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 June 30, 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)
June 30, 2001
Assets
Cash and cash equivalents $ 5,045
Receivables and deposits 1,001
Restricted escrows 288
Other assets 788
Investment properties:
Land $ 4,610
Buildings and related personal property 42,893
47,503
Less accumulated depreciation (30,234) 17,269
$24,391
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 141
Tenant security deposit liabilities 283
Accrued property taxes 368
Other liabilities 449
Mortgage notes payable 35,480
Partners' Deficit
General partner $ (4,801)
Limited partners (49,196 units issued and
outstanding) (7,529) (12,330)
$ 24,391
See Accompanying Notes to Financial Statements
b)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2001 2000 2001 2000
Revenues:
Rental income $ 2,887 $ 2,846 $ 5,663 $ 5,605
Other income 140 193 312 340
Casualty gain (Note C) -- -- 57 --
Total revenues 3,027 3,039 6,032 5,945
Expenses:
Operating 1,231 1,135 2,461 2,274
General and administrative 167 164 332 312
Depreciation 577 617 1,147 1,221
Interest 566 559 1,124 1,117
Property taxes 212 177 392 352
Total expenses 2,753 2,652 5,456 5,276
Income before extraordinary loss 274 387 576 669
Extraordinary loss on early extinguishment of
debt (Note E) (64) -- (64) --
Net income $ 210 $ 387 $ 512 $ 669
Net income allocated to general
partner (1%) $ 2 $ 4 $ 5 $ 7
Net income allocated to limited
partners (99%) 208 383 507 662
$ 210 $ 387 $ 512 $ 669
Per limited partnership unit:
Income before extraordinary loss $ 5.52 $ 7.79 $ 11.60 $ 13.46
Extraordinary loss (1.29) -- (1.29) --
Net income $ 4.23 $ 7.79 $ 10.31 $ 13.46
Distribution per limited partnership unit $ 10.40 $ 26.63 $ 22.07 $ 46.96
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 -- (11) (1,086) (1,097)
Net income for the six months
ended June 30, 2001 -- 5 507 512
Partners' deficit at
June 30, 2001 49,196 $ (4,801) $(7,529) $(12,330)
See Accompanying Notes to Financial Statements
d)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2001 2000
Cash flows from operating activities:
Net income $ 512 $ 669
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,147 1,221
Amortization of loan costs 39 39
Bad debt 85 98
Casualty gain (57) --
Extraordinary loss on early extinguishment of debt 64 --
Change in accounts:
Receivables and deposits (774) (602)
Other assets (95) (15)
Accounts payable (181) (97)
Tenant security deposit liabilities 42 (22)
Accrued property taxes 327 343
Other liabilities (111) 125
Net cash provided by operating activities 998 1,759
Cash flows from investing activities:
Property improvements and replacements (802) (852)
Net withdrawals from restricted escrows 96 95
Insurance proceeds received 76 --
Net cash used in investing activities (630) (757)
Cash flows from financing activities:
Distributions to partners (1,097) (2,333)
Proceeds from refinancing 10,790 --
Repayment of mortgage note payable (6,000) --
Loan costs paid (356) --
Net cash provided by (used in) financing activities 3,337 (2,333)
Net increase (decrease) in cash and cash equivalents 3,705 (1,331)
Cash and cash equivalents at beginning of period 1,340 1,988
Cash and cash equivalents at end of period $ 5,045 $ 657
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,121 $ 1,078
Included in property improvements and replacements for the six months ended June
30, 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 and six month
periods ended June 30, 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"), a publicly traded real estate investment
trust.
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 established 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 six months ended June 30, 2001, the Partnership declared and paid
distributions of approximately $1,097,000 (approximately $1,086,000 paid to the
limited partners or $22.07 per limited partnership unit) from operations. Cash
distributions of approximately $2,333,000 (approximately $2,310,000 paid to the
limited partners or $46.96 per limited partnership unit) were paid from
operations during the six months ended June 30, 2000. Subsequent to June 30,
2001, the Partnership declared and paid a distribution of approximately
$4,513,000 (approximately $3,891,000 paid to the limited partners or $79.09 per
limited partnership unit) of which approximately $79,000 (approximately $78,000
to the limited partners or $1.59 per limited partnership unit) was from
operations and approximately $4,434,000 (approximately $3,813,000 to the limited
partners or $77.50 per limited partnership unit) was from the refinancing
proceeds of Doral Springs.
Note C - Casualty Event
During the six months ended June 30, 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 the receipt 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 six months ended June 30, 2001 and 2000 as
reflected in the following table:
2001 2000
(in thousands)
Property management fees (included in operating expenses) $ 304 $ 296
Reimbursement for services of affiliates (included in
general and administrative expenses and investment
properties) 192 114
Partnership management fees (included in general
and administrative expenses) 98 208
Refinance fee (included in loan costs) 108 --
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 $304,000 and
$296,000 for the six months ended June 30, 2001 and 2000, respectively.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $192,000 and $114,000 for the
six months ended June 30, 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. Affiliates of the General
Partner received approximately $98,000 and $208,000 for the six months ended
June 30, 2001 and 2000, respectively, for providing these services.
In connection with the refinancing of Doral Springs Apartments on June 28, 2001,
the Partnership paid the General Partner a fee of approximately $108,000
pursuant to the Partnership Agreement.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 31,154.25 limited partnership units
(the "Units") in the Partnership representing 63.33% of the outstanding Units at
June 30, 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 63.33% 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 - Refinancing and Extraordinary Loss
On June 28, 2001, the Partnership refinanced the mortgage encumbering Doral
Springs Apartments. The refinancing replaced indebtedness of approximately
$6,000,000 with a new mortgage in the amount of $10,790,000. The new mortgage
carries a stated interest rate of 7.53%. Interest on the old mortgage was 7.33%.
Principal and interest payments on the mortgage loan of approximately $87,000
are due monthly until the loan matures in July 2021. Total capitalized loan
costs were approximately $356,000. The Partnership recognized an extraordinary
loss on the early extinguishment of debt of approximately $64,000 due to the
write-off of unamortized loan costs.
Note F - 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 six
months ended June 30, 2001 and 2000:
Average Occupancy
Property 2001 2000
Breckinridge Square 90% 94%
Louisville, Kentucky
Churchill Park 90% 97%
Louisville, Kentucky
The Lakes 91% 86%
Raleigh, North Carolina
Doral Springs 97% 96%
Miami, Florida
The General Partner attributes the decrease in occupancy at Breckinridge Square
and Churchill Park to the slow economy in the Louisville area and to lower
mortgage interest rates causing more tenants to purchase homes.
The General Partner attributes the increase in occupancy at The Lakes to a fire
in January 2000 which rendered 12 units unleasable during 2000. During 2001,
these units were leasable and occupancy rates returned to the levels they were
prior to the fire.
Results of Operations
The Partnership's net income for the six months ended June 30, 2001 was
approximately $512,000 as compared to approximately $669,000 for the six months
ended June 30, 2000. The Partnership's net income for the three months ended
June 30, 2001 was approximately $210,000 as compared to approximately $387,000
for the three months ended June 30, 2000.
The decrease in net income for the six months ended June 30, 2001 is due to the
recognition of an extraordinary loss on the early extinguishment of debt and an
increase in total expenses partially offset by an increase in total revenues.
The decrease in net income for the three months ended June 20, 2001 is due to
the recognition of an extraordinary loss on the early extinguishment of debt, an
increase in total expenses and a slight decrease in total revenues. The
Partnership recognized an extraordinary loss on the early extinguishment of debt
of approximately $64,000 due to the June 2001 refinancing of the mortgage
encumbering Doral Springs Apartments resulting in the write off of unamortized
loan costs. The increase in total expenses for the three and six month periods
is due to increases in operating and property tax expenses offset by a decrease
in depreciation expense. Operating expense increased due to increases in
insurance costs and utilities, especially natural gas costs, at all the
Registrant's investment properties offset by decreased maintenance expenses at
the Lakes Apartments primarily related to costs for repairs stemming from a
January 2000 fire. Property tax expense increased for the three and six month
periods due to an increase in the assessed value of The Lakes by the local
taxing authorities and due to payment of a tax reassessment from a prior year at
Churchill Park. Depreciation expense decreased primarily due to the building
becoming fully depreciated during the third quarter of 2000 at Breckinridge
Square.
The increase in total revenues for the six months ended June 30, 2001 is due to
an increase in rental income and the recognition of a casualty gain offset by a
decrease in other income. The decrease in total revenues for the three months
ended June 30, 2001 is due to a decrease in other income which more than offset
an increase in rental revenue. Rental income increased for the three and six
month periods due to an increase in average rental rates at all the properties
and an increase in occupancy at The Lakes and Doral Springs which more than
offset decreases in occupancy at Breckinridge Square and Churchill Park. Other
income decreased for the three and six month periods due to a decrease in
interest income at all the properties as a result of lower average cash balances
in interest bearing accounts during 2001.
During the six months ended June 30, 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 the receipt of
insurance proceeds of approximately $76,000 and the write-off of the net book
value of the destroyed assets totaling approximately $19,000.
Included in general and administrative expenses are reimbursements to the
General Partner as allowed under the Partnership Agreement. In addition to these
reimbursements, costs associated with the quarterly and annual communications
with investors and regulatory agencies and the annual audit required by the
Partnership Agreement are also included.
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 June 30, 2001, the Partnership had cash and cash equivalents of approximately
$5,045,000 compared to approximately $657,000 at June 30, 2000. Cash and cash
equivalents increased approximately $3,705,000 from December 31, 2000 due to
approximately $3,337,000 and $998,000 of cash provided by financing and
operating activities, respectively, partially offset by approximately $630,000
of cash used in investing activities. Cash provided by financing activities
consisted primarily of proceeds received from the refinancing of the mortgage
encumbering Doral Springs, offset by distributions to partners, the repayment of
the mortgage encumbering Doral Springs and loan costs paid. Cash used in
investing activities consisted of property improvements and replacements offset
by net withdrawals from escrow accounts maintained by the mortgage lender and
insurance proceeds received. The Partnership invests its working capital
reserves in interest bearing accounts.
On June 28, 2001, the Partnership refinanced the mortgage encumbering Doral
Springs Apartments. The refinancing replaced indebtedness of approximately
$6,000,000 with a new mortgage in the amount of $10,790,000. The new mortgage
carries a stated interest rate of 7.53%. Interest on the old mortgage was 7.33%.
Principal and interest payments on the mortgage loan of approximately $87,000
are due monthly until the loan matures in July 2021. Total capitalized loan
costs were approximately $356,000. The Partnership recognized an extraordinary
loss on the early extinguishment of debt of approximately $64,000 due to the
write-off of unamortized loan costs.
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 $297,000 for capital improvements for structural upgrades and
floor covering, appliance, and HVAC unit replacements. The Partnership completed
approximately $120,000 in capital expenditures at Breckinridge Square Apartments
during the six months ended June 30, 2001, consisting primarily of heating and
air conditioning upgrades, structural improvements, 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
$294,000 for capital improvements for fencing, interior decoration, structural
improvements and floor covering and appliance replacements. The Partnership
completed approximately $93,000 in capital expenditures at Churchill Park
Apartments as of June 30, 2001, consisting primarily of interior decoration and
floor covering, appliance, and water heater 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 $213,000 in budgeted and nonbudgeted capital expenditures at The
Lakes Apartments as of June 30, 2001, consisting primarily of building
improvements, maintenance equipment, floor covering, air conditioning and
appliance replacements and other enhancements. These improvements were funded
primarily from operations.
Doral Springs Apartments: For 2001, the Partnership has budgeted approximately
$220,000 for capital improvements, consisting primarily of cabinet, floor
covering, air conditioning and appliance replacements. The Partnership completed
approximately $293,000 in budgeted and nonbudgeted capital expenditures at Doral
Springs Apartments as of June 30, 2001, consisting primarily of plumbing
upgrades, floor covering and appliance replacement and other building
improvements. These improvements were funded from operations and insurance
proceeds.
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 $10,790,000 on Doral Springs requires monthly
principal and interest payments of approximately $87,000 and matures in July
2021. The mortgage indebtedness of approximately $24,690,000 encumbering
Breckinridge Square, Churchill Park and The Lakes Apartments requires monthly
interest only payments. These notes require balloon payments on December 1,
2005. The General Partner may attempt to refinance the mortgages encumbering
Breckinridge Square, Churchill Park and The Lakes Apartments and/or sell the
properties prior to such maturity dates. If the properties cannot be refinanced
or sold for a sufficient amount, the Registrant will risk losing such properties
through foreclosure.
During the six months ended June 30, 2001, the Partnership declared and paid
distributions of approximately $1,097,000 (approximately $1,086,000 paid to the
limited partners or $22.07 per limited partnership unit) from operations. Cash
distributions of approximately $2,333,000 (approximately $2,310,000 paid to the
limited partners or $46.96 per limited partnership unit) were paid from
operations during the six months ended June 30, 2000. Subsequent to June 30,
2001, the Partnership declared and paid a distribution of approximately
$4,513,000 (approximately $3,891,000 paid to the limited partners or $79.09 per
limited partnership unit) of which approximately $79,000 (approximately $78,000
to the limited partners or $1.59 per limited partnership unit) was from
operations and approximately $4,434,000 (approximately $3,813,000 to the limited
partners or $77.50 per limited partnership unit) was from the refinancing
proceeds of Doral Springs. 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 31,154.25 limited partnership units
(the "Units") in the Partnership representing 63.33% of the outstanding Units at
June 30, 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 63.33% 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 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits:
Exhibit 10.51, Multifamily Note dated June 28, 2001, by and
between Consolidated Capital Growth Fund, a California limited
partnership and GMAC Commercial Mortgage Corporation.
b) Reports on Form 8-K:
None filed during the quarter ended June 30, 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: August 7, 2001
EXHIBIT 10.51
EXHIBIT C
FHLMC Loan No. 002692686
Doral Springs Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $10,790,000.00 As of June ___, 2001
FOR VALUE RECEIVED, the undersigned ("Borrower") jointly and severally (if
more than one) promises to pay to the order of GMAC COMMERCIAL MORTGAGE
CORPORATION, a California corporation, the principal sum of Ten Million Seven
Hundred Ninety Thousand and 00/100 Dollars (US $10,790,000.00), with interest on
the unpaid principal balance at the annual rate of Seven and Five Hundred Thirty
Thousandths percent (7.530%).
Defined Terms. As used in this Note, (i) the term "Lender" means the holder of
this Note, and (ii) the term "Indebtedness" means the principal of, interest on,
and any other amounts due at any time under, this Note, the Security Instrument
or any other Loan Document, including prepayment premiums, late charges, default
interest, and advances to protect the security of the Security Instrument under
Section 12 of the Security Instrument. "Event of Default" and other capitalized
terms used but not defined in this Note shall have the meanings given to such
terms in the Security Instrument.
Address for Payment. All payments due under this Note shall be payable at 200
Witmer Road, Post Office Box 809, Horsham, Pennsylvania 19044, Attn: Servicing -
Account Manager, or such other place as may be designated by written notice to
Borrower from or on behalf of Lender. Payment of Principal and Interest.
Principal and interest shall be paid as follows:
Unless disbursement of principal is made by Lender to Borrower on the first day
of the month, interest for the period beginning on the date of disbursement and
ending on and including the last day of the month in which such disbursement is
made shall be payable simultaneously with the execution of this Note. Interest
under this Note shall be computed on the basis of a 360-day year consisting of
twelve 30-day months. Consecutive monthly installments of principal and
interest, each in the amount of Eighty Seven Thousand One Hundred Twenty One and
54/100 Dollars (US $87,121.54), shall be payable on the first day of each month
beginning on August 1, 2001, until the entire unpaid principal balance evidenced
by this Note is fully paid. Any accrued interest remaining past due for 30 days
or more may, at Lender's discretion, be added to and become part of the unpaid
principal balance and shall bear interest at the rate or rates specified in this
Note, and any reference below to "accrued interest" shall refer to accrued
interest which has not become part of the unpaid principal balance. Any
remaining principal and interest shall be due and payable on July 1, 2021 or on
any earlier date on which the unpaid principal balance of this Note becomes due
and payable, by acceleration or otherwise (the "Maturity Date"). The unpaid
principal balance shall continue to bear interest after the Maturity Date at the
Default Rate set forth in this Note until and including the date on which it is
paid in full. Any regularly scheduled monthly installment of principal and
interest that is received by Lender before the date it is due shall be deemed to
have been received on the due date solely for the purpose of calculating
interest due.
Application of Payments. If at any time Lender receives, from Borrower or
otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender may apply that payment to amounts
then due and payable in any manner and in any order determined by Lender, in
Lender's discretion. Borrower agrees that neither Lender's acceptance of a
payment from Borrower in an amount that is less than all amounts then due and
payable nor Lender's application of such payment shall constitute or be deemed
to constitute either a waiver of the unpaid amounts or an accord and
satisfaction. Security. The Indebtedness is secured, among other things, by a
multifamily mortgage, deed to secure debt or deed of trust dated as of the date
of this Note (the "Security Instrument"), and reference is made to the Security
Instrument for other rights of Lender as to collateral for the Indebtedness.
Acceleration. If an Event of Default has occurred and is continuing, the entire
unpaid principal balance, any accrued interest, the prepayment premium payable
under Paragraph 10, if any, and all other amounts payable under this Note and
any other Loan Document shall at once become due and payable, at the option of
Lender, without any prior notice to Borrower (except if notice is required by
applicable law, then after such notice). Lender may exercise this option to
accelerate regardless of any prior forbearance. Late Charge. If any monthly
amount payable under this Note or under the Security Instrument or any other
Loan Document is not received by Lender within ten (10) days after the amount is
due (unless applicable law requires a longer period of time before a late charge
may be imposed, in which event such longer period shall be substituted),
Borrower shall pay to Lender, immediately and without demand by Lender, a late
charge equal to five percent (5%) of such amount (unless applicable law requires
a lesser amount be charged, in which event such lesser amount shall be
substituted). Borrower acknowledges that its failure to make timely payments
will cause Lender to incur additional expenses in servicing and processing the
loan evidenced by this Note (the "Loan"), and that it is extremely difficult and
impractical to determine those additional expenses. Borrower agrees that the
late charge payable pursuant to this Paragraph represents a fair and reasonable
estimate, taking into account all circumstances existing on the date of this
Note, of the additional expenses Lender will incur by reason of such late
payment. The late charge is payable in addition to, and not in lieu of, any
interest payable at the Default Rate pursuant to Paragraph 8. Default Rate. So
long as (a) any monthly installment under this Note remains past due for thirty
(30) days or more, or (b) any other Event of Default has occurred and is
continuing, interest under this Note shall accrue on the unpaid principal
balance from the earlier of the due date of the first unpaid monthly installment
or the occurrence of such other Event of Default, as applicable, at a rate (the
"Default Rate") equal to the lesser of four (4) percentage points above the rate
stated in the first paragraph of this Note and the maximum interest rate which
may be collected from Borrower under applicable law. If the unpaid principal
balance and all accrued interest are not paid in full on the Maturity Date, the
unpaid principal balance and all accrued interest shall bear interest from the
Maturity Date at the Default Rate. Borrower also acknowledges that its failure
to make timely payments will cause Lender to incur additional expenses in
servicing and processing the Loan, that, during the time that any monthly
installment under this Note is delinquent for more than thirty (30) days, Lender
will incur additional costs and expenses arising from its loss of the use of the
money due and from the adverse impact on Lender's ability to meet its other
obligations and to take advantage of other investment opportunities, and that it
is extremely difficult and impractical to determine those additional costs and
expenses. Borrower also acknowledges that, during the time that any monthly
installment under this Note is delinquent for more than thirty (30) days or any
other Event of Default has occurred and is continuing, Lender's risk of
nonpayment of this Note will be materially increased and Lender is entitled to
be compensated for such increased risk. Borrower agrees that the increase in the
rate of interest payable under this Note to the Default Rate represents a fair
and reasonable estimate, taking into account all circumstances existing on the
date of this Note, of the additional costs and expenses Lender will incur by
reason of the Borrower's delinquent payment and the additional compensation
Lender is entitled to receive for the increased risks of nonpayment associated
with a delinquent loan. Limits on Personal Liability.
Except as otherwise provided in this Paragraph 9, Borrower shall have no
personal liability under this Note, the Security Instrument or any other Loan
Document for the repayment of the Indebtedness or for the performance of any
other obligations of Borrower under the Loan Documents, and Lender's only
recourse for the satisfaction of the Indebtedness and the performance of such
obligations shall be Lender's exercise of its rights and remedies with respect
to the Mortgaged Property and any other collateral held by Lender as security
for the Indebtedness. This limitation on Borrower's liability shall not limit or
impair Lender's enforcement of its rights against any guarantor of the
Indebtedness or any guarantor of any obligations of Borrower. Borrower shall be
personally liable to Lender for the repayment of a portion of the Indebtedness
equal to zero percent (0%) of the original principal balance of this Note, plus
any other amounts for which Borrower has personal liability under this Paragraph
9. In addition to Borrower's personal liability under Paragraph 9(b), Borrower
shall be personally liable to Lender for the repayment of a further portion of
the Indebtedness equal to any loss or damage suffered by Lender as a result of
(1) failure of Borrower to pay to Lender upon demand after an Event of Default
all Rents to which Lender is entitled under Section 3(a) of the Security
Instrument and the amount of all security deposits collected by Borrower from
tenants then in residence; (2) failure of Borrower to apply all insurance
proceeds and condemnation proceeds as required by the Security Instrument; or
(3) failure of Borrower to comply with Section 14(d) or (e) of the Security
Instrument relating to the delivery of books and records, statements, schedules
and reports. For purposes of determining Borrower's personal liability under
Paragraph 9(b) and Paragraph 9(c), all payments made by Borrower or any
guarantor of this Note with respect to the Indebtedness and all amounts received
by Lender from the enforcement of its rights under the Security Instrument shall
be applied first to the portion of the Indebtedness for which Borrower has no
personal liability. Borrower shall become personally liable to Lender for the
repayment of all of the Indebtedness upon the occurrence of any of the following
Events of Default: (1) Borrower's acquisition of any property or operation of
any business not permitted by Section 33 of the Security Instrument; (2) a
Transfer (including, but not limited to, a lien or encumbrance) that is an Event
of Default under Section 21 of the Security Instrument, other than a Transfer
consisting solely of the involuntary removal or involuntary withdrawal of a
general partner in a limited partnership or a manager in a limited liability
company; or (3) fraud or written material misrepresentation by Borrower or any
officer, director, partner, member or employee of Borrower in connection with
the application for or creation of the Indebtedness or any request for any
action or consent by Lender. In addition to any personal liability for the
Indebtedness, Borrower shall be personally liable to Lender for (1) the
performance of all of Borrower's obligations under Section 18 of the Security
Instrument (relating to environmental matters); (2) the costs of any audit under
Section 14(d) of the Security Instrument; and (3) any costs and expenses
incurred by Lender in connection with the collection of any amount for which
Borrower is personally liable under this Paragraph 9, including fees and out of
pocket expenses of attorneys and expert witnesses and the costs of conducting
any independent audit of Borrower's books and records to determine the amount
for which Borrower has personal liability. To the extent that Borrower has
personal liability under this Paragraph 9, Lender may exercise its rights
against Borrower personally without regard to whether Lender has exercised any
rights against the Mortgaged Property or any other security, or pursued any
rights against any guarantor, or pursued any other rights available to Lender
under this Note, the Security Instrument, any other Loan Document or applicable
law. For purposes of this Paragraph 9, the term "Mortgaged Property" shall not
include any funds that (1) have been applied by Borrower as required or
permitted by the Security Instrument prior to the occurrence of an Event of
Default or (2) Borrower was unable to apply as required or permitted by the
Security Instrument because of a bankruptcy, receivership, or similar judicial
proceeding. To the fullest extent permitted by applicable law, in any action to
enforce Borrower's personal liability under this Paragraph 9, Borrower waives
any right to set off the value of the Mortgaged Property against such personal
liability.
Voluntary and Involuntary Prepayments.
A prepayment premium shall be payable in connection with any prepayment (any
receipt by Lender of principal, other than principal required to be paid in
monthly installments pursuant to Paragraph 3(b), prior to the scheduled Maturity
Date set forth in Paragraph 3(c)) under this Note as provided below: Borrower
may voluntarily prepay all of the unpaid principal balance of this Note on a
Business Day designated as the date for such prepayment in a written notice from
Borrower to Lender given at least 30 days prior to the date of such prepayment.
Such prepayment shall be made by paying (A) the amount of principal being
prepaid, (B) all accrued interest, (C) all other sums due Lender at the time of
such prepayment, and (D) the prepayment premium calculated pursuant to Paragraph
10(c). For all purposes including the accrual of interest, any prepayment
received by Lender on any day other than the last calendar day of the month
shall be deemed to have been received on the last calendar day of such month.
For purposes of this Note, a "Business Day" means any day other than a Saturday,
Sunday or any other day on which Lender is not open for business. Unless
expressly provided for in the Loan Documents, Borrower shall not have the option
to voluntarily prepay less than all of the unpaid principal balance. However, if
a partial prepayment is provided for in the Loan Documents or is accepted by
Lender in Lender's discretion, a prepayment premium calculated pursuant to
Paragraph 10(c) shall be due and payable by Borrower. Upon Lender's exercise of
any right of acceleration under this Note, Borrower shall pay to Lender, in
addition to the entire unpaid principal balance of this Note outstanding at the
time of the acceleration, (A) all accrued interest and all other sums due
Lender, and (B) the prepayment premium calculated pursuant to Paragraph 10(c).
Any application by Lender of any collateral or other security to the repayment
of any portion of the unpaid principal balance of this Note prior to the
Maturity Date and in the absence of acceleration shall be deemed to be a partial
prepayment by Borrower, requiring the payment to Lender by Borrower of a
prepayment premium.
Notwithstanding the provisions of Paragraph 10(a), no prepayment premium shall
be payable with respect to (A) any prepayment made during the period from one
hundred eighty (180) days before the scheduled Maturity Date to the scheduled
Maturity Date, or (B) any prepayment occurring as a result of the application of
anyinsurance proceeds or condemnation award under the Security Instrument. Any
prepayment premium payable under this Note shall be computed as follows: (1) If
the prepayment is made between the date of this Note and the date that is 180
months after the first day of the first calendar month following the date of
this Note (the "Yield Maintenance Period"), the prepayment premium shall be
whichever is the greater of subparagraphs (i) and (ii) below:
(i) 1.0% of the unpaid principal balance of this Note; or
(ii) the product obtained by multiplying:
(A) the amount of principal being prepaid, by
(B) the excess (if any) of the Monthly Note Rate over the
Assumed Reinvestment Rate, by
(C) the Present Value Factor.
For purposes of subparagraph (ii), the following definitions shall
apply:
Monthly Note Rate: one-twelfth (1/12) of the annual interest rate of
this Note, expressed as a decimal calculated to five digits.
Prepayment Date: in the case of a voluntary prepayment, the date on
which the prepayment is made; in the case of the application by
Lender of collateral or security to a portion of the principal
balance, the date of such application; and in any other case, the
date on which Lender accelerates the unpaid principal balance of
this Note.
Assumed Reinvestment Rate: one-twelfth (1/12) of the yield rate as
of the date 5 Business Days before the Prepayment Date, on the
9.250% U.S. Treasury Security due February 1, 2016, as reported in
The Wall Street Journal, expressed as a decimal calculated to five
digits. In the event that no yield is published on the applicable
date for the Treasury Security used to determine the Assumed
Reinvestment Rate, Lender, in its discretion, shall select the
non-callable Treasury Security maturing in the same year as the
Treasury Security specified above with the lowest yield published in
The Wall Street Journal as of the applicable date. If the
publication of such yield rates in The Wall Street Journal is
discontinued for any reason, Lender shall select a security with a
comparable rate and term to the Treasury Security used to determine
the Assumed Reinvestment Rate. The selection of an alternate
security pursuant to this Paragraph shall be made in Lender's
discretion.
Present Value Factor: the factor that discounts to present value the
costs resulting to Lender from the difference in interest rates
during the months remaining in the Yield Maintenance Period, using
the Assumed Reinvestment Rate as the discount rate, with monthly
compounding, expressed numerically as follows:
[OBJECT OMITTED]
n = number of months remaining in Yield Maintenance Period
ARR = Assumed Reinvestment Rate
(2) If the prepayment is made after the expiration of the Yield
Maintenance Period but before the period set forth in Paragraph 10(b)(A) above,
the prepayment premium shall be 1.0% of the unpaid principal balance of this
Note.
Any permitted or required prepayment of less than the unpaid principal balance
of this Note shall not extend or postpone the due date of any subsequent monthly
installments or change the amount of such installments, unless Lender agrees
otherwise in writing.
Borrower recognizes that any prepayment of the unpaid principal balance of this
Note, whether voluntary or involuntary or resulting from a default by Borrower,
will result in Lender's incurring loss, including reinvestment loss, additional
expense and frustration or impairment of Lender's ability to meet its
commitments to third parties. Borrower agrees to pay to Lender upon demand
damages for the detriment caused by any prepayment, and agrees that it is
extremely difficult and impractical to ascertain the extent of such damages.
Borrower therefore acknowledges and agrees that the formula for calculating
prepayment premiums set forth in this Note represents a reasonable estimate of
the damages Lender will incur because of a prepayment.
Borrower further acknowledges that the prepayment premium provisions of this
Note are a material part of the consideration for the Loan, and acknowledges
that the terms of this Note are in other respects more favorable to Borrower as
a result of the Borrower's voluntary agreement to the prepayment premium
provisions.
Costs and Expenses. To the fullest extent allowed by applicable law, Borrower
shall pay all expenses and costs, including fees and out-of-pocket expenses of
attorneys (including Lender's in-house attorneys) and expert witnesses and costs
of investigation, incurred by Lender as a result of any default under this Note
or in connection with efforts to collect any amount due under this Note, or to
enforce the provisions of any of the other Loan Documents, including those
incurred in post-judgment collection efforts and in any bankruptcy proceeding
(including any action for relief from the automatic stay of any bankruptcy
proceeding) or judicial or non-judicial foreclosure proceeding.
Forbearance. Any forbearance by Lender in exercising any right or remedy under
this Note, the Security Instrument, or any other Loan Document or otherwise
afforded by applicable law, shall not be a waiver of or preclude the exercise of
that or any other right or remedy. The acceptance by Lender of any payment after
the due date of such payment, or in an amount which is less than the required
payment, shall not be a waiver of Lender's right to require prompt payment when
due of all other payments or to exercise any right or remedy with respect to any
failure to make prompt payment. Enforcement by Lender of any security for
Borrower's obligations under this Note shall not constitute an election by
Lender of remedies so as to preclude the exercise of any other right or remedy
available to Lender.
Waivers. Presentment, demand, notice of dishonor, protest, notice of
acceleration, notice of intent to demand or accelerate payment or maturity,
presentment for payment, notice of nonpayment, grace, and diligence in
collecting the Indebtedness are waived by Borrower and all endorsers and
guarantors of this Note and all other third party obligors.
Loan Charges. Neither this Note nor any of the other Loan Documents shall be
construed to create a contract for the use, forbearance or detention of money
requiring payment of interest at a rate greater than the maximum interest rate
permitted to be charged under applicable law. If any applicable law limiting the
amount of interest or other charges permitted to be collected from Borrower in
connection with the Loan is interpreted so that any interest or other charge
provided for in any Loan Document, whether considered separately or together
with other charges provided for in any other Loan Document, violates that law,
and Borrower is entitled to the benefit of that law, that interest or charge is
hereby reduced to the extent necessary to eliminate that violation. The amounts,
if any, previously paid to Lender in excess of the permitted amounts shall be
applied by Lender to reduce the unpaid principal balance of this Note. For the
purpose of determining whether any applicable law limiting the amount of
interest or other charges permitted to be collected from Borrower has been
violated, all Indebtedness that constitutes interest, as well as all other
charges made in connection with the Indebtedness that constitute interest, shall
be deemed to be allocated and spread ratably over the stated term of the Note.
Unless otherwise required by applicable law, such allocation and spreading shall
be effected in such a manner that the rate of interest so computed is uniform
throughout the stated term of the Note.
Commercial Purpose. Borrower represents that the Indebtedness is being incurred
by Borrower solely for the purpose of carrying on a business or commercial
enterprise, and not for personal, family, household or agricultural purposes.
Counting of Days. Except where otherwise specifically provided, any reference in
this Note to a period of "days" means calendar days, not Business Days.
Governing Law. This Note shall be governed by the law of the jurisdiction in
which the Land is located.
Captions. The captions of the paragraphs of this Note are for convenience only
and shall be disregarded in construing this Note.
Notices; Written Modifications. All notices, demands and other communications
required or permitted to be given by Lender to Borrower pursuant to this Note
shall be given in accordance with Section 31 of the Security Instrument. Any
modification or amendment to this Note shall be ineffective unless in writing
signed by the party sought to be charged with such modification or amendment;
provided, however, that in the event of a Transfer under the terms of the
Security Instrument, any or some or all of the Modifications to Multifamily Note
may be modified or rendered void by Lender at Lender's option by notice to
Borrower/transferee.
Consent to Jurisdiction and Venue. Borrower agrees that any controversy arising
under or in relation to this Note shall be litigated exclusively in the
jurisdiction in which the Land is located (the "Property Jurisdiction"). The
state and federal courts and authorities with jurisdiction in the Property
Jurisdiction shall have exclusive jurisdiction over all controversies which
shall arise under or in relation to this Note. Borrower irrevocably consents to
service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile,
habitual residence or otherwise. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER
EACH (A) AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING
OUT OF THIS NOTE OR THE RELATIONSHIP BETWEEN THE PARTIES AS LENDER AND BORROWER
THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY
WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN
THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH
PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
ATTACHED EXHIBIT. The following Exhibit is attached to this Note:
-----
X Exhibit A Modifications to Multifamily Note
-----
IN WITNESS WHEREOF, Borrower has signed and delivered this Note under seal
or has caused this Note to be signed and delivered under seal by its duly
authorized representative. Borrower intends that this Note shall be deemed to be
signed and delivered as a sealed instrument.
CONSOLIDATED CAPITAL GROWTH FUND, a
California limited partnership doing
business in Florida as Consolidated
Capital Growth Fund Limited Partnership
By: CONCAP Equities, Inc., a Delaware
corporation, its general partner
By: ______________________
Patti K. Fielding
Senior Vice President
--------------
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS THE ____ DAY OF JUNE, 2001.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By:_________________________________
Donald W. Marshall
Vice President
EXHIBIT A
MODIFICATIONS TO MULTIFAMILY NOTE
Modifications to Multifamily Note
1. The first sentence of Paragraph 8 of the Note ("Default Rate") is hereby
deleted and replaced with the following:
So long as (a) any monthly installment under this Note remains past
due for more than thirty (30) days or (b) any other event of Default
has occurred and is continuing, interest under this Note shall
accrue on the unpaid principal balance from the earlier of the due
date of the first unpaid monthly installment or the occurrence of
such other Event of Default, as applicable, at a rate (the "Default
Rate") equal to the lesser of (1) the maximum interest rate which
may be collected from Borrower under applicable law or (2) the
greater of (i) three percent (3%) above the Interest Rate or (ii)
four percent (4.0%) above the then-prevailing Prime Rate. As used
herein, the term "Prime Rate" shall mean the rate of interest
announced by The Wall Street Journal from time to time as the "Prime
Rate".
2. Paragraph 9(c) of the Note is amended to add the following subparagraph (4):
(4) failure by Borrower to pay the amount of the water and sewer
charges, taxes, fire, hazard or other insurance premiums, ground
rents, assessments or other charges in accordance with the terms
of the Security Instrument.
3. Paragraph 19 is modified by deleting: "; provided, however, that in the
event of a Transfer under the terms of the Security Instrument, any or
some or all of the Modifications to Multifamily Note may be modified or
rendered void by Lender at Lender's option by notice to
Borrower/transferee" in the last sentence of the Paragraph; and by adding
the following new sentence:
The Modifications to Multifamily Note set forth in this Exhibit A
shall be null and void unless title to the Mortgaged Property is
vested in an entity whose Controlling Interest(s) are directly or
indirectly held by AIMCO REIT or AIMCO OP. The capitalized terms
used in this paragraph are defined in the Security Instrument.