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, 2002
[ ] 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, 2002
Assets
Cash and cash equivalents $ 1,596
Receivables and deposits 403
Restricted escrows 58
Other assets 888
Investment properties:
Land $ 4,610
Buildings and related personal property 43,902
48,512
Less accumulated depreciation (31,954) 16,558
$ 19,503
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 181
Tenant security deposit liabilities 285
Accrued property taxes 177
Other liabilities 638
Mortgage notes payable 35,321
Partners' Deficit
General partner $ (5,425)
Limited partners (49,196 units issued and
outstanding) (11,674) (17,099)
$ 19,503
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,
2002 2001
Revenues:
Rental income $2,669 $2,776
Other income 177 172
Casualty gain (Note C) -- 57
Total revenues 2,846 3,005
Expenses:
Operating 1,039 1,230
General and administrative 110 165
Depreciation 585 570
Interest 647 558
Property taxes 188 180
Total expenses 2,569 2,703
Net income $ 277 $ 302
Net income allocated to general partner (1%) $ 3 $ 3
Net income allocated to limited partners (99%) 274 299
$ 277 $ 302
Net income per limited partnership unit $ 5.57 $ 6.08
Distribution per limited partnership unit $ -- $11.67
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, 2001 49,196 $(5,428) $(11,948) $(17,376)
Net income for the three months
ended March 31, 2002 -- 3 274 277
Partners' deficit at
March 31, 2002 49,196 $(5,425) $(11,674) $(17,099)
See Accompanying Notes to Financial Statements
d)
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2002 2001
Cash flows from operating activities:
Net income $ 277 $ 302
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 585 570
Amortization of loan costs 17 19
Casualty gain -- (57)
Change in accounts:
Receivables and deposits (104) (101)
Other assets (247) (168)
Accounts payable 35 (200)
Tenant security deposit liabilities 8 21
Accrued property taxes 177 180
Other liabilities 207 (89)
Net cash provided by operating activities 955 477
Cash flows from investing activities:
Property improvements and replacements (177) (489)
Net withdrawals from restricted escrows 235 52
Insurance proceeds received -- 76
Net cash provided by (used in) investing activities 58 (361)
Cash flows from financing activities:
Principal payments on mortgage note payable (61) --
Distributions to partners -- (580)
Net cash used in financing activities (61) (580)
Net increase (decrease) in cash and cash equivalents 952 (464)
Cash and cash equivalents at beginning of period 644 1,340
Cash and cash equivalents at end of period $ 1,596 $ 876
Supplemental disclosure of cash flow information:
Cash paid for interest $ 630 $ 539
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, 2002, are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 2002. 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, 2001.
The General Partner is a wholly owned subsidiary of Apartment Investment and
Management Company ("AIMCO"), a publicly traded real estate investment trust.
Note B - 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.
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 $145,000 and
$150,000 for the three months ended March 31, 2002 and 2001, respectively, which
is included in operating expenses.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $88,000 and $106,000 for the
three months ended March 31, 2002 and 2001, respectively, which is included in
general and administrative expenses and investment properties. Included in these
amounts are fees related to construction management services provided by an
affiliate of the General Partner of approximately $2,000 and $19,000 for the
three months ended March 31, 2002 and 2001, respectively. The construction
management service fees are calculated based on a percentage of current year
additions to the investment properties.
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. No fee was paid during the
three months ended March 31, 2002. During the three months ended March 31, 2001,
affiliates of the General Partner received approximately $52,000 for providing
these services, which is included in general and administrative expenses.
Beginning in 2001, the Partnership began insuring its properties up to certain
limits through coverage provided by AIMCO which is generally self-insured for a
portion of losses and liabilities related to workers compensation, property
casualty and vehicle liability. The Partnership insures its properties above the
AIMCO limits through insurance policies obtained by AIMCO from insurers
unaffiliated with the General Partner. During the three months ended March 31,
2002 and 2001, the Partnership was charged by AIMCO and its affiliates
approximately $135,000 and $187,000, respectively, for insurance coverage and
fees associated with policy claims administration.
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 - Legal Proceedings
The Partnership is a party to a certain legal action resulting from its
operating activities. This action is a routine litigation and administrative
proceeding arising in the ordinary course of business and is not 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, 2002 and 2001:
Average Occupancy
Property 2002 2001
Breckinridge Square 84% 89%
Louisville, Kentucky
Churchill Park 74% 86%
Louisville, Kentucky
The Lakes 86% 89%
Raleigh, North Carolina
Doral Springs 94% 98%
Miami, Florida
The General Partner attributes the decrease in occupancy at all of the
investment properties to a slower economy and recent job layoffs.
Results of Operations
The Partnership's net income for the three months ended March 31, 2002 and 2001
was approximately $277,000 and $302,000, respectively. The decrease in net
income is due to a decrease in total revenues which was offset by a decrease in
total expenses. Total revenues decreased due to decreases in rental income and
the recognition of a casualty gain in 2001 (see "Item 1. Financial Statements -
Note C"). Rental income decreased due to a decrease in average occupancy at all
four of the investment properties and due to a decrease in average rental rates
at Breckenridge Square Apartments, Churchill Park Apartments, and The Lakes
Apartments.
Total expenses decreased due to decreases in operating and general and
administrative expenses partially offset by an increase in interest expense.
Operating expense decreased due to decreases in utility expense, and salary
expense at all four investment properties. Interest expense increased due to the
refinancing of the mortgage encumbering Doral Springs Apartments in June of 2001
which resulted in a larger loan balance.
General and administrative expenses decreased due to a decrease in partnership
management fees which is the result of no cash being distributed from operations
to the partners during the three months ended March 31, 2002. Included in
general and administrative expenses are reimbursements to the General Partner as
allowed under the Partnership Agreement. In addition, costs associated with the
quarterly and annual communications with investors and regulatory agencies and
the annual audit required by the Partnership Agreement are also included.
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, 2002, the Partnership had cash and cash equivalents of
approximately $1,596,000 compared to approximately $876,000 at March 31, 2001.
The increase in cash and cash equivalents of approximately $952,000 for the
three months ended March 31, 2002, from the Partnership's calendar year end of
December 31, 2001, is due to approximately $955,000 and $58,000 of cash provided
by operating and investing activities, respectively, which was partially offset
by approximately $61,000 of cash used in financing activities. Cash provided by
investing activities consisted of net withdrawals from restricted escrows,
partially offset by property improvements and replacements. Cash used in
financing activities consisted of principal payments on the mortgage encumbering
Doral Springs Apartments. 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 and local legal and regulatory requirements. Capital improvements
planned for each of the Registrant's properties are detailed below.
Breckinridge Square Apartments: For 2002, the Partnership has budgeted
approximately $159,000 for capital improvements for HVAC, appliance, water meter
and floor covering replacements. The Partnership completed approximately $63,000
in capital expenditures at Breckinridge Square Apartments as of March 31, 2002,
consisting primarily of heating upgrades, plumbing upgrades, and water heater,
appliance and floor covering replacements. These improvements were funded
primarily from operations. 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.
Churchill Park Apartments: For 2002, the Partnership has budgeted approximately
$207,000 for capital improvements for major painting, door, air conditioning and
floor covering replacements and water conservation enhancement. The Partnership
completed approximately $38,000 in capital expenditures at Churchill Park
Apartments as of March 31, 2002, consisting primarily of sewer upgrades and
floor covering replacements. These improvements were funded primarily from
operations. 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.
The Lakes Apartments: For 2002, the Partnership has budgeted approximately
$201,000 for capital improvements, consisting primarily of water heater, floor
covering and appliance replacements. The Partnership completed approximately
$45,000 in capital expenditures at The Lakes Apartments as of March 31, 2002,
consisting primarily of floor covering replacements. These improvements were
funded primarily from operations and replacement reserves. 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.
Doral Springs Apartments: For 2002, the Partnership has budgeted approximately
$122,000 for capital improvements, consisting primarily of air conditioning,
floor covering and appliance replacements. The Partnership completed
approximately $31,000 in budgeted expenditures at Doral Springs Apartments as of
March 31, 2002, consisting primarily of roof, appliance and floor covering
replacements. These improvements were funded from operations. 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.
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 is approximately $35,321,000, of which approximately $24,690,000
requires monthly interest only payments. These notes require balloon payments on
December 1, 2005. The remaining indebtedness, approximately $10,631,000, is
required to make monthly principal and interest payments of approximately
$60,000. This note will be fully amortized when it matures on July 1, 2021. The
General Partner may 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 will risk losing such properties
through foreclosure.
The Partnership distributed the following amounts during the three months ended
March 31, 2002 and 2001 (in thousands, except per unit data):
Three Months Per Limited Three Months Per Limited
Ended Partnership Ended Partnership
March 31, 2002 Unit March 31, 2001 Unit
Operations $ -- $ -- $ 580 $11.67
The Partnership's cash available for distribution is reviewed on a monthly
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 distributions to its partners during the
remainder of 2002 or subsequent periods.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 31,398.25 limited partnership units
(the "Units") in the Partnership representing 63.82% of the outstanding Units at
March 31, 2002. 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 voting on certain
amendments to the Partnership Agreement and voting to remove the General
Partner. As a result of its ownership of 63.82% of the outstanding Units, AIMCO
is in a position to influence all such 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 a certain legal action resulting from its
operating activities. This action is a routine litigation and administrative
proceeding arising in the ordinary course of business and is not 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, 2002.
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: