UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 22, 2002
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
(Exact name of registrant as specified in its charter)
California 0-11723 94-2883067
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification Number)
incorporation)
55 Beattie Place
Post Office Box 1089
Greenville, South Carolina 29602 29602
(Address of principal executive offices) (Zip Code)
(864) 239-1000
(Registrant's telephone number)
N/A
(Former Name or former address, if changed since last report)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant hereby amends the following items, financial statements, exhibits or
other portions of its Current Report on Form 8-K, dated August 22, 2002 (filed
with the Securities and Exchange Commission on September 5, 2002), as set forth
in the pages attached hereto.
Item 7. Financial Statements and Exhibits
(a) and (b) FINANCIAL STATEMENTS OF PROPERTIES ACQUIRED AND PRO FORMA FINANCIAL
INFORMATION
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Pro Forma Consolidated Balance Sheet
(Unaudited) as of June 30, 2002................................ 4
Pro Forma Consolidated Income Statement
(Unaudited) for the six months ended June 30, 2002............. 5
Pro Forma Consolidated Income Statement
(Unaudited) for the year ended December 31, 2001............... 6
Notes to Pro Forma Consolidated Financial Information.................. 7
Report of Independent Auditors....................................... 8
Combined Statements of Revenues and Certain Expenses for the six months
ended June 30, 2002 (unaudited) and the years ended
December 31, 2001, 2000 and 1999................................ 9
Notes to Consolidated Statements of Revenues and Certain Expenses...... 10
(c) EXHIBITS
None.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
By: ConCap Equities, Inc.
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President and Director
Date: November 5, 2002
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated balance sheet of Consolidated Capital
Institutional Properties/2 ("CCIP/2" or the "Partnership") as of June 30, 2002
has been prepared as if the Partnership's acquisition of the fee interest in
three properties (Canyon Crest Apartments, Highcrest Townhomes and Windemere
Apartments) had been consummated on June 30, 2002. The unaudited pro forma
consolidated income statements for the year ended December 31, 2001 and the six
months ended June 30, 2002 are presented as if the Partnership's acquisition of
the three properties occurred on January 1, 2001 and the effect was carried
forward through the year and the six month period.
On August 22, 2002, the general partner of CCIP/2 executed and filed deeds in
lieu of foreclosure on two of the properties of Consolidated Capital Equity
Properties/2 ("CCEP/2"): Canyon Crest Apartments and Highcrest Townhomes. In
addition, on August 28, 2002, the general partner of CCIP/2 executed and filed a
deed in lieu of foreclosure on Windemere Apartments.
The pro forma consolidated financial statements do not represent what the
Partnership's financial position or results of operations would have been
assuming the completion of the Partnership's acquisition of the three properties
had occurred on January 1, 2001 and period indicated, nor do they project the
Partnership's financial position or results of operations at any future date or
for any future period. These pro forma consolidated financial statements should
be read in conjunction with the Partnership's 2001 Annual Report on Form 10-K
and the Partnership's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2002.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2002
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
CCIP/2 Partnership
HISTORICAL ACQUISITION PROFORMA
(A) (B) ADJUSTED
Assets
Cash and cash equivalents $ 41 $ 450 $ 491
Receivables and deposits -- 106 106
Restricted escrows -- 105 105
Other assets 21 85 106
Investment in Master Loan to
affiliate 44,779 (35,526) (C) 9,253
Less: Allowance for impairment loss (24,329) 24,329 (C) --
20,450 (11,197) 9,253
Investment in affiliated partnerships -- 918 918
Investment properties:
Land -- 10,079 10,079
Building and related personal
property -- 16,921 16,921
-- 27,000 27,000
Less: Accumulated depreciation -- -- --
-- 27,000 27,000
$ 20,512 $ 17,467 $ 37,979
Liabilities and Partners' (Deficit)
Capital
Liabilities
Accounts payable $ -- $ 60 $ 60
Tenant security deposit liabilities -- 109 109
Accrued property taxes -- 317 317
Due to affiliates 5,223 -- 5,223
Other liabilities 61 133 194
Distribution payable 141 -- 141
Mortgage notes payable -- 15,900 15,900
Total Liabilities 5,425 16,519 21,944
Partners' (Deficit) Capital
General Partner (372) 9 (363)
Limited partners (909,123.60 units
issued and outstanding) 15,459 939 16,398
15,087 948 (D) 16,035
$ 20,512 $ 17,467 $ 37,979
The accompanying notes are an integral part of
these pro forma financial statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIOD ENDED JUNE 30, 2002
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
CCIP/2 PARTNERSHIP
HISTORICAL ACQUISITION PROFORMA PROFORMA
(A) (B) ADJUSTMENTS ADJUSTED
Revenues
Rental income $ -- $ 2,251 $ -- $ 2,251
Reduction of provision for
impairment loss 3,800 -- (3,800) (C) --
Other income 1 258 -- 259
Total revenues 3,801 2,509 (3,800) 2,510
Expenses
Operating -- 857 -- 857
General and administrative 271 -- 31 (D) 302
Depreciation -- -- 380 (E) 380
Interest 53 609 -- 662
Property taxes -- 233 -- 233
Total expenses 324 1,699 411 2,434
Net income (loss) $ 3,477 $ 810 $(4,211) $ 76
Net income (loss) allocated
to general partner (1%) $ 35 $ 8 $ (42) $ 1
Net income (loss) allocated
to limited partners (99%) 3,442 802 (4,169) 75
Net income (loss) $ 3,477 $ 810 $(4,211) $ 76
Net income (loss) per limited
partnership unit $ 3.79 $ 0.88 $ (4.59) $ 0.08
The accompanying notes are an integral part of
these pro forma financial statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2001
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
CCIP/2 PARTNERSHIP
HISTORICAL ACQUISITION PROFORMA PROFORMA
(A) (B) ADJUSTMENTS ADJUSTED
Revenues
Rental income $ -- $ 4,540 $ -- $ 4,540
Interest income on
investment in Master Loan
to affiliate 904 -- (904) (C) --
Reduction of provision for
impairment loss 1,000 -- (1,000) (D) --
Other income 30 438 -- 468
Total revenues 1,934 4,978 (1,904) 5,008
Expenses
Operating -- 1,831 -- 1,831
General and administrative 513 -- 42 (E) 555
Depreciation -- -- 760 (F) 760
Interest -- 1,235 -- 1,235
Property taxes -- 442 -- 442
Total expenses 513 3,508 802 4,823
Net income (loss) $ 1,421 $ 1,470 $(2,706) $ 185
Net income (loss) allocated
to general partner (1%) $ 14 $ 15 $ (27) $ 2
Net income (loss) allocated
to limited partners (99%) 1,407 1,455 (2,679) 183
Net income (loss) $ 1,421 $ 1,470 $(2,706) $ 185
Net income (loss) per
limited partnership unit $ 1.55 $ 1.60 $ (2.95) $ 0.20
The accompanying notes are an integral part of
these pro forma financial statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES/2
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2002
(A) Reflects the consolidated balance sheet of CCIP/2 reported on the
Quarterly Report Form 10-Q at June 30, 2002.
(B) Reflects the assets and liabilities valuation of the three properties
(Canyon Crest Apartments, Highcrest Townhomes and Windemere Apartments) at
June 30, 2002.
(C) The write off of the portion of the investment in the Master Loan to
CCEP/2 related to the three properties foreclosed on by the Partnership.
(D) Reflects gain on foreclosure as a result of recording the assets and
liabilities of the three properties at their respective fair values.
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE
SIX MONTHS ENDED JUNE 30, 2002
(A) Reflects the consolidated statement of income of CCIP/2 for the six month
period ended June 30, 2002 as reported on the Partnership's Quarterly
Report on Form 10-Q.
(B) Reflects the historical operations of the three properties for the six
months ended June 30, 2002.
(C) Reflects elimination of reduction of provision for impairment loss on the
Master Loan as all of the properties which serve as collateral for the
Master Loan have either been or will be foreclosed upon.
(D) Reflects General Partner Reimbursements for the three properties.
(E) Reflects straight line depreciation for Canyon Crest Apartments, Highcrest
Townhomes and Windemere Apartments based on estimated useful lives of 30
years, for buildings and five years for furniture, fixtures and equipment.
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE
YEAR ENDED DECEMBER 31, 2001
(A) Reflects the consolidated statement of income of CCIP/2 for the year ended
December 31, 2001 as reported on the Partnership's Annual Report on Form
10-K.
(B) Reflects the historical operations of the three properties for the year
ended December 31, 2001.
(C) Reflects elimination of Master Loan balance and related interest income
due to the acquisition through foreclosure on the collateral for the loan.
All interest income was eliminated due to the impending foreclosure of the
remaining property which serves as collateral for the loan.
(D) Reflects elimination of reduction of provision for impairment loss on the
Master Loan as all of the properties which serve as collateral for the
Master Loan have either been or will be foreclosed upon.
(E) Reflects General Partner Reimbursements for the three properties.
(F) Reflects straight line depreciation for Canyon Crest Apartments, Highcrest
Townhomes and Windemere Apartments based on estimated useful lives of 30
years for buildings and five years for furniture, fixtures and equipment.
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Institutional Properties/2
We have audited the accompanying combined statements of revenues and certain
expenses of Canyon Crest Apartments, Highcrest Townhomes and Windemere
Apartments (the "Properties") as described in Note 1 for the years ended
December 31, 2001, 2000 and 1999. These financial statements are the
responsibility of the Properties' management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statements of revenues and certain expenses was
prepared using the basis of accounting described in Note 1 for the purposes of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in Form 8-K/A of Consolidated Capital Institutional
Properties/2, and are not intended to be a complete presentation of the
Properties' revenues and expenses.
In our opinion, the financial statements referred to above presents fairly, in
all material respects, the revenues and certain expenses of the Properties, as
described in Note 1 for the years ended December 31, 2001, 2000 and 1999 in
conformity with accounting principles generally accepted in the United States.
/s/Ernst & Young LLP
October 31, 2002
Greenville, South Carolina
Canyon Crest Apartments, Highcrest Townhomes and Windemere Apartments
Combined Statements of Revenues and Certain Expenses
Years Ended December 31, 2001, 2000 and 1999 and Unaudited
Six Months Ended June 30, 2002
(In thousands)
Six Months
Ended Year Ended December 31
June 30, 2002 2001 2000 1999
(Unaudited)
Revenues:
Rental income $ 2,251 $ 4,540 $ 4,324 $ 4,337
Other income 258 438 370 197
Total revenue 2,509 4,978 4,694 4,534
Certain expenses:
Advertising 41 93 116 95
Utilities 200 434 387 341
Management fees 125 268 237 228
Salaries and benefits 209 482 466 520
Repairs and maintenance 172 328 411 342
Insurance 48 76 49 50
Other operating expenses 62 150 132 107
Interest expense 609 1,235 766 660
Property tax expense 233 442 436 496
Loss on refinancing -- -- 475 --
Total expenses 1,699 3,508 3,475 2,839
Revenues in excess of
certain expenses $ 810 $ 1,470 $ 1,219 $ 1,695
See accompanying notes.
Canyon Crest Apartments, Highcrest Townhomes and Windemere Apartments
Notes to Combined Statements of Revenues and Certain Expenses
Years Ended December 31, 2001, 2000 and 1999 and
Unaudited Six Months Ended June 30, 2002
1. Basis of Presentation
The accompanying combined statements of revenues and certain expenses relate to
the operations of Canyon Crest Apartments, Highcrest Townhomes and Windemere
Apartments (the "Properties"). The financial statements have been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for the acquisition of real estate properties. Accordingly,
the combined statements of revenues and certain expenses exclude certain items
that may not be comparable to the proposed future operations of the Properties,
primarily depreciation expense. Consequently, the financial statements are not
representative of the actual operations of the Properties for the periods
presented, nor are they indicative of future operations.
2. Summary of Significant Accounting Policies
Revenue Recognition
The Properties generally lease apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Properties will offer rental concessions during particularly slow months or in
response to heavy competition from other similar complexes in the area.
Concessions are charged to income as earned.
Advertising
The properties expense the cost of advertising as incurred.
Use of Estimates
The preparation of combined statements of revenues and certain expenses in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the amounts
reported in the statement of revenues and certain expenses and accompanying
notes. Actual results could differ from those estimates.
3. Interim Unaudited Financial Information
The financial statement for the six months ended June 30, 2002 is unaudited,
however, in the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary for a fair presentation of the financial
statement for the interim period have been included. The results of the interim
period are not necessarily indicative of the results to be obtained for a full
fiscal year.
4. Refinancings
During 2000, the mortgage indebtedness for Canyon Crest Apartments, Highcrest
Townhomes and Windemere Apartments was refinanced. The refinancings replaced
indebtedness of $9,000,000 with new indebtedness of $16,475,000. The
indebtedness carries stated interest rates of 7.10% to 7.83%. Principal and
interest payments are due on the indebtedness monthly until maturity in 2010 for
Highcrest Townhomes and Windemere Apartments and in 2011 for Canyon Crest
Apartments, at which time balloon payments are due. A loss on refinancing was
recorded associated with these Properties of approximately $475,000, due to
write-off of unamortized loan costs and prepayment penalties.
Canyon Crest Apartments, Highcrest Townhomes and Windemere Apartments
Notes to Combined Statements of Revenues and Certain Expenses
5. Related Party Transactions
Affiliates of the Properties are entitled to receive 5% of gross receipts from
the Properties for providing property management services. The Properties paid
to such affiliates approximately $268,000, $237,000 and $228,000 for the years
ended December 31, 2001, 2000 and 1999, respectively and approximately $125,000
for the six months ended June 30, 2002.