UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 10, 2003
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact name of registrant as specified in its charter)
California 0-10831 94-2744492
(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
(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)
On November 10, 2003, the Registrant closed an acquisition that was reported as
a subsequent event on the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 2003 (filed with the Securities Exchange
Commission on November 14, 2003). In such filing, the Registrant elected to
provide the financial statements and other pro forma financial information
required in connection with reporting such acquisition on a delayed basis as
permitted under the Securities Exchange Act of 1934.
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 September 30, 2003.......................... 5
Pro Forma Consolidated Income Statement
(Unaudited) for the nine months ended September 30, 2003...... 6
Pro Forma Consolidated Income Statement
(Unaudited) for the year ended December 31, 2002............... 7
Notes to Pro Forma Consolidated Financial Information.................. 8
Report of Independent Auditors....................................... 9
Combined Statements of Revenues and Certain Expenses for the nine months
ended September 30, 2003 (unaudited) and the years ended
December 31, 2002, 2001 and 2000................................ 10
Notes to Consolidated Statements of Revenues and Certain Expenses...... 11
(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
By: ConCap Equities, Inc.
Its General Partner
By: /s/Patrick J. Foye
Patrick J. Foye
Executive Vice President and Director
Date: January 28, 2004
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited pro forma consolidated balance sheet of Consolidated Capital
Institutional Properties ("CCIP" or the "Partnership") as of September 30, 2003
has been prepared as if the Partnership's acquisition of the fee interest in the
four properties (Plantation Gardens Apartments, Regency Oaks Apartments, The
Dunes Apartments, and Palm Lake Apartments) had been consummated on September
30, 2003.
The unaudited pro forma consolidated income statements for the year ended
December 31, 2002 and the nine months ended September 30, 2003 are presented as
if the Partnership's acquisition of the four properties occurred on January 1,
2002 and the effect was carried forward through the year and the nine month
period.
The Partnership was initially formed for the benefit of its limited partners to
lend funds to Consolidated Capital Equity Partners ("CCEP"), a California
general partnership. The general partner of CCEP is an affiliate of the General
Partner. The Partnership loaned funds to CCEP subject to a nonrecourse note with
a participation interest (the "Master Loan"). The loans were made to, and the
real properties that secure the Master Loan were purchased and were owned by,
CCEP.
The Master Loan matured in November 2000. The General Partner had been
negotiating with CCEP with respect to its options which included foreclosing on
the properties that collateralize the Master Loan or extending the terms of the
Master Loan. The General Partner decided to foreclose on the properties that
collateralize the Master Loan.
On November 10, 2003, the Partnership acquired the four remaining properties
held by Consolidated Capital Equity Properties ("CCEP"): Plantation Gardens
Apartments, Regency Oaks Apartments, The Dunes Apartments, and Palm Lake
Apartments. These properties were sold at a foreclosure sale due to CCEP's
inability to repay the Master Loan and accrued interest. An affiliate of the
General Partner advanced the Partnership approximately $31,278,000 in order to
purchase these properties at the foreclosure sale. The sale proceeds were sent
to the Partnership as the lien holder and were used to repay the advance from
the General Partner's affiliate. The advance bore interest at the prime rate
plus 2%, and the Partnership paid approximately $114,000 in interest for the
period the advance was outstanding. The Partnership acquired the properties
previously held by CCEP subject to the existing liens on the properties,
including the first mortgage loans. CCIP intends to continue to operate these
properties as residential apartment complexes.
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 four properties
had occurred on January 1, 2002, 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 2002 Annual Report on Form 10-K and the Partnership's
Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2003.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2003
(UNAUDITED)
(IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
CCIP Partnership
HISTORICAL ACQUISITION PROFORMA
(A) (B) ADJUSTED
Assets
Cash and cash equivalents $ 1,504 $ 237 $ 1,741
Receivables and deposits 382 207 589
Restricted escrows 891 -- 891
Other assets 1,097 284 1,381
Investment in Master Loan to
affiliate 14,123 (14,123)(C) --
Investment in affiliated
partnerships 945 -- 945
Investment properties:
Land 14,272 8,507 22,779
Buildings and related personal
property 68,835 30,393 99,228
83,107 38,900 122,007
Less: Accumulated depreciation (22,120) -- (22,120)
60,987 38,900 99,887
$79,929 $25,505 $105,434
Liabilities and Partners'
Capital
Liabilities
Accounts Payable $ 205 $ 124 $ 329
Tenant security deposit
liabilities 680 295 975
Accrued property taxes 378 563 941
Other liabilities 1,116 265 1,381
Mortgage notes payable 51,705 23,935 75,640
Total Liabilities 54,084 25,182 79,266
Partners' Capital
General Partner 119 3 122
Limited partners (199,043.2
units issued and outstanding) 25,726 320 26,046
25,845 323 (D) 26,168
$79,929 $25,505 $105,434
The accompanying notes are an integral part of these pro forma financial
statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2003
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
CCIP PARTNERSHIP
HISTORICAL ACQUISITION PROFORMA PROFORMA
(A) (B) ADJUSTMENTS ADJUSTED
Revenues
Rental income $12,439 $ 5,458 $ -- $17,897
Other income 1,026 838 -- 1,864
Casualty gain 18 -- -- 18
Total revenues 13,483 6,296 -- 19,779
Expenses
Operating 6,081 2,903 -- 8,984
General and administrative 738 -- 165 (C) 903
Depreciation 2,981 -- 860 (D) 3,841
Interest 2,728 1,353 (132)(E) 3,949
Property taxes 867 535 -- 1,402
Total expenses 13,395 4,791 893 19,079
Income from operations 88 1,505 (893) 700
Gain on sale of investment 1,098 -- -- 1,098
Net income (loss) $ 1,186 $ 1,505 $ (893) $ 1,798
Net income (loss) allocated
to general partner (1%) 12 15 (9) 18
Net income (loss) allocated
to limited partners (99%) 1,174 1,490 (884) 1,780
Net income (loss) $ 1,186 $ 1,505 $ (893) $ 1,798
Net income (loss) per limited
partnership unit $ 5.90 $ 7.48 $ (4.44) $ 8.94
The accompanying notes are an integral part of these pro forma financial
statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
PRO FORMA CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2002
(UNAUDITED)
(DOLLARS IN THOUSANDS EXCEPT PER UNIT AMOUNTS)
CCIP PARTNERSHIP
HISTORICAL ACQUISITION PROFORMA PROFORMA
(A) (B) ADJUSTMENTS ADJUSTED
Revenues
Rental income $13,232 $ 7,211 $ -- $20,443
Interest income on
investment in Master Loan
to affiliate 386 -- (386)(C) --
Other income 1,028 1,187 -- 2,215
Total revenues 14,646 8,398 (386) 22,658
Expenses
Operating 5,649 3,734 -- 9,383
General and administrative 836 -- 220 (D) 1,056
Depreciation 3,189 -- 1,147 (E) 4,336
Interest 2,482 1,900 (176)(F) 4,206
Property taxes 1,003 724 -- 1,727
Total expenses 13,159 6,358 1,191 20,708
Income from operations 1,487 2,040 (1,577) 1,950
Gain on foreclosure of real
estate 1,831 -- -- 1,831
Net income (loss) $ 3,318 $ 2,040 $(1,577) $ 3,781
Net income (loss) allocated
to general partner (1%) 33 20 (15) 38
Net income (loss) allocated
to limited partners (99%) 3,285 2,020 (1,562) 3,743
Net income (loss) $ 3,318 $ 2,040 $(1,577) $ 3,781
Net income (loss) per
limited partnership unit $ 16.50 $ 10.13 $ (7.84) $ 18.79
The accompanying notes are an integral part of these pro forma financial
statements.
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 2003
(A) Reflects the consolidated balance sheet of CCIP reported on the Quarterly
Report on Form 10-Q as of September 30, 2003.
(B) Reflects the assets and liabilities valuation of the four acquired
properties (Plantation Gardens Apartments, Regency Oaks Apartments, The
Dunes Apartments, and Palm Lake Apartments) at September 30, 2003.
(C) The write off of the investment in the Master Loan to CCEP related to the
four properties foreclosed on by the Partnership.
(D) Reflects gain on foreclosure as a result of recording the assets and
liabilities of the four properties at their respective fair values.
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2003
(A) Reflects the consolidated statement of income of CCIP for the nine-month
period ended September 30, 2003 as reported on the Partnership's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2003.
(B) Reflects the historical operations of the four properties for the nine
months ended September 30, 2003.
(C) Reflects General Partner reimbursements and audit and tax return fees for
the four properties.
(D) Reflects straight line depreciation for the four properties based on
estimated useful lives of 30 years for buildings and five years for
furniture, fixtures and equipment.
(E) Reflects debt premium amortization related to the fair value adjustment
for the four properties.
NOTES TO PRO FORMA CONSOLIDATED INCOME STATEMENT FOR THE
YEAR ENDED DECEMBER 31, 2002
(A) Reflects the consolidated statement of income of CCIP for the year ended
December 31, 2002 as reported on the Partnership's Annual Report on Form
10-K for the fiscal year ended December 31, 2002.
(B) Reflects the historical operations of the four properties for the year
ended December 31, 2002.
(C) Reflects elimination of Master Loan balance and related interest income
due to the acquisition through foreclosure on the collateral for the
Master Loan.
(D) Reflects General Partner reimbursements and audit and tax return fees for
the four properties.
(E) Reflects straight line depreciation for the four properties based on
estimated useful lives of 30 years for buildings and five years for
furniture, fixtures and equipment.
(F) Reflects debt premium amortization related to the fair value adjustment
for the four properties.
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Equity Partners, L.P.
We have audited the accompanying combined statements of revenues and certain
expenses of The Dunes Apartments, Palm Lake Apartments, Plantation Gardens
Apartments and Regency Oaks Apartments (the "Properties") for the years ended
December 31, 2002, 2001, and 2000. The combined statement of revenues and
certain expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined statement of revenues
and certain expenses 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 statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. 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 audits provide a reasonable basis for our
opinion.
The accompanying combined statements of revenues and certain expenses was
prepared for the purposes of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in Form 8-K of Consolidated
Capital Institutional Properties, and is not intended to be a complete
presentation of the Properties' revenues and expenses.
In our opinion, the combined statements of revenues and certain expenses
referred to above present fairly, in all material respects, the revenues and
certain expenses of the Properties, as described in Note 1, for the years ended
December 31, 2002, 2001 and 2000, in conformity with accounting principles
generally accepted in the United States.
/s/Ernst & Young LLP
December 16, 2003
Greenville, South Carolina
The Dunes Apartments, Palm Lake Apartments,
Plantation Gardens Apartments and Regency Oaks Apartments
Combined Statements of Revenues and Certain Expenses
Years Ended December 31, 2002, 2001 and 2000 and Unaudited Nine
Months Ended September 30, 2003
(In thousands)
Nine Months
Ended
September 30, Year Ended December 31,
2003 2002 2001 2000
(Unaudited)
Revenues:
Rental income $ 5,458 $ 7,211 $ 7,732 $ 7,317
Other income 838 1,187 906 713
Total revenue 6,296 8,398 8,638 8,030
Certain expenses:
Advertising 191 174 166 180
Utilities 477 611 617 611
Management fees 310 412 460 407
Salaries and benefits 413 630 957 952
Repairs and maintenance 853 1,031 1,006 1,040
Insurance 260 349 373 136
Other operating expenses 399 527 355 378
Interest expense 1,353 1,900 1,968 1,073
Property tax expense 535 724 697 660
Loss on refinancing -- -- -- 680
Total expenses 4,791 6,358 6,599 6,117
Revenues in excess of certain
expenses $ 1,505 $ 2,040 $ 2,039 $ 1,913
See accompanying notes.
The Dunes Apartments, Palm Lake Apartments,
Plantation Gardens Apartments and Regency Oaks Apartments
Notes to Combined Statements of Revenues and Certain Expenses
Years Ended December 31, 2002, 2001 and 2000 and Unaudited Nine
Months Ended September 30, 2003
1. Basis of Presentation
The accompanying combined statements of revenues and certain expenses relates to
the operations of The Dunes Apartments, Palm Lake Apartments, Plantation Gardens
Apartments and Regency Oaks 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 excludes 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 for 2002, 2001 and
2000 are charged to income as earned. Any concessions given in 2003
are recognized over the life of the lease agreement.
Advertising
The Properties expense the cost of advertising as incurred.
Use of Estimates
The preparation of the 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 combined statements of revenues and certain expenses and
accompanying notes. Actual results could differ from these estimates.
The Dunes Apartments, Palm Lake Apartments,
Plantation Gardens Apartments and Regency Oaks Apartments
Notes to Combined Statements of Revenues and Certain Expenses
Years Ended December 31, 2002, 2001 and 2000 and Unaudited Nine
Months Ended September 30, 2003
3. Interim Unaudited Financial Information
The financial statement for the nine months ended September 30, 2003 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/Financings and Extraordinary Loss
During 2000, the mortgage indebtedness for each of the Properties was refinanced
or new indebtedness was placed on the Properties. The refinancings and
financings replaced indebtedness in an aggregate principal amount of $10,302,000
with new indebtedness in an aggregate principal amount of $24,470,000. The
indebtedness carries stated interest rates of 7.80% to 7.86%. Principal and
interest payments are due on the indebtedness monthly until maturity in 2010, at
which time balloon payments are due. A loss on refinancing was recorded
associated with these Properties of approximately $680,000, due to write-off of
unamortized loan costs and prepayment penalties.
5. Related Party Transactions
Affiliates of the properties are entitled to receive 5% of gross revenues from
the Properties for providing property management services. The Properties paid
to such affiliates approximately $412,000, $460,000 and $407,000 for the years
ended December 31, 2002, 2001 and 2000, respectively and approximately $310,000
for the nine months ended September 30, 2003.
The Properties are insured 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
Properties are insured above the AIMCO limits through insurance policies
obtained by AIMCO from insurers unaffiliated with the General Partner. For the
nine months ended September 30, 2003 and the years ended December 31, 2002,
2001, and 2000, the Properties were charged by AIMCO and its affiliates
approximately $103,000 and $124,000, $176,000 and $0 respectively, for insurance
coverage and fees associated with policy claims administration.