delivered at Closing, delivery of any other required items
shall be deemed made by Seller to Purchaser, if Seller
leaves such documents at the Property in their customary
place of storage or in the custody of Purchaser's
representatives.
7.2.2. Purchaser. At Closing, Purchaser shall deliver to Seller
the following items with respect to each Property being conveyed
or transferred by merger at such Closing:
7.2.2.1. The full Purchase Price as required by ARTICLE 3 hereof
plus or minus the adjustments or prorations required by
this Purchase Contract. If at Closing there are any liens
or encumbrances on the Property that Seller is obligated or
elects to pay and discharge, Seller may use any portion of
the Purchase Price for the Property(s) to satisfy the same,
provided that Seller shall have delivered to Purchaser, or
to Purchaser's designee, on such Closing instruments in
recordable form sufficient to satisfy such liens and
encumbrances of record (or, as to any mortgages or deeds of
trust, appropriate payoff letters, acceptable to the Title
Insurer), together with the cost of recording or filing
such instruments.
7.2.2.2. A closing statement executed by Purchaser.
7.2.2.3. A countersigned counterpart of the Assignment of
Property Contracts, Commercial Leases and Permits.
7.2.2.4. Such other instruments, documents or certificates as are
required to be delivered by Purchaser to Seller in
accordance with any of the other provisions of this
Purchase Contract.
ARTICLE 8.
REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER AND PURCHASER
8.1. Representations And Warranties Of Seller.
8.1.1.For the purpose of inducing Purchaser to enter into this Purchase
Contract and to consummate the sale and purchase of the Property in
accordance herewith, Seller represents and warrants to Purchaser the
following as of the Effective Date and as of the Closing Date:
8.1.1.1. Seller identified in the Recitals is lawfully and duly
organized, and in good standing under the laws of the state
of its formation set forth in the initial paragraph of this
Purchase Contract; and has or at Closing shall have the
power and authority to sell and convey the Property and to
execute the documents to be executed by Seller and prior to
Closing will have taken as applicable, all corporate,
partnership, limited liability company or equivalent entity
actions required for the execution and delivery of this
Purchase Contract, and the consummation of the transactions
contemplated by this Purchase Contract. The compliance with
or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms,
conditions or provisions of, or constitute a default under,
any Purchase Contract to which Seller is a party or by
which Seller or any Subsidiary Owner is otherwise bound.
Seller has not made any other Purchase Contract for the
sale of, or given any other person the right to purchase,
all or any part of any of the Property applicable to the
foregoing representation;
8.1.1.2. Seller owns insurable, fee title to the Property,
including all real property contained therein required
to be sold to Purchaser, subject only to the Permitted
Exceptions;
8.1.1.3. There are no adverse or other parties in possession of
the Property, except for occupants, guests and tenants
under the Commercial Leases;
8.1.1.4. The joinder of no person or entity other than Seller is
necessary to convey the Property, fully and completely to
Purchaser at Closing, or to fulfill Seller's obligations
and Seller has all necessary right and authority to convey
and assign to Purchaser all contract rights and warranties
required to be conveyed and assigned to Purchaser
hereunder;
8.1.1.5. Purchaser has no duty to collect withholding taxes for
Seller pursuant to the Foreign Investors Real Property
Tax Act of 1980, as amended;
8.1.1.6. To Seller's actual knowledge, there are no actions,
proceedings, litigation or governmental investigations
or condemnation actions either pending or threatened
against the Property, as applicable;
8.1.1.7. Seller has no actual knowledge of any claims for labor
performed, materials furnished or services rendered in
connection with constructing, improving or repairing any of
the Property, as applicable, caused by Seller and which
remain unpaid beyond the date for which payment was due and
in respect of which liens may or could be filed against any
of the Property, as applicable;
8.1.1.8. Seller has no actual knowledge, and has not received or is
not in possession of any written Notice advising or
alleging, that the entirety of the Property, and the use
and operation thereof, are not in compliance with all
applicable municipal and other governmental laws,
ordinances, rules, regulations, codes, licenses, permits
and authorizations. To Seller's knowledge, there are
presently and validly in effect all licenses, permits and
other authorizations necessary for the use, occupancy and
operation of the Property as it is presently being
operated.
8.1.1.9. To Seller's actual knowledge, all of Seller's Deliveries
listed on Exhibit C hereto, (and which are actually in the
Seller's possession) are true, correct and complete in all
material respects, and fairly present the information set
forth in a manner that is not materially misleading.
8.1.1.10.To Seller's actual knowledge, (i) the tenants listed in
the Rent Roll (as defined on Exhibit C) are the only
tenants occupying the Project; (ii) there are no other
leases, tenancies or other arrangements under which any
other party has a right to occupy all or any part of the
Property; (iii) copies of all Commercial Leases, and all
amendments thereto and guaranties thereof, if any, have
been furnished by Seller to Purchaser and the copies so
provided are true, correct and complete; (iv) the
Commercial Leases have not been amended, modified or
terminated (except for any amendments delivered to
Purchaser pursuant to the preceding sentence) and are in
full force and effect; (v) the Commercial Leases are
presently in full force and effect and there are no
material defaults thereunder; (vi) the Rent Roll is true,
accurate and correct in all material respects; and (vii)
all leasing and real estate brokerage fees and commissions,
if any, for the initial term, and any renewal term
presently in effect, of each Commercial Lease have been
paid.
8.1.2.Except for the representations and warranties expressly set forth
above in Section 8.1.1 the Property is expressly purchased and sold
"AS IS," "WHERE IS," and "WITH ALL FAULTS." The Purchase Price and
the terms and conditions set forth herein are the result of
arm's-length bargaining between entities familiar with transactions
of this kind, and said price, terms and conditions reflect the fact
that Purchaser shall have the benefit of, and is relying upon, no
information provided by Seller and no statements, representations or
warranties (except as set forth in Section 8.1.1 above), express or
implied, made by or enforceable directly against Seller, including,
without limitation, any relating to the value of the Property, the
physical or environmental condition of the Property, the state,
federal, county or local law, ordinance, order, permit or
suitability, compliance or lack of compliance of the Property with
any regulation, or any other attribute or matter of or relating to
the Property (other than any covenants of title contained in the
deeds conveying the Property and the representations set forth
above). Purchaser represents and warrants that as of the date hereof
and as of the Closing Date, it has and shall have reviewed and
conducted such independent analyses, studies, reports,
investigations and inspections as it deems appropriate in connection
with the Property. If Seller provides or has provided any documents,
opinions or work product of consultants, surveyors, architects,
engineers, title companies, governmental authorities or any other
person or entity with respect to the Property, Purchaser and Seller
agree that Seller has done so or shall do so only for the
convenience of both parties, Purchaser shall not rely thereon and
the reliance by Purchaser upon any such documents, opinions or work
product shall not create or give rise to any liability of or against
Seller, any Subsidiary Owner, Seller's partners or affiliates or any
of their respective partners, officers, directors, participants,
employees, contractors, attorneys, consultants, representatives,
agents, successors, assigns or predecessors-in-interest. Purchaser
shall rely only upon any title insurance obtained by Purchaser with
respect to title to the Property. Purchaser acknowledges and agrees
that (except as set forth in Section 8.1.1 above) no representation
has been made and no responsibility is assumed by Seller with
respect to current and future applicable zoning or building code
requirements or the compliance of the Property with any other laws,
rules, ordinances or regulations, the financial earning capacity or
expense history of the Property, the continuation of contracts,
continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by tenants of any Commercial Leases or,
without limiting any of the foregoing, occupancy at Closing. Prior
to Closing, Seller shall have the right, but not the obligation, to
enforce its rights against any and all Property occupants, guests or
tenants.
8.1.3.Seller and Purchaser agree that those representations contained in
Section 8.1 shall survive Closing for a period of One (1) year (that
is, any proceeding based on the breach of a representation contained
in Section 8.1 that survives Closing must be commenced within One
(1) year subsequent to the date of such representation). In the
event that Seller breaches any representation contained in Section
8.1 and Purchaser had knowledge of such breach, Purchaser shall be
deemed to have waived any right of recovery and Seller shall not
have any liability in connection therewith.
8.1.4.Representations and warranties above made to the knowledge of
Seller shall not be deemed to imply any duty of inquiry. For
purposes of this Purchase Contract, the term Seller's "knowledge"
shall mean and refer to only actual knowledge of the Designated
Representative (as hereinafter defined) of the Seller and shall not
be construed to refer to the knowledge of any other partner,
officer, director, agent, employee or representative of the Seller,
or any affiliate of the Seller, or to impose upon such Designated
Representative any duty to investigate the matter to which such
actual knowledge or the absence thereof pertains, or to impose upon
such Designated Representative any individual personal liability. As
used herein, the term "Designated Representative" shall refer to
Patty Malia. Seller hereby represents and warrants to Purchaser that
(a) the Designated Representative currently is, a Senior Property
Manager employed by Insignia Commercial Group, Inc., which is
Seller's third party property management company, which company has
managed the Property for the preceding approximately four year
period and (b) the Designated Representative is the person with the
most knowledge of Seller's day-to-day operation and maintenance of
the Property and Seller has no other employees, officers, agents or
third party property managers who might be reasonably expected to
have knowledge regarding the day-to-day operation or maintenance of
the Property that the Designated Representative does not share.
8.2. Representations And Warranties Of Purchaser
8.2.1.For the purpose of inducing Seller to enter into this Purchase
Contract and to consummate the sale and purchase of the Property in
accordance herewith, Purchaser represents and warrants to Seller the
following as of the Effective Date and as of the Closing Date:
8.2.2. With respect to Purchaser and its business, Purchaser
represents and warrants, in particular, that:
8.2.2.1. FR Acquisitions, Inc. is a Corporation duly organized,
validly existing and in good standing under the laws of
the State of Maryland.
8.2.2.2. Purchaser, acting through any of its or their duly
empowered and authorized officers or members, has all
necessary power and authority to own and use its properties
and to transact the business in which it is engaged, and
has full power and authority to enter into this Purchase
Contract, to execute and deliver the documents and
instruments required of Purchaser herein, and to perform
its obligations hereunder; and no consent of any of
Purchaser's officers or members are required to so empower
or authorize Purchaser.
8.2.2.3. No pending or, to the knowledge of Purchaser, threatened
litigation exists which if determined adversely would
restrain the consummation of the transactions contemplated
by this Purchase Contract or would declare illegal, invalid
or non-binding any of Purchaser's obligations or covenants
to Seller.
8.2.2.4. Purchaser is duly authorized to execute and deliver, acting
through its duly empowered and authorized officers and
members, respectively, and perform this Purchase Contract
and all documents and instruments and transactions
contemplated hereby or incidental hereto, and such
execution, delivery and performance by Purchaser does not
(i) violate any of the provisions of their respective
certificates of incorporation or bylaws, (ii) violate any
provision of any law, governmental rule or regulation
currently in effect, (iii) violate any judgment, decree,
writ, injunction, award, determination or order currently
in effect that names or is specifically directed at
Purchaser or its property, and (iv) require the consent,
approval, order or authorization of, or any filing with or
Notice to, any court or other governmental authority.
8.2.2.5. The joinder of no person or entity other than Purchaser is
necessary to consummate the transactions to be performed by
Purchaser and Purchaser has all necessary right and
authority to perform such acts as are required and
contemplated by this Purchase Contract.
8.2.3.Purchaser has not dealt with any broker, finder or any other
person, in connection with the purchase of or the negotiation of the
purchase of the Property that might give rise to any claim for
commission against Seller or lien or claim against the Property.
ARTICLE 9.
CONDITIONS PRECEDENT TO CLOSING
9.1. Purchaser's obligation to close under this Purchase Contract, shall be
subject to and conditioned upon the fulfillment of each and all of the
following conditions precedent:
9.1.1. All of the documents required to be delivered by Seller to
Purchaser at each Closing pursuant to the terms and conditions
hereof shall have been delivered and shall be in form and
substance reasonably satisfactory to Purchaser;
9.1.2. Each of the representations and warranties of Seller
contained herein shall be true in all material respects as of the
Closing Date;
9.1.3. Seller shall have complied with, fulfilled and performed in
all material respects each of the covenants, terms and conditions
to be complied with, fulfilled or performed by Seller hereunder;
9.1.4.The physical condition of the Property shall be substantially the
same on the Closing Date as on the Effective Date, reasonable wear
and tear excepted, unless the alteration of said physical condition
is the result of Damage and Eminent Domain (as such terms
hereinafter are defined).
9.1.5.At Closing, there shall be no administrative agency, litigation or
governmental proceeding of any kind whatsoever, pending or
threatened, that, after Closing, would, in Purchaser's sole (but
reasonable) discretion, materially and adversely affect the value or
marketability of the Property, or the ability of Purchaser to
operate the Property in the manner it is being operated on the
Effective Date.
9.1.6.If applicable, Seller shall have complied with all requirements of
any law relating to the sale or transfer of the assets of a
business, including without limitation, the requirements of the law,
relating to bulk sales.
In the event of the failure of any condition precedent to Purchaser's
obligation to close set forth in this Purchase Contract (other than as the
result of, due to or because of any willful or intentional act or omission
of Purchaser), Purchaser may elect to terminate this Purchase Contract,
whereupon the Deposit shall be promptly returned to Purchaser.
9.2. Without limiting any of the rights of Seller elsewhere provided for in
this Purchase Contract, Seller's obligation to close with respect to
conveyance of a particular Property under this Purchase Contract shall be
subject to and conditioned upon the fulfillment of each and all of the
following conditions precedent:
9.2.1.Purchaser's representations and warranties set forth in this
Purchase Contract shall have been true and correct in all material
respects when made, and shall be true and correct in all material
respects on the Closing Date and as of the Effective Date as though
such representations and warranties were made at and as of such date
and time.
9.2.2.Purchaser shall have fully performed and complied with all
covenants, conditions, and other obligations in this Purchase
Contract to be performed or complied with by it at or prior to
Closing including, without limitation, payment in full of the
Purchase Price.
9.2.3.There shall not be pending or, to the knowledge of either Purchaser
or Seller, any litigation or threatened litigation which, if
determined adversely, would restrain the consummation of any of the
transactions contemplated by this Purchase Contract or declare
illegal, invalid or nonbinding any of the covenants or obligations
of the Purchaser.
ARTICLE 10.
BROKERAGE
10.1. Seller represents and warrants to Purchaser that it has dealt only with
Lang Baumgarten, Aztec Group, Inc., 2665 South Bayshore Drive,
Penthouse-IIA, Coconut Grove, Florida 33133 ("Broker") in connection with
this Purchase Contract. Seller and Purchaser each represents and warrants
to the other that other than Aztec Group, Inc., it has not dealt with or
utilized the services of any other real estate broker, sales person or
finder in connection with this Purchase Contract, and each party agrees to
indemnify the other party from and against all claims for brokerage
commissions and finder's fees arising from or attributable to the acts of
omissions of the indemnifying party; provided, however, in no event shall
Purchaser indemnify Seller for any claims asserted by or on behalf of
Broker.
10.2. Seller agrees to pay Broker a commission according to the terms of a
separate agreement. Broker shall not be deemed a party or third party
beneficiary of this Purchase Contract.
10.3. Broker assumes no responsibility for the condition of the Property or
representation for the performance of this Purchase Contract by the
Seller or Purchaser.
ARTICLE 11.
POSSESSION
11.1. Possession of the Property subject to the Permitted Exceptions shall be
delivered to Purchaser at the Closing, subject to Purchaser's right of
entry for inspection as set forth in ARTICLE 5.
ARTICLE 12.
DEFAULTS AND REMEDIES
12.1. In the event Purchaser defaults hereunder prior to the Closing Date and
consummation of the Closing does not occur by reason of such default by
Purchaser, Seller and Purchaser agree that it would be impractical and
extremely difficult to estimate the damages which Seller may suffer.
Therefore, Seller and Purchaser hereby agree that, except for the
Purchaser's obligations to Seller under Section 5.3, the reasonable
estimate of the total net detriment that Seller would suffer in the event
that Purchaser terminates this Purchase Contract or defaults hereunder
prior to the Closing Date is and shall be, as Seller's sole remedy
(whether at law or in equity), the right to receive from the Escrow Agent
and retain the full amount of the Deposit. The payment and performance of
the above as liquidated damages is not intended as a forfeiture or penalty
within the meaning of applicable law and is intended to settle all issues
and questions about the amount of damages suffered by Seller in the
applicable event, except only for damages under Section 5.3 above,
irrespective of the time when the inquiry about such damages may take
place. Upon any such failure by Purchaser hereunder, this Purchase
Contract shall be terminated, and neither party shall have any further
rights or obligations hereunder, each to the other, except for the
Purchaser's obligations to Seller under Section 5.3 above, and the right
of Seller to collect such liquidated damages to the extent not theretofore
paid by Purchaser.
12.2. If Seller fails to perform any of the covenants and agreements contained
herein to be performed by Seller within the time for performance as
specified herein (including Seller's obligation to close), and (x) in the
event the Closing has not occurred, Purchaser may elect either to (i)
terminate Purchaser's obligations under this Purchase Contract by written
Notice to Seller with a copy to Escrow Agent, in which event the Deposit
shall be returned immediately to Purchaser, or (ii) file an action for
specific performance; or (y) in the event that the Closing has occurred,
Purchaser may file an action against Seller for any and all losses, costs,
damages and expenses (including but not limited to, court costs and
attorneys' reasonable fees) actually suffered or incurred by Purchaser as
a result of such breach or failure by Seller. If the Closing has not
occurred and Purchaser elects (ii) above, then Seller agrees that
Purchaser shall not be required to post a bond or any other collateral
with the court or any other party as a condition to Purchaser's pursuit of
an action. Seller hereby covenants and agrees that in the event that the
Closing has not occurred as a result of, due to, or because of any willful
or intentional act or omission of Seller, Purchaser may (in addition to
any and all other remedies of Purchaser hereunder) file an action for
damages in an amount equal to the lesser of (a) damages actually suffered
by Purchaser by reason of Seller's defaults hereunder (including, but not
limited to, attorneys' fees, engineering fees, fees of environmental
consultants, appraisers' fees, and accountants' fees incurred by Purchaser
in connection with this Purchase Contract and any action hereunder) or (b)
fifty thousand dollars ($50,000). The provisions of the immediately
preceding sentence shall survive any termination of this Purchase
Contract. Nothing in this Section 12.2 shall be deemed to in any way limit
or prevent Purchaser from exercising any right of termination provided to
Purchaser elsewhere in this Purchase Contract. Notwithstanding the
foregoing, in the event Seller defaults in any of its post-closing
obligations under Section 7.1.3, Section 7.1.4, Section 7.1.5 or Section
10.1 hereof, Purchaser shall have all of its remedies at law and in equity
on account of such default.
ARTICLE 13.
RISK OF LOSS OF CASUALTY
13.1. In the event that at the time of Closing all or substantially all of the
Property is (or has been) damaged by fire or other casualty, Purchaser may
elect, in its sole discretion to (i) terminate this Purchase Contract by
written Notice to Seller in which event the Deposit shall be returned to
Purchaser, or (ii) proceed to close subject to (1) a reduction in the
Purchaser Price equal to the deductible under Seller's casualty insurance
policy for the Property and (2) on assignment to Purchaser of any
insurance proceeds in respect of fire or other casualty occurring between
the date of ratification of this contract and the time of settlement and
Seller shall reasonably cooperate with Purchaser in the adjustment and
settlement of any such claims. Seller shall not, in any event, be
obligated to effect any repair, replacement, and/or restoration, but may
do so at its option in which case Seller may apply the insurance proceeds
to the costs of restoration.
ARTICLE 14.
ESTOPPEL CERTIFICATES AND SUBORDINATION
NONDISTURBANCE AND ATTORNMENT AGREEMENTS
14.1. No later than five (5) business days prior to the Closing Date, Seller
shall obtain and deliver to Purchaser estoppel certificates, dated no
earlier than 30 days prior to Closing ("Estoppel Certificates"), from
Tenants occupying at least 80% of the leased square footage of the
Property (the "Required Tenants"), which Required Tenants shall in all
events include Upman Enterprises and Savannah Laboratories. Seller shall
use reasonable, diligent and good faith efforts to obtain each such
Estoppel Certificate substantially in the form attached to this Agreement
as Exhibit F and certified to Purchaser and any and all other parties
required by Purchaser during the Feasibility Period (the "Purchaser's Form
Certificate"); provided, however, that in the event that Seller is unable
to obtain the Purchaser's Form Certificate from any Tenant, Seller shall
use reasonable and good faith efforts to obtain, from that Tenant, an
Estoppel Certificate in the form required by that Tenant's respective
Commercial Lease; provided further, however, that Purchaser shall not be
required to accept an Estoppel Certificate that is not (A) in the form of
Exhibit F or the specific form required by, and attached as an exhibit to,
that particular Tenant's respective Commercial Lease or/and (B) is not
certified to Purchaser and any and all other parties required by Purchaser
during the Feasibility Period. If Seller fails (despite its diligent
efforts) to obtain (and timely deliver) an Estoppel Certificate, from the
number of Required Tenants as determined above, Purchaser's sole remedy
shall be either to (i) terminate this Purchase Contract; or (ii) proceed
to close and waive the requirement of such an Estoppel Certificate with
respect to the Required Tenant's Lease and tenancy for which Seller fails
to procure an Estoppel Certificate. Additionally, Seller covenants and
agrees to use good faith, diligent efforts to obtain a Subordination,
Non-Disturbance and Attornment Agreement (each, a "Subordination
Agreement") from each Tenant dated no earlier than thirty (30) days prior
to the Closing Date, in such form as Purchaser's lender, if any, may
reasonably require; provided, however, that in the event that Seller fails
to obtain the form of Subordination Agreement requested by Purchaser's
lender from any Tenant, Seller shall use reasonable and good faith efforts
to obtain the form of Subordination Agreement, if any, required by that
Tenant's respective Lease.
ARTICLE 15.
EMINENT DOMAIN
15.1. In the event that at the time of Closing all or any part of the Property
is (or has previously been) acquired, or is about to be acquired, by
authority of any governmental agency in purchase in lieu thereof (or in
the event that at such time there is any Notice of any such acquisition by
any such governmental agency), Purchaser shall have the right, at
Purchaser's option, to terminate this Purchase Contract by giving written
Notice within Fifteen (15) days of the occurrence of such event and
recover the Deposit hereunder, or to settle in accordance with the terms
of this Purchase Contract for the full Purchase Price and receive the full
benefit or any condemnation award. It is expressly agreed between the
parties hereto that this paragraph shall in no way apply to customary
dedications for public purposes which may be necessary for the development
of the Property.
ARTICLE 16.
COVENANTS OF SELLER
16.1. Effective as of the Contract Date, Seller hereby covenants with
Purchaser as follows:
16.1.1. Seller shall neither amend any Commercial Lease, in any material
respect, nor execute any new lease, license, or other agreement
affecting the ownership or operation of the Property or for personal
property, equipment, or vehicles, without Purchaser's prior written
approval (which approval shall not be unreasonably withheld and
shall be deemed given if Purchaser's written disapproval is not
delivered to Seller within five (5) business days following Seller's
written request for such approval). Provided that (i) Purchaser
approves or is deemed to have approved any new lease or amendment to
any Commercial Lease in accordance with this Section 16.1.1 and (ii)
Purchaser approves any leasing commissions payable with respect
thereto in writing (which approval shall not be unreasonably
withheld and shall be deemed given if Purchaser's written
disapproval of such leasing commissions is not delivered within five
business days following Seller's written request for such approval),
then Purchaser shall assume responsibility for the payment of such
leasing commissions.
16.1.2. Seller shall not amend any existing Property Contract or enter
into any new contract with respect to the ownership and operation of
the Property that will survive the Closing, or that would otherwise
affect the use, operation or enjoyment of the Property after
Closing, without Purchaser's prior written approval (which approval
shall not be unreasonably withheld and shall be deemed given if
Purchaser's written disapproval is not delivered to Seller within
five (5) business days following Seller's request for such
approval). If Purchaser approves or is deemed to have approved any
new contract or the amendment of any Property Contract in accordance
with this Section 16.1.2, Purchaser shall assume all obligations of
such contract(s) relating to the period after the Closing.
16.1.3. Seller shall operate and manage the Property in the same manner in
which it is being operated as of the Effective Date, maintaining
present services, and shall maintain the Property in its same repair
and working order; and shall perform, when due, all of Seller's
obligations under the Commercial Leases, Property Contracts, Permits
and other agreements relating to the Property and otherwise in
accordance with applicable laws, ordinances, rules and regulations
affecting the Property. Except as otherwise specifically provided
herein, at Closing, Seller shall deliver the Property in
substantially the same condition as exists on the Effective Date,
reasonable wear and tear and damage by casualty or condemnation
excepted.
16.1.4. Seller shall, to the extent Seller obtains knowledge thereof,
promptly notify Purchaser of any material change in any condition
with respect to the Property, or of the occurrence of any event or
circumstance, that makes any representation or warranty of Seller to
Purchaser under this Purchase Contract untrue or misleading, or any
covenant of Purchaser under this Purchase Contract incapable or less
likely of being performed, it being understood that Seller's
obligation to provide Notice to Purchaser under this Section 15.1.4
shall in no way abrogate Purchaser's right to terminate this
Purchase Contract. Subject to the limitation provided in Exhibit G,
upon Purchaser's request, for a period of two (2) years after
Closing, Seller shall make the Records available to Purchaser for
inspection, copying and audit by Purchaser's designated accountants,
and at Purchaser's expense. Seller shall provide Purchaser, but
without third-party expense to Seller, with copies of, or access to,
such factual information as may be reasonably requested by
Purchaser, and in the possession or control of Seller, to enable
First Industrial (as hereinafter defined) to file Form 8-K (as
specified on Exhibit G hereto), if, as and when such filing may be
required by the Securities and Exchange Commission ("SEC"). Without
limitation of the foregoing, but subject to the limitations provided
on Exhibit G, (x) Purchaser or its designated independent or other
accountants may audit the operating statements, and Seller shall
supply such documentation in its possession or control as Purchaser
or its accountants may reasonably request in order to complete such
audit, and Seller shall execute the form of audit letter contained
in Exhibit H and (y) Seller shall furnish Purchaser with such
financial and other information as may be reasonably required by
Purchaser or its assigns to make any required filings with the SEC
or other governmental authority.
ARTICLE 17.
MISCELLANEOUS
17.1. Exhibits And Schedules
All Exhibits and Schedules annexed hereto are a part of this Purchase
Contract for all purposes.
17.2. Assignability
The terms, conditions and covenants of this Purchase Contract shall be
binding upon and shall inure to the benefit of the parties and their
respective nominees, successors, beneficiaries and assigns; provided,
however, no conveyance, assignment or transfer of any interest whatsoever
of, in or to the Property or of this Purchase Contract shall be made by
Seller during the term of this Purchase Contract. Purchaser may assign all
or any of its right, title and interest under this Purchase Contract to
(i) any third party intermediary (an "Intermediary") in connection with a
tax-deferred exchange pursuant to Section 1031 of the Internal Revenue
Code (an "Exchange"), (ii) First Industrial Realty Trust, Inc., a Maryland
corporation ("First Industrial"), or to any corporate or partnership
entity affiliated with, or related to, First Industrial (any such entity,
an "Affiliate"), or (iii) any corporate or partnership entity in which
First Industrial or an Affiliate is a partner, co-venturer, shareholder or
member (any such entity, a "Venture Partner"). No such assignee shall
accrue any obligations or liabilities hereunder until the effective date
of such assignment. In addition to its right of assignment, Purchaser
shall also have the right, exercisable prior to Closing, to designate any
Affiliate, Venture Partner or Intermediary, as the grantee or transferee
of any or all of the conveyances, transfers and assignments to be made by
Seller at Closing hereunder, independent of, or in addition to, any
assignment of this Purchase Contract. In the event of an assignment of
this Purchase Contract by Purchaser, its assignee shall be deemed to be
the Purchaser hereunder for all purposes hereof, and shall have all rights
and obligations of Purchaser hereunder (including, but not limited to, the
right of further assignment), and the assignor shall be released from all
liability hereunder. In the event that an Affiliate or Venture Partner
shall be designated as a transferee hereunder, that transferee shall have
the benefit of all of the representations, warranties and rights which, by
the terms of this Purchase Contract, are incorporated herein or relate to
the conveyance in question, including, without limitation, all guaranties
and indemnities granted to Purchaser hereunder or in connection herewith ,
and shall be bound to all of Purchaser's obligation under this Purchase
Contract.
17.3. Binding Effect
This Purchase Contract shall be binding upon and inure to the benefit of
Seller and Purchaser, and their respective successors, heirs and permitted
assigns.
17.4. Captions
The captions, headings, and arrangements used in this Purchase Contract
are for convenience only and do not in any way affect, limit, amplify, or
modify the terms and provisions hereof.
17.5. Number And Gender Of Words
Whenever herein the singular number is used, the same shall include the
plural where appropriate, and words of any gender shall include each other
gender where appropriate.
17.6. Notices
All Notices, demands, requests and other communications required pursuant
to the provisions of this Purchase Contract ("Notice") shall be in writing
and shall be deemed to have been properly given or served for all purposes
(i) if sent by Federal Express or the nationally recognized overnight
carrier for next business day delivery, on the first business day
following deposit of such Notice with such carrier, or (ii) if personally
delivered, on the actual date of delivery or (iii) if sent by certified
mail, return receipt requested postage prepaid, on the Fifth (5th)
business day following the date of mailing or (iv) the same day when sent
confirmed facsimile with a copy sent by Federal Express or other
commercial overnight courier addressed as follows:
If to Seller: If to Purchaser:
Consolidated Capital FR Acquisitions, Inc.
Institutional Properties/3 c/o First Industrial Realty
C/o AIMCO Trust, Inc.
18730 South Bellaire Street 311 South Wacker Drive
Suite 1700 Suite 4000
Denver, CO 80222 Chicago, Illinois 60606
Attention:..Tim Works Attention: Andy Zgutowicz
Harry Alcock Fax No. (312) 922-6826
Martha Carlin
Fax No. ______________
And:
Argent Real Estate Service,
Inc.
1401 Brickell Avenue
Suite 520
Miami, Florida 33131
Fax 305-371-6898
Attn: David Marquette
Fax No. (305) 374-2386
And
Lang Baumgarten
Aztec Group
2665 South Bayshore Drive
Suite PH 2A
Coconut Grove, Florida 33133
Fax No. ______________
And And
With a copy to: With a copy to:
Broad and Cassel Barack Ferrazzano Kirschbaum
201 S. Biscayne Boulevard Perlman & Nagelberg
Suite 3000 333 West Wacker Drive
Miami, Florida 33144 Suite 2700
Attn: Gary Carman, P.A. and Chicago, Illinois 60606
Attn: Mark J. Beaubien, Esq.
Thomas J. Palmieri,P.A. and
Jason T. Tadych, Esq.
Fax No. (312) 984-3150
Fax No. (305) 373-9443
Any of the parties may designate a change of address by Notice in writing
to the other parties. Whenever in this Purchase Contract the giving of
Notice by mail or otherwise is required, the giving of such Notice may be
waived in writing by the person or persons entitled to receive such
Notice.
17.7. Governing Law And Venue
The laws of the State of Florida shall govern the validity, construction,
enforcement, and interpretation of this Purchase Contract, unless
otherwise specified herein except for the conflict of laws provisions
thereof. All claims, disputes and other matters in question arising out of
or relating to this Purchase Contract, or the breach thereof, shall be
decided by proceedings instituted and litigated in the United States
District Court for the district in which the Property is situated, and the
parties hereto expressly consent to the venue and jurisdiction of such
court.
17.8. Entirety And Amendments
This Purchase Contract embodies the entire Purchase Contract between the
parties and supersedes all prior Purchase Contracts and understandings, if
any, relating to the Property, and may be amended or supplemented only by
an instrument in writing executed by the party against whom enforcement is
sought.
17.9. Severability
If any of the provisions of this Purchase Contract is held to be illegal,
invalid, or unenforceable under present or future laws, such provision
shall be fully severable. The Purchase Contract shall be construed and
enforced as if such illegal, invalid, or unenforceable provision had never
comprised a part of this Purchase Contract; and the remaining provisions
of this Purchase Contract shall remain in full force and effect and shall
not be affected by the illegal, invalid, or unenforceable provision or by
its severance from this Purchase Contract. In lieu of such illegal,
invalid, or unenforceable provision, there shall be added automatically as
a part of this Purchase Contract a provision as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible to make
such provision legal, valid, and enforceable.
17.10. Multiple Counterparts
This Purchase Contract may be executed in a number of identical
counterparts. If so executed, each of such counterparts is to be deemed an
original for all purposes and all such counterparts shall, collectively,
constitute one Purchase Contract. In making proof of this Purchase
Contract, it shall not be necessary to produce or account for more than
one such counterparts.
17.11. Further Acts
In addition to the acts and deeds recited herein and contemplated and
performed, executed and/or delivered by Seller and Purchaser, Seller and
Purchaser agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered any and all such further acts, deeds,
and assurances as may be necessary to consummate the transactions
contemplated hereby.
17.12. Construction
No provision of this Purchase Contract shall be construed in favor of, or
against, any particular party by reason of any presumption with respect to
the drafting of this Purchase Contract; both parties, being represented by
counsel, having fully participated in the negotiation of this instrument.
17.13. Confidentiality
Purchaser shall not disclose the terms and conditions contained in this
Purchase Contract, shall keep the same confidential, provided that
Purchaser may disclose the terms and conditions of this Purchase Contract
(i) as required by law, (ii) to consummate the terms of this Purchase
Contract, or any financing relating thereto, or (iii) to Purchaser's or
Seller's lenders, attorneys and accountants,. Any information provided by
Seller to Purchaser under the terms of this Purchase Contract is for
informational purposes only. In providing such information to Purchaser,
Seller makes no representation or warranty, express, written, oral,
statutory, or implied, and all such representations and warranties are
hereby expressly excluded. Purchaser shall not in any way be entitled to
rely upon the accuracy of such information. Such information is also
confidential and Purchaser shall be prohibited from making such
information public to any other person or entity other than its agents and
legal representatives, without Seller's prior written authorization, which
may be granted or denied in Seller's sole discretion.
17.14. Time Of The Essence
It is expressly agreed by the parties hereto that time is of the essence
with respect to this Purchase Contract.
17.15. Cumulative Remedies And Waiver
Except as otherwise provided herein, no remedy herein conferred or
reserved is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be
in addition to every other remedy given under this Purchase Contract or
now or hereafter existing at law or in equity. No delay or omission to
exercise any right or power accruing upon any default, omission, or
failure of performance hereunder shall impair any right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient. No
waiver, amendment, release, or modification of this Purchase Contract
shall be established by conduct, custom, or course of dealing.
17.16. Litigation Expenses
In the event either party hereto commences litigation against the other to
enforce its rights hereunder, the prevailing party in such litigation
shall be entitled to recover from the other party its reasonable
attorneys' fees and expenses incidental to such litigation.
17.17. Time Periods
Should the last day of a time period fall on a weekend or legal holiday,
the next Business Day thereafter shall be considered the end of the time
period.
17.18. Exchange
At Seller's sole cost and expense, Seller may structure the sale of the
Property to Purchaser as a Like Kind Exchange under Internal Revenue Code
Section 1031 whereby Seller will acquire certain property (the "Like Kind
Exchange Property") in conjunction with the sale of the Property (the
"Like Kind Exchange"). Purchaser shall cooperate fully and promptly with
Seller's conduct of the Like Kind Exchange, provided that all costs and
expenses generated in connection with the Like Kind Exchange shall be
borne solely by Seller, and Purchaser shall not be required to take title
to or contract for the purchase of any other property. If Seller uses a
qualified intermediary to effectuate the exchange, any assignment of the
rights or obligations of Seller hereunder shall not relieve, release or
absolve Seller of its obligations to Purchaser. In no event shall the
Closing Date be delayed by the Like Kind Exchange. Seller shall indemnify
and hold harmless Purchaser from and against any and all liability arising
from and out of the Like Kind Exchange.
NOW WHEREFORE, the parties hereto have executed this Purchase Contract as
of the date first set forth above.
Seller: CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited partnership
By: CONCAP EQUITIES, INC., a Delaware
corporation as General Partner
By:
Printed:
Title:
Purchaser: FR ACQUISITIONS, INC., a Maryland corporation
By:
Printed:
Title:
EXHIBIT A
LEGAL DESCRIPTION
The S.E.1/4of the N.E.1/4of the N.W.1/4of Section 31, Township 28
South, Range 18 East, Hillsborough County, Florida, less the
South 25 feet for road right-of-way and less the right-of-way for
Benjamin Road off the East side thereof.
SUBJECT TO that certain Easement dated March 10, 1982, in favor of Tampa
Electric Company and recorded April 6, 1982, in Official Records Book
3932, Page 1907, of the Public Records of Hillsborough County, Florida.
EXHIBIT B
FORM OF ESCROW AGREEMENT
THIS ESCROW AGREEMENT ("Escrow Agreement") made this day of _____________,
1999 by and among, , CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/3, a
California limited partnership ("Seller"); FR ACQUISITIONS, INC., a Maryland
corporation ("Purchaser"); and BROAD AND CASSEL ("Escrow Agent");
WITNESSETH:
Whereas Purchaser and Seller are parties to a certain Purchase and Sale
Contract (the "Purchase Contract") made and dated as of the _____ day of
________________ 1999; and
Whereas, the Purchase Contract requires that Purchaser provide a Deposit
in the amount of FORTY THOUSAND DOLLARS ($40,000.00) in cash to be held pursuant
to an escrow agreement approved by Purchaser and Seller.
Now, therefore, the parties agree to the following:
1.....Establishment of Escrow. Escrow Agent hereby acknowledges receipt of
the initial deposit in the amount of FORTY THOUSAND DOLLARS ($40,000.00) in cash
(if by check subject to collection) (the "Escrow Fund"), to be deposited, held,
invested, and disbursed for the benefit of Seller and Purchaser and their
respective successors and assigns, as provided herein and as provided in the
Purchase Contract.
2.....Investment of Escrow Fund. All funds received by Escrow Agent shall
be held in insured accounts and invested in such short-term, money market funds
or accounts, interest bearing bank accounts, bank certificates of deposit or
bank repurchase agreements as directed by Purchaser and all interest and income
thereon shall become part of the Escrow Fund and shall be remitted to the party
entitled to the Escrow Fund, as set forth below.
3.....Application of Escrow Fund. Escrow Agent shall hold the Escrow Fund
as provided above and (a) if the sale of the Property is closed by the date
fixed therefore (or any extension date provided for by mutual written consent of
the parties hereto, given or withheld in their respective sole discretion),
Escrow Agent shall deliver the Escrow Fund to Seller in immediately available
funds by wire transfer in accordance with the instructions of Seller on the
Closing Date as set forth in the Purchase Contract, (b) if the sale of the
Property is not closed by the date fixed therefor (or any such extension date)
owing to failure of satisfaction of a condition precedent to Purchaser's
obligations, the Escrow Agent shall return and refund the Escrow Fund to
Purchaser, (c) if the sale of the Property is not closed by the date fixed
therefor (or any such extension date) owing to failure of performance by Seller,
Purchaser shall give Notice to the Escrow Agent and Seller and in such Notice
shall state whether it elects as its remedy return of the Escrow Fund or
specific performance of the Purchase Contract, if Purchaser elects return of the
Escrow Fund, Escrow Agent shall return and refund the Escrow Fund to Purchaser,
(d) if the sale of the Property is not closed by the date fixed therefor (or any
such extension date) owing to failure of performance by Purchaser, Escrow Agent
shall forthwith deliver to Seller the Escrow Fund in immediately available funds
by wire transfer in accordance with the instructions of Seller, and (e) if
Purchaser shall have canceled the Purchase Contract on or before the expiration
of the Feasibility Period (as defined in the Purchase Contract), the Escrow
Agent shall return and refund the Escrow Fund to Purchaser.
......If on or prior to the termination of the Escrow Agreement, a party
claims to be entitled to payment of the Escrow Fund under the provisions
referred to, such party shall give Notice to the Escrow Agent and the other
party of the claim in writing, describing in such Notice the nature of the
claim, and the provisions of the Purchase Contract on which the claim is based.
Unless the other party sends the Escrow Agent a written objection to the claim,
with a copy concurrently to the claiming party, within five (5) days after
delivery of the Notice of claim, the claim shall be conclusively presumed to
have been approved. In such case, or in the event of mutual written consent of
the parties hereto, given or withheld in their respective sole discretion,
Escrow Agent shall, within Two (2) business days thereafter, pay the claim as
demanded. Notwithstanding the foregoing, Escrow Agent shall deliver the Escrow
Fund to Seller forthwith upon Closing in accordance with the terms of subpart
(a) of the immediately preceding paragraph.
......When all monies held by Escrow Agent have been finally distributed
in accordance herewith, this Escrow Agreement shall terminate.
4.....Liability. Escrow Agent will be obligated to perform only the duties
that are expressly set forth herein. In case of conflicting demands upon Escrow
Agent, it may (i) refuse to comply therewith as long as such disagreement
continues and make no delivery or other disposition of any funds or property
then held (and Escrow Agent shall not be or become liable in any way for such
failure or refusal to comply with such conflicting or adverse claims or demands,
except for its failure to exercise due care, willful breach and willful
misconduct); and (ii) continue to so refrain and so refuse to act until all
differences have been adjusted by agreement and, Escrow Agent has been notified
thereof in writing signed jointly by Seller and Purchaser or (iii) to interplead
the portion of Escrow Fund in dispute.
5.....No Obligation to Take Legal Action. Escrow Agent shall not be under
any obligation to take any legal action in connection with this Escrow Agreement
or for its enforcement, or to appear in, prosecute, or defend any action or
legal proceeding which, in its opinion, would or might involve it in any costs,
expense, loss, or liability, unless and as often as required by it, it is
furnished with satisfactory security and indemnity against all such costs,
expenses, losses, or liabilities.
6.....Status of Escrow Agent. Escrow Agent is to be considered and
regarded as a depository only, and shall not be responsible or liable (except
for its failure to exercise due care, willful breach or willful misconduct) for
the sufficiency or correctness as to form, manner of execution, or validity of
any instrument deposited pursuant to this Escrow Agreement, nor as to the
identity, authority, or rights of any person executing the same. Escrow Agent's
duties hereunder shall be limited to the safekeeping and investment of money,
instruments, and securities received by it as Escrow Agent and for their
disbursement in accordance with the written escrow instructions given it in
accordance with this Escrow Agreement.
7.....Written Instructions of Parties. Notwithstanding any contrary
provision contained herein, Escrow Agent shall, at all times, have full right
and authority and the duty and obligation to pay over and disburse the
principal, interest and quitclaim deed of the Escrow Fund in accordance with the
joint written instructions signed by Seller and Purchaser.
8.....Notices. Any required or permitted Notice or other communication
under this Escrow Agreement ("Notice") shall be given as follows. All Notices,
requests, demands and other communications hereunder shall be deemed to have
been duly given if the same shall be in writing and shall be delivered
personally or sent by Federal Express or other recognized national overnight
courier service maintaining records of delivery, sent by registered or certified
mail, postage pre-paid, or by confirmed facsimile with a copy sent by Federal
Express or other recognized national overnight courier service maintaining
records of delivery, and addressed as set forth below:
......(a) If to Seller:
Consolidated Capital Institutional Properties/3
c/o AIMCO
18730 South Bellaire Street
Suite 1700
Denver, CO 80222
Attention: Tim Works
Harry Alcock
Martha Carlin
Fax No. ______________________
Argent Real Estate Service, Inc.
1401 Brickell Avenue
Suite 520
Miami, Florida 33131
Fax 305-371-6898
Attn: David Marquette
Fax No. (305) 374-2386
And
Lang Baumgarten
Aztec Group
2665 South Bayshore Drive
Suite PH 2A
Coconut Grove, Florida 33133
Fax No. ______________________
With a copy to:
Gary Carman, P.A. and Thomas J. Palmieri, P.A.
Broad and Cassel
201 S. Biscayne Boulevard
Suite 3000
Miami, Florida 33131
Fax No. (305) 373-9443
(b) If to Purchaser:
FR Acquisitions, Inc.
c/o First Industrial Realty Trust, Inc.
311 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Attention: Mr. Andy Zgutowicz
Fax No. (312) 922-6826
With a copy to:
Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive, Suite 2700
Chicago, Illinois 60606
Attention: Mark J. Beaubien, Esq. and Jason T. Tadych, Esq.
Fax No. (312) 984-3150
(c) If to Escrow Agent:
Broad and Cassel
Miami Center
201 South Biscayne Boulevard
Suite 3000
Miami, Florida 33131
Attn:.
Fax No. (305) 373-9443
Any party may change the address to which Notices are to be
addressed by giving the other parties Notice in the manner herein set forth. All
such Notices, requests, demands and other communications shall be deemed to have
been delivered (i) as of the day of receipt, in the case of personal delivery,
or (ii) as of the day of receipt or attempted delivery date in the case of
delivery by air courier, or (iii) as of the date of receipt or first attempted
delivery, as evidenced by the return receipt card, in the case of mailing by
certified or registered United States mail; or (iv) the same day when sent by
confirmed facsimile with a copy sent by Federal Express or other commercial
overnight courier service.
9. Fee. Escrow Agent shall receive an fee of N/A for its services
hereunder, but be paid or reimbursed for all expenses, disbursements and
advances, including reasonable attorney's fees, incurred or paid in connection
with carrying out its duties hereunder, all amounts to be payable by Purchaser
and not out of the Escrow Fund. Non-payment of such fee by Purchaser shall not
entitle Escrow Agent to refuse or fail to act as required by this Escrow
Agreement.
10. Titles and Section Headings. Titles of sections and subsections
contained in this Escrow Agreement are inserted for convenience of reference
only, and neither form a part of this Escrow Agreement or are to be used in
its construction or interpretation.
11. Counterparts. This Escrow Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which shall constitute one and the same instrument.
12. Non-Waiver. No waiver by either party of any breach of any term or
condition of this Escrow Agreement shall operate as a waiver of any other breach
of such term or condition or of any other term or condition. No failure to
enforce such provision shall operate as a waiver of such provision or of any
other provision hereof, or constitute or be deemed a waiver or release of any
other party for anything arising out of, connected with, or based upon this
Escrow Agreement.
13. Binding Effect. This Escrow Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective transferees,
successors, and assigns. The parties recognize and acknowledge that the powers
and authority granted Escrow Agent herein are each irrevocable and coupled with
an interest. Escrow Agent shall have no liability to any Seller for any mistakes
in judgment in the performance of any function hereunder, except for failure to
exercise due care, willful breach and willful misconduct.
14. Nonlimitation of Liability. Nothing contained herein shall in
any way limit the liabilities, obligations and remedies of Seller and
Purchaser as set forth in the Purchase Contract.
15. Governing Law. This Escrow Agreement shall be governed by and
construed in accordance with the laws of the Florida.
16. Time of Essence. Time is of the essence of this Escrow Agreement.
17. Entire Agreement; Modification. This Escrow Agreement supersedes
all prior agreements and constitutes the entire agreement with respect to the
subject matter hereof. It may not be altered or modified without the written
consent of all parties.
In witness whereof each of the parties hereto has caused this Escrow
Agreement to be executed on its behalf duly authorized persons, all as of the
day and year first above written.
FR ACQUISITIONS, INC., a Maryland
corporation
By:
Name:
Its:
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited partnership
By: CONCAP EQUITIES, INC., a Delaware
corporation as General Partner
By:
Name:
Its:
BROAD AND CASSEL
By:
, Partner
EXHIBIT C
SELLER'S DELIVERIES
1. Copies of any and all Commercial Leases and all other written
agreements affecting or relating to the ownership and operation of the
Property.
2. A copy of the most currently available rent roll (the "Rent Roll")
maintained by Seller in the normal course of its ownership and operation of the
Property, as well as any delinquency reports maintained by Seller or Seller's
management agent.
3. Copies of certificates of insurance for all hazard, rent loss,
liability and other insurance policies currently in force with respect to the
Property and/or Seller's business.
4. Copies of all income and expense statements, year-end financial and
monthly and annual operating statements (the "Operating Statements") for
calendar years 1995, 1996, 1997, 1998 and, to the extent available, 1999. Seller
shall deliver to Purchaser all Operating Statements prepared in the ordinary
course of business promptly upon preparation thereof relating to periods prior
to Closing, even if prepared after Closing.
5. Copies of all engineering and architectural plans and specifications,
drawings, studies and surveys relating to the Property (collectively the
"Plans"), in Seller's possession or control, and copies of any reports or
studies (including, but not limited to, inspection reports of governmental
authorities or insurance carriers), in Seller's possession or control, in
respect of the physical condition or operation of the Property or recommended
improvements thereto. Copies of all records pertaining to the repair,
replacement and maintenance of the mechanical systems at the Building, the roof
and the structural components of the Building.
6. Copies of the bill or bills issued for the years 1997, 1998 and, if
available, 1999, for all real estate taxes and personal property taxes and
copies of any and all Notices pertaining to real estate taxes or assessments
applicable to the Property (the "Tax Bills"). Seller shall promptly deliver to
Purchaser copies of any such bills or Notices received by Seller after the
Contract Date, even if received after Closing.
7. Copies of all brokerage commission, management, leasing, maintenance,
repair, service, pest control and supply contracts (including, without
limitation, janitorial, elevator, scavenger, laundry and landscaping
agreements), equipment rental agreements and master antenna agreements (if
applicable), and any other contracts or agreements relating to or affecting the
Property or which will be binding upon the Property or Purchaser subsequent to
Closing, all as amended.
8. Copies of all certificates of occupancy, licenses, permits,
authorizations and approvals required by law or by any governmental authority
having jurisdiction thereover in respect of the Property, or any portion
thereof, occupancy thereof or any present use thereof (the "Governmental
Approvals").
9. Copies of any operating budgets for the Property for the years
1997, 1998 and, to the extent available, 1999.
10. Copies of all guarantees, warranties and other documents or
instruments evidencing or relating to the Miscellaneous Property Assets.
11. Copies of all unrecorded easements and licenses of Seller for the
benefit of the Property or of third parties burdening the Property.
12. Copies of all tenant files, delinquency reports, aged receivables
reports and tenant correspondence.
13. (i) all reports (including drafts thereof), test results, analytical
data, boring logs and other studies undertaken by or at the request of Seller
and/or in Seller's possession or control with respect to the Property and the
environmental conditions thereof; (ii) all written correspondence, orders,
directives and Notices from Governmental Authorities received by Seller
(including predecessors in interest) or its consultants and contractors in
connection with the environmental condition of the Property; and (iii) all
correspondence (including reports and drafts thereof) to and from Governmental
Authorities, environmental consultants and any third party concerning the
environmental condition of the Property (the materials referred to in items (i)
- - (iii) above are collectively referred to as the "Environmental Information").
EXHIBIT D
SURVEY CERTIFICATION
TO: FR Acquisitions, Inc.; First Industrial Realty Trust, Inc., First
Industrial, L.P., and Chicago Title Insurance Company
I hereby certify that on the ______ day of _______________, 199___ (a) an
accurate boundary survey entitled "___________________" the ("Survey") of the
premises (the "Property") known by street address ___________________________,
was conducted under my direction according to local professional practices; (b)
the Survey and the information, courses and distances shown thereon are correct;
(c) all monuments shown on the survey actually exist, and the location , size
and type of materials thereof are correctly shown; (d) the title lines and lines
of actual possession of the Property are the same; (e) the size, location and
type of all buildings and visible improvements, if any, on the Property are
shown on the Survey; (f) the Property has direct access to _____________, which
is a dedicated public way; (g) there are no easements, rights-of-way, old
highways or abandoned roads, lanes or driveways affecting the Property appearing
from a careful physical inspection of the same, other than those shown and
depicted on the Survey or those which may be discovered by a complete title exam
of the subject property and all adjoiners; (h) there are no visible boundary
line conflicts (i) all recorded easements, as noted in Title Company Commitment
No. _______, dated __________________, 199___, and all set-back lines, have been
correctly platted or noted on the Survey; (j) except as shown on the Survey
there are no improvements on the Property upon any easement, rights-of-way or
adjacent land or encroachments of visible improvements located on adjacent land
upon the Property; (k) the Survey shows the location of all surface drainage
located on the Property; (l) the Survey shows the location of any visible
telephone, telegraph, electric or other power lines, wires, and poles on the
Property; and (m) the parcel(s) described on the Survey do not lie within flood
areas in accordance with maps entitled "Flood Insurance Rate Map", which such
map covers the area in which the Property is situated.
I further certify that the Survey meet s the requirements of the
Florida Statutes and the minimum requirements adopted by the F.S.P.L.S.,
F.L.T.A. pursuant to F.S. ss.472.027 and Rule 61G17-6 of the Florida
Administrative Code.
Date: ______________________
EXHIBIT E
FORM OF TENANT NOTICE LETTER
[DATE], 1999
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
[NAME AND ADDRESS OF TENANT
PER LEASE NOTICE PROVISION]
Re: Sale of [NAME OF PROPERTY]
Dear Tenant:
This letter shall constitute Notice of the transfer of the above-referenced
premises and assignment of your lease for said premises by Consolidated Capital
Institutional Properties/3 ("Former Landlord") to First Industrial, L.P. ("First
Industrial"). From and after the date of this Notice, all rent payments due
under your lease shall be paid to:
First Industrial L.P.
P. O. Box 905331
Charlotte, North Carolina 28290-5531
or if sent by Federal Express or overnight courier:
First Chicago National Processing Corp.
Suite 108, 806 Tyvola Road
Charlotte, North Carolina
Attn: First Industrial L.P. Box 905331
Your local First Industrial property management office is located at the
following address:
First Industrial, L.P.
6302 Benjamin Road, Suite 400
Tampa, Florida 33634
Your local asset manager is Ross Kirk, who may be contacted at (813) 884-6161,
ext. 10 or via facsimile at (813) 889-9469.
All formal written Notices delivered under your lease should, however, be
directed to First Industrial at:
First Industrial, L.P.
311 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Attn: Vice President-Portfolio Management
w/copy to: Barack Ferrazzano Kirschbaum Perlman & Nagelberg
333 West Wacker Drive
27th Floor
Chicago, Illinois 60606
Attn: Suzanne Bessette-Smith
Please do not hesitate to contact your local First Industrial property
management office with any questions. The effective date of this Notice is the
date of this letter.
CONSOLIDATED CAPITAL INSTITUTIONAL FIRST INDUSTRIAL, L.P., a Delaware
PROPERTIES/3, a California limited limited partnership
partnership,
By: First Industrial Realty Trust,
Inc.,
its general partner
By: __________________________________
By: ________________________________
Its: __________________________________
Its:
EXHIBIT F
FORM OF ESTOPPEL CERTIFICATE
To: FR Acquisitions, Inc., its successor and assigns; First Industrial
Realty Trust, Inc.; First Industrial, L.P.; and Chicago Title Insurance
Company
(Lease to be Attached)
ESTOPPEL CERTIFICATE
The undersigned, ______________________________________ ("Tenant"), hereby
certifies that:
1. Annexed hereto as Exhibit A is a true and correct copy of the lease
("Lease"), dated as of the ____________ day of ________________, 19___, by and
between the undersigned, as tenant ("Tenant"), and
________________________________________________ as landlord ("Landlord"),
covering certain [insert type of property] space ("Premises") in the building
located at _____________________ ("Building"). The net rentable square footage
of the Premises is ________________________.
2. The Lease is valid and in full force and effect on the date hereof. The term
of the Lease commenced on ____________, 19___, and the termination date of the
present term of the Lease, excluding renewals, is __________________, 19___.
3. There are no other agreements between Landlord and Tenant with respect
to the Premises.
4. There are no uncured defaults on the part of Tenant or on the part of
Landlord under the Lease, and no event has occurred and no condition exists
which, with the giving of Notice or the lapse of time, or both, will constitute
a default under the Lease.
5. Fixed Rent payable by Tenant presently is $______________ per month and
no such rent has been paid more than 30 days in advance of its due date.
Tenant's security deposit is $_______________.
6. Additional Rent (including Tenant's share of tax increases and cost of living
increases) payable by Tenant presently is $______________ per month and no such
rent has been paid more than 30 days in advance of its due date.
7. Tenant claims no present charge, lien or claim of offset under the Lease or
otherwise, against rents or other charges due or to become due thereunder.
8. Tenant has accepted possession of the Premises and any improvements required
by the terms of the Lease to be made by the lessor thereunder have been
completed to the satisfaction of Tenant.
9. The address for Notices to be sent to Tenant is as set forth in the
Lease.
10. This Estoppel Certificate may be relied upon by any prospective purchaser of
the Building or lender to a purchaser of the Building. If any prospective lender
so requires, whether currently or at a future date, Tenant will execute and
deliver, for the benefit of such lender, a subordination, nondisturbance and
attornment agreement, in form and substance reasonably and mutually acceptable
to Tenant and such lender.
11. Tenant has no right of first refusal, option or other right to purchase the
Premises or the Building, nor does Tenant have any right to unilaterally cancel
the Lease. Tenant has no renewal options or expansion options.
12. Rents payable pursuant to the Lease are not based upon the income or
profits of Tenant.
13. There is not a material amount of personal property demised to the
Tenant under or in connection with the Lease.
14. Except for those services required (under the express terms of the Lease) to
be provided by Landlord to Tenant, the Landlord provides no other services to
the Tenant in connection with its lease of the Premises.
15. The Lease was not entered into in connection with a sale/leaseback
transaction.
16. There are no subleases under or in connection with the Lease.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Estoppel Certificate on the ___________ day of ______________, 19____.
-------------------------------
(Tenant)
By:
Title:
EXHIBIT G
8-K Requirements
For the period of time commencing on the Contract Date and continuing through
the first anniversary of the Closing Date, Seller shall, from time to time, upon
reasonable advance Notice from Purchaser, provide Purchaser and its
representatives, agents and employees with access to all financial and other
information pertaining to the period of Seller's ownership and operation of the
Property, which information is relevant and reasonably necessary, in the opinion
of First's outside, third party accountants (the "Accountants"), to enable First
and its Accountants to prepare financial statements in compliance with any or
all of (a) Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
(the "Commission"); (b) any other rule issued by the Commission and applicable
to First; and (c) any registration statement, report or disclosure statement
filed with the Commission by, or on behalf of, First; provided, however, that
(x) Seller shall not be required to deliver any documentation which it shall
have previously delivered to Purchaser during the Feasibility Period pursuant to
Article 5 and Exhibit C of the Purchase and Sale Contract, and (y) Seller shall
not be required or obligated to provide any information which it does not
actually have in its possession or under its control, and (z) in any such
event(s), Purchaser shall reimburse Seller for those third party, out-of-pocket
costs and expenses that Seller incurs in order to comply with the foregoing
requirement. Seller acknowledges and agrees that the following is a
representative description of the information and documentation that First and
the Accountants may require in order to comply with (a), (b) and (c) above.
Seller shall provide such information, and documentation on a per-Building
basis, if available.
1. Rent rolls for the calendar month in which the Closing occurs and the 11
calendar months immediately preceding the calendar month in which the Closing
occurs; 2. Seller's written analysis of both (a) scheduled increases in base
rent required under the Lease in effect on the Closing Date; and (b) rent
concessions imposed those Leases, and the straight line effect of (a) and (b);
3. Seller's internally-prepared Operating Statements; 4. Access to Lease; 5.
Most currently available real estate Tax Bills; 6. Access to Seller's cash
receipt journal(s) and bank statements for the Property; 7. Seller's general
ledger with respect to the Property; 8. Seller's schedule of expense
reimbursements required under Leases in effect on the Closing Date; 9. Schedule
(per Seller's general ledger) of those items of repairs and maintenance
performed by, or at the direction of Seller, during Seller's final fiscal year
in which Seller owns and operates the Property (the "Final Fiscal Year"); 10.
Schedule (per Seller's general ledger) of those capital improvements and fixed
asset additions made by, or at the direction of, Seller during the Final Fiscal
Year; 11. Access to Seller's invoices with respect to expenditures made during
the Final Fiscal Year; 12. Access (during normal and customary business hours)
to responsible personnel to answer accounting questions; and 13. A
representation letter in such form as is reasonably required by Purchaser,
signed by the individual(s) responsible for Seller's financial reporting, as
prescribed by generally accepted auditing standards promulgated by the Auditing
Standards Division of the American Institute of Certified Public Accountants,
which representation letter may be required to assist the Accountants in
rendering an opinion on such financial statements.
EXHIBIT H
Form of Audit Letter
[Date]
Dear Sirs:
We are writing at your request to confirm our understanding that
your audit of the statement of operating income for the year ended
_____________________, ______, was made for the purpose of expressing an opinion
as to whether the statement of operating income presents fairly, in all material
respects, the results of operations of the Tampa Corporate Center in conformity
with generally accepted accounting principles. In connection with your audit we
confirm, to the best of our knowledge and belief, the following representations
made during your audit.
1. All financial records, board minutes and data related to the property
have been made available to you.
2. There have been no:
a. Irregularities involving any member of management or
employees who have significant roles in the system of internal accounting
control structure.
b. Irregularities involving other employees that could have a
material effect on the financial statements.
c. Communications from regulatory agencies concerning noncompliance
with, or deficiencies in, financial reporting practices that could have a
material effect on the financial statements.
d. Violations or possible violations of laws or regulations, the
effects of which should be considered for disclosure in the financial statements
or as a basis for recording a loss contingency.
3. There are no:
a. Unasserted claims or assessments that are probable of
assertion and must be disclosed in accordance with Statement of Financial
Accounting Standards No. 5.
b. Material liabilities or gain or loss contingencies
(including oral and written guarantees) that are required to be accrued or
disclosed by Statement of Financial Accounting Standards No. 5.
c. Material transactions that have not been properly recorded
in the accounting records underlying the financial statements.
d. Events that have occurred subsequent to
___________________, ___________ in the financial statements that would
require adjustment to or disclosure in the financial statements, except for
the sale which you are aware of.
4. Appropriate adjustment, when material, has been made for:
a. Uncollectible amounts recorded under lease contracts.
b. Rental income received in advance.
c. Rent concessions, abatements, or rent holidays.
5. The Company has complied with all aspects of contractual agreements
that would have a material effect on the financial statements in the event of
noncompliance.
6. All significant related party transactions have been properly
recorded or disclosed in the financial statements.
7. In the opinion of the undersigned the ____________ and _____________
financial information provided to you contains all adjustments necessary for a
fair presentation of operating income.
By:
[Seller/Seller's Property Manager]
EXHIBIT I
EXCLUDED PERMITS
EXHIBIT J
EQUIPMENT
EXHIBIT K
LEASING COMMISSIONS PAYABLE
Exhibit 10.45
REINSTATEMENT OF AND FIRST
AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS REINSTATEMENT OF AND FIRST AMENDMENT TO PURCHASE AND SALE CONTRACT
(the "First Amendment") is entered into as of August 31, 1999, by and among FR
Acquisitions, Inc., a Maryland corporation ("Purchaser"), and CONSOLIDATED
CAPITAL INSTITUTIONAL PROPERTIES/3, a California limited partnership ("Seller").
RECITALS:
A. Purchaser and Seller entered into that certain Purchase and Sale
Contract dated as of June 15, 1999 (the "Contract") concerning the purchase and
sale of the Property (as defined in the Contract).
B. Purchaser has previously terminated the Contract.
C. Purchaser and Seller desire to reinstate and amend the Contract
in accordance with the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree that,
notwithstanding anything to the contrary contained in the Contract, the Contract
shall be amended as follows:
1. Defined Terms. All capitalized terms used, but not defined, herein
shall have the meanings ascribed to them in the Contract.
2. Reinstatement. The Contract is hereby reinstated as of the date first
written above.
3. Purchase Price. Seller and Purchaser hereby agree the Purchase Price
shall be Four Million One Hundred Seventy-Five Thousand and
00/100 Dollars ($4,175,000.00).
4. Full Force and Effect. Except as specifically amended hereby, the
Contract remains in full force and effect and is hereby ratified
by the parties hereto. In the event that any of the terms or
conditions of the Contract conflict with this First Amendment,
the terms and conditions of this First Amendment shall control.
Any references to the "Contract" made in any closing documents or
instruments delivered at Closing shall be deemed to mean the
Contract as amended hereby.
5. Counterparts. This First Amendment may be executed in any number of
identical counterparts, any or all of which may contain the
signatures of less than all of the parties, and all of which shall
be construed together as a single instrument. For purposes of this
First Amendment, signatures by facsimile shall be binding to the
same extent as original signatures.
IN WITNESS WHEREOF, the parties have executed this First Amendment as of
the date first set forth above.
PURCHASER:
FR ACQUISITIONS, INC., a Maryland
corporation
By:
Name:
Title:
SELLER:
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited
partnership
By: CONCAP EQUITIES, INC., A Delaware
corporation as General partner
By:
Name:
Title:
Exhibit 10.46
SECOND AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS SECOND AMENDMENT TO PURCHASE AND SALE CONTRACT (the "Second
Amendment") is entered into as of September ___, 1999, by and among FR
Acquisitions, Inc., a Maryland corporation ("Purchaser"), and CONSOLIDATED
CAPITAL INSTITUTIONAL PROPERTIES/3, a California limited partnership ("Seller").
RECITALS:
A. Purchaser and Seller entered into that certain Purchase and Sale
Contract dated as of June 15, 1999, as amended by that certain Reinstatement of
and First Amendment to Purchase and Sale Contract dated August 31, 1999 (the
"Contract") concerning the purchase and sale of the Property (as defined in the
Contract).
B. Purchaser and Seller desire to amend the Contract in accordance
with the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree that,
notwithstanding anything to the contrary contained in the Contract, the Contract
shall be amended as follows:
1. Defined Terms. All capitalized terms used, but not defined, herein
shall have the meanings ascribed to them in the Contract.
2. Closing Date. Seller and Purchaser hereby agree that the Closing Date
shall be September 27, 1999.
3. Full Force and Effect. Except as specifically amended hereby, the
Contract remains in full force and effect and is hereby ratified
by the parties hereto. In the event that any of the terms or
conditions of the Contract conflict with this Second Amendment,
the terms and conditions of this Second Amendment shall control.
Any references to the "Contract" made in any closing documents or
instruments delivered at Closing shall be deemed to mean the
Contract as amended hereby.
4. Counterparts. This Second Amendment may be executed in any number of
identical counterparts, any or all of which may contain the
signatures of less than all of the parties, and all of which shall
be construed together as a single instrument. For purposes of this
Second Amendment, signatures by facsimile shall be binding to the
same extent as original signatures.
IN WITNESS WHEREOF, the parties have executed this Second Amendment as of
the date first set forth above.
PURCHASER:
FR ACQUISITIONS, INC., a Maryland
corporation
By:
Name:
Title:
SELLER:
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited
partnership
By: CONCAP EQUITIES, INC., A Delaware
corporation as General partner
By:
Name:
Title:
Exhibit 10.47
THIRD AMENDMENT TO PURCHASE AND SALE CONTRACT
THIS THIRD AMENDMENT TO PURCHASE AND SALE CONTRACT (the "Third Amendment")
is entered into as of September 27, 1999, by and among FR Acquisitions, Inc., a
Maryland corporation ("Purchaser"), and CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited partnership ("Seller").
RECITALS:
A. Purchaser and Seller entered into that certain Purchase and Sale
Contract dated as of June 15, 1999, as amended by that certain Reinstatement of
and First Amendment to Purchase and Sale Contract dated August 31, 1999 and that
certain Second Amendment to Purchase and Sale Contract dated September 16, 1999
(the "Contract") concerning the purchase and sale of the Property (as defined in
the Contract).
B. Purchaser and Seller desire to amend the Contract in accordance
with the terms and conditions set forth below.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree that,
notwithstanding anything to the contrary contained in the Contract, the Contract
shall be amended as follows:
1. Defined Terms. All capitalized terms used, but not defined, herein
shall have the meanings ascribed to them in the Contract.
2. Closing Date. Seller and Purchaser hereby agree that the Closing Date
shall be October 4, 1999.
3. Full Force and Effect. Except as specifically amended hereby, the
Contract remains in full force and effect and is hereby ratified
by the parties hereto. In the event that any of the terms or
conditions of the Contract conflict with this Third Amendment, the
terms and conditions of this Third Amendment shall control. Any
references to the "Contract" made in any closing documents or
instruments delivered at Closing shall be deemed to mean the
Contract as amended hereby.
4. Counterparts. This Third Amendment may be executed in any number of
identical counterparts, any or all of which may contain the
signatures of less than all of the parties, and all of which shall
be construed together as a single instrument. For purposes of this
Third Amendment, signatures by facsimile shall be binding to the
same extent as original signatures.
IN WITNESS WHEREOF, the parties have executed this Third Amendment as of
the date first set forth above.
PURCHASER:
FR ACQUISITIONS, INC., a Maryland
corporation
By:
Name:
Title:
SELLER:
CONSOLIDATED CAPITAL INSTITUTIONAL
PROPERTIES/3, a California limited
partnership
By: CONCAP EQUITIES, INC., A Delaware
corporation as General partner
By:
Name:
Title: