FORM 10-QSB--QUARTERLY OR TRANSITIONAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Quarterly or Transitional Report
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _________to _________
Commission file number 0-8639
CONSOLIDATED CAPITAL GROWTH FUND
(Exact name of small business issuer as specified in its charter)
California 94-2382571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Partnership was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No____
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
a)
CONSOLIDATED CAPITAL GROWTH FUND
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
March 31, 2001
Assets
Cash and cash equivalents $ 876
Receivables and deposits 398
Restricted escrows 332
Other assets 589
Investment properties:
Land $ 4,610
Buildings and related personal property 42,610
47,220
Less accumulated depreciation (29,672) 17,548
$19,743
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 122
Tenant security deposit liabilities 262
Accrued property taxes 221
Other liabilities 471
Mortgage notes payable 30,690
Partners' Deficit
General partner $ (4,798)
Limited partners (49,196 units issued and
outstanding) (7,225) (12,023)
$ 19,743
See Accompanying Notes to Financial Statements
b)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except unit data)
Three Months Ended
March 31,
2001 2000
Revenues:
Rental income $2,776 $2,759
Other income 172 147
Casualty gain (Note C) 57 --
Total revenues 3,005 2,906
Expenses:
Operating 1,230 1,139
General and administrative 165 148
Depreciation 570 604
Interest 558 558
Property taxes 180 175
Total expenses 2,703 2,624
Net income $ 302 $ 282
Net income allocated to general partner (1%) $ 3 $ 3
Net income allocated to limited partners (99%) 299 279
$ 302 $ 282
Net income per limited partnership unit $ 6.08 $ 5.67
Distribution per limited partnership unit $11.67 $20.33
See Accompanying Notes to Financial Statements
c)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 49,196 $ 1 $49,196 $49,197
Partners' deficit at
December 31, 2000 49,196 $ (4,795) $(6,950) $(11,745)
Distribution to partners -- (6) (574) (580)
Net income for the three months
ended March 31, 2001 -- 3 299 302
Partners' deficit
at March 31, 2001 49,196 $ (4,798) $ (7,225) $(12,023)
See Accompanying Notes to Financial Statements
d)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2001 2000
Cash flows from operating activities:
Net income $ 302 $ 282
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 570 604
Amortization of loan costs 19 19
Casualty gain (57) --
Change in accounts:
Receivables and deposits (101) (12)
Other assets (168) (64)
Accounts payable (200) (102)
Tenant security deposit liabilities 21 (23)
Accrued property taxes 180 180
Other liabilities (89) 119
Net cash provided by operating activities 477 1,003
Cash flows from investing activities:
Property improvements and replacements (489) (420)
Net withdrawals from (deposits to) restricted escrows 52 (49)
Insurance proceeds received 76 --
Net cash used in investing activities (361) (469)
Cash flows used in financing activities:
Distributions to partners (580) (1,010)
Net decrease in cash and cash equivalents (464) (476)
Cash and cash equivalents at beginning of period 1,340 2,069
Cash and cash equivalents at end of period $ 876 $ 1,593
Supplemental disclosure of cash flow information:
Cash paid for interest $ 539 $ 539
Included in property improvements and replacements for the three months ended
March 31, 2001 are approximately $83,000 of improvements which were included in
accounts payable at December 31, 2000.
See Accompanying Notes to Financial Statements
e)
CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Consolidated Capital Growth
Fund (the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 2001, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2001. For further information,
refer to the financial statements and footnotes thereto included in the
Partnership's Annual Report on Form 10-KSB for the year ended December 31, 2000.
The General Partner is a wholly owned subsidiary of Apartment Investment and
Management Company ("AIMCO").
Segment Reporting: Statement of Financial Accounting Standards ("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. As defined in SFAS
131, the Partnership has only one reportable segment. The General Partner
believes that segment-based disclosures will not result in a more meaningful
presentation than the financial statements as currently presented.
Note B - Distributions
During the three months ended March 31, 2001, the Partnership declared and paid
distributions of approximately $580,000 (approximately $574,000 paid to the
limited partners or $11.67 per limited partnership unit) from operations. Cash
distributions of approximately $1,010,000 (approximately $1,000,000 paid to the
limited partners or $20.33 per limited partnership unit) were paid from
operations during the three months ended March 31, 2000. Subsequent to March 31,
2001, the Partnership declared and paid distributions of approximately $517,000
(approximately $512,000 paid to the limited partners or $10.41 per limited
partnership unit) from operations.
Note C - Casualty Event
During the three months ended March 31, 2001, a net casualty gain of
approximately $57,000 was recorded at Doral Springs Apartments. The casualty
gain related to a flood that occurred in October 2000. The gain was a result of
insurance proceeds of approximately $76,000 and the write-off of the net book
value of the destroyed assets totaling approximately $19,000.
Note D - Transactions with Affiliated Parties
The Partnership has no employees and is dependent on the General Partner and its
affiliates for the management and administration of all partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership. The General Partner and its affiliates received
reimbursements and fees during the three months ended March 31, 2001 and 2000 as
reflected in the following table:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 150 $ 147
Reimbursement for services of affiliates (included in
operating and general and administrative expense
and investment properties) 106 50
Partnership management fees (included in general
and administrative expense) 52 90
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from all of the Registrant's properties for providing property management
services. The Registrant paid to such affiliates approximately $150,000 and
$147,000 for the three months ended March 31, 2001 and 2000, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $106,000 and $50,000 for the
three months ended March 31, 2001 and 2000, respectively.
The Partnership Agreement provides for a fee equal to 9% of the total
distributions made to the limited partners from "cash available for
distribution" (as defined in the Agreement) to be paid to the General Partner
for executive and administrative management services. During the three months
ended March 31, 2001 and 2000, affiliates of the General Partner received
$52,000 and $90,000, respectively, for providing these services.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 30,703.75 limited partnership units
(the "Units") in the Partnership representing 62.41% of the outstanding Units at
March 31, 2001. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional limited partnership interests in the Partnership for
cash or in exchange for units in the operating partnership of AIMCO either
through private purchases or tender offers. Under the Partnership Agreement,
unitholders holding a majority of the Units are entitled to take action with
respect to a variety of matters, which would include without limitation, voting
on certain amendments to the Partnership Agreement and voting to remove the
General Partner. As a result of its ownership of 62.41% of the outstanding
Units, AIMCO is in a position to influence all voting decisions with respect to
the Registrant. 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 its affiliation with the General Partner.
Note E - Legal Proceedings
The Partnership is a party to certain legal actions resulting from its operating
activities. These actions are routine litigation and administrative proceedings
arising in the ordinary course of business and none of which are expected to
have a material adverse effect on the financial condition or results of
operations of the Partnership.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The matters discussed in this Form 10-QSB 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-QSB and the other filings with the
Securities and Exchange Commission made by the Registrant from time to time. The
discussion of the Registrant's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Registrant's business and results of
operation. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.
The Partnership's investment properties consist of four apartment complexes. The
following table sets forth the average occupancy of the properties for the three
months ended March 31, 2001 and 2000:
Average Occupancy
Property 2001 2000
Breckinridge Square 89% 93%
Louisville, Kentucky
Churchill Park 86% 97%
Louisville, Kentucky
The Lakes 89% 85%
Raleigh, North Carolina
Doral Springs 98% 96%
Miami, Florida
The General Partner attributes the increase in occupancy at The Lakes Apartments
to a fire in January 2000 which rendered 12 units unleaseable. During January
2001, these units were leaseable and occupancy rates returned to what they were
before the fire.
The General Partner attributes the decrease in occupancy at Breckenridge
Apartments and Churchill Park Apartments to a slower economy in the Louisville
area and several new apartment complexes in the area.
Results of Operations
The Partnership's net income for the three months ended March 31, 2001 and 2000
was approximately $302,000 and $282,000, respectively. The increase in net
income is due to an increase in total revenues which was partially offset by an
increase in total expenses.
Total revenues increased due to increases in rental revenue and other income and
due to a casualty at Doral Springs Apartments. Rental income increased due to
increased occupancy at Doral Springs and The Lakes and due to an increase in
average annual rental rates at all four investment properties, offset by
decreases in occupancy at Breckinridge Square and Churchill Park. Other income
increased due to an increase in laundry income at Churchill Park and due to
increases in interest income at all of the properties.
Total expenses increased due to increases in operating and general and
administrative expenses offset by a decrease in depreciation expense. Operating
expense increased due to increases in utilities and payroll expenses at all four
investment properties. These increases were offset by decreases in maintenance
expense at Churchill Park and The Lakes. Depreciation expense decreased due to
the building at Breckinridge Square becoming fully depreciated in the last
quarter of 2000.
During the three months ended March 31, 2001, a net casualty gain of
approximately $57,000 was recorded at Doral Springs Apartments. The casualty
gain related to a flood that occurred in October 2000. The gain was a result of
insurance proceeds of approximately $76,000 and the write-off of the net book
value of the destroyed assets totaling approximately $19,000.
General and administrative expenses increased due to an increase in the cost of
services included in the management reimbursements to the General Partner as
allowed under the Partnership Agreement. In addition to these reimbursements,
cost associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement
are also included.
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 expense. 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 March 31, 2001, the Partnership had cash and cash equivalents of
approximately $876,000 compared to approximately $1,593,000 at March 31, 2000.
The decrease in cash and cash equivalents of approximately $464,000 for the
three months ended March 31, 2001, from the Partnership's calendar year end of
December 31, 2000, is due to approximately $580,000 and $361,000 of cash used in
financing and investing activities, respectively, which was partially offset by
approximately $477,000 of cash provided by operating activities. Cash used in
investing activities consisted of property improvements and replacements,
partially offset by net withdrawals from escrow accounts maintained by the
mortgage lender and insurance proceeds received. Cash used in financing
activities consisted of partner distributions. The Partnership invests its
working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the investment properties to adequately maintain the
physical assets and other operating needs of the Registrant and to comply with
Federal, state, local, legal and regulatory requirements. Capital improvements
planned for each of the Registrant's properties are detailed below.
Breckinridge Square Apartments: For 2001, the Partnership has budgeted
approximately $153,000 for capital improvements for interior and exterior
building improvements. The Partnership completed approximately $40,000 in
capital expenditures at Breckinridge Square Apartments as of March 31, 2001,
consisting primarily of heating and air conditioning upgrades, water heater
replacements, plumbing upgrades and appliance and floor covering replacements.
These improvements were funded primarily from operations.
Churchill Park Apartments: For 2001, the Partnership has budgeted approximately
$172,000 for capital improvements for interior and exterior building
improvements. The Partnership completed approximately $30,000 in capital
expenditures at Churchill Park Apartments as of March 31, 2001, consisting
primarily of interior decoration and floor covering replacements. These
improvements were funded primarily from operations.
The Lakes Apartments: For 2001, the Partnership has budgeted approximately
$165,000 for capital improvements, consisting primarily of floor covering,
appliance, and water heater replacements. The Partnership completed
approximately $123,000 in capital expenditures at The Lakes Apartments as of
March 31, 2001, consisting primarily of building improvements, maintenance
equipment, floor covering and appliance replacements and other enhancements.
These improvements were funded primarily from operations.
Doral Springs Apartments: For 2001, the Partnership has budgeted approximately
$185,000 for capital improvements, consisting primarily of cabinet, floor
covering and appliance replacements. The Partnership completed approximately
$213,000 in budgeted and non-budgeted capital expenditures at Doral Springs
Apartments as of March 31, 2001, consisting primarily of plumbing upgrades,
floor covering and appliance replacement and other building improvements. These
improvements were funded from operations and replacement reserves.
The additional capital expenditures will be incurred only if cash is available
from operations and Partnership reserves. To the extent that such budgeted
capital improvements are completed, the Registrant's distributable cash flow, if
any, may be adversely affected at least in the short term.
The Partnership's current assets are thought to be sufficient for any near-term
needs (exclusive of capital improvements) of the Registrant. The mortgage
indebtedness of approximately $30,690,000 requires monthly interest only
payments. These notes require balloon payments on November 1, 2003, and December
1, 2005. The General Partner may attempt to refinance such indebtedness and/or
sell the properties prior to such maturity date. If the properties cannot be
refinanced or sold for a sufficient amount, the Registrant will risk losing such
properties through foreclosure.
During the three months ended March 31, 2001, the Partnership declared and paid
distributions of approximately $580,000 (approximately $574,000 paid to the
limited partners or $11.67 per limited partnership unit) from operations. Cash
distributions of approximately $1,010,000 (approximately $1,000,000 paid to the
limited partners or $20.33 per limited partnership unit) were paid from
operations during the three months ended March 31, 2000. Subsequent to March 31,
2001, the Partnership declared and paid distributions of approximately $517,000
(approximately $512,000 paid to the limited partners or $10.41 per limited
partnership unit) from operations. The Partnership's distribution policy is
reviewed on a quarterly basis. Future cash distributions will depend on the
levels of net cash generated from operations, the availability of cash reserves,
and the timing of debt maturities, refinancings, and/or property sales. There
can be no assurance that the Partnership will generate sufficient funds from
operations, after required capital expenditures, to permit any additional
distributions to its partners during the remainder of 2001 or subsequent
periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 30,703.75 limited partnership units
(the "Units") in the Partnership representing 62.41% of the outstanding Units at
March 31, 2001. A number of these Units were acquired pursuant to tender offers
made by AIMCO or its affiliates. It is possible that AIMCO or its affiliates
will acquire additional limited partnership interests in the Partnership for
cash or in exchange for units in the operating partnership of AIMCO either
through private purchases or tender offers. Under the Partnership Agreement,
unitholders holding a majority of the Units are entitled to take action with
respect to a variety of matters, which would include without limitation, voting
on certain amendments to the Partnership Agreement and voting to remove the
General Partner. As a result of its ownership of 62.41% of the outstanding
Units, AIMCO is in a position to influence all voting decisions with respect to
the Registrant. 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 its affiliation with the General Partner.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Partnership is a party to certain legal actions resulting from its operating
activities. These actions are routine litigation and administrative proceedings
arising in the ordinary course of business and none of which are expected to
have a material adverse effect on the financial condition or results of
operations of the Partnership.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
None.
b) Reports on Form 8-K:
None filed during the quarter ended March 31, 2001.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL GROWTH FUND
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: May 14, 2001