SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2003
or
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Name of small business issuer in its charter)
California 94-2768742
(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)
Issuer's telephone number (864) 239-1000
Securities registered under Section 12(b) of the Exchange Act:
None
Securities registered under Section 12(g) of the Exchange Act:
Units of Limited Partnership Interests
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
Yes ______ No __X__
State the aggregate market value of the voting partnership interests held by
non-affiliates computed by reference to the price at which the partnership
interests were sold, or the average bid and asked prices of such partnership
interests as of December 31, 2003. No market exists for the limited partnership
interests of the Registrant, and, therefore, no aggregate market value can be
determined.
DOCUMENTS INCORPORATED BY REFERENCE
None
The matters discussed in this report contain certain forward-looking statements,
including, without limitation, statements regarding future financial performance
and the effect of government regulations. Actual results may differ materially
from those described in the forward-looking statements and will be affected by a
variety of risks and factors including, without limitation: national and local
economic conditions; the terms of governmental regulations that affect the
Registrant and interpretations of those regulations; the competitive environment
in which the Registrant operates; financing risks, including the risk that cash
flows from operations may be insufficient to meet required payments of principal
and interest; real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets; litigation, including costs associated with prosecuting and
defending claims and any adverse outcomes, and possible environmental
liabilities. Readers should carefully review the Registrant's financial
statements and the notes thereto, as well as the risk factors described in the
documents the Registrant files from time to time with the Securities and
Exchange Commission.
PART I
Item 1. Description of Business
Consolidated Capital Properties IV (the "Partnership" or "Registrant") was
organized on September 22, 1981 as a limited partnership under the California
Uniform Limited Partnership Act. On December 18, 1981, the Partnership commenced
a public offering for the sale of 200,000 units (the "Units") with the general
partner's right to increase the offering to 400,000 units. The Units represent
equity interests in the Partnership and entitle the holders thereof to
participate in certain allocations and distributions of the Partnership. The
sale of Units closed on December 14, 1983, with 343,106 Units sold at $500 each,
or gross proceeds of $171,553,000 to the Partnership. Since its initial
offering, the Partnership has not received, nor are limited partners required to
make, additional capital contributions.
By the end of fiscal year 1985, approximately 73% of the proceeds raised had
been invested in 48 properties. Of the remaining 27%, 11% was required for
organizational and offering expenses, sales commissions and acquisition fees,
and 16% was retained in Partnership reserves for project improvements and
working capital as required by the Partnership Agreement.
The general partner of the Partnership is ConCap Equities, Inc., a Delaware
corporation (the "General Partner" or "CEI"). The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust. The directors and officers of the General
Partner also serve as executive officers of AIMCO. The Partnership Agreement
provides that the Partnership is to terminate on December 31, 2011 unless
terminated prior to that date.
The Partnership's primary business and only industry segment is real estate
related operations. The Partnership is engaged in the business of operating and
holding real estate properties for investment. As of the close of fiscal year
1985, the Partnership had completed its property acquisition stage and had
acquired 48 properties. At December 31, 2003, the Partnership owned 13
income-producing properties (or interests therein) and one property which is
under development in Atlanta, Georgia, which range in age from 26 to 31 years
old and are principally located in the midwest, southeastern and southwestern
United States. Prior to 2003, the Partnership had disposed of 33 properties
originally owned by the Partnership. One property was sold in 2003. See "Item 2.
Description of Properties" for further information about the Partnership's
remaining properties.
Risk Factors
The real estate business in which the Partnership is engaged is highly
competitive. There are other residential properties within the market area of
the Partnership's properties. The number and quality of competitive properties,
including those which may be managed by an affiliate of the General Partner, in
such market area could have a material effect on the rental market for the
apartments at the Partnership's properties and the rents that may be charged for
such apartments. While the General Partner and its affiliates own and/or control
a significant number of apartment units in the United States, such units
represent an insignificant percentage of total apartment units in the United
States and competition for the apartments is local.
Laws benefiting disabled persons may result in the Partnership's incurrence of
unanticipated expenses. Under the Americans with Disabilities Act of 1990, or
ADA, all places intended to be used by the public are required to meet certain
Federal requirements related to access and use by disabled persons. Likewise,
the Fair Housing Amendments Act of 1988, or FHAA, requires apartment properties
first occupied after March 13, 1990 to be accessible to the handicapped. These
and other Federal, state and local laws may require modifications to the
Partnership's properties, or restrict renovations of the properties.
Noncompliance with these laws could result in the imposition of fines or an
award of damages to private litigants and also could result in an order to
correct any non-complying feature, which could result in substantial capital
expenditures. Although the General Partner believes that the Partnership's
properties are substantially in compliance with present requirements, the
Partnership may incur unanticipated expenses to comply with the ADA and the
FHAA.
Both the income and expenses of operating the properties owned by the
Partnership are subject to factors outside of the Partnership's control, such as
changes in the supply and demand for similar properties resulting from various
market conditions, increases/decreases in unemployment or population shifts,
changes in the availability of permanent mortgage financing, changes in zoning
laws, or changes in patterns or needs of users. In addition, there are risks
inherent in owning and operating residential properties because such properties
are susceptible to the impact of economic and other conditions outside of the
control of the Partnership.
There have been, and it is possible there may be other, Federal, state and local
legislation and regulations enacted relating to the protection of the
environment. The Partnership is unable to predict the extent, if any, to which
such new legislation or regulations might occur and the degree to which such
existing or new legislation or regulations might adversely affect the properties
owned by the Partnership.
The Partnership monitors its properties for evidence of pollutants, toxins and
other dangerous substances, including the presence of asbestos. In certain cases
environmental testing has been performed which resulted in no material adverse
conditions or liabilities. In no case has the Partnership received notice that
it is a potentially responsible party with respect to an environmental clean up
site.
The Partnership has no employees. Property management and administrative
services are provided by the General Partner and by agents of the General
Partner. The General Partner has also selected an affiliate to provide real
estate advisory and asset management services to the Partnership. As advisor,
such affiliate provides all Partnership accounting and administrative services,
investment management, and supervisory services over property management and
leasing.
A further description of the Partnership's business is included in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in "Item 7" of this Form 10-K.
Transfers of Control
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired a controlling
interest in CCEC. In December 1988, CCEC filed for reorganization under Chapter
11 of the United States Bankruptcy Code. In 1990, as part of its reorganization
plan, CEI acquired CCEC's general partner interests in the Partnership and in 15
other affiliated public limited partnerships (the "Affiliated Partnerships") and
CEI replaced CCEC as managing general partner in all 16 partnerships. The
selection of CEI as the sole managing general partner was approved by a majority
of the Limited Partners in the Partnership and in each of the affiliated
partnerships pursuant to a solicitation of the Limited Partners dated August 10,
1990. As part of this solicitation, the Limited Partners also approved an
amendment to the Partnership Agreement to limit changes of control of the
Partnership, and the conversion of CCMC from a general partner to a special
limited partner, thereby leaving CEI as the sole general partner of the
Partnership. On November 14, 1990, CCMC was dissolved and its special limited
partnership interest was divided among its former partners. All of CEI's
outstanding stock was owned by Insignia Properties Trust ("IPT") (See below).
Pursuant to a series of transactions which closed on October 1, 1998 and
February 26, 1999, Insignia Financial Group, Inc. and IPT merged into AIMCO, a
publicly traded real estate investment trust, with AIMCO being the surviving
corporation (the "Insignia Merger"). As a result, AIMCO acquired 100% ownership
interest in the General Partner. The General Partner does not believe that this
transaction has had or will have a material effect on the affairs and operations
of the Partnership.
Item 2. Description of Properties
The Partnership originally acquired 48 properties of which fourteen (14) were
sold, ten (10) were conveyed to lenders in lieu of foreclosure, and ten (10)
were foreclosed upon by the lenders. As of December 31, 2003, the Partnership
owned thirteen (13) apartment complexes and one which is currently under
development. Additional information about the properties is found in "Item 8.
Financial Statements and Supplementary Data".
Date of
Property Purchase Type of Ownership Use
The Apartments (1) 04/84 Fee ownership, subject to Apartment
Omaha, Nebraska a first mortgage 204 units
Arbours of Hermitage Apts. (1) 09/83 Fee ownership subject to Apartment
Nashville, Tennessee a first mortgage 350 units
Belmont Place Apts. (2)(3) 08/82 Fee ownership subject to Land being
Marietta, Georgia a first mortgage developed
Briar Bay Racquet Club Apts. (2) 09/82 Fee ownership subject to Apartment
Miami, Florida a first mortgage 194 units
Citadel Apts. (1) 05/83 Fee ownership subject Apartment
El Paso, Texas to a first mortgage 261 units
Citadel Village Apts. (1) 12/82 Fee ownership subject Apartment
Colorado Springs, Colorado to a first mortgage 122 units
Foothill Place Apts. (2) 08/85 Fee ownership subject Apartment
Salt Lake City, Utah to a first mortgage 450 units
Knollwood Apts. (1) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 326 units
Lake Forest Apts. 04/84 Fee ownership subject Apartment
Omaha, Nebraska to a first mortgage 312 units
Nob Hill Villa Apts. (1) 04/83 Fee ownership subject Apartment
Nashville, Tennessee to a first mortgage 472 units
Point West Apts. (1) 11/85 Fee ownership subject to Apartment
Charleston, South Carolina a first mortgage 120 units
Post Ridge Apts. (2) 07/82 Fee ownership subject Apartment
Nashville, Tennessee to first and second 150 units
mortgages
Rivers Edge Apts. (2) 04/83 Fee ownership subject Apartment
Auburn, Washington to a first mortgage 120 units
Village East Apts. (1) 12/82 Fee ownership subject Apartment
Cimarron Hills, Colorado to a first mortgage 137 units
(1) Property is held by a limited partnership and/or limited liability
corporation in which the Partnership owns a 100% interest.
(2) Property is held by a limited partnership in which the Partnership owns a
99% interest.
(3) Property formerly known as Chimney Hill Apartments.
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,232,000 for the year ended December 31,
2003, as a result of this sale. This amount is shown as gain from sale of
discontinued operations in the accompanying consolidated statements of
operations. The property's operations, income of approximately $8,000, $497,000,
and $536,000 for the years ended December 31, 2003, 2002, and 2001,
respectively, are included in income from discontinued operations and include
revenues of approximately $327,000, $1,571,000, and $1,625,000, respectively. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $13,000 for the year ended December 31, 2003 due to the write-off
of unamortized loan costs, which is also included in income from discontinued
operations in the accompanying consolidated statements of operations.
Schedule of Properties
Set forth below for each of the Partnership's properties is the gross carrying
value, accumulated depreciation, depreciable life, method of depreciation and
Federal tax basis.
Gross
Carrying Accumulated Depreciable Method of Federal
Property Value Depreciation Life Depreciation Tax Basis
(in thousands) (in
thousands)
The Apartments $ 9,468 $ 8,260 5-30 yrs S/L $ 1,523
Arbours of Hermitage
Apartments 15,203 12,372 5-30 yrs S/L 3,255
Briar Bay Racquet Club
Apartments 8,313 6,814 5-30 yrs S/L 2,076
Belmont Place
Apartments 3,923 -- 5-30 yrs S/L 3,717
Citadel Apartments 8,241 7,081 5-30 yrs S/L 989
Citadel Village
Apartments 4,805 3,920 5-30 yrs S/L 1,438
Foothill Place
Apartments 17,279 12,388 5-30 yrs S/L 6,115
Knollwood Apartments 12,798 10,853 5-30 yrs S/L 2,467
Lake Forest Apartments 10,220 8,511 5-30 yrs S/L 1,798
Nob Hill Villa
Apartments 14,834 12,528 5-30 yrs S/L 2,277
Point West Apartments 3,418 2,834 5-30 yrs S/L 731
Post Ridge Apartments 5,743 4,596 5-30 yrs S/L 1,383
Rivers Edge Apartments 3,745 2,921 5-30 yrs S/L 997
Village East Apartments 4,380 3,469 5-30 yrs S/L 973
Total $122,370 $ 96,547 $ 29,739
See "Note A - Organization and Significant Accounting Policies" to the
consolidated financial statements included in "Item 8. Financial Statements and
Supplementary Data" for a description of the Partnership's capitalization and
depreciation policies.
Schedule of Property Indebtedness
The following table sets forth certain information relating to the loans
encumbering the Partnership's properties.
Principal Principal Principal
Balance At Balance At Stated Balance
December 31, December Interest Period Maturity Due At
31,
Property 2003 2002 Rate Amortized Date Maturity (3)
(in thousands) (in
thousands)
The Apartments $ 4,367 $ 4,489 8.37% 20 yrs 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 6.95% (1) 12/05 5,650
Belmont Place Apartments 5,400 5,400 6.95% (1) 12/05 5,400
Briar Bay Racquet Club
Apartments 3,500 3,500 6.95% (1) 12/05 3,500
Citadel Apartments 4,303 4,424 8.25% 20 yrs 03/20 --
Citadel Village 2,450 2,450 6.95% (1) 12/05 2,450
Apartments
Foothill Place 10,100 10,100 6.95% (1) 12/05 10,100
Apartments
Knollwood Apartments 6,780 6,780 6.95% (1) 12/05 6,780
Lake Forest Apartments 6,156 6,321 7.13% 20 yrs 10/21 --
Nob Hill Villa 6,476 6,640 9.20% 25 yrs 04/05 6,250
Apartments
Point West Apartments 2,221 2,288 7.86% 20 yrs 12/19 --
Post Ridge Apartments
1st mortgage 4,279 4,398 6.63% 20 yrs 01/22 --
2nd mortgage 375 -- 7.04% 18 yrs 01/22 173
Rivers Edge Apartments 3,693 3,796 7.82% 20 yrs 09/20 --
South Port Apartments -- 4,244 7.19% (2) (2) --
Village East Apartments 2,150 2,150 6.95% (1) 12/05 2,150
Totals $67,900 $72,630 $42,453
(1) Monthly payments of interest only at the stated rate until maturity. (2) The
Partnership sold South Port Apartments to an unrelated third party
in March 2003.
(3) See "Note C - Mortgage Notes Payable" to the consolidated financial
statements included in "Item 8. Financial Statements and Supplementary
Data" for information with respect to the Partnership's ability to prepay
these loans and other specific details about the loans.
See "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations" for information relating to the refinancing of the
mortgage encumbering Lake Forest Apartments in September 2001 and the
refinancing of the mortgage encumbering Post Ridge Apartments in December 2001.
On October 22, 2003, the Partnership entered into a second mortgage for Post
Ridge Apartments. The second mortgage is in the principal amount of $375,000 and
has a stated interest rate of 7.04% per annum. Payments of principal and
interest of approximately $3,000 are due on the first day of each month
commencing December 2003 until January 2022 at which time a balloon payment of
approximately $173,000 is required. The proceeds from the second mortgage will
be used as a cross collateralized loan to Belmont Place Apartments to establish
a capital escrow reserve as required by the mortgage lender. Belmont Place
Apartments will use these proceeds to continue the ongoing construction project
at the property (see "Note G - Redevelopment of Belmont Place Apartments"
included in "Item 8. Financial Statements and Supplementary Data").
Rental Rates and Occupancy
The following table sets forth the average annual rental rates and occupancy for
2003 and 2002 for each property.
Average Annual Average
Rental Rates Occupancy
(per unit)
Property 2003 2002 2003 2002
The Apartments $ 7,128 $ 7,159 94% 91%
Arbours of Hermitage Apartments 7,375 7,496 95% 94%
Belmont Place Apartments 5,637 8,501 2% 73%
Briar Bay Racquet Club Apartments 9,883 9,856 91% 94%
Citadel Apartments 6,569 6,616 95% 94%
Citadel Village Apartments 8,306 9,237 80% 87%
Foothill Place Apartments 7,910 8,303 91% 88%
Knollwood Apartments 7,853 8,049 95% 94%
Lake Forest Apartments 7,157 7,245 95% 94%
Nob Hill Villa Apartments 5,783 5,946 92% 91%
Point West Apartments 6,831 6,844 90% 93%
Post Ridge Apartments 9,049 9,339 95% 92%
Rivers Edge Apartments 8,331 8,402 93% 92%
Village East Apartments 7,505 7,866 68% 81%
The decreases in occupancy at Point West and Briar Bay Apartments is due to more
tenants purchasing houses due to lower mortgage interest rates and changing
economic conditions in their respective local markets. The decreases in
occupancy at Citadel Village and Village East Apartments is due to recent
military deployments as both properties are located near military bases and an
increase in competitive pricing strategies used by competition in their
respective markets. The increase in occupancy at Post Ridge, Foothill Place, and
The Apartments is attributable to a more aggressive marketing campaign and the
use of competitive pricing strategies in their respective markets.
The General Partner has determined that Belmont Place Apartments (formerly know
as Chimney Hills Apartments) suffered from severe structural defects in the
building's foundation and as such, has demolished the property. The General
Partner has designed and approved a redevelopment plan for the property that
requires the complete demolition and reconstruction of the apartment complex.
Site work on the redevelopment began during the fourth quarter of 2003. The
General Partner believes that the estimated fair value of the land exceeds this
property's recorded value at December 31, 2003.
Subsequent to year end, the Partnership entered into a construction contract
with Casden Builders, Inc. (a related party) to develop the new Belmont Place
Apartments at an estimated project cost of approximately $26.4 million. The
construction contract provides for a payment of the cost of work plus a fee
without a maximum guaranteed price. Belmont Place Apartments is expected to be
completed in 2005. The Partnership plans to fund these construction expenditures
from operating cash flow, proceeds from the cross collateralized loan,
partnership reserves and loans from the General Partner.
As noted under "Item 1. Description of Business", the real estate industry is
highly competitive. All of the properties are subject to competition from other
residential apartment complexes in the area. The General Partner believes that
all of the properties are adequately insured. Each property is an apartment
complex which leases units for lease terms of one year or less. No residential
tenant leases 10% or more of the available rental space. All of the properties
are in good physical condition, with the exception of Belmont Place Apartments,
as described above, subject to normal depreciation and deterioration as is
typical for assets of this type and age.
Real Estate Taxes and Rates
Real estate taxes and rates in 2003 and 2002 for each property were:
2003 2003 2002 2002
Billing Rate Billing Rate
(in thousands) (in thousands)
The Apartments $127 2.2% $153 2.1%
Arbours of Hermitage Apartments 186 3.8% 192 3.8%
Belmont Place Apartments 152 3.0% 172 3.0%
Briar Bay Racquet Club Apartments 200 2.2% 159 2.1%
Citadel Apartments 184 3.0% 208 3.0%
Citadel Village Apartments 19 5.9% 22 5.7%
Foothill Place Apartments 175 1.5% 169 1.5%
Knollwood Apartments 183 3.8% 206 3.8%
Lake Forest Apartments 196 2.2% 200 2.1%
Nob Hill Villa Apartments 171 4.6% 238 4.6%
Point West Apartments 62 28.0% 61 28.0%
Post Ridge Apartments 98 3.8% 104 3.8%
Rivers Edge Apartments 70 1.4% 51 1.4%
Village East Apartments 22 6.0% 24 5.9%
Capital Improvements
The Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$117,000 of capital improvements at the property, consisting primarily of
structural and building improvements, furniture and fixtures, water heater
replacements, major landscaping, and floor covering replacements. These
improvements were funded from operating cash flow and insurance proceeds. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$112,000. Additional improvements may be considered during 2004 and will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Arbours of Hermitage Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$115,000 of capital improvements at the property, consisting primarily of
structural improvements, air conditioning upgrades, water heater replacements,
and appliance and floor covering replacements. These improvements were funded
from operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $193,000. Additional improvements may be considered during
2004 and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Briar Bay Racquet Club Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$90,000 of capital improvements at the property consisting primarily of roof
replacements, structural improvements, fire safety upgrades, major landscaping,
and appliance and floor covering replacements. These improvements were funded
from operating cash flow and replacement reserves. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $107,000. Additional improvements
may be considered during 2004 and will depend on the physical condition of the
property as well as replacement reserves and anticipated cash flow generated by
the property.
Belmont Place Apartments
During the year ended December 31, 2003, the Partnership capitalized
approximately $2,178,000 of costs at the property consisting primarily of
architects fees and capitalized construction period interest of approximately
$390,000, taxes and insurance of approximately $233,000 and other construction
period expenses of approximately $343,000. These improvements were funded from
operating cash flow and Partnership reserves. The Partnership is currently
reconstructing the property.
Subsequent to year end, the Partnership entered into a construction contract
with Casden Builders, Inc. (a related party) to develop the new Belmont Place
Apartments at an estimated project cost of approximately $26.4 million. The
construction contract provides for a payment of the cost of work plus a fee
without a maximum guaranteed price. Belmont Place Apartments is expected to be
completed in 2005. The Partnership plans to fund these construction expenditures
from operating cash flow, proceeds from the cross collateralized loan,
partnership reserves and loans from the General Partner.
Citadel Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$69,000 of capital improvements at the property consisting primarily of water
and sewer upgrades, water heater replacements, plumbing improvements, air
conditioning replacements, floor covering and appliance replacements and
swimming pool improvements. These improvements were funded from operating cash
flow. The Partnership is currently evaluating the capital improvement needs of
the property for the upcoming year and currently expects to budget approximately
$144,000. Additional improvements may be considered during 2004 and will depend
on the physical condition of the property as well as cash flow generated by the
property.
Citadel Village Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$135,000 of capital improvements at the property, consisting primarily of air
conditioning upgrades, gutter replacements, and appliance and floor covering
replacements. These improvements were funded from operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$67,000. Additional improvements may be considered during 2004 and will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Foothill Place Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$474,000 of capital improvements at the property, consisting primarily of floor
and wall covering and appliance replacements, plumbing fixture replacements,
installation of a sprinkler system, structural improvements, air conditioning
upgrades, door replacements, swimming pool improvements, structural
improvements, and water heater replacements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $248,000. Additional improvements may be considered during
2004 and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Knollwood Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$109,000 of capital improvements at the property, consisting primarily of
structural improvements, water heater replacements, roof replacements, air
conditioning replacements and floor covering and appliance replacements. These
improvements were funded from operating cash flow. The Partnership is currently
evaluating the capital improvement needs of the property for the upcoming year
and currently expects to budget approximately $179,000. Additional improvements
may be considered during 2004 and will depend on the physical condition of the
property as well as anticipated cash flow generated by the property.
Lake Forest Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$116,000 of capital improvements at the property, consisting primarily of water
heater and air conditioning replacements, major landscaping, fitness equipment,
fire safety upgrades, structural improvements, and floor covering and appliance
replacements. These improvements were funded from replacement reserves and
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $172,000. Additional improvements may be considered during
2004 and will depend on the physical condition of the property as well as
replacement reserves and anticipated cash flow generated by the property.
Nob Hill Villa Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$503,000 of capital improvements at the property consisting primarily of
structural improvements, water heater replacements, water and sewer upgrades,
electrical upgrades, major landscaping, plumbing fixture upgrades, air
conditioning replacements, and floor covering and appliance replacements. These
improvements were funded from replacement reserves and operating cash flow. The
Partnership is currently evaluating the capital improvement needs of the
property for the upcoming year and currently expects to budget approximately
$260,000. Additional improvements may be considered during 2004 and will depend
on the physical condition of the property as well as replacement reserves and
anticipated cash flow generated by the property.
Point West Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$43,000 of capital improvements at the property consisting primarily of floor
covering and appliance replacements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $66,000. Additional capital improvements may be considered
during 2004 and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Post Ridge Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$138,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements, air conditioning upgrades, structural
improvements, and parking area improvements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $83,000. Additional improvements may be considered during
2004 and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Rivers Edge Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$61,000 of capital improvements at the property, consisting primarily of floor
covering and appliance replacements. These improvements were funded from
operating cash flow. The Partnership is currently evaluating the capital
improvement needs of the property for the upcoming year and currently expects to
budget approximately $66,000. Additional improvements may be considered during
2004 and will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
South Port Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$21,000 of capital improvements at South Port Apartments, consisting primarily
of floor covering and appliance replacements. These improvements were funded
from operating cash flow. The property was sold on March 28, 2003.
Village East Apartments
During the year ended December 31, 2003, the Partnership completed approximately
$95,000 of capital improvements at the property, consisting primarily of
structural improvements, heating system improvements, exterior building
painting, and floor covering and appliance replacements. These improvements were
funded from operating cash flow. The Partnership is currently evaluating the
capital improvement needs of the property for the upcoming year and currently
expects to budget approximately $75,000. Additional improvements may be
considered during 2004 and will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.
Item 3. Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. The General Partner is currently scheduled
to file a brief in support of the order approving settlement and entering
judgment thereto by April 23, 2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Discovery is currently
underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
Item 4. Submission of Matters to a Vote of Security Holders
The unit holders of the Partnership did not vote on any matter during the
quarter ended December 31, 2003.
PART II
Item 5. Market for the Registrant's Units of Limited Partnership and
Related Security Holder Matters
(A) No established trading market for the Partnership's Units exists, nor is
one expected to develop.
(B) Title of Class Number of Unitholders of Record
Limited Partnership Units 7,047 as of December 31, 2003
There were 342,773 Units outstanding at December 31, 2003, of which affiliates
of the General Partner owned 202,351.50 Units or approximately 59.03%.
The following table sets forth the distributions declared by the Partnership for
the years ended December 31, 2003, 2002 and 2001 (in thousands except per unit
data) (see "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations" for more details):
Per Per Per
Year Ended Limited Year Ended Limited Year Ended Limited
December 31, Partnership December 31, Partnership December 31, Partnership
2003 Unit 2002 Unit 2001 Unit
Operations $1,827 $ 5.12 $5,515 $15.45 $4,981 $13.95
Refinance (1) -- -- 76 0.21 1,548 4.33
Sale (2) 3,743 10.50 -- -- 2,610 7.31
$5,570 $15.62 $5,591 $15.66 $9,139 $25.59
(1) From refinance proceeds of Post Ridge Apartments distributed in 2002 and
refinance proceeds of Lake Forest Apartments distributed in 2001.
(2) From sale proceeds of Southport Apartments distributed in 2003 and sale
proceeds of Stratford Place Apartments distributed in 2001.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $9,000, $29,000
and $66,000 was distributed to the general partner of the majority owned
sub-tier limited partnerships during the years ended December 31, 2003, 2002,
and 2001, respectively.
Future cash distributions will depend on the levels of net cash generated from
operations, the availability of cash reserves and the timing of the debt
maturities, refinancings and/or property sales. The Partnership's cash available
for distribution is reviewed on a monthly basis. There can be no assurance,
however, that the Partnership will generate sufficient funds from operations
after required capital expenditures to permit any distributions to its partners
in the year 2004 or subsequent periods. See "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations" for information
relating to anticipated capital expenditures at the properties.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 202,351.50 limited partnership units
(the "Units") in the Partnership representing 59.03% of the outstanding Units at
December 31, 2003. 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 Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.03% of the
outstanding Units, AIMCO and its affiliates are in a position to control all
voting decisions with respect to the Partnership. Although the General Partner
owes fiduciary duties to the limited partners of the Partnership, the General
Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a
result, the duties of the General Partner, as general partner, to the
Partnership and its limited partners may come into conflict with the duties of
the General Partner to AIMCO, as its sole stockholder.
Item 6. Selected Financial Data
The following table sets forth a summary of certain financial data for the
Partnership. Certain 1999, 2000, 2001 and 2002 amounts have been restated due to
property sales to conform to the 2003 presentation in accordance with accounting
principles generally accepted in the United States. This summary should be read
in conjunction with the Partnership's consolidated financial statements and
notes thereto appearing in "Item 8. Financial Statements and Supplementary
Data."
Years Ended December 31,
(in thousands, except per unit data)
Consolidated Statements
of Operations 2003 2002 2001 2000 1999
(Restated) (Restated) (Restated) (Restated)
Total revenues $23,094 $25,896 $ 27,310 $ 26,823 $ 28,004
Total expenses (21,134) (22,129) (23,772) (22,334) (22,707)
Income before
discontinued operations 1,960 3,767 3,538 4,489 5,297
Gain from sale of discontinued
operations 6,232 -- -- 3,440 638
Income from discontinued
operations 8 497 620 545 183
Net income $ 8,200 $ 4,264 $ 4,158 $ 8,474 $ 6,118
Per Limited Partnership Unit:
Income before
discontinued operations $ 5.50 $ 10.55 $ 9.91 $ 12.57 $ 14.84
Gain from sale of discontinued
operations 17.45 -- -- 9.63 1.78
Income from discontinued
operations .02 1.39 1.74 1.53 .51
Net income $ 22.97 $ 11.94 $ 11.65 $ 23.73 $ 17.13
Distributions per Limited
Partnership Unit $ 15.62 $ 15.66 $ 25.59 $ 31.32 $ 49.29
Limited Partnership Units
outstanding 342,773 342,773 342,773 342,773 342,773
Consolidated Balance Sheets
Total assets $ 30,775 $ 32,287 $ 34,180 $ 38,870 $ 44,464
Mortgage notes payable $ 67,900 $ 72,630 $ 73,475 $ 71,791 $ 70,997
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
INTRODUCTION
The operations of the Partnership primarily include operating and holding
income-producing real estate properties for the benefit of its partners.
Therefore, the following discussion of operations, liquidity and capital
resources will focus on these activities and should be read in conjunction with
"Item 8. Financial Statements and Supplementary Data" and the notes related
thereto included elsewhere in this report.
Results of Operations
The Partnership's net income was approximately $8,200,000 for the year ended
December 31, 2003, compared to approximately $4,264,000 for the year ended
December 31, 2002 and net income of approximately $4,158,000 for the year ended
December 31, 2001.
Effective January 1, 2002, the Partnership adopted Statement of Financial
Accounting Standards ("SFAS") No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets", which established standards for the way that
public business enterprises report information about long-lived assets that are
either being held for sale or have already been disposed of by sale or other
means. The standard requires that results of operations for a long-lived asset
that is being held for sale or has already been disposed of be reported as
discontinued operations on the statement of operations. As a result, the
accompanying consolidated statements of operations have been restated as of
January 1, 2001 to reflect the operations of Stratford Place and South Port
Apartments as income from discontinued operations due to their sales in December
2000 and March 2003, respectively. The Partnership recognized income from
discontinued operations of approximately $8,000, $497,000 and $620,000 during
the years ended December 31, 2003, 2002 and 2001, respectively.
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,232,000 for the year ended December 31,
2003, as a result of this sale. This amount is shown as gain from sale of
discontinued operations in the accompanying consolidated statements of
operations. The property's operations, income of approximately $8,000, $497,000,
and $536,000 for the years ended December 31, 2003, 2002, and 2001,
respectively, are included in income from discontinued operations and include
revenues of approximately $327,000, $1,571,000, and $1,625,000, respectively. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $13,000 for the year ended December 31, 2003 due to the write-off
of unamortized loan costs, which is also included in income from discontinued
operations in the accompanying consolidated statements of operations.
Excluding the impact of discontinued operations and the gain on sale of
discontinued operations, the Partnership's income from continuing operations was
approximately $1,960,000 for the year ended December 31, 2003, compared to
approximately $3,767,000 for the year ended December 31, 2002 and approximately
$3,538,000 for the year ended December 31, 2001.
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 expenses. 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, the General Partner may use
rental concessions and rental rate reductions to offset softening market
conditions, accordingly, there is no guarantee that the General Partner will be
able to sustain such a plan.
2003 Compared to 2002
Income from continuing operations decreased due to a decrease in total revenues
partially offset by a decrease in total expenses. The decrease in total revenues
is due to a decrease in rental income partially offset by the casualty gain
recognized in 2003. The decrease in rental income is due to decreased average
rental rates at eleven of the Partnership's fourteen properties, a decrease in
occupancy levels at five of the investment properties and an increase in
concessions at nine of the investment properties partially offset by an increase
in occupancy at nine of the investment properties.
In January 2003, The Apartments had a fire, which damaged five apartment units
and a hallway. Insurance proceeds of approximately $23,000 were received as of
December 31, 2003. The Partnership recognized a casualty gain of approximately
$23,000 for the year ended December 31, 2003. The damaged assets were fully
depreciated at the time of the fire.
Total expenses decreased due to decreases in general and administrative,
depreciation, interest and property tax expenses partially offset by an increase
in operating expenses. Depreciation expense decreased due to fixed assets
becoming fully depreciated at The Apartments, Lake Forest Apartments and
Foothill Place Apartments during 2003. Interest expense decreased due to the
capitalization of interest at Belmont Place Apartments related to the
construction project during 2003. The decrease in property tax expense is due to
the increased capitalization of property taxes at Belmont Place Apartments and
decreases in the assessed values of nine of the Partnership's investment
properties.
General and administrative expense decreased due to a decrease in the 9%
management fee on distributions from operating cash flows. In addition,
management reimbursements to the General Partner as allowed under the
Partnership Agreement and 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 in general and
administrative expenses.
Operating expense increased due to increases in property, administrative,
insurance and advertising expenses partially offset by a decrease in property
management fees. Property expense increased due to increases in payroll and
related benefits. Administrative expenses increased due to increases in contract
common area cleaning and legal expenses. Insurance expense increased due to an
increase in hazard insurance premiums at many of the Partnership's investment
properties. Advertising expense increased due to an increase in periodical and
web advertising at many of the Partnership's investment properties. Property
management fees are based on a percentage of revenues and decreased as a result
of decreases in revenues at most of the investment properties.
2002 Compared to 2001
Income from continuing operations increased due to a decrease in total expenses
partially offset by a decrease in total revenues. The decrease in total revenues
is due to a decrease in rental income and casualty gain partially offset by an
increase in other income. The decrease in rental income is due to decreases in
average rental rates at eleven of the Partnership's fourteen properties and in
occupancy levels at eight of the investment properties. The decrease in casualty
gain was the result of fire damage at two of the properties recognized in 2001.
The increase in other income is primarily attributable to an increase in utility
reimbursements and lease cancellation fees partially offset by a decrease in
miscellaneous income and interest income as a result of lower average cash
balances being maintained in interest bearing accounts.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received over the write-off of the undepreciated damaged
assets.
Total expenses decreased due to a decrease in operating, general and
administrative, depreciation and interest expenses and loss on early
extinguishment of debt partially offset by an increase in property tax expense.
Operating expense decreased due to a decrease in property and maintenance
expenses and property management fees partially offset by an increase in
advertising expense and insurance expense. Property expense decreased due to a
decrease in employee salaries, gas utility bills and commissions and bonuses
partially offset by an increase in utility processing fees and leasing payroll.
Maintenance expense decreased during 2002 due to an increase in the
capitalization of certain direct and indirect project costs, primarily payroll
related costs (see "Item 8. Financial Statements - Note A"). Property management
fees are based on a percentage of revenues and decreased as a result of
decreases in rental income at many of the investment properties. Advertising
expense increased due to an increase in resident relations at Belmont Place
Apartments and web advertising partially offset by a decrease in newspaper
advertising. General and administrative expenses decreased due to a decrease in
professional fees and management reimbursements to the General Partner as
allowed under the Partnership Agreement partially offset by an increase in the
9% management fee on distributions from operating cash flows. Depreciation
decreased due to fixed assets becoming fully depreciated at The Apartments and
Lake Forest Apartments during 2002 partially offset by an increase in capital
improvements completed and placed into service during the past twelve months.
Interest expense decreased due to the capitalization of approximately $107,000
of interest expense at Belmont Place Apartments related to the renovation
project during 2002. The increase in property tax expense is due to an increase
in the assessed value of several of the Partnership's properties and a decrease
in refunds from overpayment of prior year taxes.
LIQUIDITY AND CAPITAL RESOURCES
2003 Compared to 2002
At December 31, 2003, the Partnership held cash and cash equivalents of
approximately $1,537,000 compared to approximately $2,127,000 at December 31,
2002. The decrease in cash and cash equivalents of approximately $590,000 for
the year ended December 31, 2003 is due to approximately $10,165,000 of cash
used in financing activities partially offset by approximately $5,528,000 of
cash provided by operating activities and approximately $4,047,000 of cash
provided by investing activities. Cash used in financing activities consisted of
distributions to partners, repayment of the mortgage encumbering South Port
Apartments and payments of principal on the mortgage indebtedness encumbering
the Partnership's properties partially offset by the proceeds received from the
second mortgage at Post Ridge Apartments. Cash provided by investing activities
consisted of proceeds from the sale of South Port Apartments and net insurance
proceeds received from the casualty at The Apartments partially offset by
property improvements and replacements and net deposits to restricted escrow
accounts. The Partnership invests its working capital reserves in interest
bearing accounts.
In January 2003, The Apartments had a fire which damaged five apartment units
and a hallway. Insurance proceeds of approximately $23,000 were received during
the year ended December 31, 2003. The Partnership recognized a casualty gain of
approximately $23,000 for the year ended December 31, 2003. The damaged assets
were fully depreciated at the time of the fire.
In March 2000, South Port Apartments had hail and wind damage, which affected
all 240 units and damaged 100% of the roof, which was replaced. Insurance
proceeds of approximately $168,000 and $182,000 were received during the years
ended December 31, 2002 and 2001, respectively. The Partnership recognized a
casualty gain of approximately $120,000 and $128,000 during the years ended
December 31, 2002 and 2001, respectively, which represents the excess of the
proceeds received over the write-off of undepreciated damaged assets. These
amounts are included in income from discontinued operations in the accompanying
consolidated statement of operations.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001. The damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001, which represents the
excess of the proceeds received over the write-off of the undepreciated damaged
assets.
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 properties to adequately maintain the physical
assets and other operating needs of the Partnership and to comply with Federal,
state, and local legal and regulatory requirements. The General Partner monitors
developments in the area of legal and regulatory compliance and is studying new
federal laws, including the Sarbanes-Oxley Act of 2002. The Sarbanes-Oxley Act
of 2002 mandates or suggests additional compliance measures with regard to
governance, disclosure, audit and other areas. In light of these changes, the
Partnership expects that it will incur higher expenses related to compliance,
including increased legal and audit fees. The Partnership is currently
evaluating the capital improvement needs of the properties for the upcoming year
and currently expects to budget approximately $1,772,000, not including Belmont
Place Apartments. Subsequent to year end, the Partnership entered into a
construction contract with Casden Builders, Inc. (a related party) to develop
the new Belmont Place Apartments at an estimated project cost of approximately
$26.4 million. The construction contract provides for a payment of the cost of
work plus a fee without a maximum guaranteed price. Belmont Place Apartments is
expected to be completed in 2005. The Partnership plans to fund these
construction expenditures from operating cash flow, proceeds from the cross
collateralized loan, partnership reserves and loans from the General Partner.
Additional improvements may be considered during 2004 and will depend on the
physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. The additional capital
expenditures will be incurred only if cash is available from operations or from
replacement reserves. To the extent that such budgeted capital improvements are
completed, the Partnership's distributable cash flow, if any, may be adversely
affected at least in the short term.
The Partnership's assets are thought to be sufficient for any near-term needs
(exclusive of capital improvements) of the Partnership. The mortgage
indebtedness encumbering the Partnership's investment properties of
approximately $67,900,000 matures at various dates between 2005 and 2022 with
balloon payments of approximately $42,280,000 and $173,000 due in 2005 and 2022,
respectively. The General Partner will attempt to refinance such indebtedness
and/or sell the properties prior to such maturity dates. If a property cannot be
refinanced or sold for a sufficient amount, the Partnership will risk losing
such property through foreclosure.
On October 22, 2003, the Partnership entered into a second mortgage for Post
Ridge Apartments. The second mortgage is in the principal amount of $375,000 and
has a stated interest rate of 7.04% per annum. Payments of principal and
interest of approximately $3,000 are due on the first day of each month
commencing December 2003 until January 2022 at which time a balloon payment of
approximately $173,000 is required. The proceeds from the second mortgage will
be used as a cross collateralized loan to Belmont Place Apartments to establish
a capital escrow reserve as required by the mortgage lender. Belmont Place
Apartments will use these proceeds to continue the ongoing construction project
at the property.
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000. The Partnership wrote off approximately $32,000 in
unamortized loan costs and paid prepayment penalties of approximately $110,000
resulting in a loss on early extinguishment of debt of approximately $142,000,
which is included in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,00 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in a loss on early extinguishment of debt of approximately $40,000
which is included in interest expense.
The Partnership declared the following distributions during the years ended
December 31, 2003, 2002 and 2001 (in thousands except per unit data):
Per Per Per
Year Ended Limited Year Ended Limited Year Ended Limited
December, 31 Partnership December 31, Partnership December 31, Partnership
2003 Unit 2002 Unit 2001 Unit
Operations $1,827 $ 5.12 $5,515 $15.45 $4,981 $13.95
Refinance (1) -- -- 76 0.21 1,548 4.33
Sale (2) 3,743 10.50 -- -- 2,610 7.31
$5,570 $15.62 $5,591 $15.66 $9,139 $25.59
(1) From refinance proceeds of Post Ridge Apartments distributed in 2002 and
refinance proceeds of Lake Forest Apartments distributed in 2001.
(2) From sale proceeds of Southport Apartments distributed in 2003 and sale
proceeds of Stratford Place Apartments distributed in 2001.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $9,000, $29,000
and $66,000 was distributed to the general partner of the majority owned
sub-tier limited partnerships during the years ended December 31, 2003, 2002,
and 2001, respectively.
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,
however, that the Partnership will generate sufficient funds from operations,
after planned capital improvement expenditures, to permit any distributions to
its partners in 2004 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 202,351.50 limited partnership units
(the "Units") in the Partnership representing 59.03% of the outstanding Units at
December 31, 2003. 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 Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.03% of the
outstanding Units, AIMCO and its affiliates are in a position to control all
voting decisions with respect to the Partnership. Although the General Partner
owes fiduciary duties to the limited partners of the Partnership, the General
Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a
result, the duties of the General Partner, as general partner, to the
Partnership and its limited partners may come into conflict with the duties of
the General Partner to AIMCO, as its sole stockholder.
Critical Accounting Policies and Estimates
A summary of the Partnership's significant accounting policies is included in
"Note A - Organization and Significant Accounting Policies" to the consolidated
financial statements included in "Item 8. Financial Statements and Supplementary
Data." The General Partner believes that the consistent application of these
policies enables the Partnership to provide readers of the financial statements
with useful and reliable information about the Partnership's operating results
and financial condition. The preparation of consolidated financial statements in
conformity with accounting principles generally accepted in the United States
requires the Partnership to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and liabilities at the date of
the financial statements as well as reported amounts of revenues and expenses
during the reporting period. Actual results could differ from these estimates.
Judgments and assessments of uncertainties are required in applying the
Partnership's accounting policies in many areas. The following may involve a
higher degree of judgment and complexity.
Impairment of Long-Lived Assets
Investment properties are recorded at cost, less accumulated depreciation,
unless considered impaired. If events or circumstances indicate that the
carrying amount of a property may be impaired, the Partnership will make an
assessment of its recoverability by estimating the undiscounted future cash
flows, excluding interest charges, of the property. If the carrying amount
exceeds the aggregate future cash flows, the Partnership would recognize an
impairment loss to the extent the carrying amount exceeds the fair value of the
property.
Real property investments are subject to varying degrees of risk. Several
factors may adversely affect the economic performance and value of the
Partnership's investment properties. These factors include, but are not limited
to, changes in the national, regional and local economic climate; local
conditions, such as an oversupply of multifamily properties; competition from
other available multifamily property owners and changes in market rental rates.
Any adverse changes in these factors could cause an impairment of the
Partnership's assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
Rental income attributable to leases is recognized monthly as it is earned. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area. Any
concessions given at the inception of the lease are amortized over the life of
the lease.
Item 7a. Market Risk Factors
The Partnership is exposed to market risks from adverse changes in interest
rates. In this regard, changes in U.S. interest rates affect the interest earned
on the Partnership's cash and cash equivalents as well as interest paid on its
indebtedness. As a policy, the Partnership does not engage in speculative or
leveraged transactions, nor does it hold or issue financial instruments for
trading purposes. The Partnership is exposed to changes in interest rates
primarily as a result of its borrowing activities used to maintain liquidity and
fund business operations. To mitigate the impact of fluctuations in U.S.
interest rates, the Partnership maintains its debt as fixed rate in nature by
borrowing on a long-term basis. Based on interest rates at December 31, 2003, a
100 basis point increase or decrease in market interest rates would have an
annual impact of approximately $679,000 on the Partnership.
The following table summarizes the Partnership's debt obligations at December
31, 2003. The interest rates represent the weighted-average rates. The fair
value of the debt obligations after discounting the scheduled loan payments to
maturity, at the Partnership's incremental borrowing rate was approximately
$70,714,000 at December 31, 2003.
Long-term Debt
Principal amount by expected maturity: Fixed Rate Debt Average Interest Rate
(in thousands)
2004 $ 936 7.79%
2005 43,144 7.41%
2006 882 7.59%
2007 952 7.59%
2008 1,027 7.59%
Thereafter 20,959 7.59%
Total $67,900
Item 8. Financial Statements and Supplementary Data
CONSOLIDATED CAPITAL PROPERTIES IV
LIST OF FINANCIAL STATEMENTS
Report of Ernst & Young LLP, Independent Auditors
Consolidated Balance Sheets - December 31, 2003 and 2002
Consolidated Statements of Operations - Years ended December 31, 2003,
2002 and 2001
Consolidated Statements of Changes in Partners' Deficit - Years ended
December 31, 2003, 2002, and 2001
Consolidated Statements of Cash Flows - Years ended December 31, 2003,
2002 and 2001
Notes to Consolidated Financial Statements
Report of Ernst & Young LLP, Independent Auditors
The Partners
Consolidated Capital Properties IV
We have audited the accompanying consolidated balance sheets of Consolidated
Capital Properties IV as of December 31, 2003 and 2002, and the related
consolidated statements of operations, changes in partners' deficit, and cash
flows for each of the three years in the period ended December 31, 2003. These
financial statements are the responsibility of the Partnership's 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 the Partnership's management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Consolidated
Capital Properties IV at December 31, 2003 and 2002, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States.
/s/ERNST & YOUNG LLP
Greenville, South Carolina
February 27, 2004
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
December 31,
2003 2002
Assets
Cash and cash equivalents $ 1,537 $ 2,127
Receivables and deposits 1,163 1,166
Restricted escrows 748 656
Other assets 1,504 1,449
Due from affiliates (Note B) -- 149
Investment properties (Notes C and F):
Land 12,996 10,907
Buildings and related personal property 109,374 126,750
122,370 137,657
Less accumulated depreciation (96,547) (110,917)
25,823 26,740
$ 30,775 $ 32,287
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 731 $ 407
Tenant security deposit liabilities 510 523
Accrued property taxes 1,247 1,392
Other liabilities 1,107 820
Distribution payable (Note E) 715 571
Mortgage notes payable (Note C) 67,900 72,630
72,210 76,343
Partners' Deficit
General partners (Note E) (7,044) (7,146)
Limited partners (342,773 units issued and
outstanding) (34,391) (36,910)
(41,435) (44,056)
$ 30,775 $ 32,287
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
Years Ended December 31,
2003 2002 2001
(Restated) (Restated)
Revenues:
Rental income $20,436 $23,247 $25,103
Other income 2,635 2,649 2,099
Casualty gain (Note H) 23 -- 108
Total revenues 23,094 25,896 27,310
Expenses:
Operating 10,128 9,778 10,710
General and administrative 1,334 1,565 1,929
Depreciation 3,237 3,550 3,880
Interest 4,860 5,197 5,474
Property taxes 1,575 2,039 1,779
Total expenses 21,134 22,129 23,772
Income before discontinued operations 1,960 3,767 3,538
Income from discontinued operations 8 497 620
Gain on sale of discontinued operations
(Note D) 6,232 -- --
Net income (Note I) $ 8,200 $ 4,264 $ 4,158
Net income allocated to general partners (4%) $ 328 $ 171 $ 166
Net income allocated to limited partners (96%) 7,872 4,093 3,992
Net income $ 8,200 $ 4,264 $ 4,158
Per limited partnership unit:
Income before discontinued operations $ 5.50 $ 10.55 $ 9.91
Income from discontinued operations .02 1.39 1.74
Gain on sale of discontinued operations 17.45 -- --
Net income $ 22.97 $ 11.94 $ 11.65
Distributions per limited partnership unit $ 15.62 $ 15.66 $ 25.59
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partners Partners Total
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2000 342,773 $ (6,798) $(30,855) $(37,653)
Net income for the year ended
December 31, 2001 -- 166 3,992 4,158
Distributions to partners -- (432) (8,773) (9,205)
Partners' deficit at
December 31, 2001 342,773 (7,064) (35,636) (42,700)
Net income for the year ended
December 31, 2002 -- 171 4,093 4,264
Distributions to partners -- (253) (5,367) (5,620)
Partners' deficit at
December 31, 2002 342,773 (7,146) (36,910) (44,056)
Net income for the year ended
December 31, 2003 -- 328 7,872 8,200
Distributions to partners -- (226) (5,353) (5,579)
Partners' deficit at
December 31, 2003 342,773 $ (7,044) $(34,391) $(41,435)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Years Ended December 31,
2003 2002 2001
Cash flows from operating activities:
Net income $ 8,200 $ 4,264 $ 4,158
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,293 3,770 4,082
Amortization of loan costs 211 208 221
Gain from sale of discontinued operations (6,232) -- --
Casualty gain (23) (120) (236)
Loss on early extinguishment of debt 13 -- 182
Change in accounts:
Receivables and deposits 3 20 668
Due from affiliates 149 (149) --
Other assets (279) (29) 47
Accounts payable 64 203 (817)
Tenant security deposit liabilities (13) 26 9
Accrued property taxes (145) 203 (122)
Other liabilities 287 (127) (563)
Net cash provided by operating activities 5,528 8,269 7,629
Cash flows from investing activities:
Property improvements and replacements (4,021) (2,565) (3,895)
Net proceeds from sale of discontinued operations 8,137 -- --
Net (deposits to) withdrawals from restricted
escrows (92) (12) 256
Insurance proceeds received 23 168 298
Net cash provided by (used in)
investing activities 4,047 (2,409) (3,341)
Cash flows from financing activities:
Payments on mortgage notes payable (876) (845) (566)
Repayment of mortgage notes payable (4,229) -- (8,750)
Proceeds from mortgage notes payable 375 -- 11,000
Prepayment penalties -- -- (110)
Loan costs paid -- -- (471)
Distributions to partners (5,435) (5,617) (9,039)
Net cash used in financing activities (10,165) (6,462) (7,936)
Net decrease in cash and cash equivalents (590) (602) (3,648)
Cash and cash equivalents at beginning of the year 2,127 2,729 6,377
Cash and cash equivalents at end of year $ 1,537 $ 2,127 $ 2,729
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
At December 31, 2003, 2002 and 2001, distributions payable to partners were each
adjusted by approximately $144,000, $3,000 and $166,000 for non-cash activity,
respectively.
Cash paid for interest was approximately $5,251,000, $5,401,000 and $5,408,000
for the years ended December 31, 2003, 2002 and 2001, respectively.
At December 31, 2003, property improvements and replacements of approximately
$243,000 were included in accounts payable.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2003
Note A - Organization and Significant Accounting Policies
Organization: Consolidated Capital Properties IV (the "Partnership" or
"Registrant"), a California limited partnership, was formed on September 22,
1981, to operate and hold real estate properties. The general partner of the
Partnership is ConCap Equities, Inc. (the "General Partner" or "CEI"), a
Delaware corporation. Additionally, the General Partner is a subsidiary of
Apartment Investment and Management Company ("AIMCO"), a publicly traded real
estate investment trust. The Partnership Agreement provides that the Partnership
is to terminate on December 31, 2011 unless terminated prior to that date. As of
December 31, 2003, the Partnership operates 13 residential properties in or near
major urban areas in the United States and is constructing one residential
property.
Upon the Partnership's formation in 1981, Consolidated Capital Equities
Corporation ("CCEC"), a Colorado corporation, was the corporate general partner
and Consolidated Capital Management Company ("CCMC"), a California general
partnership, was the non-corporate general partner. In 1988, through a series of
transactions, Southmark Corporation ("Southmark") acquired controlling interest
in CCEC. In December 1988, CCEC filed for reorganization under Chapter 11 of the
United States Bankruptcy Code. In 1990, as part of CCEC's reorganization plan,
CEI acquired CCEC's general partner interests in the Partnership and in 15 other
affiliated public limited partnerships (the "Affiliated Partnerships") and CEI
replaced CCEC as managing general partner in all 16 partnerships. The selection
of CEI as the sole managing general partner was approved by a majority of the
limited partners in the Partnership and in each of the Affiliated Partnerships
pursuant to a solicitation of the Limited Partners dated August 10, 1990. As
part of the solicitation, the Limited Partners also approved an amendment to the
Partnership Agreement to limit changes of control of the Partnership, and the
conversion of CCMC from a general partner to a Special Limited Partner, thereby
leaving CEI as the sole general partner of the Partnership. On November 14,
1990, CCMC was dissolved and its Special Limited Partnership interest was
divided among its former partners.
All of CEI's outstanding stock is owned by Insignia Properties Trust ("IPT"),
which is an affiliate of AIMCO. In December 1994, the parent of GII Realty,
Inc., entered into a transaction (the "Insignia Transaction") in which an
affiliate of Insignia acquired an option (exercisable in whole or in part from
time to time) to purchase all of the stock of GII Realty, Inc. and, pursuant to
a partial exercise of such option, acquired 50.5% of that stock. As part of the
Insignia Transaction, the Insignia affiliate also acquired all of the
outstanding stock of Partnership Services, Inc., an asset management entity, and
a subsidiary of Insignia acquired all of the outstanding stock of Coventry
Properties, Inc., a property management entity. In addition, confidentiality,
non-competition, and standstill arrangements were entered into between certain
of the parties. Those arrangements, among other things, prohibit GII Realty's
former sole shareholder from purchasing Partnership Units for a period of three
years. On October 24, 1995, the Insignia affiliate exercised the remaining
portion of its option to purchase all of the remaining outstanding capital stock
of GII Realty, Inc.
Basis of Presentation: Effective January 1, 2002, the Partnership adopted
Statement of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
the Impairment or Disposal of Long-Lived Assets", which established standards
for the way that public business enterprises report information about long-lived
assets that are either being held for sale or have already been disposed of by
sale or other means. The standard requires that results of operations for a
long-lived asset that is being held for sale or has already been disposed of be
reported as a discontinued operation on the statement of operations. As a
result, the accompanying consolidated statements of operations have been
restated as of January 1, 2001 to reflect the operations of Stratford Place and
South Port Apartments as income from discontinued operations due to their sales
in December 2000 and March 31, 2003, respectively. The gain on sale of
discontinued operations recognized during the year ended December 31, 2003 was
approximately $6,232,000. The income from discontinued operations recognized
during the years ended December 31, 2003, 2002 and 2001 was approximately
$8,000, $497,000 and $620,000, respectively.
Consolidation: The consolidated financial statements include the Partnership's
majority interest in a joint venture which owns South Port Apartments. The
Partnership has the ability to control the major operating and financial
policies of the joint venture. No minority interest has been reflected for the
joint venture because minority interests are limited to the extent of their
equity capital, and losses in excess of the minority interest equity capital are
charged against the Partnership's interest. Should the losses reverse, the
Partnership would be credited with the amount of minority interest losses
previously absorbed. The other partner of this joint venture is AIMCO
Properties, LP, an affiliate of the General Partner. South Port Apartments was
sold in March 2003.
The Partnership's consolidated financial statements also include the accounts of
the Partnership, its wholly-owned partnerships, and its 99% limited partnership
interest in Briar Bay Apartments Associates, Ltd., Post Ridge Associates, Ltd.,
Concap River's Edge Associates, Ltd., Foothill Chimney Associates, L.P., and
ConCap Stratford Associates, Ltd. The Partnership may remove the general partner
of its 99% owned partnerships; therefore, the partnerships are deemed controlled
and therefore consolidated by the Partnership. All significant interpartnership
balances have been eliminated.
Cash and Cash Equivalents: Cash and cash equivalents include cash on hand and in
banks. At certain times, the amount of cash deposited at a bank may exceed the
limit on insured deposits. Cash balances include approximately $1,358,000 and
$1,916,000 at December 31, 2003 and 2002, respectively, that are maintained by
the affiliated management company on behalf of affiliated entities in a cash
concentration account.
Security Deposits: The Partnership requires security deposits from lessees for
the duration of the lease and such deposits are included in receivables and
deposits. Deposits are refunded when the tenant vacates, provided the tenant has
not damaged its space and is current on its rental payments.
Restricted Escrows:
Capital Improvement Reserves - At the time of the refinancings of the
mortgage notes payable encumbering Nob Hill Villa Apartments, the Arbours
of Hermitage Apartments, Briar Bay Apartments, Belmont Place Apartments
(formerly known as Chimney Hill Apartments), Citadel Village Apartments,
Foothill Place Apartments, Knollwood Apartments, Village East Apartments,
Lake Forest Apartments and South Port Apartments, approximately $1,638,000
was designated for certain capital improvements. At December 31, 2002, the
total remaining escrow balance was approximately $36,000 and $230,000 for
Lake Forest Apartments and South Port Apartments, respectively. As of
December 31, 2003, the capital improvement reserves for all of these
properties had been fully utilized.
Replacement Reserve Account - At the time of the refinancings of the
mortgage notes payable encumbering the Arbours of Hermitage Apartments,
Briar Bay Racquet Club Apartments, Nob Hill Villa Apartments, South Port
Apartments, Belmont Place Apartments, Citadel Village Apartments, Foothill
Place Apartments, Knollwood Apartments, and Village East Apartments,
$507,000 of the proceeds, ranging from $191 to $325 per unit, were
designated for replacement reserves. These funds were established to cover
necessary repairs and replacements of existing improvements. At December
31, 2003 and 2002, the total reserve balance was approximately $373,000
and $390,000, respectively.
Repair Reserve Account - As part of the redevelopment of Belmont Place
Apartments, the mortgage lender required a repair escrow account to be set
by the Partnership. In order to fulfill this requirement, the Partnership
entered into a second mortgage of approximately $375,000 on Post Ridge
Apartments. The proceeds from the second mortgage were transferred to
Belmont Place Apartments as a cross-collateralized loan to fund the repair
escrow required by the mortgage lender. The repair escrow balance at
Belmont Place Apartments was approximately $375,000 at December 31, 2003.
Investments in Real Estate: Investment properties consist of thirteen apartment
complexes and one property under construction, which are stated at cost.
Expenditures in excess of $250 that maintain an existing asset which has a
useful life of more than one year are capitalized as capital replacement
expenditures and depreciated over the estimated useful life of the asset.
Expenditures for ordinary repairs, maintenance and apartment turnover costs are
expensed as incurred. The Partnership capitalized interest costs of
approximately $390,000, tax and insurance expenses of approximately $233,000 and
other construction period expenses of approximately $343,000 during the year
ended December 31, 2003 with respect to the construction project that is
currently in process at Belmont Place Apartments.
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets ", the Partnership records impairment losses on long-lived
assets used in operations when events and circumstances indicate that the assets
might be impaired and the undiscounted cash flows estimated to be generated by
those assets are less than the carrying amounts of those assets. The impairment
loss is measured by comparing the fair value of the assets to its carrying
amount. Costs of apartment properties that have been permanently impaired have
been written down to appraised value. No adjustments for impairment of value
were recorded in any of the years ended December 31, 2003, 2002 or 2001.
During 2001, AIMCO, an affiliate of the General Partner, commissioned a project
to study process improvement ideas to reduce operating costs. The result of the
study led to a re-engineering of business processes and eventual redeployment of
personnel and related capital spending. The implementation of these plans during
2002, accounted for as a change in accounting estimate, resulted in a refinement
of the Partnership's process for capitalizing certain direct and indirect
project costs (principally payroll related costs) and increased capitalization
of such costs by approximately $316,000 in 2002 compared to 2001.
Depreciation: Depreciation is provided by the straight-line method over the
estimated lives of the investment properties and related personal property. For
Federal income tax purposes, the accelerated cost recovery method is used (1)
for real property over 18 years for additions after March 15, 1984, and before
May 9, 1985, and 19 years for additions after May 8, 1985 and before January 1,
1987. As a result of the Tax Reform Act of 1986, for additions after December
31, 1986, the modified accelerated cost recovery method is used for depreciation
of (1) real property over 27 1/2 years and (2) personal property additions over
5 years.
Leases: The Partnership generally leases apartment units for twelve-month terms
or less. The Partnership recognizes income as earned on its leases. The
Partnership evaluates all accounts receivable from residents and establishes an
allowance, after the application of security deposits, for accounts greater than
30 days past due on current tenants and all receivables due from former tenants.
In addition, the General Partner's policy is to offer rental concessions during
particularly slow months or in response to heavy competition from other similar
complexes in the area. Any concessions given at the inception of the lease are
amortized over the life of the lease.
Loan Costs: Loan costs of approximately $2,330,000 and $2,345,000, net of
accumulated amortization of approximately $1,270,000 and $1,198,000, are
included in other assets at December 31, 2003 and 2002, respectively. The loan
costs are amortized using the straight-line method over the lives of the related
mortgage notes. Amortization of loan costs is included in interest expense.
Amortization expense is expected to be approximately $209,000 in 2004,
approximately $189,000 in 2005, approximately $77,000 in 2006, approximately
$76,000 in 2007, and approximately $67,000 in 2008.
Fair Value of Financial Statements: SFAS No. 107, "Disclosures about Fair Value
of Financial Instruments", as amended by SFAS No. 119, "Disclosures about
Derivative Financial Instruments and Fair Value of Financial Instruments",
requires disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet, for which it is practicable to
estimate fair value. Fair value is defined in the SFAS as the amount at which
the instruments could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. The Partnership believes
that the carrying amount of its financial instruments (except for long term
debt) approximates their fair value due to the short term maturity of these
instruments. The fair value of the Partnership's long term debt, after
discounting the scheduled loan payments to maturity, at the Partnership's
incremental borrowing rate was approximately $70,714,000 at December 31, 2003.
Allocation of Net Income and Net Loss: The Partnership Agreement provides for
net income (losses) and distributions of distributable cash from operations to
be allocated generally 96% to the Limited Partners and 4% to the General
Partner.
Net Income (Loss) Per Limited Partnership Unit: Net income (loss) per Limited
Partnership Unit is computed by dividing net income (loss) allocated to the
Limited Partners by the number of Units outstanding. Per Unit information has
been computed based on the number of Units outstanding at the beginning of each
year.
Segment Reporting: 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 No. 131, the Partnership has only one reportable
segment.
Advertising Costs: Advertising costs of approximately $553,000, $542,000 and
$469,000 in 2003, 2002 and 2001, respectively, are charged to operating expense
as incurred.
Use of Estimates: The preparation of financial statements 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 financial statements and accompanying notes. Actual results could differ
from those estimates.
Reclassification: Certain reclassifications have been made to the 2001 and 2002
balances to conform to the 2003 presentation.
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 certain payments to affiliates for
services and for reimbursements 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 Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$1,161,000, $1,382,000 and $1,569,000 for the years ended December 31, 2003,
2002 and 2001, respectively, which is included in operating expense and income
from discontinued operations.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $955,000, $906,000 and $2,172,000, for the years
ended December 31, 2003, 2002 and 2001, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $104,000, $55,000 and $1,208,000 for the
years ended December 31, 2003, 2002 and 2001, respectively. The construction
management service fees are calculated based on a percentage of current
additions to investment properties. The first three quarters of 2002 were based
on estimated amounts and in the fourth quarter of 2002 the reimbursements were
adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the
General Partner owed the Partnership approximately $111,000 for overpayment of
management reimbursements during 2002. This amount was refunded to the
Partnership in 2003.
Subsequent to December 31, 2003, an affiliate of the General Partner advanced
the Partnership approximately $900,000 to assist in the construction of Belmont
Place Apartments.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner paid approximately $158,000, $477,000 and $430,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2003, 2002 and 2001, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000 in 2001 for loan costs
which are capitalized and included with other assets on the consolidated balance
sheets. These loan costs were associated with the refinancing of two of the
Partnership's properties in 2001.
For acting as a real estate broker in connection with the sale of South Port
Apartments in March 2003, the General Partner was paid a real estate commission
of approximately $295,000 during the year ended December 31, 2003. For acting as
real estate broker in connection with the sale of Stratford Place Apartments in
December 2000, a real estate commission of approximately $228,000 was accrued in
December 2000 and paid to the General Partner during the year ended December 31,
2001. For acting as real estate broker in connection with the sale of Overlook
Apartments in December 1999, the General Partner was paid a real estate
commission of approximately $40,000 during the year ended December 31, 2000.
When the Partnership terminates, the General Partner will have to return these
commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
The Partnership insures 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 years ended December 31, 2003, 2002, and 2001, respectively,
the Partnership paid AIMCO and its affiliates approximately $350,000, $423,000
and $313,000 for insurance coverage and fees associated with policy claims
administration.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 202,351.50 limited partnership units
(the "Units") in the Partnership representing 59.03% of the outstanding Units at
December 31, 2003. 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 Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.03% of the
outstanding Units, AIMCO and its affiliates are in a position to control all
voting decisions with respect to the Partnership. Although the General Partner
owes fiduciary duties to the limited partners of the Partnership, the General
Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a
result, the duties of the General Partner, as general partner, to the
Partnership and its limited partners may come into conflict with the duties of
the General Partner to AIMCO, as its sole stockholder.
Note C - Mortgage Notes Payable
The principle terms of mortgage notes payable are as follows:
Principal Principal Monthly Principal
Balance At Balance At Payment Stated Balance
December 31, December 31, Including Interest Maturity Due At
Property 2003 2002 Interest Rate Date Maturity
(in thousands) (in thousands)
The Apartments $ 4,367 $ 4,489 $ 41 8.37% 03/20 $ --
Arbours of Hermitage
Apartments 5,650 5,650 33 (a) 6.95% 12/05 5,650
Belmont Place 5,400 5,400 31 (a) 6.95% 12/05 5,400
Apartments
Briar Bay Racquet Club
Apartments 3,500 3,500 20 (a) 6.95% 12/05 3,500
Citadel Apartments 4,303 4,424 40 8.25% 03/20 --
Citadel Village 2,450 2,450 14 6.95% 12/05 2,450
Apartments
Foothill Place 10,100 10,100 58 (a) 6.95% 12/05 10,100
Apartments
Knollwood Apartments 6,780 6,780 39 (a) 6.95% 12/05 6,780
Lake Forest Apartments 6,156 6,321 51 (b) 7.13% 10/21 --
Nob Hill Villa 6,476 6,640 64 9.20% 04/05 6,250
Apartments
Point West Apartments 2,221 2,288 20 7.86% 12/19 --
Post Ridge Apartments
1st mortgage 4,279 4,398 34 (c) 6.63% 01/22 --
2nd mortgage 375 -- 3 (d) 7.04% 01/22 173
Rivers Edge Apartments 3,693 3,796 33 7.82% 09/20 --
South Port Apartments -- 4,244 -- (e) 7.19% (e) --
Village East Apartments 2,150 2,150 12 (a) 6.95% 12/05 2,150
Total $67,900 $72,630 $ 493 $42,453
(a) Monthly payments of interest only at the stated rate until maturity. (b)
Debt was obtained effective September 27, 2001 (see below for further
explanation).
(c) Debt was obtained effective December 21, 2001 (see below for further
explanation).
(d) Debt was obtained effective October 22, 2003 (see below for further
explanation).
(e) The Partnership sold South Port Apartments to an unrelated third party in
March 2003.
On October 22, 2003, the Partnership entered into a second mortgage for Post
Ridge Apartments. The second mortgage is in the principal amount of $375,000 and
has a stated interest rate of 7.04% per annum. Payments of principal and
interest of approximately $3,000 are due on the first day of each month
commencing December 2003 until January 2022 at which time a balloon payment of
approximately $173,000 is required. The proceeds from the second mortgage will
be used as a cross collateralized loan to Belmont Place Apartments to establish
a capital escrow reserve as required by the mortgage lender. Belmont Place
Apartments will use these proceeds to continue the ongoing construction project
of the property (See Note G - Redevelopment of Belmont Place).
On December 21, 2001, the Partnership refinanced the mortgage encumbering Post
Ridge Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,050,000 with a new mortgage of $4,500,000. The mortgage was
refinanced at a rate of 6.63% compared to the prior rate of 7.33% and matures on
January 1, 2022. Capitalized loan costs incurred for the refinancing were
approximately $254,000. The Partnership wrote off approximately $32,000 in
unamortized loan costs and paid prepayment penalties of approximately $110,000
resulting in a loss on early extinguishment of debt of approximately $142,000,
which is included in interest expense.
On September 27, 2001, the Partnership refinanced the mortgage encumbering Lake
Forest Apartments. The refinancing replaced mortgage indebtedness of
approximately $4,700,000 with a new mortgage of $6,500,000. The mortgage was
refinanced at a rate of 7.13% compared to the prior rate of 7.33% and matures on
October 1, 2021. Capitalized loan costs incurred for the refinancing were
approximately $217,000. The Partnership wrote off unamortized loan costs, which
resulted in a loss on early extinguishment of debt of approximately $40,000
which is included in interest expense.
The notes payable represent borrowings on the properties purchased by the
Partnership. The notes are non-recourse, and are collateralized by deeds of
trust on the investment properties. The notes mature between 2005 and 2022 with
balloon payments of approximately $42,280,000 and $173,000 due in 2005 and 2022,
respectively, and bear interest at rates ranging from 6.63% to 9.20%. Various
mortgages require prepayment penalties if repaid prior to maturity. Further, the
properties may not be sold subject to existing indebtedness.
Future annual principal payments required under the terms of the mortgage notes
payable subsequent to December 31, 2003, are as follows (in thousands):
2004 $ 936
2005 43,144
2006 882
2007 952
2008 1,027
Thereafter 20,959
Total $67,900
Note D - Disposition of Investment Property
On March 28, 2003, the Partnership sold South Port Apartments to an unrelated
third party, for a gross sale price of $8,625,000. The net proceeds realized by
the Partnership were approximately $8,137,000 after payment of closing costs of
approximately $488,000. The Partnership used approximately $4,229,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $6,232,000 for the year ended December 31,
2003, as a result of this sale. This amount is shown as gain from sale of
discontinued operations in the accompanying consolidated statements of
operations. The property's operations, income of approximately $8,000, $497,000,
and $536,000 for the years ended December 31, 2003, 2002, and 2001,
respectively, are included in income from discontinued operations and include
revenues of approximately $327,000, $1,571,000, and $1,625,000, respectively. In
addition, the Partnership recorded a loss on early extinguishment of debt of
approximately $13,000 for the year ended December 31, 2003 due to the write-off
of unamortized loan costs, which is also included in income from discontinued
operations in the accompanying consolidated statements of operations.
Note E - Distributions
During 2003, the Partnership declared distributions of approximately $5,570,000
(approximately $5,353,000 to the limited partners or $15.62 per limited
partnership unit) consisting of approximately $1,827,000 (approximately
$1,754,000 or $5.12 per limited partnership unit) from operations and
approximately $3,743,000 (approximately $3,599,000 or $10.50 per limited
partnership unit) from the sales proceeds of South Port Apartments, which sold
in March of 2003. Approximately $144,000 of these distributions from proceeds is
payable at December 31, 2003 to the General Partner and special limited partners
as this portion is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus cash. In conjunction with the transfer of funds from their certain
majority owned sub-tier limited partnerships to the Partnership, approximately
$9,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 2002, the Partnership declared distributions of approximately $5,591,000
(approximately $5,367,000 to the limited partners or $15.66 per limited
partnership unit) consisting of approximately $5,515,000 (approximately
$5,294,000 or $15.45 per limited partnership unit) from operations and
approximately $76,000 (approximately $73,000 to the limited partners or $0.21
per limited partnership unit) of refinancing proceeds from Post Ridge
Apartments. Approximately $3,000 of these distributions from proceeds is payable
at December 31, 2003 to the General Partner and special limited partners as this
portion is subordinated and deferred per the Partnership Agreement until the
limited partners receive 100% of their original capital contributions from
surplus cash. In conjunction with the transfer of fund from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$29,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 2001, the Partnership declared distributions of approximately $9,139,000
(approximately $8,773,000 to the limited partners or $25.59 per limited
partnership unit) consisting of approximately $4,981,000 (approximately
$4,782,000 to the limited partners or $13.95 per limited partnership unit) from
operations and approximately $4,158,000 (approximately $3,991,000 to the limited
partners or $11.64 per limited partnership unit) of refinance proceeds for Lake
Forest Apartments and sale proceeds of Stratford Place Apartments, which sold in
December of 2000. Approximately $166,000 of these distributions from proceeds is
payable at December 31, 2003 to the General Partner and special limited partners
as this portion is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus cash. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$66,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
During 2000, the Partnership declared distributions of approximately $11,183,000
(approximately $10,736,000 to the limited partners or $31.32 per limited
partnership unit) consisting of approximately $6,194,000 (approximately
$5,947,000 to the limited partners or $17.35 per limited partnership unit) from
operations and approximately $4,989,000 (approximately $4,789,000 to the limited
partners or $13.97 per limited partnership unit) of refinancing proceeds from
The Apartments, Citadel Apartments, Rivers Edge Apartments, and Stratford Place
Apartments and sale proceeds from Overlook Apartments which sold December 1999.
Approximately $197,000 of these distributions from proceeds is payable at
December 31, 2003 to the General Partner and special limited partners as this
distribution is subordinated and deferred per the Partnership Agreement until
the limited partners receive 100% of their original capital contributions from
surplus funds. In conjunction with the transfer of funds from their certain
majority-owned sub-tier limited partnerships to the Partnership, approximately
$56,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships.
As of December 31, 1999, the Partnership had a distribution payable of
approximately $4,318,000 (approximately $3,921,000 to the limited partners or
$11.44 per limited partnership unit) consisting of cash from operations of
approximately $1,874,000 (approximately $1,679,000 to the limited partners or
$4.90 per limited partnership unit) and a distribution of refinance proceeds
representing funds from the financing of Point West Apartments of approximately
$2,444,000 (approximately $2,242,000 to the limited partners or $6.54 per
limited partnership unit). In January 2000, approximately $4,113,000 of this
distribution was paid and the remainder of approximately $205,000 is payable at
December 31, 2003.
Note F - Investment Properties and Accumulated Depreciation
Initial Cost
To Partnership
(in thousands)
Buildings Net Cost
and Capitalized
Personal Subsequent to
Description Encumbrances Land Property Acquisition
(in thousands) (in thousands)
The Apartments $ 4,367 $ 438 $ 6,218 $ 2,812
Arbours of Hermitage
Apartments 5,650 547 8,574 6,082
Belmont Place Apartments 5,400 659 7,188 (3,924)
Briar Bay Racquet Club
Apartments 3,500 1,084 5,271 1,958
Citadel Apartments 4,303 695 5,619 1,927
Citadel Village Apartments 2,450 337 3,334 1,134
Foothill Place Apartments 10,100 3,492 9,435 4,352
Knollwood Apartments 6,780 345 7,065 5,388
Lake Forest Apartments 6,156 692 5,811 3,717
Nob Hill Villa Apartments 6,476 490 8,922 5,422
Point West Apartments 2,221 285 2,919 214
Post Ridge Apartments 4,654 143 2,498 3,102
Rivers Edge Apartments 3,693 512 2,160 1,073
Village East Apartments 2,150 184 2,236 1,960
Totals $67,900 $ 9,903 $77,250 $35,217
Gross Amount At Which
Carried
At December 31, 2003
(in thousands)
Buildings
And
Related
Personal Accumulated Date of Date Depreciable
Description Land Property Total Depreciation Construction Acquired Life-Years
(in thousands)
The Apartments $ 438 $ 9,030 $ 9,468 $ 8,260 1973 04/84 5-18
Arbours of Hermitage
Apartments 547 14,656 15,203 12,372 1973 09/83 5-18
Belmont Place 3,923 -- 3,923 -- -- 08/82 --
Apartments
Briar Bay Racquet
Club
Apartments 1,084 7,229 8,313 6,814 1975 09/82 5-18
Citadel Apartments 694 7,547 8,241 7,081 1973 05/83 5-18
Citadel Village 337 4,468 4,805 3,920 1974 12/82 5-18
Apartments
Foothill Place 3,402 13,877 17,279 12,388 1973 08/85 5-18
Apartments
Knollwood Apartments 345 12,453 12,798 10,853 1972 07/82 5-18
Lake Forest 692 9,528 10,220 8,511 1971 04/84 5-18
Apartments
Nob Hill Villa 490 14,344 14,834 12,528 1971 04/83 5-18
Apartments
Point West Apartments 206 3,212 3,418 2,834 1973 11/85 5-40
Post Ridge Apartments 143 5,600 5,743 4,596 1972 07/82 5-18
Rivers Edge 512 3,233 3,745 2,921 1976 04/83 5-18
Apartments
Village East 183 4,197 4,380 3,469 1973 12/82 5-18
Apartments
Totals $12,996 $109,374 $122,370 $ 96,547
Reconciliation of "Investment Properties and Accumulated Depreciation":
Years ended December 31,
2003 2002 2001
(in thousands)
Investment Properties
Balance at beginning of year $137,657 $135,208 $131,514
Additions 4,264 2,565 3,895
Property dispositions - other (19,551) (116) (201)
Balance at end of year $122,370 $137,657 $135,208
Accumulated Depreciation
Balance at beginning of year $110,917 $107,215 $103,272
Additions charged to expense 3,293 3,770 4,082
Property dispositions - other (17,663) (68) (139)
Balance at end of year $ 96,547 $110,917 $107,215
The aggregate cost of the real estate for Federal income tax purposes at
December 31, 2003, 2002 and 2001, is approximately $150,401,000, $149,635,000,
and $153,587,000, respectively. The accumulated depreciation taken for Federal
income tax purposes at December 31, 2003, 2002 and 2001, is approximately
$120,662,000, $118,176,000 and $120,682,000, respectively.
Note G - Redevelopment of Belmont Place Apartments
The General Partner has determined that Belmont Place Apartments (formerly known
as Chimney Hill Apartments) suffered from severe structural defects in the
building's foundation and as such, has demolished the property. The General
Partner has designed and approved a redevelopment plan for the property that
requires the complete demolition and reconstruction of the apartment complex.
The property was completely demolished and site work on the redevelopment began
during the fourth quarter of 2003. During the years ended December 31, 2003 and
2002, the Partnership capitalized interest costs of approximately $390,000 and
$107,000, tax and insurance expenses of approximately $233,000 and $31,000, and
other construction period operating expenses of approximately $343,000 and
$65,000, respectively. The General Partner believes that the estimated fair
value of the land exceeds this property's recorded value at December 31, 2003.
Subsequent to year end, the Partnership entered into a construction contract
with Casden Builders, Inc. (a related party) to develop the new Belmont Place
Apartments at an estimated project cost of approximately $26.4 million. The
construction contract provides for a payment of the cost of work plus a fee
without a maximum guaranteed price. Belmont Place Apartments is expected to be
completed in 2005. The Partnership plans to fund these construction expenditures
from operating cash flow, proceeds from the cross collateralized loan,
partnership reserves and loans from the General Partner.
Note H - Casualty Events
In January 2003, The Apartments had a fire which damaged five apartment units
and a hallway. Insurance proceeds of approximately $23,000 were received during
the year ended December 31, 2003. The Partnership recognized a casualty gain of
approximately $23,000 for the year ended December 31, 2003. The damaged assets
were fully depreciated at the time of the fire.
In March 2000, South Port Apartments had wind and hail damage, which damaged the
majority of the 240 rental units. The repairs included roof replacements to the
majority of units. Insurance proceeds of approximately $168,000 and $182,000
were received during the years ended December 31, 2002 and 2001, respectively.
The Partnership recognized casualty gains of approximately $120,000 and $128,000
during the years ended December 31, 2002 and 2001, respectively, which
represents the excess of the proceeds received over the write-off of the
undepreciated damaged assets. These amounts are included in income from
discontinued operations.
In April 2001, The Arbours of Hermitage had a fire, which damaged one apartment
building. Insurance proceeds of approximately $83,000 were received during the
year ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $83,000 for the year ended December 31, 2001 as the damaged assets
were fully depreciated at the time of the fire.
In May 2000, Nob Hill Villa Apartments had a fire, which damaged two apartment
units. Insurance proceeds of approximately $33,000 were received during the year
ended December 31, 2001. The Partnership recognized a casualty gain of
approximately $25,000 for the year ended December 31, 2001 which represents the
excess of the proceeds received over the write-off of the undepreciated damaged
assets.
Subsequent to December 31, 2003, The Apartments suffered damage to 180 apartment
units due to an ice storm. Management is currently trying to estimate the cost
to repair the damaged units but does not anticipate that the Partnership will
record a loss related to this casualty.
Note I - Income Taxes
The Partnership is classified as a partnership for Federal income tax purposes.
Accordingly, no provision for income taxes is made in the consolidated financial
statements of the Partnership. Taxable income or loss of the Partnership is
reported in the income tax returns of its partners.
The following is a reconciliation between net income as reported in the
consolidated financial statements and Federal taxable income allocated to the
partners in the Partnership's information return for the years ended December
31, 2003, 2002 and 2001 (in thousands, except per unit data):
2003 2002 2001
Net income as reported $ 8,200 $ 4,264 $ 4,158
(Deduct) add: Deferred revenue and other
liabilities (2) 150 (89)
Depreciation differences 56 130 (185)
Accrued expenses (7) (35) 20
Minority interest -- (305) (255)
Other 274 (283) (22)
Gain (loss) on casualty/
disposition/foreclosure (1,720) (119) (343)
Federal taxable income $ 6,801 $ 3,802 $ 3,284
Federal taxable income per
Limited Partnership unit $ 20.55 $ 10.65 $ 9.20
The following is a reconciliation between the Partnership's reported amounts and
Federal tax basis of net liabilities (in thousands):
Net liabilities as reported $(41,435)
Land and buildings 12,180
Accumulated depreciation (7,259)
Syndication fees 18,871
Other 4,570
Net liabilities - Federal tax basis $(13,073)
Note J - Legal Proceedings
In March 1998, several putative unit holders of limited partnership units of the
Partnership commenced an action entitled Rosalie Nuanes, et al. v. Insignia
Financial Group, Inc., et al. (the "Nuanes action") in the Superior Court of the
State of California for the County of San Mateo. The plaintiffs named as
defendants, among others, the Partnership, its General Partner and several of
their affiliated partnerships and corporate entities. The action purported to
assert claims on behalf of a class of limited partners and derivatively on
behalf of a number of limited partnerships (including the Partnership) that are
named as nominal defendants, challenging, among other things, the acquisition of
interests in certain General Partner entities by Insignia Financial Group, Inc.
("Insignia") and entities that were, at one time, affiliates of Insignia; past
tender offers by the Insignia affiliates to acquire limited partnership units;
management of the partnerships by the Insignia affiliates; and the series of
transactions which closed on October 1, 1998 and February 26, 1999 whereby
Insignia and Insignia Properties Trust, respectively, were merged into AIMCO.
The plaintiffs sought monetary damages and equitable relief, including judicial
dissolution of the Partnership. In addition, during the third quarter of 2001, a
complaint (the "Heller action") was filed against the same defendants that are
named in the Nuanes action, captioned Heller v. Insignia Financial Group. On or
about August 6, 2001, plaintiffs filed a first amended complaint. The Heller
action was brought as a purported derivative action, and asserted claims for,
among other things, breach of fiduciary duty, unfair competition, conversion,
unjust enrichment, and judicial dissolution.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action.
In general terms, the proposed settlement provides for certification for
settlement purposes of a settlement class consisting of all limited partners in
this Partnership and others (the "Partnerships") as of December 20, 2002, the
dismissal with prejudice and release of claims in the Nuanes and Heller
litigation, payment by AIMCO of $9.9 million (which shall be distributed to
settlement class members after deduction of attorney fees and costs of class
counsel and certain costs of settlement) and up to $1 million toward the cost of
independent appraisals of the Partnerships' properties by a Court appointed
appraiser. An affiliate of the General Partner has also agreed to make at least
one round of tender offers to purchase all of the partnership interests in the
Partnerships within one year of final approval, if it is granted, and to provide
partners with the independent appraisals at the time of these tenders. The
proposed settlement also provided for the limitation of the allowable costs
which the General Partner or its affiliates will charge the Partnerships in
connection with this litigation and imposes limits on the class counsel fees and
costs in this litigation. On April 11, 2003, notice was distributed to limited
partners providing the details of the proposed settlement.
On June 13, 2003, the Court granted final approval of the settlement and entered
judgment in both the Nuanes and Heller actions. On August 12, 2003, an objector
("Objector") filed an appeal seeking to vacate and/or reverse the order
approving the settlement and entering judgment thereto. On November 24, 2003,
the Objector filed an application requesting the Court order AIMCO to withdraw
settlement tender offers it had commenced, refrain from making further offers
pending the appeal and auction any units tendered to third parties, contending
that the offers did not conform with the terms of the Settlement. Counsel for
the Objector (on behalf of another investor) had alternatively requested the
Court take certain action purportedly to enforce the terms of the settlement
agreement. On December 18, 2003, the Court heard oral argument on the motions
and denied them both in their entirety. On January 28, 2004, Objector filed his
opening brief in his pending appeal. The General Partner is currently scheduled
to file a brief in support of the order approving settlement and entering
judgment thereto by April 23, 2004.
On August 8, 2003 AIMCO Properties L.P., an affiliate of the General Partner,
was served with a Complaint in the United States District Court, District of
Columbia alleging that AIMCO Properties L.P. willfully violated the Fair Labor
Standards Act (FLSA) by failing to pay maintenance workers overtime for all
hours worked in excess of forty per week. The Complaint is styled as a
Collective Action under the FLSA and seeks to certify state subclasses in
California, Maryland, and the District of Columbia. Specifically, the plaintiffs
contend that AIMCO Properties L.P. failed to compensate maintenance workers for
time that they were required to be "on-call". Additionally, the Complaint
alleges AIMCO Properties L.P. failed to comply with the FLSA in compensating
maintenance workers for time that they worked in responding to a call while
"on-call". The Complaint also attempts to certify a subclass for salaried
service directors who are challenging their classification as exempt from the
overtime provisions of the FLSA. AIMCO Properties L.P. has filed an answer to
the Complaint denying the substantive allegations. Discovery is currently
underway.
The General Partner does not anticipate that any costs to the Partnership,
whether legal or settlement costs, associated with these cases will be material
to the Partnership's overall operations.
The Partnership is unaware of any other pending or outstanding litigation
matters involving it or its investment properties that are not of a routine
nature arising in the ordinary course of business.
Note K - Selected Quarterly Financial Data (unaudited)
The following is a summary of the unaudited quarterly results of operations for
the Partnership (in thousands, except per unit data):
2003 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 5,556 $ 5,711 $ 6,077 $ 5,750 $ 23,094
Total expenses (5,479) (5,021) (5,510) (5,124) (21,134)
Income before discontinued
operations 77 690 567 626 1,960
Discontinued operations 33 (24) (1) -- 8
Gain on sale of discontinued
operations 6,149 -- 83 -- 6,232
Net income $ 6,259 $ 666 $ 649 $ 626 $ 8,200
Per limited partnership unit:
Income before discontinued
operations $ .22 $ 1.93 $ 1.59 $ 1.76 $ 5.50
Discontinued operations .09 (.07) -- -- .02
Gain from sale of discontinued
operations 17.22 -- .23 -- 17.45
Net income $ 17.53 $ 1.86 $ 1.82 $ 1.76 $ 22.97
2002 1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Total
Total revenues $ 6,829 $ 6,620 $ 6,308 $ 6,139 $ 25,896
Total expenses (5,588) (5,989) (5,552) (5,000) (22,129)
Income before discontinued
operations 1,241 631 756 1,139 3,767
Discontinued operations 187 102 124 84 497
Net income $ 1,428 $ 733 $ 880 $ 1,223 $ 4,264
Per limited partnership unit:
Income before discontinued
operations $ 3.48 $ 1.76 $ 2.12 $ 3.19 $ 10.55
Discontinued operations .52 .29 .35 .23 1.39
Net income $ 4.00 $ 2.05 $ 2.47 $ 3.42 $ 11.94
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
None.
Item 9A. Controls and Procedures
(a) Disclosure Controls and Procedures. The Partnership's management, with the
participation of the principal executive officer and principal financial officer
of the General Partner, who are the equivalent of the Partnership's principal
executive officer and principal financial officer, respectively, has evaluated
the effectiveness of the Partnership's disclosure controls and procedures (as
such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the
period covered by this report. Based on such evaluation, the principal executive
officer and principal financial officer of the General Partner, who are the
equivalent of the Partnership's principal executive officer and principal
financial officer, respectively, have concluded that, as of the end of such
period, the Partnership's disclosure controls and procedures are effective.
(b) Internal Control Over Financial Reporting. There have not been any changes
in the Partnership's internal control over financial reporting (as such term is
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the
fourth quarter of 2003 that have materially affected, or are reasonably likely
to materially affect, the Partnership's internal control over financial
reporting.
PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Consolidated Capital Properties IV (the "Registrant" or "Partnership") has no
directors or officers. ConCap Equities, Inc. ("CEI" or the "General Partner")
manages and controls the Partnership and has general responsibility and
authority in all matters affecting its business.
The names of the directors and officers of the General Partner, their ages and
the nature of all positions presently held by them are set forth below.
Peter K. Kompaniez 59 Director
Martha L. Long 44 Director and Senior Vice President
Harry G. Alcock 41 Executive Vice President
Miles Cortez 60 Executive Vice President, General Counsel
and Secretary
Patti K. Fielding 40 Executive Vice President
Paul J. McAuliffe 47 Executive Vice President and Chief
Financial Officer
Thomas M. Herzog 41 Senior Vice President and Chief Accounting
Officer
Peter K. Kompaniez has been Director of the General Partner since February
2004. Mr. Kompaniez has been Vice Chairman of the Board of Directors of
AIMCO since July 1994 and was appointed President in July 1997. Mr. Kompaniez
has also served as Chief Operating Officer of NHP Incorporated after it was
acquired by AIMCO in December 1997. Effective April 1, 2004, Mr. Kompaniez
resigned as President of AIMCO. Mr. Kompaniez will continue in his role as
Director of the General Partner and Vice Chairman of AIMCO's Board and will
serve AIMCO on a variety of special and ongoing projects in an operating
role.
Martha L. Long has been a Director and Senior Vice President of the General
Partner since February 2004. Ms. Long has been with AIMCO since October 1998 and
has served in various capacities. From 1998 to 2001, Ms. Long served as Senior
Vice President and Controller of AIMCO and the General Partner. During 2002 and
2003, Ms. Long served as Senior Vice President of Continuous Improvement for
AIMCO.
Harry G. Alcock was appointed Executive Vice President of the General Partner in
February 2004 and has been Executive Vice President and Chief Investment Officer
of AIMCO since October 1999. Prior to October 1999 Mr. Alcock served as a Vice
President of AIMCO from July 1996 to October 1997, when he was promoted to
Senior Vice President-Acquisitions where he served until October 1999. Mr.
Alcock has had responsibility for acquisition and financing activities of AIMCO
since July 1994.
Miles Cortez was appointed Executive Vice President, General Counsel and
Secretary of the General Partner in February 2004 and of AIMCO in August 2001.
Prior to joining AIMCO, Mr. Cortez was the senior partner of Cortez Macaulay
Bernhardt & Schuetze LLC, a Denver law firm, from December 1997 through
September 2001.
Patti K. Fielding was appointed Executive Vice President - Securities and Debt
of the General Partner in February 2004 and of AIMCO in February 2003. Ms.
Fielding previously served as Senior Vice President - Securities and Debt of
AIMCO from January 2000 to February 2003. Ms. Fielding is responsible for
securities and debt financing and the treasury department. Ms. Fielding joined
AIMCO in February 1997 and served as Vice President - Tenders, Securities and
Debt until January 2000.
Paul J. McAuliffe has been Executive Vice President and Chief Financial Officer
of the General Partner since April 2002. Mr. McAuliffe has served as Executive
Vice President of AIMCO since February 1999 and was appointed Chief Financial
Officer of AIMCO in October 1999. From May 1996 until he joined AIMCO, Mr.
McAuliffe was Senior Managing Director of Secured Capital Corp.
Thomas M. Herzog was appointed Senior Vice President and Chief Accounting
Officer of the General Partner in February 2004 and of AIMCO in January 2004.
Prior to joining AIMCO in January 2004, Mr. Herzog was at GE Real Estate,
serving as Chief Accounting Officer & Global Controller from April 2002 to
January 2004 and as Chief Technical Advisor from March 2000 to April 2002. Prior
to joining GE Real Estate, Mr. Herzog was at Deloitte & Touche LLP from 1990
until 2000, including a two-year assignment in the real estate national office.
One or more of the above persons are also directors and/or officers of a general
partner (or general partner of a general partner) of limited partnerships which
either have a class of securities registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, or are subject to the reporting requirements of
Section 15(d) of such Act. Further, one or more of the above persons are also
directors and/or officers of Apartment Investment and Management Company and the
general partner of AIMCO Properties, L.P., entities that have a class of
securities registered pursuant to Section 12(g) of the Securities Exchange Act
of 1934, or are subject to the reporting requirements of Section 15 (d) of such
Act.
The board of directors of the General Partner does not have a separate audit
committee. As such, the board of directors of the General Partner fulfills the
functions of an audit committee. The board of directors has determined that
Martha L. Long meets the requirement of an "audit committee financial expert".
The directors and officers of the General Partner with authority over the
Partnership are all employees of subsidiaries of AIMCO. AIMCO has adopted a code
of ethics that applies to such directors and officers that is posted on AIMCO's
website (www.AIMCO.com). AIMCO's website is not incorporated by reference to
this filing.
Item 11. Executive Compensation
Neither the directors nor officers of the General Partner received any
remuneration from the Partnership during the year ended December 31, 2003.
Item 12. Security Ownership of Certain Beneficial Owners and Management
(a) Security Ownership of Certain Beneficial Owners
Except as provided below, as of December 31, 2003, no person or group was known
to CEI to own of record or beneficially more than five percent of the Units of
the Partnership:
Entity Number of Units Percentage
AIMCO IPLP, L.P. 67,033.50 19.55%
(an affiliate of AIMCO)
IPLP Acquisition I, LLC 29,612.50 8.64%
(an affiliate of AIMCO)
AIMCO Properties, L.P. 105,705.50 30.84%
(an affiliate of AIMCO)
AIMCO IPLP, L.P. (formerly known as Insignia, L.P.) and IPLP Acquisition I,
LLC are indirectly, ultimately owned by AIMCO. Their business address is 55
Beattie Place, Greenville, SC 29602.
AIMCO Properties, L.P. is indirectly ultimately controlled by AIMCO. Its
business address is 4582 S. Ulster St. Parkway, Suite 1100, Denver, Colorado
80237.
(b) Beneficial Owners of Management
Neither CEI nor any of the directors or officers or associates of CEI own any
Units of the Partnership of record or beneficially.
(c) Changes in Control
Beneficial Owners of CEI
As of December 31, 2003, the following persons were known to CEI to be the
beneficial owners of more than five percent (5%) of its common stock:
Number of Percent
Name and Address CEI Shares Of Total
Insignia Properties Trust ("IPT") 100,000 100%
55 Beattie Place, Greenville, SC 29602
Effective February 26, 1999, IPT was merged with and into AIMCO. As of December
31, 2003, AIMCO owns 51% of the outstanding common shares of beneficial interest
of IPT.
Item 13. Certain Relationships and Related Transactions
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 certain payments to affiliates for
services and for reimbursements 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 Partnership's properties as compensation for providing property
management services. The Partnership paid to such affiliates approximately
$1,161,000, $1,382,000 and $1,569,000 for the years ended December 31, 2003,
2002 and 2001, respectively, which is included in operating expense and income
from discontinued operations.
Affiliates of the General Partner received reimbursement of accountable expenses
amounting to approximately $955,000, $906,000 and $2,172,000, for the years
ended December 31, 2003, 2002 and 2001, respectively. Included in these amounts
are fees related to construction management services provided by an affiliate of
the General Partner of approximately $104,000, $55,000 and $1,208,000 for the
years ended December 31, 2003, 2002 and 2001, respectively. The construction
management service fees are calculated based on a percentage of current
additions to investment properties. The first three quarters of 2002 were based
on estimated amounts and in the fourth quarter of 2002 the reimbursements were
adjusted by $111,000 to actual costs. At December 31, 2002, an affiliate of the
General Partner owed the Partnership approximately $111,000 for overpayment of
management reimbursements during 2002. This amount was refunded to the
Partnership in 2003.
Subsequent to December 31, 2003, an affiliate of the General Partner advanced
the Partnership approximately $900,000 to assist in the construction of Belmont
Place Apartments.
The Limited Partnership Agreement ("Partnership Agreement") provides for a
special management fee equal to 9% of the total distributions made to the
limited partners from cash flow provided by operations to be paid to the General
Partner for executive and administrative management services. Affiliates of the
General Partner paid approximately $158,000, $477,000 and $430,000 under this
provision of the Partnership Agreement to the General Partner during the years
ended December 31, 2003, 2002 and 2001, respectively.
In addition to reimbursement for services of affiliates, the Partnership paid an
affiliate of the General Partner approximately $110,000 in 2001 for loan costs
which are capitalized and included with other assets on the consolidated balance
sheets. These loan costs were associated with the refinancing of two of the
Partnership's properties in 2001.
For acting as a real estate broker in connection with the sale of South Port
Apartments in March 2003, the General Partner was paid a real estate commission
of approximately $295,000 during the year ended December 31, 2003. For acting as
real estate broker in connection with the sale of Stratford Place Apartments in
December 2000, a real estate commission of approximately $228,000 was accrued in
December 2000 and paid to the General Partner during the year ended December 31,
2001. For acting as real estate broker in connection with the sale of Overlook
Apartments in December 1999, the General Partner was paid a real estate
commission of approximately $40,000 during the year ended December 31, 2000.
When the Partnership terminates, the General Partner will have to return these
commissions if the limited partners do not receive their original invested
capital plus a 6% per annum cumulative return.
The Partnership insures 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 years ended December 31, 2003, 2002, and 2001, respectively,
the Partnership paid AIMCO and its affiliates approximately $350,000, $423,000
and $313,000 for insurance coverage and fees associated with policy claims
administration.
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 202,351.50 limited partnership units
(the "Units") in the Partnership representing 59.03% of the outstanding Units at
December 31, 2003. 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 Units in exchange for cash or a combination
of cash and units in AIMCO Properties, L.P., the operating partnership of AIMCO,
either through private purchases or tender offers. Pursuant to the Partnership
Agreement, unitholders holding a majority of the Units are entitled to take
action with respect to a variety of matters that include, but are not limited
to, voting on certain amendments to the Partnership Agreement and voting to
remove the General Partner. As a result of its ownership of 59.03% of the
outstanding Units, AIMCO and its affiliates are in a position to control all
voting decisions with respect to the Partnership. Although the General Partner
owes fiduciary duties to the limited partners of the Partnership, the General
Partner also owes fiduciary duties to AIMCO as its sole stockholder. As a
result, the duties of the General Partner, as general partner, to the
Partnership and its limited partners may come into conflict with the duties of
the General Partner to AIMCO, as its sole stockholder.
Item 14. Principal Accounting Fees and Services
The General Partner has reappointed Ernst & Young LLP as independent auditors to
audit the financial statements of the Partnership for 2004.
Audit Fees. The Partnership paid to Ernst & Young LLP audit fees of
approximately $112,000 and $113,000 for 2003 and 2002, respectively.
Tax Fees. The Partnership paid to Ernst & Young LLP fees for tax services for
2003 and 2002 of approximately $69,000 and $77,000, respectively.
Item 15. Exhibits, Financial Statements, Schedules and Reports on Form 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements
Consolidated Balance Sheets - December 31, 2003 and 2002
Consolidated Statements of Operations - Years Ended December 31,
2003, 2002 and 2001
Consolidated Statements of Changes in Partners' Deficit - Years
Ended December 31, 2003, 2002 and 2001
Consolidated Statements of Cash Flows - Years Ended December 31,
2003, 2002 and 2001
Notes to Consolidated Financial Statements
2. Schedules
All schedules are omitted because either they are not required, or
not applicable or the financial information is included in the
financial statements or notes thereto.
3. Exhibits
S-K Reference
Number Document Description
3 Certificate of Limited Partnership, as amended to date.
10.1 Property Management Agreement No. 105 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.2 Property Management Agreement No. 106 dated October 23,
1990, by and between the LeTourneau Associates, Ltd. and
CCEC (Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990).
10.3 Property Management Agreement No. 107 dated October 23,
1990, by and between Overlook Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1990).
10.4 Property Management Agreement No., 108 dated October 23,
1990, by and between Park 77 Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1990).
10.5 Property Management Agreement No., 205 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.6 Property Management Agreement No., 306 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.7 Property Management Agreement No., 307 dated October 23,
1990, by and between Point West Associates, Ltd. and CCEC
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1990).
10.8 Property Management Agreement No., 403 dated October 23,
1990, by and between the Partnership and CCEC (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1990).
10.9 Property Management Agreement No., 404 dated October 23,
1990, by and between Denbigh Village Associates, Ltd. and
CCEC (Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990).
10.10 Property Management Agreement No., 405 dated October 23,
1990, by and between Stratford Place Associates, Ltd. and
CCEC (Incorporated by reference to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 1990).
10.11 Bill of Sale and Assignment dated October 23, 1990, by and
between CCEC and ConCap Services Company (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended September 30, 1990).
10.12 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCEC and ConCap Management Limited Partnership
("CCMLP") (Incorporated by reference to the Quarterly Report
on Form 10-Q for the quarter ended September 30, 1990).
10.13 Assignment and Assumption Agreement as to Certain Property
Management Services dated October 23, 1990, by and between
CCMLP and ConCap Capital Company (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.14 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and The Hayman Company (100 Series of
Property Management Contracts) (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.15 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Horn-Barlow Companies (200 Series of
Property Management Contracts). (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.16 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and Metro ConCap, Inc. (300 Series of
Property Management Contracts). (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.17 Assignment and Assumption Agreement dated October 23, 1990, by
and between CCMLP and R&B Realty Group (400 Series of Property
Management Contracts). (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.19 Assignment and Assumption Agreement dated April 1, 1991, by
and between the Partnership and ConCap Village East Apartments
Associates, L.P. (Property Management Agreement No. 205).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.20 Assignment and Assumption Agreement dated April 1, 1991, by
and between the Partnership and Nob Hill Apartments
Associates, L.P. (Property Management Agreement No. 306).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.24 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with the Partnership concerning Briar Bay Racquet
Club). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.25 Assignment and Assumption of Property Management Agreement
dated August 1, 1991, by and between R & B Realty Group and R
& B Apartment Management Company, Inc. (Property Management
Agreement with Stratford Place Associates, Ltd.).
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.26 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Property Management Agreement No. 306). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.27 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Property Management Agreement No. 205). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.28 Assignment and Assumption Agreement dated September 1, 1991,
by and between ConCap Village East Apartments Associates, L.P.
and CCP IV Associates, Ltd. (Property Management Agreement No.
205). (Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991).
10.29 Assignment and Assumption Agreement dated September 15,
1991, by and between the Partnership and Foothill Chimney
Associates Limited Partnership (Property Management
Agreement No. 105). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.30 Assignment and Assumption Agreement dated September 15,
1991, by and between the Partnership and Foothill Chimney
Associates Limited Partnership (Property Management
Agreement No. 205). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.31 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and
Horn-Barlow Companies (the "Horn-Barlow Construction
Management Agreement") (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.33 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Horn-Barlow Construction Management
Agreement Concerning Chimney Hill Apartments). (Incorporated
by reference to the Annual Report on Form 10-K for the year
ended December 31, 1991).
10.34 Assignment and Assumption Agreement dated September 1,
1991, by and between ConCap Village East Apartments
Associates, L.P. and CCP IV Associates, Ltd. (Village East
Construction Agreement). (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1991).
10.35 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and Metro
ConCap, Inc. (the "Metro Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.36 Assignment and Assumption Agreement dated September 1, 1991,
by and between the Partnership and CCP IV Associates, Ltd.
(Metro Construction Management Agreement concerning Arbour
East and Knollwood Apartments). (Incorporated by reference to
the Annual Report on Form 10-K for the year ended December 31,
1991).
10.37 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and The Hayman
Company (the "Hayman Construction Management Agreement")
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.38 Assignment and Assumption Agreement dated September 15, 1991,
by and between the Partnership and Foothill Chimney Associates
Limited Partnership (Hayman Construction Management Agreement
concerning Chimney Hill Apartments). (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.39 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between the Partnership and R & B
Apartment Management Company, Inc. (Incorporated by reference
to the Annual Report on Form 10-K for the year ended December
31, 1991).
10.40 Construction Management Cost Reimbursement Agreement dated
January 1, 1991, by and between ConCap Metro Centre
Associates, L.P. and R & B Commercial Management Company, Inc.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.41 Investor Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990). (Incorporated by reference to the Annual
Report on Form 10-K for the year ended December 31, 1991). .
10.42 Assignment and Assumption Agreement (Investor Services
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Services Company (Incorporated by reference to the
Annual Report on Form 10-K for the year ended December 31,
1990).
10.43 Letter of Notice dated December 20, 1991, from Partnership
Services, Inc. ("PSI") to the Partnership regarding the change
in ownership and dissolution of ConCap Services Company
whereby PSI assumed the Investor Services Agreement.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1991).
10.44 Financial Services Agreement dated October 23, 1990, by and
between the Partnership and CCEC (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1990).
10.45 Assignment and Assumption Agreement (Financial Service
Agreement) dated October 23, 1990, by and between CCEC and
ConCap Capital Company (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended September
30, 1990).
10.46 Letter of Notice dated December 20, 1991, from PSI to the
Partnership regarding the change in ownership and dissolution
of ConCap Capital Company whereby PSI (Incorporated by
reference to the Annual Report on Form 10-K for the year ended
December 31, 1991).
10.47 Property Management Agreement No. 419 dated May 13, 1993, by
and between the Partnership and Coventry Properties, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.48 Assignment and Assumption Agreement (Property Management
Agreement No. 419) dated May 13, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.49 Assignment and Assumption as to certain Property Management
Services dated May 13, 1993, by and between Coventry
Properties, Inc. and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.50 Property Management Agreement No. 419A dated October 11,
1993, by and between ConCap Stratford Associates, Ltd. and
Coventry Properties, Inc. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993).
10.51 Assignment and Assumption Agreement (Property Management
Agreement No. 419A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.52 Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.53 Property Management Agreement No. 427A dated October 11,
1993, by and between ConCap River's Edge Associates, Ltd.
and Coventry Properties, Inc. (Incorporated by reference to
the Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993).
10.54 Assignment and Assumption Agreement (Property Management
Agreement No. 427A) dated October 11, 1993, by and between
Coventry Properties, Inc., R & B Apartment Management
Company, Inc. and Partnership Services, Inc. (Incorporated
by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 1993).
10.55 Assignment and Agreement as to Certain Property Management
Services dated October 11, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended September 30, 1993).
10.56 Property Management Agreement No. 513A dated August 18,
1993, by and between ConCap Citadel Associates, Ltd. and
Coventry Properties, Inc.
10.57 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.58 Property Management Agreement No. 514 dated June 1, 1993,
by and between the Partnership and Coventry Properties, Inc.
10.59 Assignment and Agreement as to Certain Property Management
Services dated November 17, 1993, by and between Coventry
Properties, Inc., and Partnership Services, Inc.
10.60 Stock and Asset Purchase Agreement, dated December 8, 1994
(the "Gordon Agreement"), among MAE-ICC, Inc. ("MAE-ICC"),
Gordon Realty Inc. ("Gordon"), GII Realty, Inc. ("GII
Realty"), and certain other parties. (Incorporated by
reference to Form 8-K dated December 8, 1994).
10.61 Exercise of the Option (as defined in the Gordon Agreement),
dated December 8, 1994, between MAE-ICC and Gordon.
(Incorporated by reference to Form 8-K dated December 8,
1994).
10.62 Contracts related to refinancing of debt:
(a) Deed of Trust and Security Agreement dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
(b) Promissory Note dated March 27, 1995 between Nob Hill
Villa Apartment Associates, L.P., a Tennessee limited
partnership, and First Union National Bank of North Carolina,
a North Carolina Corporation.
(c) Assignment of leases and Rents dated March 27, 1995
between Nob Hill Villa Apartment Associates, L.P., a Tennessee
limited partnership, and First Union National Bank of North
Carolina, a North Carolina Corporation.
10.63 Multifamily Note dated November 30, 1995 between Briar Bay
Apartments, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.64 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.65 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.66 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.67 Multifamily Note dated November 30, 1995 between CCP IV
Associates, LTD., a Texas limited partnership, and Lehman
Brothers Holdings Inc. d/b/a Lehman Capital, A Division of
Lehman Brothers Holdings Inc.
10.68 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
10.69 Multifamily Note dated November 30, 1995 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings Inc.
10.71 Exercise of the remaining portion of the option (as defined in
the Gordon Agreement), dated December 8, 1994 between MAE-ICC
and Gordon. (Incorporated by reference to Form 8-K dated
October 24, 1995).
10.75 Mortgage and Security Agreement dated November 18, 1997,
between Southport CCP IV, L.L.C., a South Carolina limited
liability company and Lehman Brothers Holdings, Inc. d/b/a
Lehman Capital, a division of Lehman Brothers Holdings,
Inc., a Delaware Corporation.
10.76 Multifamily Note dated November 9, 1999 between Point West
Associates Limited Partnership, a Georgia limited partnership
and GMAC Commercial Mortgage Corporation, a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.77 Purchase and Sale Contract between Registrant and Overlook
Associates, Ltd, a Georgia limited partnership dated December
13, 1999, documenting sale of Overlook Apartments located in
Memphis, Tennessee. (Incorporated by reference to Annual
Report on Form 10-K ended December 31, 1999).
10.78 Multifamily Note dated February 2, 2000 between Apartment
Associates, Ltd., a Texas limited partnership and ARCS
Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.79 Multifamily Note dated February 28, 2000 between ConCap
Citadel Associated, Ltd., a Texas limited partnership and
ARCs Commercial Mortgage Cl., L.P., a California
corporation. (Incorporated by reference to Annual Report on
Form 10-K ended December 31, 1999).
10.80 Multifamily Note dated May 31, 2000 between Concap
Stratford Associates, Ltd., a Texas limited partnership and
ARCS Commercial Mortgage Co., L.P., a California limited
partnership. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended June 30, 2000.)
10.81 Multifamily Note dated August 29, 2000 between ConCap
Rivers Edge Associates, Ltd., a Texas Limited Partnership,
and GMAC Commercial Mortgage Corporation, a California
Corporation. (Incorporated by reference to Quarterly Report
on Form 10-Q for quarter ended September 30, 2000.)
10.82 Purchase and Sale Contract dated September 26, 2000 between
ConCap Stratford Associates, Ltd., a Texas Limited
Partnership, and First Worthing Company Limited, a Texas
Limited Partnership.
10.83 First Amendment to Purchase and Sale Contract dated October
26, 2000 between ConCap Stratford Associates, Ltd., a Texas
Limited Partnership, and First Worthing Company Limited, a
Texas Limited Partnership.
10.84 Second Amendment to Purchase and Sale Contract dated
October 31, 2000 between ConCap Stratford Associates, Ltd.,
a Texas Limited Partnership, and First Worthing Company
Limited, a Texas Limited Partnership.
10.85 Multifamily Note dated September 27, 2001 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and AIMCO Properties, L.P., a Delaware
limited partnership, in favor of GMAC Commercial Mortgage
Corporation, a California corporation.
10.86 Multifamily Note dated December 20, 2001 between Post Ridge
Associates, Ltd., a Tennessee limited partnership, and GMAC
Commercial Mortgage Corporation, a California corporation.
10.87 Purchase and Sale Contract dated January 14, 2003 between
South Port CCP IV, L.L.C., a South Carolina limited
liability company, and Warren Lortie Associates, Inc., a
California corporation.
10.88 Reinstatement and First Amendment of Purchase and Sale
Contract between South Port IV, L.L.C., a South Carolina
limited liability company, and Warren Lortie Associates,
Inc., a California corporation.
10.89 Form of Multifamily Note dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation.
10.90 Form of Replacement Reserve Agreement dated October 22, 2003
between Post Ridge Associates, Ltd., Limited Partnership, a
Tennessee limited partnership, and GMAC Commercial Mortgage
Corporation, a California corporation.
10.91 Form on Repair Agreement dated October 22, 2003 between Post
Ridge Associates, Ltd., Limited Partnership, a Tennessee
limited partnership, and GMAC Commercial Mortgage Corporation,
a California corporation.
10.92 Form of Cross-Collateralization Agreement dated October 22,
2003 between Post Ridge Associates, Ltd., Limited Partnership,
a Tennessee limited partnership, and Federal Home Loan
Mortgage Corporation, a corporation organized and existing
under the laws of the United States of America.
10.93 Form of Cross-Collateralization Agreement dated October 22,
2003 between Foothill Chimney Associates Limited Partnership,
a Georgia limited partnership, and Federal Home Loan Mortgage
Corporation, a corporation organized and existing under the
laws of the United States of America.
10.94 Form of Debt Service Escrow Agreement dated October 22, 2003
between Foothill Chimney Associates Limited Partnership, a
Georgia limited partnership, and Federal Homes Loan Mortgage
Corporation, a corporate instrumentality of the United States
of America.
10.95 Form of Second Modification to Replacement Reserve Agreement
dated October 22, 2003 between Foothill Chimney Associates
Limited Partnership, a Georgia limited partnership, and
Federal Homes Loan Mortgage Corporation, a corporate
instrumentality of the United States of America.
11 Statement regarding computation of Net Income per Limited
Partnership Unit (Incorporated by reference to Note A of
Item 8 - Financial Statements of this Form 10-K).
19.1 Chapter 11 Plan of CCP/IV Associates, Ltd. (Restated to
incorporate first amended Chapter 11 Plan filed October 27,
1992 and second amendments to Chapter 11 Plan of CCP/IV
Associates, Ltd. filed December 14, 1992) dated December 14,
1992, and filed December 14, 1992, in the United States
Bankruptcy Court for the Middle District of Tennessee.
(Incorporated by reference to the Annual Report on Form 10-K
for the year ended December 31, 1992).
19.2 First amended disclosure statement to accompany Chapter 11
Plan, dated February 21, 1992, and amended October 27, 1992
filed by CCP/IV Associates, Ltd. filed October 27, 1992, in
the United States Bankruptcy Court for the Middle District of
Tennessee. (Incorporated by reference to the Annual Report on
Form 10-K for the year ended December 31, 1992).
31.1 Certification of equivalent of Chief Executive Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of equivalent of Chief Financial Officer
pursuant to Securities Exchange Act Rules
13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
(b) Reports on Form 8-K filed:
None filed during the quarter ended December 31, 2003.
SIGNATURES
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 PROPERTIES IV
By: ConCap Equities, Inc.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President
and Chief Accounting Officer
Date: March 30, 2004
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.
/s/Peter K. Kompaniez Director Date: March 30, 2004
Peter K. Kompaniez
/s/Martha L. Long Director and Senior Vice Date: March 30, 2004
Martha L. Long President
/s/Thomas M. Herzog Senior Vice President Date: March 30, 2004
Thomas M. Herzog and Chief Accounting Officer
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this annual report on Form 10-K of Consolidated Capital
Properties IV;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal control over financial reporting.
Date: March 30, 2004
/s/Martha L. Long
Martha L. Long
Senior Vice President of ConCap Equities,
Inc., equivalent of the chief executive
officer of the Partnership
Exhibit 31.2
CERTIFICATION
I, Thomas M. Herzog, certify that:
1. I have reviewed this annual report on Form 10-K of Consolidated Capital
Properties IV;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known
to us by others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the
registrant's most recent fiscal quarter (the registrant's fourth
fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
Date: March 30, 2004
/s/Thomas M. Herzog
Thomas M. Herzog
Senior Vice President and Chief
Accounting Officer of ConCap Equities,
Inc.,
equivalent of the chief financial
officer of the Partnership
Exhibit 32.1
Certification of CEO and CFO
Pursuant to 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report on Form 10-K of Consolidated Capital
Properties IV (the "Partnership"), for the year ended December 31, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
Martha L. Long, as the equivalent of the chief executive officer of the
Partnership, and Thomas M. Herzog, as the equivalent of the chief financial
officer of the Partnership, each hereby certifies, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that, to the best of his knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Partnership.
/s/Martha L. Long
Name: Martha L. Long
Date: March 30, 2004
/s/Thomas M. Herzog
Name: Thomas M. Herzog
Date: March 30, 2004
This certification is furnished with this Report pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Partnership for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
Exhibit 10.87
PURCHASE AND SALE CONTRACT
BETWEEN
SOUTH PORT CCPIV, L.L.C.,
A South Carolina limited liability company
AS SELLER
AND
WARREN LORTIE ASSOCIATES, INC.,
a California corporation
AS PURCHASER
TABLE OF CONTENTS
Page
PURCHASE AND SALE CONTRACT
THIS PURCHASE AND SALE CONTRACT ("Purchase Contract" or the "Agreement")
is entered into as of the 14th day of January, 2003 (the "Effective Date") by
and between SOUTH PORT CCPIV, L.L.C., a South Carolina limited liability
company, having a principal address at 2000 South Colorado Boulevard, Tower Two,
Suite 2-1000, Denver, Colorado 80222 ("Seller") and WARREN LORTIE ASSOCIATES,
INC., a California corporation, having a principal address at 1301 Dove Street
#920, Newport Beach, California 92660 ("Purchaser").
NOW, THEREFORE WITNESSETH: That for and in consideration of mutual
covenants and agreements hereinafter set forth, Seller and Purchaser hereby
agree as follows:
RECITALS
R-1. Seller holds legal title to the real estate located in Tulsa County,
Oklahoma, as more particularly described in Exhibit A attached hereto and made a
part hereof. Improvements have been constructed on the property described in
this Recital.
R-2. Purchaser desires to purchase and Seller has agreed to sell such
land, improvements and certain associated property, defined below as the
"Property" on the terms and conditions set forth below, (which terms and
conditions shall control in the event of any conflict with these Recitals), such
that on the Closing Date (as hereinafter defined) the Property will be conveyed
by special warranty deed to Purchaser.
R-3. Purchaser has agreed to pay to Seller the Purchase Price for the
Property, and Seller has agreed to sell the Property to Purchaser, on the terms
and conditions set forth below.
R-4. Purchaser intends to make investigations regarding the Property, and
Purchaser's intended uses of each of the Property as Purchaser deems necessary
and desirable.
ARTICLE 1
DEFINED TERMS
1.1 Unless otherwise defined herein, terms with initial capital letters in this
Purchase Contract shall have the meanings set forth in this ARTICLE 1 below.
1.1.1 "Business Day" means any day other than a Saturday or Sunday or Federal
holiday or legal holiday in the State of Oklahoma. 1.1.2 "Closing" means the
consummation of the purchase and sale and related transactions contemplated by
this Purchase Contract in accordance with the terms and conditions of this
Purchase Contract.
1.1.3 "Closing Date" means the date on which date the Closing of the conveyance
of the Property is required to be held under the terms and conditions of this
Purchase Contract and on which date full payment of the Purchase Price for the
Property shall have been paid to and received by Seller in immediately available
U.S. funds.
1.1.4 "Excluded Permits" means those Permits which, under applicable law, are
nontransferable and such other Permits as may be designated as Excluded Permits
on Exhibit 1.1.4, if any, attached hereto.
1.1.5 Intentionally Omitted.
1.1.6 "Fixtures and Tangible Personal Property" means all fixtures, furniture,
furnishings, fittings, equipment, machinery, computers (to the extent located on
the Property and owned by Seller), fax machines (to the extent located on the
Property and owned by Seller), copiers (to the extent located on the Property
and owned by Seller), apparatus, appliances and other articles of tangible
personal property now located on the Land or in the Improvements as of the date
of this Purchase Contract and used or usable in connection with any present or
future occupation or operation of all or any part of the Property. The term
"Fixtures and Tangible Personal Property" does not include (i) equipment leased
by Seller and the interest of Seller in any equipment provided to the Property
for use, but not owned or leased, by Seller, or (ii) any computer hardware and
software furnished to Seller by Buyers Access, (iii) any AIMCO Benchmark Series
Books, (iv) any "Connect: Remote Horizon" software or (v) property owned or
leased by Tenants and guests, employees or other persons furnishing goods or
services to the Property, or (vi) property and equipment owned by Seller, which
in the ordinary course of business of the Property is not used exclusively for
the business, operation or management of the Property or (vii) the property and
equipment, if any, expressly identified in Exhibit 1.1.6. 1.1.7 "Improvements"
means all buildings and improvements, located on the Land taken "as is".
1.1.8 "Land" means all of those certain tracts of land located in the State of
Oklahoma described on Exhibit "A" attached hereto, and all rights, privileges
and appurtenances pertaining thereto.
1.1.9 "Lease(s)" means the interest of Seller in and to all leases, subleases
and other occupancy agreements, whether or not of record, which provide for the
use or occupancy of space or facilities on or relating to the Property and which
are in force as of the Effective Date for the applicable Property. 1.1.10
"Miscellaneous Property Assets" means all contract rights, leases, concessions,
warranties, plans, drawings and other items of intangible personal property
relating to the ownership or operation of the Property and owned by Seller,
excluding, however, (i) receivables, (ii) Property Contracts, (iii) Leases, (iv)
Permits, (v) cash or other funds, whether in petty cash or house "banks," or on
deposit in bank accounts or in transit for deposit, (vi) refunds, rebates or
other claims, or any interest thereon, for periods or events occurring prior to
the Closing Date, (vii) utility and similar deposits, or (viii) insurance or
other prepaid items or (ix) Seller's proprietary books and records, except to
the extent that Seller receives a credit on the closing statement for any such
item. The term "Miscellaneous Property Assets" shall also include the following,
but only to the extent owned by Seller and in Seller's possession: site plans,
surveys, soil and substrata studies, architectural renderings, plans and
specifications, engineering plans and studies, floor plans, tenant data sheets,
landscape plans and other plans or studies of any kind, if any, which relate to
the Land and or the Improvements or the Fixtures and Tangible Personal Property.
The term "Miscellaneous Property Assets" shall also include all of Seller's
rights, if any, in and to the name "Southport Apartments".
1.1.11 "Permits" means all licenses and permits granted by governmental
authorities having jurisdiction over the Property in respect of the matter to
which the applicable license or permit applies and owned by Seller and used in
or relating to the ownership, occupancy or operation of the Property or any part
thereof not subject to a Lease.
1.1.12 "Permitted Exceptions" means those exceptions or conditions permitted to
encumber the title to the Property in accordance with the provisions of Section
6.1.
1.1.13 "Property" means the Land and Improvements and all rights of Seller
relating to the Land and the Improvements, including without limitation, any
rights, title and interest of Seller, if any, in and to (i) any strips and gores
adjacent to the Land and any land lying in the bed of any street, road, or
avenue opened or proposed, in front of or adjoining the Land, to the center line
thereof; (ii) any unpaid award for any taking by condemnation or any damage to
the Property by reason of a change of grade of any street or highway; (iii) all
of the easements, rights, privileges, and appurtenances belonging or in any way
appertaining to the Property; together with all Fixtures and Tangible Personal
Property, the right, if any and only to the extent transferable, of Seller in
and to Property Contracts and Leases, Permits other than Excluded Permits and
the Miscellaneous Property Assets owned by Seller which are located on the
Property and used in its operation.
1.1.14 "Property Contracts" means all purchase orders, maintenance, service, or
utility contracts and similar contracts, which relate to the ownership,
maintenance, construction or repair and/or operation of the Property and which
are not cancelable on 90 days' or shorter Notice, except Leases.
1.1.15 "Purchase Contract" means this Purchase and Sale Contract by and between
Seller and Purchaser. 1.1.16 "Purchase Price" means the total consideration to
be paid by Purchaser to Seller for the purchase of the Property.
1.1.17 "Survey" shall have the meaning ascribed thereto in Section 6.7. 1.1.18
"Tenant" means any person or entity entitled to occupy any portion of the
Property under a Lease.
1.1.19 "Title Commitment" or "Title Commitments" shall have the meaning ascribed
thereto in Section 6.1. 1.1.20 "Title Insurer" shall have the meaning set forth
in Section 6.1.
ARTICLE 2
PURCHASE AND SALE OF PROPERTY
2.1 Seller agrees to sell and convey the Property to Purchaser and Purchaser
agrees to purchase the Property from Seller, in accordance with the terms and
conditions set forth in this Purchase Contract.
ARTICLE 3
PURCHASE PRICE & DEPOSIT
3.1 The total purchase price ("Purchase Price") for the Property shall be Eight
Million Seven Hundred and Twenty Five Thousand and No/100 Dollars
($8,725,000.00), which shall be paid by Purchaser, as follows: 3.1.1 On the date
hereof, Purchaser shall deliver to Fidelity National Title Insurance Company
("Escrow Agent" or the "Title Insurer") a deposit in the sum of Eighty Seven
Thousand Two Hundred Fifty and No/100 Dollars ($87,250.00), in cash, (such sum
being hereinafter referred to and held as the "Initial Deposit"). Purchaser
shall also deliver a quitclaim deed to the Escrow Agent in the form attached as
Exhibit 3.1.1. Purchaser and Seller each approve the form of Escrow Agreement
attached as Exhibit B. 3.1.2 On the day that the Feasibility Period (as
hereinafter defined) expires, Purchaser shall deliver to Escrow Agent an
additional deposit in the sum of Eighty Seven Thousand Two Hundred Fifty and
No/100 Dollars ($87,250.00), in cash, (such sum being hereinafter referred to
and held as the "Additional Deposit").
3.1.3 The Escrow Agent shall hold the Deposit and make delivery of the Deposit
to the party entitled thereto under the terms hereof. Escrow Agent shall invest
the Deposit in such short-term, high-grade securities, interest-bearing bank
accounts, money market funds or accounts, bank certificates of deposit or bank
repurchase agreements as Escrow Agent, in its discretion, deems suitable,
(provided that Escrow Agent shall invest the Deposit as jointly directed by
Seller and Purchaser should Seller and Purchaser each in their respective sole
discretion determine to issue such joint investment instructions to the Escrow
Agent) and all interest and income thereon shall become part of the Deposit and
shall be remitted to the party entitled to the Deposit, as set forth below.
3.1.4 If the sale of the Property is closed by the date fixed therefor (or any
extension date provided for herein), monies held as the Deposit shall be applied
to the Purchase Price on the Closing Date. If the sale of the Property is not
closed by the date fixed therefor (or any such extension date) owing to failure
of satisfaction of a condition precedent to Purchaser's obligations, the Deposit
shall be returned and refunded to Purchaser, and neither party shall have any
further liability hereunder, subject to and except for Purchaser's liability
under Section 5.3. 3.1.5 If the sale of the Property is not closed by the date
fixed therefor (or any such extension date) owing to failure of performance by
Seller, Purchaser shall be entitled to the remedies set forth in ARTICLE 12
hereof. If the sale of the Property is not closed by the date fixed therefor (or
any such extension date) owing to failure of performance by Purchaser, the
Deposit shall be forfeited by Purchaser and the sum thereof shall go to Seller
forthwith as liquidated damages for the lost opportunity costs and transaction
expenses incurred by Seller, as more fully set forth in ARTICLE 12 below.
ARTICLE 4
FINANCING
4.1 Purchaser shall have a period of fifty (50) calendar days (the "Financing
Contingency Period) following the Effective Date to obtain approval from Lender
(defined below) to assume that certain loan on the Property in the original
principal amount of $4,500,000.00 (the "Existing Loan") made by Lehman Brothers
Holdings Inc. d/b/a Lehman Capital, a Division of Lehman Brothers Holdings Inc.,
a Delaware corporation ("Lender"). Purchaser shall obtain the remaining funds
required for settlement (that portion of the Purchase Price to be paid in cash
to Seller in excess of the outstanding principal balance of the Existing Loan as
of the Closing), which shall not be a contingency to Closing. Purchaser agrees
that it must approve the Existing Loan documentation within (10) calendar days
following the Effective Date, and must submit its loan application to Lender for
the assumption of the Existing Loan within (5) calendar days of such approval.
Purchaser's requested assumption shall not include any requirement by Purchaser
to change the terms of the Existing Loan. Purchaser agrees to pay all fees and
costs required by Lender to assume the Existing Loan, and to execute any and all
documents required by Lender in connection with and as necessary for Purchaser
to assume the Existing Loan. Seller agrees that Seller's rights in and to all
existing reserves held by Lender in connection with the Existing Loan shall be
transferred to Purchaser upon the Closing; provided, however, that Seller shall
receive a credit for such reserves at Closing. It shall be a condition to
Purchaser's assumption of the Existing Loan that upon the Closing, Seller shall
be released from all liability under the Existing Loan, and that Purchaser shall
assume all obligations and liabilities in connection therewith.
ARTICLE 5
FEASIBILITY PERIOD
5.1 Subject to the terms of Section 5.3 below, for thirty (30) calendar days
following the Effective Date, but in no event later than February 12, 2003 (the
"Feasibility Period"), Purchaser, and its agents, contractors, engineers,
surveyors, attorneys, and employees ("Consultants") shall have the right from
time to time to enter onto the Property:
5.1.1 To conduct and make any and all customary studies, tests, examinations and
inspections, or investigations of or concerning the Property (including without
limitation, engineering and feasibility studies, evaluation of drainage and
flood plain, soil tests for bearing capacity and percolation and surveys,
including topographical surveys).
5.1.2 To confirm any and all matters which Purchaser may reasonably desire to
confirm with respect to the Property. 5.1.3 To ascertain and confirm the
suitability of the property for Purchaser's intended use of the Property.
5.1.4 To review all Materials (as hereinafter defined) other than Seller's
proprietary information, including, Materials held by the Property Manager and
the Regional Property Manager (as defined in Section 8.1.4 of this Purchase
Contract).
5.2 Purchaser shall have the right to terminate this Purchase Contract for any
reason, or no reason, by giving written Notice to Seller and Escrow Agent on or
before 5:00 p.m. EST on the date of expiration of the Feasibility Period. If
Purchaser exercises such right to terminate, this Purchase Contract shall
terminate and be of no further force and effect, subject to and except for
Purchaser's liability under Section 5.3, and Escrow Agent shall forthwith
deliver the Quitclaim Deed of all of Purchaser's right and interest in the
Property to Seller, and then promptly return the Deposit to Purchaser. If
Purchaser fails to provide Seller with written Notice of cancellation prior to
the end of the Feasibility Period in strict accordance with the Notice
provisions of this Purchase Contract, this Purchase Contract shall remain in
full force and effect and Purchaser's obligation to purchase the Property shall
be non-contingent and unconditional except only for satisfaction of the
conditions expressly stated in this ARTICLE 5 and in ARTICLE 9.
5.3 Purchaser shall indemnify and hold Seller harmless for any actions taken by
Purchaser and its Consultants on the Property. Purchaser shall indemnify, defend
(with attorneys selected by Seller) and hold Seller harmless from any and all
claims, damages, costs and liability which may arise due to such entries,
surveys, tests, investigations and the like. Seller shall have the right,
without limitation, to disapprove any and all entries, surveys, tests,
investigations and the like that in their reasonable judgment could result in
any injury to the Property or breach of any agreement, or expose Seller to any
liability, costs, liens or violations of applicable law, or otherwise adversely
affect the Property or Seller's interest therein. No consent by the Seller to
any such activity shall be deemed to constitute a waiver by Seller or assumption
of liability or risk by Seller. Purchaser hereby agrees to restore the Property
to the same condition existing immediately prior to Purchaser's exercise of its
rights pursuant to this ARTICLE 5 at Purchaser's sole cost and expense.
Purchaser shall maintain casualty insurance and comprehensive public liability
insurance with coverages of not less than $1,000,000.00 for injury or death to
any one person and $3,000,000.00 for injury or death to more than one person and
$500,000.00 with respect to property damage, by water or otherwise. The
provisions of this Section shall survive the Closing or termination of this
Purchase Contract.
5.4 Purchaser shall not permit any mechanic's or materialmen's liens or any
other liens to attach to the Property by reason of the performance of any work
or the purchase of any materials by Purchaser or any other party in connection
with any studies or tests conducted by or for Purchaser. Purchaser shall give
notice to Seller a reasonable time prior to entry onto the Property, shall
deliver proof of insurance coverage required above to Seller and shall permit
Seller to have a representative present during all investigations and
inspections conducted with respect to the Property. Purchaser shall take all
reasonable actions and implement all protections necessary to ensure that all
actions taken in connection with the investigations and inspections of the
Property, and all equipment, materials and substances generated, used or brought
onto the Property pose no material threat to the safety of persons or the
environment and cause no damage to the Property or other property of Seller or
other persons. All information made available by Seller to Purchaser in
accordance with this Purchase Contract or obtained by Purchaser in the course of
its investigations shall be treated as confidential information by Purchaser,
and, prior to the purchase of the Property by Purchaser, Purchaser shall use its
best efforts to prevent its Consultants, agents and employees from divulging
such information to any unrelated third parties except as reasonably necessary
to third parties engaged by Purchaser for the limited purpose of analyzing and
investigating such information for the purpose of consummating the transaction
contemplated by this Purchase Contract, including Purchaser's attorneys and
representatives, prospective lenders and engineers.
5.5 Seller shall deliver to Purchaser within ten (10) calendar days from the
Effective Date copies of all leases, contracts, engineering studies, surveys and
other materials (the "Materials") in Seller's possession or control relating to
the Property (other than proprietary information of Seller). If the sale of the
Property is not closed by the date fixed therefor, Purchaser shall, within five
(5) calendar days, return all such Materials to Seller.
ARTICLE 6
TITLE
6.1 Seller shall promptly obtain from Fidelity National Insurance Company, 3D
International Tower, 1900 West Loop South, Suite 650, Houston, Texas 77027 (the
"Title Insurer") a preliminary title report or commitment (the "Title
Commitment") to issue an Owner's Policy of Title Insurance (the "Title Policy")
insuring Purchaser's title to the Property to be good and indefeasible in the
amount of the Purchase Price, subject only to the Permitted Exceptions
(described below) and other liens and encumbrances not constituting objections
to title in accordance herewith. Seller shall be responsible for abstracting
costs and Purchaser shall be responsible for title examination costs. Seller
shall be responsible for the additional title insurance premium for an owner's
title insurance policy, over and above the premium for any lender's title
insurance policy Purchaser may obtain. Purchaser shall be responsible for the
cost of any endorsements and any additional premiums required for ALTA or any
other extended coverage on the Title Policy. A copy of the Title Commitment and
the documents of record reflected therein and Seller's existing survey, shall be
furnished to the Purchaser and attorney for Seller. On or before the expiration
of the Feasibility Period, Purchaser shall give written notice (the "Objection
Notice") to the attorneys for Seller of any conditions of title which Purchaser
is not obligated to take the Property subject to pursuant to the provisions of
this Agreement (the "Objections") separately specifying and setting forth each
of such Objections. Seller shall be entitled to reasonable adjournments of the
Closing Date to cure the Objections. If Purchaser gives Seller an Objection
Notice within the period set forth above, then all matters disclosed on the
Title Commitment which are not objected to in such Objection Notice shall be
deemed to be Permitted Exceptions. If Purchaser fails to give Seller an
Objection Notice within the period set forth above, then all matters disclosed
on the Title Commitment shall be deemed to be Permitted Exceptions.
6.2 If Seller gives Purchaser notice (the "Response Notice") that Seller is
unable or unwilling to convey title to the Property as required by this Purchase
Agreement, Purchaser may, as its exclusive remedy, elect by written notice given
to Seller within five (5) days after the Response Notice is given, either (a) to
accept such title as Seller is able to convey without any reduction or abatement
of the Purchase Price, or (b) to terminate this Purchase Contract in which event
the Deposit shall be returned to Purchaser. If Purchaser fails to give notice of
its election to terminate this Agreement within such five (5) day period,
Purchaser shall be deemed to have waived said objections and to have elected to
proceed to close the transactions contemplated by this Purchase Contract.
6.3 The existence of liens or encumbrances other than the Permitted Exceptions
or those which are permitted by this Purchase Contract shall be deemed to be
Permitted Exceptions if the Title Insurer will insure Purchaser's title clear of
the matter or will insure against the enforcement of such matter out of the
Property. Unpaid liens for real estate and personal property taxes for years
prior to the fiscal year in which the Closing Date occurs and any other matter
which Seller is obligated to pay and discharge at the Closing shall not be
deemed objections to title, but the amount thereof chargeable to Seller, plus
interest and penalties thereon, if any, shall be deducted from the Purchase
Price on the Closing Date and paid to the Title Insurer for the payment of such
matters.
6.4 Notwithstanding the foregoing, any deeds of trust and/or mortgages
(including any and all mortgages which secure that certain loan on the Property
in the original principal amount of $4,500,000.00 made by Lehman Brothers
Holdings Inc. d/b/a Lehman Capital, a Division of Lehman Brothers Holdings Inc.,
a Delaware corporation, against the Property (collectively, "Liens") shall be
deemed objectionable exceptions, whether Purchaser gives written notice of such
or not, and, except to the extent assumed by Purchaser, shall be paid off,
satisfied, discharged and/or cured by Seller at or before Closing, the same
being a material obligation of Seller under this Purchase Contract.
6.5 Intentionally Deleted.
6.6 Seller covenants that it will not voluntarily create or cause any lien or
encumbrance to attach to the Property between the date of this Purchase Contract
and the Closing Date (other than Leases and Property Contracts in the ordinary
course of business and other than liens for unpaid real estate and personal
property taxes not yet delinquent); any such monetary lien or encumbrance so
attaching by voluntary act of Seller (hereinafter, a "Voluntary Intervening
Lien") shall be discharged by the Seller at or prior to Closing on the Closing
Date or any postponed Closing Date. Except as expressly provided above, Seller
shall not be required to undertake efforts to remove any other lien,
encumbrance, security interest, exception, objection or other matter, to make
any expenditure of money or institute litigation or any other judicial or
administrative proceeding and Seller may elect not to discharge the same;
provided, however, if any lien or encumbrance (other than a Voluntary
Intervening Lien) attaches to the Property between the date of this Purchase
Contract and the Closing Date, Seller shall be required to satisfy or discharge
said lien or encumbrance at or prior to the Closing, provided that Seller shall
not be required to expend more than $50,000 in connection with such satisfaction
or discharge. If the amount required to satisfy or discharge such lien or
encumbrance exceeds $50,000, Purchaser shall have the option of either (a)
paying the excess amount over $50,000 required to satisfy or discharge such
lien, and proceeding to the Closing, or (b) terminating this Purchase Contract,
in which case, the Deposit shall be returned and refunded to Purchaser and
neither party shall have any further liability hereunder, subject to and except
for Purchaser's liability under Section 5.3 of this Purchase Contract. Seller
shall have no option to terminate this Purchase Contract if Purchaser has
elected to pay the amount in excess of $50,000 to satisfy or discharge such lien
or encumbrance.
6.7 The cost of obtaining a Survey for the Property and any updates thereto
("Survey") shall be shared equally by Purchaser and Seller and the Survey shall
be delivered to Purchaser and Seller within the Feasibility Period. The Survey
(i) shall be prepared in accordance with and shall comply with the minimum
requirements of the ALTA; (ii) shall be in a form, and shall be certified as of
a date satisfactory to Title Insurer to enable Title Insurer to delete standard
survey exceptions from the title insurance policy to be issued pursuant to the
Title Commitments, except for any Permitted Exceptions; (iii) shall specifically
show all improvements, recorded easements to the extent locatable, set back
lines, and such other matters shown as exceptions by the Title Commitments; (iv)
shall specifically show the right of way for all adjacent public streets; (v)
shall specifically disclose whether (and, if so, what part of) any of the
Property is in an area designated as requiring flood insurance under applicable
federal laws regulating lenders; (vi) shall contain a perimeter legal
description of the Property which may be used in the special warranty deed or
equivalent deed; (vii) shall be certified to Purchaser, Purchaser's lender,
Seller and Title Insurer as being true and correct; and (viii) shall certify
that the legal description set forth therein describes the same, and comprises
all of, the real estate comprising the Property to be purchased by Purchaser
pursuant to the terms of this Purchase Contract. In the event the perimeter
legal description of the Property contained in the Survey differs from that
contained in the deed or deeds by which Seller took title to the Property, the
latter description shall be used in the special warranty deed delivered to
Purchaser at Closing, and the Survey legal shall be used in a quitclaim deed to
the Property which also shall be delivered to Purchaser at Closing. Purchaser,
at Purchaser's sole cost and expense, may also cause to be prepared an
environmental report for the Property ("Environmental Report"). 6.7.1 Should
such Survey disclose conditions that give rise to a title exception, other than
a Permitted Exception, Purchaser shall have the right to object thereto within
the Feasibility Period in accordance with the procedures set forth in Section
6.1 above.
6.7.2 Purchaser and Seller agree to make payment in full of all costs of
obtaining the Survey required by Section 6.7 of this Purchase Contract on or
before Closing or termination of this Purchase Contract.
ARTICLE 7
CLOSING
7.1 Dates, Places Of Closing, Prorations, Delinquent Rent and Closing Costs.
7.1.1 The Closing shall occur sixty (60) calendar days after the Effective Date,
but in no event later than March 14, 2003 through an escrow with Escrow Agent,
whereby the Seller, Purchaser and their attorneys need not be physically present
at the Closing and may deliver documents by overnight air courier or other
means.
7.1.2 In addition to reasonable adjournments to cure Objections as provided in
Section 6.1 of this Purchase Contract, the Closing Date may be extended without
penalty at the option of Seller to a date not later than thirty (30) days
following the Closing Date specified above to satisfy a condition to be
satisfied by Seller, or such later date as is mutually acceptable to Seller and
Purchaser.
7.1.3 All normal and customarily proratable items, including, without
limitation, Rents (as defined below), operating expenses, personal property
taxes, other operating expenses and fees, shall be prorated as of the Closing
Date, Seller being charged or credited, as appropriate, for all of same
attributable to the period up to the Closing Date (and credited for any amounts
paid by Seller attributable to the period on or after the Closing Date, if
assumed by Purchaser) and Purchaser being responsible for, and credited or
charged, as the case may be, for all of same attributable to the period on and
after the Closing Date. All unapplied refundable deposits under Tenant leases,
if any, shall be transferred by Seller to Purchaser at the Closing and any
non-refundable deposits shall be retained by Seller without credit to Purchaser.
Purchaser shall assume at Closing the obligations under the Property Contracts
assumed by Purchaser, provided that any payments under the Property Contracts
have been prorated. Any real estate ad valorem or similar taxes for the Property
for the year in which the Closing occurs, or any installment of assessments
payable in installments which installment is payable in the calendar year of
Closing, shall be prorated to the date of Closing, based upon actual days
involved. The proration of real property taxes or installments of assessments
shall be based upon the assessed valuation and tax rate figures for the year in
which the Closing occurs to the extent the same are available; provided, that in
the event that actual figures (whether for the assessed value of the Property or
for the tax rate) for the year of Closing are not available at the Closing Date,
the proration shall be made using figures from the preceding year. For purposes
of this Section 7.1.3 and Section 7.1.4 and Section 7.1.5, the terms "Rent" and
"Rents" shall include, without limitation, all rents or other charges or
reimbursements of any nature which are payable by Tenants. The provisions of
this Section 7.1.3 shall apply during the Proration Period (as defined below).
Rents and all related charges shall be prorated based on actual collections as
of the Closing Date.
7.1.4 If any of the items subject to proration hereunder cannot be prorated at
the Closing because the information necessary to compute such proration is
unavailable, or if any errors or omissions in computing prorations at the
Closing are discovered subsequent to the Closing, then such item shall be
reapportioned and such errors and omissions corrected as soon as practicable
after the Closing Date and the proper party reimbursed, which obligation shall
survive the Closing for a period (the "Proration Period") from the Closing Date
until one (1) year after the Closing Date. Neither party hereto shall have the
right to require a recomputation of a Closing proration or a correction of an
error or omission in a Closing proration unless within the Proration Period one
of the parties hereto (i) has obtained the previously unavailable information or
has discovered the error or omission, and (ii) has given Notice thereof to the
other party together with a copy of its good faith recomputation of the
proration and copies of all substantiating information used in such
recomputation. The failure of a party to obtain any previously unavailable
information or discover an error or omission with respect to an item subject to
proration hereunder and to give Notice thereof as provided above within the
Proration Period shall be deemed a waiver of its right to cause a recomputation
or a correction of an error or omission with respect to such item after the
Closing Date.
7.1.5 If on the Closing Date any Tenant is in arrears in any Rent payment under
any Tenant lease (the "Delinquent Rent"), any Delinquent Rent received by
Purchaser and Seller from such Tenant after the Closing shall be applied to
amounts due and payable by such Tenant during the following periods in the
following order of priority: (i) first, to the period of time after the Closing
Date, and (ii) second, to the period of time before the Closing Date. If
Delinquent Rent or any portion thereof received by Seller or Purchaser after the
Closing are due and payable to the other party by reason of this allocation, the
appropriate sum, less a proportionate share of any reasonable attorneys' fees
and costs and expenses expended in connection with the collection thereof, shall
be promptly paid to the other party. Any monies received by Seller after closing
shall be forwarded to Purchaser for disbursement in accordance with the order of
payment provided herein above. After the Closing, Seller shall continue to have
the right, but not the obligation, in its own name, to demand payment of and to
collect Delinquent Rent owed to Seller by any Tenant, which right shall include,
without limitation, the right to continue or commence legal actions or
proceedings against any Tenant (provided, that Seller shall not commence any
legal actions or proceedings against any Tenant which continues as a Tenant at
the Property after Closing without the prior consent of Purchaser, which will
not be unreasonably withheld or delayed), and the delivery of the Assignment as
defined in Section 7.2.1.3 shall not constitute a waiver by Seller of such
right. Purchaser agrees to cooperate with Seller at no cost or liability to
Purchaser in connection with all efforts by Seller to collect such Delinquent
Rent and to take all steps, whether before or after the Closing Date, as may be
necessary to carry out the intention of the foregoing, including, without
limitation, the delivery to Seller, within seven (7) days after a written
request, of any relevant books and records (including, without limitation, rent
statements, receipted bills and copies of tenant checks used in payment of such
rent), the execution of any and all consents or other documents, and the
undertaking of any act reasonably necessary for the collection of such
Delinquent Rent by Seller; provided, however, that Purchaser's obligation to
cooperate with Seller pursuant to this sentence shall not obligate Purchaser to
terminate any Tenant lease with an existing Tenant or evict any existing Tenant
from the Property. The provisions of this Section 7.1.5 shall apply during the
Proration Period.
7.1.6 Seller shall pay the cost of documentary stamp taxes and Purchaser shall
pay the cost of all recording costs with respect to the Closing. Seller and
Purchaser shall share equally in the costs of the Escrow Agent for escrow fees.
7.2 Items To Be Delivered Prior To Or At Closing.
7.2.1 Seller. At Closing, Seller shall deliver to the Escrow Agent, each of the
following items: 7.2.1.1 Special Warranty Deed in the form attached as Exhibit
7.2.1.1 and, if applicable a quitclaim deed as set forth in Section 6.7 hereof,
to Purchaser. The acceptance of such deed at Closing, shall be deemed to be full
performance of, and discharge of, every agreement and obligation on Seller's
part to be performed under this Purchase Contract, except for those that this
Purchase Contract specifically provides shall survive Closing. 7.2.1.2 A Bill of
Sale without recourse or warranty in the form attached as Exhibit 7.2.1.2
covering all Property Contracts, Leases, Permits (other than Excluded Permits)
and Fixtures and Tangible Personal Property required to be transferred to
Purchaser with respect to such Property. Purchaser shall countersign the same so
as to effect an assumption by Purchaser of, among other things, Seller's
obligations thereunder.
7.2.1.3 An Assignment (to the extent assignable and in force and effect) without
recourse or warranty in the form attached as Exhibit 7.2.1.3 of all of Seller's
right, title and interest in and to the Miscellaneous Property Assets, subject
to any required consents. Purchaser shall countersign the same so as to effect
an assumption by Purchaser, including, without limitation, of Seller's
obligations thereunder.
7.2.1.4 A closing statement executed by Seller.
7.2.1.5 A title affidavit or at Seller's option an indemnity, as applicable, in
the customary form reasonably acceptable to Seller to enable Title Insurer to
delete the standard exceptions to the title insurance policy set forth in this
Purchase Contract (other than matters constituting any Permitted Exceptions and
matters which are to be completed or performed post-Closing and other than
survey matters) to be issued pursuant to the Title Commitment; provided that
such affidavit does not subject Seller to any greater liability, or impose any
additional obligations, other than as set forth in this Purchase Contract; and
7.2.1.6 A certification of Seller's non-foreign status pursuant to Section 1445
of the Internal Revenue Code of 1986, as amended. 7.2.1.7 Except for the items
expressly listed above to be delivered at Closing, delivery of any other
required items shall be deemed made by Seller to Purchaser, if Seller leaves
such documents at the Property in their customary place of storage or in the
custody of Purchaser's representatives. 7.2.1.8 A rent roll for the Property
certified by Seller, but limited to Seller's knowledge, listing the monthly base
rent payable, lease expiration date and unapplied security deposit as of the
Closing Date. 7.2.1.9 Resolutions, certificates of good standing, and such other
organizational documents as Title Insurer shall reasonably require evidencing
Seller's authority to consummate this transaction.
7.2.1.10 To the extent in Seller's possession or control, originals or copies of
the Leases and Property Contracts, lease files, warranties, guaranties,
operating manuals, keys to the property, Seller's books and records (other than
proprietary information) regarding the Property. 7.2.2 Purchaser. At Closing,
Purchaser shall deliver to the Title Company (for disbursement to Seller upon
the Closing) the following items with respect to the Property being conveyed at
such Closing: 7.2.2.1 The full Purchase Price as required by ARTICLE 3 hereof
plus or minus the adjustments or prorations required by this Purchase Contract.
If at Closing there are any liens or encumbrances on the Property that Seller is
obligated or elects to pay and discharge, Seller may use any portion of the
Purchase Price for the Property(s) to satisfy the same, provided that Seller
shall have delivered to Title Company, on such Closing instruments in recordable
form sufficient to satisfy such liens and encumbrances of record (or, as to any
mortgages or deeds of trust, appropriate payoff letters, acceptable to the Title
Insurer), together with the cost of recording or filing such instruments.
Purchaser, if request is made within a reasonable time prior to Closing, agrees
to provide at Closing separate certified or cashier's checks as requested,
aggregating not more than the amount of the balance of the portion of Purchase
Price, to facilitate the satisfaction of any such liens or encumbrances. The
existence of any such liens or encumbrances shall not be deemed objections to
title if Seller shall comply with the foregoing requirements.
7.2.2.2 A closing statement executed by Purchaser.
7.2.2.3 A countersigned counterpart of the Bill of Sale in the form
attached as Exhibit 7.2.1.2.
7.2.2.4 A countersigned counterpart of the Assignment in the form
attached as Exhibit 7.2.1.3.
7.2.2.5 Such other instruments, documents or certificates as are required to be
delivered by Purchaser to Seller in accordance with any of the other provisions
of this Purchase Contract.
ARTICLE 8
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF SELLER AND PURCHASER
8.1 Representations, Warranties and Covenants Of Seller. 8.1.1 For the purpose
of inducing Purchaser to enter into this Purchase Contract and to consummate the
sale and purchase of the Property in accordance herewith, Seller represents and
warrants to Purchaser the following as of the Effective Date and as of the
Closing Date: 8.1.1.1 Seller is lawfully and duly organized, and in good
standing under the laws of the state of its formation set forth in the initial
paragraph of this Purchase Contract; and has or at the Closing shall have the
power and authority to sell and convey the Property and to execute the documents
to be executed by Seller and prior to the Closing will have taken as applicable,
all corporate, partnership, limited liability company or equivalent entity
actions required for the execution and delivery of this Purchase Contract, and
the consummation of the transactions contemplated by this Purchase Contract. The
compliance with or fulfillment of the terms and conditions hereof will not
conflict with, or result in a breach of, the terms, conditions or provisions of,
or constitute a default under, any purchase contract to which Seller is a party
or by which Seller is otherwise bound. Seller has not made any other purchase
contract for the sale of, or given any other person the right to purchase, all
or any part of any of the Property; 8.1.1.2 Seller owns insurable, fee title to
the Property, including all real property contained therein required to be sold
to Purchaser, subject only to the Permitted Exceptions (provided, however, that
if this representation is or becomes untrue, Purchaser's remedies shall be
limited to the remedies set forth in Section 6.2 hereof and Seller shall have no
other liability as a result thereof, either before or after Closing); 8.1.1.3
There are no adverse or other parties in possession of the Property, except for
occupants, guests and tenants under the Leases (provided, however, that if this
representation is or becomes untrue, Purchaser's remedies shall be limited to
the remedies set forth in Section 6.2 hereof).
8.1.1.4 The joinder of no person or entity other than Seller is necessary to
convey the Property, fully and completely, to Purchaser at Closing, or to
fulfill Seller's obligations and Seller has all necessary right and authority to
convey and assign to Purchaser all contract rights and warranties required to be
conveyed and assigned to Purchaser hereunder; 8.1.1.5 Purchaser has no duty to
collect withholding taxes for Seller pursuant to the Foreign Investors Real
Property Tax Act of 1980, as amended; 8.1.1.6 To Seller's knowledge, there are
no actions, proceedings, litigation or governmental investigations or
condemnation actions either pending or threatened against the Property, as
applicable; 8.1.1.7 Seller has no knowledge of any claims for labor performed,
materials furnished or services rendered in connection with constructing,
improving or repairing any of the Property, as applicable, caused by Seller and
which remain unpaid beyond the date for which payment was due and in respect of
which liens may or could be filed against any of the Property, as applicable;
8.1.1.8 To Seller's knowledge, Seller has not received any written notice of any
proposed taking, condemnation or special assessment with respect to the
Property; 8.1.1.9 To Seller's knowledge, Seller has not received any written
notice of any uncured violations of any federal, state, county or municipal law,
ordinance, order, regulation or requirement affecting the Property; 8.1.1.10 To
Seller's knowledge, Seller has not received any written notice of any default by
Seller under any of the Property Contracts that will not be terminated on the
Closing Date; 8.1.1.11 Seller agrees to maintain its existing insurance policies
covering the Property in full force and effect through the Closing Date, to
continue to maintain the Property as Seller has been operating the Property
immediately prior to the Effective Date; and 8.1.1.12 To Seller's knowledge, all
documents relating to the Property that were delivered by Seller to Purchaser in
connection with this Purchase Contract, are true, correct and complete in all
material respects, and none contain any untrue statement of a material fact or
omit to state a material fact. 8.1.2 Except for the representations and
warranties expressly set forth above in Subsection 8.1.1, the Property is
expressly purchased and sold "AS IS," "WHERE IS," and "WITH ALL FAULTS." The
Purchase Price and the terms and conditions set forth herein are the result of
arm's-length bargaining between entities familiar with transactions of this
kind, and said price, terms and conditions reflect the fact that Purchaser shall
have the benefit of, and is not relying upon any information provided by Seller
or Broker or statements, representations or warranties, express or implied, made
by or enforceable directly against Seller or Broker, including, without
limitation, any relating to the value of the Property, the physical or
environmental condition of the Property, any state, federal, county or local
law, ordinance, order or permit; or the suitability, compliance or lack of
compliance of the Property with any regulation, or any other attribute or matter
of or relating to the Property (other than any covenants of title contained in
the deeds conveying the Property and the representations set forth above).
Purchaser represents and warrants that as of the date hereof and as of the
Closing Date, it has and shall have reviewed and conducted such independent
analyses, studies, reports, investigations and inspections as it deems
appropriate in connection with the Property. If Seller provides or has provided
any documents, summaries, opinions or work product of consultants, surveyors,
architects, engineers, title companies, governmental authorities or any other
person or entity with respect to the Property, including, without limitation,
the offering prepared by Broker, Purchaser and Seller agree that Seller has done
so or shall do so only for the convenience of both parties, Purchaser shall not
rely thereon and the reliance by Purchaser upon any such documents, summaries,
opinions or work product shall not create or give rise to any liability of or
against Seller, Seller's partners or affiliates or any of their respective
partners, officers, directors, participants, employees, contractors, attorneys,
consultants, representatives, agents, successors, assigns or
predecessors-in-interest. Purchaser shall rely only upon any title insurance
obtained by Purchaser with respect to title to the Property. Purchaser
acknowledges and agrees that no representation has been made and no
responsibility is assumed by Seller with respect to current and future
applicable zoning or building code requirements or the compliance of the
Property with any other laws, rules, ordinances or regulations, the financial
earning capacity or expense history of the Property, the continuation of
contracts, continued occupancy levels of the Property, or any part thereof, or
the continued occupancy by tenants of any Leases or, without limiting any of the
foregoing, occupancy at Closing. Prior to Closing, Seller shall have the right,
but not the obligation, to enforce its rights against any and all Property
occupants, guests or tenants. Except as otherwise set forth herein, Purchaser
agrees that the departure or removal, prior to Closing, of any of such guests,
occupants or tenants shall not be the basis for, nor shall it give rise to, any
claim on the part of Purchaser, nor shall it affect the obligations of Purchaser
under this Purchase Contract in any manner whatsoever; and Purchaser shall close
title and accept delivery of the deed with or without such tenants in possession
and without any allowance or reduction in the Purchase Price under this Purchase
Contract. Purchaser hereby releases Seller from any and all claims and
liabilities relating to the foregoing matters, except as provided in Section
8.1.3 below. 8.1.3 Seller agrees that Purchaser shall be entitled to rely on the
foregoing representations and warranties made by Seller herein and that
Purchaser has so relied. Seller and Purchaser agree that those representations
and warranties contained in Section 8.1 shall survive Closing for a period of
one (1) year (the "Survival Period"). Seller shall have no liability after the
Survival Period with respect to the representations and warranties contained
herein except to the extent that Purchaser has filed a lawsuit against Seller
during the Survival Period for breach of any representation or warranty, and
Seller's liability with respect thereto shall be limited to the actual losses of
Purchaser, but in no event greater than $50,000.00 in the aggregate. Nothing
contained herein shall be intended to limit Seller's liability in the event of a
fraudulent breach of representation by Seller. In the event that Seller breaches
any representation contained in Section 8.1 and Purchaser had knowledge of such
breach prior to the Closing Date, Purchaser shall be deemed to have waived any
right of recovery, and Seller shall not have any liability in connection
therewith. 8.1.4 Representations and warranties above made to the knowledge of
Seller shall not be deemed to imply any duty of inquiry. For purposes of this
Purchase Contract, the term Seller's "knowledge" shall mean and refer to only
actual knowledge of the Designated Representative (as hereinafter defined) of
the Seller and shall not be construed to refer to the knowledge of any other
partner, officer, director, agent, employee or representative of the Seller, or
any affiliate of the Seller, or to impose upon such Designated Representative
any duty to investigate the matter to which such actual knowledge or the absence
thereof pertains, or to impose upon such Designated Representative any
individual personal liability. As used herein, the term Designated
Representative shall refer to Patricia Doty ((918) 254-1884 (phone), (918)
254-7080 (facsimile)) of Apartment Investment & Management Company ("AIMCO"), as
the on-site property manager (the "Property Manager"), and Kim Tannery ((972)
258-1180 (phone), (972) 258-0265)), the Regional Property Manager handling this
Property at AIMCO (the "Regional Property Manager"). 8.2 Representations And
Warranties Of Purchaser 8.2.1 For the purpose of inducing Seller to enter into
this Purchase Contract and to consummate the sale and purchase of the Property
in accordance herewith, Purchaser represents and warrants to Seller the
following as of the Effective Date and as of the Closing Date: 8.2.2 With
respect to Purchaser and its business, Purchaser represents and warrants, in
particular, that: 8.2.2.1 Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of California. 8.2.2.2 Purchaser,
acting through any of its or their duly empowered and authorized officers or
members, has all necessary power and authority to own and use its properties and
to transact the business in which it is engaged, and has full power and
authority to enter into this Purchase Contract, to execute and deliver the
documents and instruments required of Purchaser herein, and to perform its
obligations hereunder; and no consent of any of Purchaser's officers or members
are required to so empower or authorize Purchaser. 8.2.2.3 No pending or, to the
knowledge of Purchaser, threatened litigation exists which if determined
adversely would restrain the consummation of the transactions contemplated by
this Purchase Contract or would declare illegal, invalid or non-binding any of
Purchaser's obligations or covenants to Seller. 8.2.2.4 Purchaser is duly
authorized to execute and deliver, acting through its duly empowered and
authorized officers and members, respectively, and perform this Purchase
Contract and all documents and instruments and transactions contemplated hereby
or incidental hereto, and such execution, delivery and performance by Purchaser
does not (i) violate any of the provisions of their respective articles of
incorporation or bylaws, (ii) violate any provision of any law, governmental
rule or regulation currently in effect, (iii) violate any judgment, decree,
writ, injunction, award, determination or order currently in effect that names
or is specifically directed at Purchaser or its property, and (iv) require the
consent, approval, order or authorization of, or any filing with or notice to,
any court or other governmental authority. 8.2.2.5 The joinder of no person or
entity other than Purchaser is necessary to consummate the transactions to be
performed by Purchaser and Purchaser has all necessary right and authority to
perform such acts as are required and contemplated by this Purchase Contract.
8.2.3 Purchaser has not dealt with any broker, finder or any other person, in
connection with the purchase of or the negotiation of the purchase of the
Property that might give rise to any claim for commission against Seller or lien
or claim against the Property. 8.2.4 Intentionally Omitted.
ARTICLE 9
CONDITIONS PRECEDENT TO CLOSING
9.1 Purchaser's obligation to close under this Purchase Contract, shall be
subject to and conditioned upon the fulfillment of each and all of the following
conditions precedent:
9.1.1 All of the documents required to be delivered by Seller to Purchaser at
the Closing pursuant to the terms and conditions hereof shall have been
delivered and shall be in form and substance reasonably satisfactory to
Purchaser; 9.1.2 Each of the representations, warranties and covenants of Seller
contained herein shall be true in all material respects as of the Closing Date
(and Purchaser shall be permitted to perform an inspection of the Property
immediately prior to the Closing Date to verify same); 9.1.3 Seller shall have
complied with, fulfilled and performed in all material respects each of the
covenants, terms and conditions to be complied with, fulfilled or performed by
Seller hereunder; 9.1.4 Neither Seller nor Seller's general partner shall be a
debtor in any bankruptcy proceeding or shall have been in the last 6 months a
debtor in any bankruptcy proceeding; 9.1.5 A taking of all or any part of the
Property must not have been commenced or threatened in writing; 9.1.6 The actual
occupancy level of the Property shall not have decreased by more than fifteen
percent (15%) from the actual occupancy level on the Effective Date; 9.1.7
Seller shall have terminated any Property Contracts which are not being assumed
by Purchaser as of the Closing Date (and which are capable of being terminated
by Seller without penalty or cost to Seller). 9.1.8 In accordance with the terms
set forth in Section 4.1, Purchaser shall have obtained approval from the Lender
for its assumption of the Existing Loan. 9.1.9 Notwithstanding anything to the
contrary, there are no other conditions on Purchaser's obligation to Close
except as expressly set forth above. If any of the above conditions are not
satisfied, then notwithstanding anything to the contrary contained in this
Purchase Contract, Purchaser may, at its option (a) waive such condition and
proceed to Closing and accept title to the Property with an agreed upon offset
or deduction from the Purchase Price (assuming Seller and Purchaser can agree
upon such offset or deduction amount, and neither party has any obligation to
come to an agreement), (b) waive such condition and proceed to Closing and
accept title to the Property without any offset or deduction from the Purchase
Price, or (iii) notify Seller of Purchaser's election to terminate this Purchase
Contract and receive a return of the Deposit from the Escrow Agent. 9.2 Without
limiting any of the rights of Seller elsewhere provided for in this Purchase
Contract, Seller's obligation to close with respect to conveyance of a
particular Property under this Purchase Contract shall be subject to and
conditioned upon the fulfillment of each and all of the following conditions
precedent: 9.2.1 Purchaser's representations and warranties set forth in this
Purchase Contract shall have been true and correct in all material respects when
made, and shall be true and correct in all material respects on the Closing Date
and as of the Effective Date as though such representations and warranties were
made at and as of such date and time. 9.2.2 Purchaser shall have fully performed
and complied with all covenants, conditions, and other obligations in this
Purchase Contract to be performed or complied with by it at or prior to Closing
including, without limitation, payment in full of the Purchase Price. 9.2.3
There shall not be pending or, to the knowledge of either Purchaser or Seller,
any litigation or threatened litigation which, if determined adversely, would
restrain the consummation of any of the transactions contemplated by this
Purchase Contract or declare illegal, invalid or nonbinding any of the covenants
or obligations of the Purchaser. 9.2.4 If applicable, Purchaser shall have
produced evidence reasonably satisfactory to Seller of Purchaser's compliance
with Hart-Scott-Rodino Act requirements or of the non-applicability thereof to
the transactions contemplated by this Purchase Contract. 9.2.5 In accordance
with the terms set forth in Section 4.1, Purchaser shall have obtained approval
from the Lender for its assumption of the Existing Loan.
ARTICLE 10
BROKERAGE
10.1 Seller represents and warrants to Purchaser that it has dealt only with
Sean Cunningham at CB Richard Ellis, 2415 E. Camelback Road, 1st Floor, Phoenix,
Arizona 85016 ((602) 735-1740 (phone), (602) 735-5156 (facsimile)) ("Broker") in
connection with this Purchase Contract. Seller and Purchaser each represents and
warrants to the other that other than Broker, it has not dealt with or utilized
the services of any other real estate broker, sales person or finder in
connection with this Purchase Contract, and each party agrees to indemnify the
other party from and against all claims for brokerage commissions and finder's
fees arising from or attributable to the acts or omissions of the indemnifying
party.
10.2 Seller agrees to pay Broker a commission according to the terms of a
separate agreement. Broker shall not be deemed a party or third party
beneficiary of this Purchase Contract.
10.3 Broker assumes no responsibility for the condition of the Property or
representation for the performance of this Purchase Contract by the Seller or
Purchaser.
ARTICLE 11
POSSESSION
11.1 Possession of the Property subject to the Permitted Exceptions shall be
delivered to Purchaser at the Closing, subject to Purchaser's right of entry for
inspection as set forth in ARTICLE 5.
ARTICLE 12
DEFAULTS AND REMEDIES
12.1 In the event Purchaser terminates this Purchase Contract (a) following the
Feasibility Period for any reason other than Seller's inability to convey title
as required by this Purchase Contract, or (b) following the Financing
Contingency Period for any reason other than Purchaser's failure to obtain
approval for the assumption of the Existing Loan in Article 4 and for any reason
other than (i) Seller's inability to perform as required by this Purchase
Contract or (ii) the failure of a condition precedent to Purchaser's obligations
hereunder, or defaults hereunder prior to the Closing Date and consummation of
the Closing does not occur by reason of such termination or default by
Purchaser, Seller and Purchaser agree that it would be impractical and extremely
difficult to estimate the damages which Seller may suffer and that the amount of
the Deposit is a reasonable estimate of the amount of such damages. Therefore,
Seller and Purchaser hereby agree that, except for the Purchaser's obligations
to Seller under Section 5.3, the reasonable estimate of the total net detriment
that Seller would suffer in the event that Purchaser terminates this Purchase
Contract following the Feasibility Period for any reason other than Seller's
inability to perform as required by this Purchase Contract or the failure of a
condition precedent to Purchaser's obligations hereunder, or defaults hereunder
prior to the Closing Date, is and shall be, as Seller's sole remedy (whether at
law or in equity), the right to receive from the Escrow Agent and retain the
full amount of the Deposit. The payment and performance of the above as
liquidated damages is not intended as a forfeiture or penalty within the meaning
of applicable law and is intended to settle all issues and questions about the
amount of damages suffered by Seller in the applicable event, except only for
damages under Section 5.3 above, irrespective of the time when the inquiry about
such damages may take place. Upon any such failure by Purchaser hereunder, this
Purchase Contract shall be terminated, and neither party shall have any further
rights or obligations hereunder, each to the other, except for the Purchaser's
obligations to Seller under Section 5.3 above, and the right of Seller to
collect such liquidated damages to the extent not theretofore paid by Purchaser.
12.2 Provided that Purchaser has not terminated this Purchase Contract and is
not otherwise in default hereunder, if the Closing does not occur as a result of
Seller's default hereunder, Purchaser's sole remedy shall be to elect to either
(a) terminate this Purchase Contract and receive reimbursement of the Deposit or
(b) enforce specific performance of this Purchase Contract. In the event
Purchaser is unable to enforce the remedy of specific performance after using
commercially reasonable efforts to seek to enforce such remedy, then in lieu of
obtaining specific performance, Purchaser shall have the right to bring suit for
damages against Seller in an amount not to exceed $50,000.00 in addition to
receiving reimbursement of the Deposit.
ARTICLE 13
RISK OF LOSS OR CASUALTY
13.1 In the event that the Property is damaged or destroyed by fire or other
casualty prior to Closing, and the cost of repair is more than $300,000, then
Seller will have no obligation to repair such damage or destruction and, at
Purchaser's option, this Agreement shall terminate. In the event Purchaser
elects not to terminate this Agreement, this transaction shall be closed in
accordance with the terms of this Agreement, notwithstanding any such damage or
destruction and Purchaser shall receive all insurance proceeds pertaining
thereto (plus a credit against the Purchase Price in the amount of any
deductible payable by Seller in connection therewith) at Closing. 13.2 In the
event that the Property is damaged or destroyed by fire or other casualty prior
to the Closing, and the cost of repair is less than $300,000, this transaction
shall be closed in accordance with the terms of this Agreement, notwithstanding
the damage or destruction; provided, however, Seller shall make such repairs if
they can be reasonably effected before the Closing. If Seller is unable to
effect such repairs, then Purchaser shall receive all insurance proceeds
pertaining thereto (plus a credit against the Purchase Price in the amount of
any deductible payable by Seller in connection therewith) at Closing.
ARTICLE 14
RATIFICATION
14.1 This Purchase Contract shall be null and void unless fully ratified by
Purchaser and Seller on or before January 14, 2003.
ARTICLE 15
EMINENT DOMAIN
15.1 In the event that at the time of Closing all or any part of the Property is
(or has previously been) acquired, or is about to be acquired, by authority of
any governmental agency in purchase in lieu thereof (or in the event that at
such time there is any notice of any such acquisition or intent to acquire by
any such governmental agency), Purchaser shall have the right, at Purchaser's
option, to terminate this Purchase Contract by giving written Notice within
Fifteen (15) days of Purchaser's receipt from Seller of the occurrence of such
event and recover the Deposit hereunder, or to settle in accordance with the
terms of this Purchase Contract for the full Purchase Price and receive the full
benefit of any condemnation award. It is expressly agreed between the parties
hereto that this paragraph shall in no way apply to customary dedications for
public purposes which may be necessary for the development of the Property.
ARTICLE 16
MISCELLANEOUS
16.1 Exhibits And Schedules
All Exhibits and Schedules, whether or not annexed hereto, are a
part of this Purchase Contract for all purposes.
16.2 Assignability
Subject to Section 16.18, this Purchase Contract is not assignable
without first obtaining the prior written approval of the non-assigning party,
except that Purchaser may assign all or an undivided interest in this Purchaser
Contract to one or more entities so long as (i) Purchaser or its affiliate
remains a part of the purchasing entity(ies), (ii) Purchaser is not released
from its liability hereunder, and (iii) Seller consents thereto (which consent
shall not be unreasonably withheld or delayed).
16.3 Binding Effect
This Purchase Contract shall be binding upon and inure to the
benefit of Seller and Purchaser, and their respective successors, heirs and
permitted assigns.
16.4 Captions
The captions, headings, and arrangements used in this Purchase
Contract are for convenience only and do not in any way affect, limit, amplify,
or modify the terms and provisions hereof.
16.5 Number And Gender Of Words
Whenever herein the singular number is used, the same shall include
the plural where appropriate, and words of any gender shall include each other
gender where appropriate.
16.6 Notices
All Notices, demands, requests and other communications required
pursuant to the provisions of this Purchase Contract ("Notice") shall be in
writing and shall be deemed to have been properly given or served for all
purposes (i) if sent by Federal Express or a nationally recognized overnight
carrier for next business day delivery, on the first business day following
deposit of such Notice with such carrier, or (ii) if personally delivered, on
the actual date of delivery or (iii) if sent by certified mail, return receipt
requested postage prepaid, on the fifth (5th) business day following the date of
mailing, or (iv) if sent by telecopier, then on the actual date of delivery (as
evidenced by a telecopier confirmation) provided that a copy of the telecopy and
confirmation is also sent by U.S. mail, addressed as follows:
If to Seller: If to Purchaser:
South Port CCPIV, L.L.C. Warren Lortie Associates, Inc.
2000 South Colorado Boulevard 1301 Dove Street, Suite 920
Tower Two, Suite 2-1000 Newport Beach, California 92660
Denver, Colorado 80222 Attn: Jon Schisler
Attn: Mr. Patrick Slavin Facsimile No. (949) 985-5854
Facsimile No. (303) 300-3252
And
With a copy to
South Port CCPIV, L.L.C.
2000 South Colorado Boulevard Bruce E. Harrington, Attorney
Tower Two, Suite 2-1000 at Law
Denver, Colorado 80222 2240 University Drive, Suite 100
Attn: Mr. Pat Stucker and Newport Beach, California 92660
Mr. Mark Reoch Facsimile No. (949) 752-1187 Facsimile No.
(303) 692-0786
With a copy to
Loeb & Loeb, LLP
1000 Wilshire Boulevard, Suite
1600
Los Angeles, California 90017
Attn: Andrew S. Clare, Esq. and
Karen N. Higgins, Esq.
Facsimile No. (213) 688-3460
Any of the parties may designate a change of address by Notice in
writing to the other parties. Whenever in this Purchase Contract the giving
of Notice by mail or otherwise is required, the giving of such Notice may be
waived in writing by the person or persons entitled to receive such Notice.
16.7 Governing Law And Venue
The laws of the State of Oklahoma shall govern the validity,
construction, enforcement, and interpretation of this Purchase Contract, unless
otherwise specified herein except for the conflict of laws provisions thereof.
All claims, disputes and other matters in question arising out of or relating to
this Purchase Contract, or the breach thereof, shall be decided by proceedings
instituted and litigated in the United States District Court for the district in
which the Property is situated, or, if such court does not have subject matter
jurisdiction, then in the District Court of Tulsa County, Oklahoma, and the
parties hereto expressly consent to the venue and jurisdiction of such courts.
16.8 Entirety And Amendments
This Purchase Contract embodies the entire Purchase Contract between
the parties and supersedes all prior Purchase Contracts and understandings, if
any, relating to the Property, and may be amended or supplemented only by an
instrument in writing executed by the party against whom enforcement is sought.
16.9 Severability
If any provision of this Purchase Contract is held to be illegal,
invalid, or unenforceable under present or future laws, such provision shall be
fully severable. The Purchase Contract shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Purchase Contract; and the remaining provisions of this Purchase Contract
shall remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance from this Purchase
Contract. In lieu of such illegal, invalid, or unenforceable provision, there
shall be added automatically as a part of this Purchase Contract a provision as
similar in terms to such illegal, invalid, or unenforceable provision as may be
possible to make such provision legal, valid, and enforceable.
16.10 Multiple Counterparts
This Purchase Contract may be executed in a number of identical
counterparts. If so executed, each of such counterparts is to be deemed an
original for all purposes and all such counterparts shall, collectively,
constitute one Purchase Contract. In making proof of this Purchase Contract, it
shall not be necessary to produce or account for more than one such
counterparts.
16.11 Further Acts
In addition to the acts and deeds recited herein and contemplated and performed,
executed and/or delivered by Seller and Purchaser, Seller and Purchaser agree to
perform, execute and/or deliver or cause to be performed, executed and/or
delivered any and all such further acts, deeds, and assurances as may be
necessary to consummate the transactions contemplated hereby.
16.12 Construction
No provision of this Purchase Contract shall be construed in favor
of, or against, any particular party by reason of any presumption with respect
to the drafting of this Purchase Contract; both parties, being represented by
counsel, having fully participated in the negotiation of this instrument.
16.13 Confidentiality
Purchaser shall not disclose the terms and conditions contained in
this Purchase Contract, shall keep the same confidential, provided that
Purchaser may disclose the terms and conditions of this Purchase Contract (i) as
required by law, (ii) to consummate the terms of this Purchase Contract, or any
financing relating thereto, or (iii) to Purchaser's or Seller's lenders,
attorneys and accountants. Any information provided by Seller to Purchaser under
the terms of this Purchase Contract is for informational purposes only. In
providing such information to Purchaser, Seller makes no representation or
warranty, express, written, oral, statutory, or implied, and all such
representations and warranties are hereby expressly excluded. Purchaser shall
not in any way be entitled to rely upon the accuracy of such information. Such
information is also confidential and Purchaser shall be prohibited from making
such information public to any other person or entity other than its agents and
legal representatives, without Seller's prior written authorization, which may
be granted or denied in Seller's sole discretion.
16.14 Time Of The Essence
It is expressly agreed by the parties hereto that time is of the
essence with respect to this Purchase Contract.
16.15 Cumulative Remedies And Waiver
No remedy herein conferred or reserved is intended to be exclusive
of any other available remedy or remedies herein conferred or referred, but each
and every such remedy shall be cumulative and shall be in addition to every
other remedy given under this Purchase Contract. No delay or omission to
exercise any right or power accruing upon any default, omission, or failure of
performance hereunder shall impair any right or power or shall be construed to
be a waiver thereof, but any such right and power may be exercised from time to
time and as often as may be deemed expedient. No waiver, amendment, release, or
modification of this Purchase Contract shall be established by conduct, custom,
or course of dealing. 16.16 Litigation Expenses
In the event either party hereto commences litigation against the
other to enforce its rights hereunder, the prevailing party in such litigation
shall be entitled to recover from the other party its reasonable attorneys' fees
and expenses incidental to such litigation. 16.17 Time Periods
Should the last day of a time period fall on a weekend or legal
holiday, the next Business Day thereafter shall be considered the end of the
time period.
16.18 Exchange
At Seller's sole cost and expense, Seller may structure the sale of
the Property to Purchaser as a Like Kind Exchange under Internal Revenue Code
Section 1031 whereby Seller will acquire certain property (the "Like Kind
Exchange Property") in conjunction with the sale of the Property (the "Like Kind
Exchange"). Purchaser shall cooperate fully and promptly with Seller's conduct
of the Like Kind Exchange, provided that all costs and expenses generated in
connection with the Like Kind Exchange shall be borne solely by Seller, and
Purchaser shall not be required to take title to or contract for the purchase of
any other property. If Seller uses a qualified intermediary to effectuate the
exchange, any assignment of the rights or obligations of Seller hereunder shall
not relieve, release or absolve Seller of its obligations to Purchaser. In no
event shall the Closing Date be delayed by the Like Kind Exchange. Seller shall
indemnify and hold harmless Purchaser from and against any and all liability
arising from and out of the Like Kind Exchange.
16.19 No Personal Liability of Officers, Trustees or directors of Seller's
Partners
Purchaser acknowledges that this Agreement is entered into by Seller
which is a Delaware limited partnership, and Purchaser agrees that no individual
officer, trustee, director or representative of the partners of Seller shall
have any personal liability under this Agreement or any document executed in
connection with the transactions contemplated by this Agreement. 16.20 No
Exclusive Negotiations
Seller shall have the right, at all times prior to the expiration of
the Feasibility Period, to solicit backup offers and enter into discussions,
negotiations, or any other communications concerning or related to the sale of
the Property with any third-party; provided, however, that such communications
are subject to the terms of this Agreement, and that Seller shall not enter into
any contract or binding agreement with a third-party for the sale of the
Property unless such agreement is contingent on the termination of this
Agreement without the Property having been conveyed to Purchaser.
NOW WHEREFORE, the parties hereto have executed this Purchase
Contract as of the date first set forth above.
Seller:
South Port CCPIV, L.L.C.,
a South Carolina limited liability company
By: South Port Apartments,
a California limited partnership,
its sole member and manager
By: Consolidated Capital Properties IV,
a California limited partnership,
its general partner
By: ConCap Equities, Inc.,
a Delaware corporation,
its sole general partner
By:/s/Patrick F. Slavin
Name: Partrick F. Slavin
Title: Senior Vice President
Purchaser:
WARREN LORTIE ASSOCIATES, INC.,
a California corporation
By: /s/Warren H. Lortie
Name: Warren H. Lortie
Title: President
ACKNOWLEDGEMENTS
STATE OF Colorado )
) ss.
COUNTY OF Denver )
This instrument was acknowledged before me on January 13, 2003, by
Patrick F. Slavin as senior vice president of ConCap Equities, Inc., a Delaware
corporation, sole general partner of Consolidated Capital Properties IV, a
California limited partnership, general partner of South Port Apartments, a
California limited partnership, sole member and manager of South Port CCPIV,
L.L.C., a South Carolina limited liability company.
/s/Marcey K. Anderson
Notary Public
Marcey K. Anderson
Typed or Printed Name
Commission number: ________
My commission expires: July 27, 2006
[SEAL]
STATE OF California )
)
COUNTY OF Orange )
This instrument was acknowledged before me on January 13, 2003,
by Warren H. Lortie as president of Warren Lortie Associates, Inc., a
California corporation.
/s/Judith A. Branca
Notary Public
Judith A. Branca
Typed or Printed Name
My commission expires: April 2, 2005
Commission number: 1299536
[SEAL]
Exhibit 10.88
REINSTATEMENT AND FIRST AMENDMENT
OF PURCHASE AND SALE CONTRACT
(Southport Apartments, Oklahoma)
This Reinstatement and First Amendment of Purchase and Sale Contract (this
"Agreement") is entered into as of the 18th day of February, 2003 (the
"Effective Date"), by and between SOUTH PORT CCPIV, L.L.C., a South Carolina
limited liability company, having a principal address of 2000 South Colorado
Boulevard, Tower Two, Suite 2-1000, Denver, Colorado 80222 ("Seller"), and
WARREN LORTIE ASSOCIATES, INC., a California corporation, having a principal
address at 1301 Dove Street #920, Newport Beach, California 92660 ("Purchaser"),
and acknowledged by FIDELITY NATIONAL TITLE INSURANCE COMPANY ("Escrow Agent").
RECITALS
A. Seller and Purchaser entered into that certain Purchase and Sale Contract
dated as of January 14, 2003 (the "Contract"), pursuant to which Seller agreed
to sell and Purchaser agreed to purchase, certain real property located in Tulsa
County, State of Oklahoma and commonly known as the "Southport Apartments" (the
"Property").
B. Pursuant to the terms of the Contract and in accordance with the terms of
that certain Escrow Agreement dated as of January 14, 2003, between Seller,
Purchaser and Escrow Agent (the "Escrow Agreement"), Purchaser delivered to
Escrow Agent an earnest money deposit of $87,250.00 (the "Initial Deposit").
C. Pursuant to a letter dated as of February 12, 2003 from Purchaser, Purchaser
terminated the Contract. Seller and Purchaser desire to reinstate and modify the
Contract, all as set forth hereinafter.
D. Capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Contract.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Purchaser agree as follows: 1.
Reinstatement. The Contract is hereby reinstated as if such Contract had never
been terminated and shall remain in full force and effect and binding on the
parties hereto, subject to the terms and conditions thereof and hereof.
2. Purchase Price. For valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchase Price is hereby reduced by the sum of
$100,000.00 from $8,725,000.00 to $8,625,000.00. 3. Deposit. Escrow Agent is in
possession of the Initial Deposit. Concurrently with the execution and delivery
of this Agreement, Purchaser shall deliver to the Escrow Agent by wire transfer
an Additional Deposit in the amount of $125,000.00 (instead of an Additional
Deposit of $87,250.00 as described in Section 3.1.2 of the Contract). The
Initial Deposit and the Additional Deposit shall be non-refundable upon the
Effective Date. 4. Waiver of Feasibility, Title and Survey Contingencies.
Purchaser hereby acknowledges and agrees that the Feasibility Period (as defined
in the Contract) has expired, and that all contingencies relating to the
Feasibility Period have been satisfied or waived by Purchaser as of the
Effective Date of this Agreement. Additionally, Purchaser hereby acknowledges
and agrees that all contingencies relating to the Purchaser's review of the
Title Commitment and Survey, as more particularly set forth in Section 6.1 and
Section 6.2 of the Contract, have been waived by Purchaser as of the Effective
Date of this Agreement.
5. Financing Loan Assumption Approval. Purchaser acknowledges that upon Lender's
approval of Purchaser's assumption of the Existing Loan, the financing
contingency provisions in Article 4 of the Contract shall be satisfied.
6. Closing Date. The Closing Date is hereby extended from March 14, 2003 to
March 28, 2003. 7. Effectiveness of Contract. Except as modified by this
Agreement, all the terms of the Contract shall remain unchanged and in full
force and effect. 8. Counterparts. This Agreement may be executed in
counterparts, each of which when compiled together shall constitute one and the
same original. 9. Telecopied Signatures. A counterpart of this Agreement signed
by one party to this Agreement and telecopied to the other party to this
Agreement or its counsel (i) shall have the same effect as an original signed
counterpart of this Agreement, and (ii) shall be conclusive proof, admissible in
judicial proceedings, of such party's execution of this Agreement. 10. No
Further Modifications. Except as otherwise modified herein, all other terms and
conditions of the Contract shall be unmodified and shall remain in full force
and effect.
[REMAINING PAGE LEFT INTENTIONALLY BLANK]
IN WITNESS WHEREOF, Seller and Purchaser have entered into this
Reinstatement and First Amendment of Purchase and Sale Contract as of the date
written above.
Seller:
South Port CCPIV, L.L.C.,
a South Carolina limited liability company
By: South Port Apartments,
a California limited partnership,
its sole member and manager
By: Consolidated Capital Properties IV,
a California limited partnership,
its general partner
By: ConCap Equities, Inc.,
a Delaware corporation,
its sole general partner
By: /s/Patrick F. Slavin
Name: Patrick F. Slavin
Title: Senior Vice President
Purchaser:
WARREN LORTIE ASSOCIATES, INC.,
a California corporation
By: /s/Paul C. Belden
Name: Paul C. Belden
Title: Vice President
Escrow Agent:
ACKNOWLEDGED BY:
FIDELITY NATIONAL TITLE INSURANCE COMPANY
By: /s/Lolly Avant
Name: Lolly Avant
Its: Vice President
Exhibit 10.89
FHLMC Loan No. 002704935
Post Ridge Apartments
MULTIFAMILY NOTE
(MULTISTATE - REVISION DATE 11-01-2000)
US $375,300.00 As of October 22, 2003
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 Three Hundred
Seventy-Five Thousand Three Hundred and 00/100 Dollars (US $375,300.00), with
interest on the unpaid principal balance at the annual rate of Seven and Forty
Thousandths percent (7.040%).
1. 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.
2. 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.
3. Payment of Principal and Interest. Principal and interest shall be paid
as follows:
(a) 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.
(b) Consecutive monthly installments of principal and interest, each in
the amount of Two Thousand Six Hundred Sixty Two and 13/100 Dollars (US
$2,662.13), shall be payable on the first day of each month beginning on
December 1, 2003, until the entire unpaid principal balance evidenced by this
Note is fully paid.
(c) 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 January 1, 2022 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.
(d) 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.
4. 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.
5. 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.
6. 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.
7. 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.
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.
9. Limits on Personal Liability.
(a) 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
(g) 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.
10. Voluntary and Involuntary Prepayments.
(a) 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:
(1) 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.
(2) 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).
(3) 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.
(b) 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 any insurance proceeds or condemnation award under the Security
Instrument.
(c) 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 [SEE EXHIBIT A] 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
9.000% U.S. Treasury Security due November 1, 2018 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.
(d) 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.
(e) 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.
(f) 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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.
16. Counting of Days. Except where otherwise specifically provided, any
reference in this Note to a period of "days" means calendar days, not Business
Days.
17. Governing Law. This Note shall be governed by the law of the
jurisdiction in which the Land is located.
18. Captions. The captions of the paragraphs of this Note are for
convenience only and shall be disregarded in construing this Note.
19. 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.
20. 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.
21. 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.
POST RIDGE ASSOCIATES, LTD., LIMITED PARTNERSHIP, a
Tennessee limited partnership, also known as POST
RIDGE ASSOCIATES, LTD.
By: ConCap Equities, Inc., a Delaware corporation,
its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
58-1763207
Borrower's Social Security/Employer ID Number
PAY TO THE ORDER OF FEDERAL HOME LOAN MORTGAGE CORPORATION, WITHOUT RECOURSE,
THIS ____ DAY OF OCTOBER, 2003.
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/Max W. Foore
Max W. Foore
Vice President
Exhibit 10.90
FHLMC Loan No. 002704935
Post Ridge Apartments
REPLACEMENT RESERVE Agreement
(REVISION DATE 01-31-2003)
This REPLACEMENT RESERVE AGREEMENT ("Agreement") is made and entered into,
to be effective as of October 22, 2003, by and between POST RIDGE ASSOCIATES,
LTD., LIMITED PARTNERSHIP, a Tennessee limited partnership, also known as POST
RIDGE ASSOCIATES, LTD. ("Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation ("Lender") and its successors and assigns.
W I T N E S S E T H:
WHEREAS, Lender has agreed to make and Borrower has agreed to accept the
Loan, which is to be evidenced by the Note and secured by the Security
Instrument encumbering the Land and the Improvements. The Land is described on
Exhibit "A" attached to this Agreement; and
WHEREAS, as a condition of making the Loan, Lender is requiring Borrower
to establish the Replacement Reserve Fund for the funding of Capital
Replacements throughout the Loan term.
NOW, THEREFORE, for and in consideration of the Loan, the mutual promises
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
agree as follows:
1. Definitions. The following terms used in this Agreement shall have the
meanings set forth below in this Section 1. Any term used in this
Agreement and not defined shall have the meaning given to that term in the
Security Instrument.
(a) "Capital Replacement" means the replacement of those items listed on
Exhibit "B" of this Agreement and such other replacements of equipment,
major components or capital systems related to the Improvements as may be
approved in writing or required by Lender.
(b) "Disbursement Period" means the interval between disbursements from the
Replacement Reserve Fund, which interval shall be no shorter than once a
quarter.
(c) "Improvements" means the buildings, Personal Property and improvements
situated upon the Land, currently constituting a multifamily apartment
project known as Post Ridge Apartments.
(d) "Initial Deposit" means the amount of Zero Dollars ($0.00) made as of the
date of this Agreement.
(e) "Inspection Fee" means a fee for performing any inspection required by
this Agreement in an amount not to exceed Three Hundred and 00/100 Dollars
($300.00) per inspection.
(f) "Investment Fee" means a one time fee for establishing the Replacement
Reserve Fund in the amount of Fifty and 00/100 Dollars ($50.00).
(g) "Loan" means the loan from Lender to Borrower in the original principal
amount of Three Hundred Seventy-Five Thousand Three Hundred and 00/100
Dollars ($375,300.00), as evidenced by the Note and secured by the
Security Instrument.
(h) "Minimum Disbursement Request Amount" means Two Thousand Five Hundred and
00/100 Dollars ($2,500.00).
(i) "Monthly Deposit" means the amount of Three Thousand Eight Hundred Twelve
and 50/100 Dollars ($3,812.50) per month to be deposited into the
Replacement Reserve Fund in accordance with this Agreement.
(j) "Property" means the Land and Improvements.
(k) "Replacement Reserve Deposit" means the Initial Deposit, the Monthly
Deposit and/or the Revised Monthly Deposit, as appropriate.
(l) "Replacement Reserve Fund" means the account established pursuant to this
Agreement to defray the costs of Capital Replacements.
(m) "Review Period" means the period ending 120 months after the first monthly
payment date.
(n) "Revised Monthly Deposit" means the amount per month that Lender
determines Borrower must deposit in the Replacement Reserve Fund during
any Subsequent Review Period.
(o) "Security Instrument" means the mortgage, deed of trust, deed to secure
debt, or other similar security instrument encumbering the Property and
securing Borrower's performance of its Loan obligations.
(p) "Subsequent Review Period" means the period of 107 months commencing
either (i) at the termination of the Review Period or (ii) at the
termination of a prior Subsequent Review Period. There may be more than
one Subsequent Review Period.
2. Replacement Reserve Fund.
(a) Establishment; Funding.
(i) Upon the closing of the Loan, the parties shall establish the Replacement
Reserve Fund and, if required by Lender, Borrower shall pay the Initial
Deposit to Lender for deposit into the Replacement Reserve Fund.
(ii) Commencing on the date the first installment of principal and/or interest
is due under the Note and continuing on the same day of each successive
month until the end of the Review Period, Borrower shall pay the Monthly
Deposit to Lender for deposit into the Replacement Reserve Fund, together
with its regular monthly payments of principal and interest as required by
the Note and Security Instrument.
(iii) Prior to the end of the Review Period, Lender will assess the physical
condition of the Property. Lender may adjust the Monthly Deposit at the
termination of the Review Period to reflect Lender's determination of the
condition of the Property. Upon written notice from Lender or Loan
Servicer, Borrower shall begin paying the Revised Monthly Deposit on the
first monthly payment date of the Subsequent Review Period and shall
continue paying the Revised Monthly Deposit until Lender further adjusts
the Replacement Reserve Deposit during a Subsequent Review Period, if
applicable. If Lender does not provide Borrower with written notice of a
Revised Monthly Deposit, Borrower shall continue to pay the Monthly
Deposit or the Revised Monthly Deposit then in effect.
(b) Investment of Deposits. Borrower and Lender agree that Lender shall
hold all moneys deposited into the Replacement Reserve Fund in an
interest bearing account, and any interest earned on such moneys
shall be added to the principal balance of the Replacement
Reserve Fund and disbursed in accordance with the provisions of
this Agreement. Borrower acknowledges and agrees that it shall
not have the right to direct Lender as to any specific investment
of moneys in the Replacement Reserve Fund. Lender shall not be
responsible for any losses resulting from investment of moneys in
the Replacement Reserve Fund or for obtaining any specific level
or percentage of earnings on such investment. Lender shall be
entitled to deduct the Investment Fee from the Replacement
Reserve Fund for establishing the Replacement Reserve.
(c) Use. Subject to the pledge and security interest and other rights of
Lender set forth in this Agreement, the Replacement Reserve Fund shall be
maintained for the payment of the costs of the Capital Replacements
identified on Exhibit "B".
(d) Deferral of Deposits. Notwithstanding subsections 2(a) through (c)
above, Lender defers its right to require Borrower to make the
Replacement Reserve Deposit. However, at the end of the Review
Period or any Subsequent Review Period, Lender reserves the right
to require that Borrower begin making the Replacement Reserve
Deposit if Lender reasonably determines that the physical
condition of the Property warrants that Borrower begin making
such deposit. Lender's determination to require such deposit
shall not depend on the existence of any of the events set forth
in subsection (e) below.
(e) Reinstatement of Deposits. Notwithstanding subsection 2(d) above, Lender
reserves the right to require at any time, upon written notice to
Borrower, that Borrower begin making the Replacement Reserve Deposit if
Lender reasonably determines that any of the following events have
occurred:
(i) Borrower's default under the Note, Security Instrument, or any other
document delivered in connection with the Loan, or
(ii) the occurrence of a Transfer which is prohibited under the terms of the
Security Instrument or which requires Lender's consent, or
(iii) Borrower's failure to maintain the Property in a satisfactory manner
and/or in accordance with the requirements of the Security Instrument.
3. Performance of Capital Replacements; Disbursements.
(a) Requests for Disbursement. Lender shall disburse funds from the
Replacement Reserve Fund, in its sole discretion, as follows:
(i) Borrower's Request. If Borrower determines, at any time or from time
to time, that a Capital Replacement is necessary or
desirable, Borrower shall perform such Capital Replacement
and request from Lender, in writing, reimbursement for such
Capital Replacement. Borrower's request for reimbursement
shall include (A) a detailed description of the Capital
Replacement performed, together with evidence, satisfactory
to Lender, that the cost of such Capital Replacement has
been paid and (B) lien waivers from each contractor and
material supplier supplying labor or materials for such
Capital Replacement, if required by Lender.
(ii) Lender's Request. If Lender shall reasonably determine at any time or from
time to time, that a Capital Replacement is necessary for the proper
maintenance of the Property, it shall so notify Borrower, in writing,
requesting that Borrower obtain and submit to Lender bids for all labor
and materials required in connection with such Capital Replacement.
Borrower shall submit such bids and a time schedule for completing each
Capital Replacement to Lender within thirty (30) days after Borrower's
receipt of Lender's written notice. Borrower shall perform such Capital
Replacement and request from Lender, in writing, reimbursement for such
Capital Replacement. Borrower's request for reimbursement shall include
(A) a detailed description of the Capital Replacement performed, together
with evidence, satisfactory to Lender, that the cost of such Capital
Replacement has been paid and (B) lien waivers from each contractor and
material supplier supplying labor or materials for such Capital
Replacement, if required by Lender.
(b) Conditions Precedent. Disbursement from the Replacement Reserve Fund shall
be made no more frequently than once every Disbursement Period and, except
for the final disbursement, no disbursement shall be made in an amount
less than the Minimum Disbursement Request Amount. Disbursements shall be
made only if the following conditions precedent have been satisfied, as
reasonably determined by Lender:
(i) Payment for Capital Replacement. The Capital Replacement has been
performed and/or installed on the Property in a good and
workmanlike manner with suitable materials (or in the case
of a partial disbursement, performed and/or installed on
the Property to an acceptable stage) and paid for by
Borrower as evidenced by copies of all applicable paid
invoices or bills submitted to Lender by Borrower at the
time Borrower requests disbursement from the Replacement
Reserve Fund.
(ii) No Default. There is no condition, event or act that would constitute a
default (with or without notice and/or lapse of time) under this Agreement
or any other Loan Document.
(iii) Representations and Warranties. All representations and warranties of
Borrower set forth in this Agreement and in the Loan Documents are true in
all material respects.
(iv) Continuing Compliance. Borrower is in full compliance with the provisions
of this Agreement, the other Loan Documents and any request or demand by
Lender permitted hereby.
(v) No Lien Claim. No lien or claim based on furnishing labor or materials has
been filed or asserted against the Property, unless Borrower has properly
provided bond or other security against loss in accordance with applicable
law.
(vi) Approvals. All licenses, permits, and approvals of governmental
authorities required for the Capital Replacement as completed to the
applicable stage have been obtained.
(vii) Legal Compliance. The Capital Replacement as completed to the applicable
stage does not violate any laws, ordinance, rules or regulations, or
building lines or restrictions applicable to the Property.
4. Right to Complete Capital Replacements. If Borrower abandons or fails
to proceed diligently to undertake and/or complete any Capital
Replacement in a timely fashion or is otherwise in default under this
Agreement for 30 days after written notice of such failure by Lender to
Borrower, Lender shall have the right (but not the obligation) to enter
upon the Property and take over and cause the completion of such
Capital Replacement. However, no such notice or grace period shall
apply in the case of such failure which could, in Lender's judgment,
absent immediate exercise by Lender of a right or remedy under this
Agreement, result in harm to Lender or impairment of the security given
under the Security Instrument or any other Loan Document. Any
contracts entered into or indebtedness incurred upon the exercise of
such right may be in the name of Borrower, and Lender is hereby
irrevocably appointed the attorney in fact of Borrower, such
appointment being coupled with an interest, to enter into such
contracts, incur such obligations, enforce any contracts or agreements
made by or on behalf of Borrower (including the prosecution and defense
of all actions and proceedings in connection with the Capital
Replacement and the payment, settlement or compromise of all bills and
claims for materials and work performed in connection with the Capital
Replacement) and do any and all things necessary or proper to complete
any Capital Replacement including signing Borrower's name to any
contracts and documents as may be deemed necessary by Lender. In no
event shall Lender be required to expend its own funds to complete any
Capital Replacement, but Lender may, in its sole discretion, advance
such funds. Any funds advanced shall be added to the outstanding
balance of the Loan, secured by the Security Instrument and payable to
Lender by Borrower in accordance with the provisions of the Security
Instrument pertaining to the protection of Lender's security and
advances made by Lender. Borrower waives any and all claims it may
have against Lender for materials used, work performed or resultant
damage to the Property.
5. Inspection. Lender or any representative of Lender may periodically
inspect any Capital Replacement in process and upon completion during
normal business hours or at any other reasonable time upon reasonable
prior written notice to Borrower (except in an emergency, as determined
by Lender in its discretion or after an Event of Default, in which
event no such prior notice shall be require). Lender shall be entitled
to deduct the Inspection Fee from the Replacement Reserve Fund for
performing any such inspection. If Lender, in its sole discretion,
retains a professional inspection engineer or other qualified third
party to inspect any Capital Replacement, Lender also shall be entitled
to deduct from the Replacement Reserve Fund an amount sufficient to pay
all reasonable fees and expenses charged by such third party inspector.
6. Insufficient Account. If Borrower requests disbursement from the
Replacement Reserve Fund for a Capital Replacement in accordance with this
Agreement in an amount which exceeds the amount on deposit in the
Replacement Reserve Fund, Lender shall disburse to Borrower only the
amount on deposit in the Replacement Reserve Fund. Borrower shall pay all
additional amounts required in connection with any such Capital
Replacement from Borrower's own funds.
7. Security Agreement. To secure Borrower's obligations under this
Agreement and to further secure Borrower's obligations under the Note,
Security Instrument and other Loan Documents, Borrower hereby conveys,
pledges, transfers and grants to Lender a security interest pursuant to
the Uniform Commercial Code of the Property Jurisdiction or any other
applicable law in and to all money in the Replacement Reserve Fund, as
same may increase or decrease from time to time, all interest and
dividends thereon and all proceeds thereof.
8. Post Default. If Borrower defaults in the performance of its
obligations under this Agreement or under the Note, Security Instrument
or any other Loan Document, after the expiration of any applicable
notice or cure period, Lender shall have all remedies available to them
under Article 9 of the Uniform Commercial Code of the Property
Jurisdiction and under any other applicable law. In addition, Lender
may retain all money in the Replacement Reserve Fund, including
interest, and in Lender's discretion, may apply such amounts, without
restriction and without any specific order of priority, to the payment
of any and all indebtedness or obligations of Borrower set forth in the
Note, Security Instrument or any other Loan Document, including, but
not limited to, principal, interest, taxes, insurance, reasonable
attorneys' fees and costs (including those of Lender's in-house
counsel) and disbursements actually incurred and/or repairs to the
Property.
9. Termination. If not sooner terminated by written concurrence of the
parties, this Agreement shall terminate upon the payment in full of the
Loan and all indebtedness incurred in connection therewith and upon such
termination, Lender shall pay to Borrower all funds remaining in the
Replacement Reserve Fund.
10. No Amendment. Nothing contained in this Agreement shall be construed to
amend, modify, alter, change or supersede the terms and provisions of the
Note, Security Instrument or any other Loan Document; and, if there is a
conflict between the terms and provisions of this Agreement and those of
the Note, Security Instrument, or any other Loan Document then the terms
and provisions of the Note, Security Instrument or such other Loan
Document shall control.
11. Release; Indemnity.
(a) Release. Borrower covenants and agrees that, in performing any of its
duties under this Agreement, none of Lender, any Loan Servicer,
or any of their respective agents or employees shall be liable
for any losses, claims, damages, liabilities and expenses that
may be incurred by any of them as a result of such performance,
except that no such party will be released from liability for any
losses, claims, damages, liabilities or expenses arising out of
the willful misconduct or gross negligence of such party.
(b) Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender, Loan Servicer and their respective agents and employees
against any and all losses, claims, damages, liabilities and
expenses including, without limitation, reasonable attorneys'
fees and costs (including those of Lender's in-house counsel) and
disbursements, which may be imposed or incurred by any of them in
connection with this Agreement except that no such party will be
indemnified from liability for any losses, claims, damages,
liabilities or expenses arising out of the willful misconduct or
gross negligence of such party.
12. Choice of Law. This Agreement shall be construed and enforced in
accordance with the laws of the Property Jurisdiction.
13. Successors and Assigns. Lender may assign its rights and interests
under this Agreement in whole or in part and upon any such assignment,
all the terms and provisions of this Agreement shall inure to the
benefit of such assignee to the extent so assigned. The terms used to
designate any of the parties herein shall be deemed to include the
heirs, legal representatives, successors and assigns of such parties;
and the term "Lender" shall also include any lawful owner, holder or
pledgee of the Note. Reference herein to "person" or "persons" shall
be deemed to include individuals and entities. Borrower may not assign
or delegate its rights, interests, or obligations under this Agreement
without first obtaining Lender's prior written consent.
14. Attorneys' Fees. In the event that Lender engages the services of an
attorney at law to enforce the provisions of this Agreement against
Borrower, then Borrower shall pay all costs of such enforcement, including
any reasonable attorneys' fees and costs (including those of Lender's
in-house counsel) and disbursements actually incurred.
15. Compliance with Laws; Insurance Requirements.
(a) Compliance with Laws. Borrower shall ensure that all Capital Replacements
comply with all applicable laws, ordinances, rules and regulations of all
governmental authorities having jurisdiction over the Property and
applicable insurance requirements including, without limitation,
applicable building codes, special use permits, environmental regulations,
and requirements of insurance underwriters.
(b) Insurance Requirements. In addition to any insurance required under
the Loan Documents, Borrower shall provide or cause to be
provided workers' compensation, builder's risk (if required by
Lender), and public liability insurance and other insurance
required under applicable law in connection with any of the
Capital Replacements. All such policies that can be endorsed
with standard mortgage clauses making losses payable to Lender or
its assigns shall be so endorsed. The originals of such policies
shall be deposited with Loan Servicer.
16. Remedies Cumulative. In the event of Borrower's default under this
Agreement, Lender may exercise all or any one or more of its rights and
remedies available under this Agreement, at law or in equity. Such
rights and remedies shall be cumulative and concurrent, and may be
enforced separately, successively or together, and Lender's exercise of
any particular right or remedy shall not in any way prevent Lender from
exercising any other right or remedy available to Lender. Lender may
exercise any such remedies from time to time as often as Lender chooses.
17. Determinations by Lender. Unless otherwise provided in this Agreement,
in any instance where the consent or approval of Lender may be given or
is required, or where any determination, judgment or decision is to be
rendered by Lender under this Agreement, the granting, withholding or
denial of such consent or approval and the rendering of such
determination, judgment or decision shall be made or exercised by
Lender (or its designated representative) at its sole and exclusive
option and in its sole and absolute discretion.
18. Completion of Capital Replacements. Lender's disbursement of moneys
from the Replacement Reserve Fund or other acknowledgment of completion
of any Capital Replacement in a manner satisfactory to Lender shall not
be deemed a certification by Lender that the Capital Replacement has
been completed in accordance with applicable building, zoning or other
codes, ordinances, statutes, laws, regulations or requirements of any
governmental authority or agency. Borrower shall at all times have the
sole responsibility for ensuring that all Capital Replacements are
completed in accordance with all such governmental requirements.
19. No Agency or Partnership. Nothing contained in this Agreement shall
constitute Lender as a joint venturer, partner or agent of Borrower, or
render Lender liable for any debts, obligations, acts, omissions,
representations or contracts of Borrower.
20. Entire Agreement. This Agreement and the other Loan Documents
represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements. There are no oral agreements between the parties. All
prior or contemporaneous agreements, understandings, representations
and statements, oral or written, are merged into this Agreement and the
other Loan Documents. Neither this Agreement nor any of its provisions
may be waived, modified, amended, discharged or terminated except in
writing signed by the party against which the enforcement of the
waiver, modification, amendment, discharge or termination is sought,
and then only to the extent set forth in writing; provided, however,
that in the event of a Transfer requiring Lender's consent under the
terms of the Security Instrument, one or more or all of the
Modifications to Agreement set forth in Exhibit C (if any) may be
modified or rendered void by Lender at Lender's option by notice to
Borrower/transferee.
21. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original document and all of which
together shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first written above.
BORROWER:
POST RIDGE ASSOCIATES, LTD., LIMITED
PARTNERSHIP, a Tennessee limited
partnership, also known as POST RIDGE
ASSOCIATES, LTD.
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
Borrower's Social Security or
Taxpayer Identification No.:
58-1763207
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/Max W. Foore
Max W. Foore
Vice President
Exhibit 10.91
FHLMC Loan No. 002704935
Post Ridge Apartments
REPAIR Agreement
(REVISION DATE 01-31-2003)
This REPAIR AGREEMENT ("Agreement") is made and entered into, to be
effective as of October 22, 2003, by and between POST RIDGE ASSOCIATES, LTD.,
LIMITED PARTNERSHIP, a Tennessee limited partnership, also known as POST RIDGE
ASSOCIATES, LTD. ("Borrower"), and GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation ("Lender") and its successors and assigns.
W I T N E S S E T H:
WHEREAS, Lender has agreed to make and Borrower has agreed to accept the
Loan, which is to be evidenced by the Note and secured by the Security
Instrument encumbering the Land described on Exhibit "A" attached to this
Agreement;
WHEREAS, as a condition of making the Loan, Lender is requiring Borrower
to make the Repairs to the Improvements, which Repairs are generally described
in the Schedule of Work attached to this Agreement as Exhibit "B".
NOW, THEREFORE, for and in consideration of the Loan, the mutual promises
and covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
agree as follows:
1. Definitions. The following terms used in this Agreement shall have the
meanings set forth below in this Section 1. Any term used in this
Agreement and not defined shall have the meaning given to that term in the
Security Instrument.
(a) "Completion Date" means the date that is 30 days after the effective date
of this Agreement.
(b) "Improvements" means the buildings and improvements situated upon the
Land, currently constituting a multifamily apartment project known as Post
Ridge Apartments.
(c) "Loan" means the loan from Lender to Borrower in the original principal
amount of Three Hundred Seventy-Five Thousand Three Hundred and 00/100
Dollars ($375,300.00), as evidenced by the Note and secured by the
Security Instrument.
(d) "Property" means the Land and Improvements.
(e) "Repairs" means the repairs to be made to the Property, as described on
the Schedule of Work or as otherwise required by Lender in accordance with
this Agreement.
(f) "Schedule of Work" means the schedule of work for the Repairs attached to
this Agreement as Exhibit "B".
(g) "Security Instrument" means the mortgage, deed of trust, deed to secure
debt, or other similar security instrument encumbering the Property and
securing Borrower's performance of its Loan obligations.
2. Repairs. Borrower covenants and agrees with Lender as follows:
(a) Commencement of Work. Except as set forth on Exhibit "C" attached
hereto, prior to the recordation of the Security Instrument, no
work of any kind has been or will be commenced or performed upon
the Property, and no materials or equipment have been or will be
delivered to or upon the Property. In the event that any work of
any kind has been commenced or performed upon the Property, or in
the event that any materials or equipment have been ordered or
delivered to or upon the Property, then (i) prior to the
execution of the Security Instrument the Borrower shall fully
disclose in writing to the title insurance company issuing the
mortgagee title insurance policy insuring the lien of the
Security Instrument that work has been commenced or performed on
the Property, or materials or equipment have been ordered or
delivered to or upon the Property, (ii) prior to the execution of
the Security Instrument Borrower shall have obtained and
delivered to Lender and the title company issuing the mortgagee
title insurance policy insuring the lien of the Security
Instrument lien waivers from all contractors, subcontractors,
suppliers, or any other applicable party, pertaining to all work
commenced or performed on the Property, or materials or equipment
ordered or delivered to or upon the Property, and (iii) the final
mortgagee's title insurance policy insuring the lien of the
Security Instrument shall take no exception from coverage for any
mechanics or materialmen's liens.
(b) Construction. Borrower will commence the Repairs as soon as practicable
after the date of this Agreement and will diligently proceed with and
complete the Repairs on or before the Completion Date in a workmanlike
manner and in accordance with the Schedule of Work, good building
practices and all applicable laws, ordinances, rules and regulations.
(c) Changes in Schedule of Work . Without the prior written consent of Lender,
Borrower will make no departures from or alterations to the Schedule of
Work.
(d) Inspections. Borrower will permit Lender or any person designated by
Lender (including without limitation a professional inspection
engineer) and any interested governmental authority, at any time
and from time to time, to inspect the Repairs and Improvements
and to examine and copy all of Borrower's books and records and
all contracts and bills pertaining to the Repairs and
Improvements. Lender shall be entitled to charge Borrower
reasonable fees for performing any such inspections and/or an
amount sufficient to reimburse Lender for all fees and expenses
charged by any professional inspection engineer employed by
Lender in connection with any such inspection. Any such fees due
and owing Lender shall be immediately payable, by Borrower to
Lender, and shall be added to the outstanding balance of the
Note, secured by the Security Instrument and payable to Lender by
Borrower in accordance with the provisions of the Security
Instrument pertaining to the protection of Lender's security and
advances made by Lender. Borrower agrees to cause the
replacement of any material or work that is defective,
unworkmanlike, does not comply with any applicable law,
ordinance, rule or regulation, or does not comply with the
requirements of this Agreement, as determined by Lender.
(e) Purchases. Without the prior written consent of Lender, no materials,
machinery, equipment, fixtures or any other part of the Repairs
shall be purchased or installed under conditional sale contracts
or lease agreements, or any other arrangement wherein title to
such Repairs is retained or subjected to a purchase money
security interest, or the right is reserved or accrues to anyone
to remove or repossess any such Repairs, or to consider them as
personal property.
3. Reporting Requirements; Completion. Prior to the Completion Date, Borrower
shall deliver to Lender the following:
(a) Contractor's Certificate. A certificate signed by each major
contractor and supplier of materials, as reasonably determined by
Lender, engaged to provide labor or materials for the Repairs to
the effect that such contractor or supplier has been paid in full
for all work completed and that the portion of the Repairs
provided by such contractor or supplier has been fully completed
in accordance with the plans and specifications (if any) provided
to it by Borrower and that such portion of the Repairs is in
compliance with all applicable building codes and other rules and
regulations promulgated by applicable regulatory or governmental
authorities;
(b) Borrower's Certificate. A certificate signed by Borrower to the effect
that the Repairs have been fully paid for and no claim or claims
exist against the Borrower or against the Property out of which a
lien based on furnishing labor or material exists or might
ripen. Borrower may except from the certificate described in the
preceding sentence any claim or claims that Borrower intends to
contest, provided that any such claim or claims are described in
Borrower's certificate and Borrower certifies to Lender that
Borrower has posted a bond or other security acceptable to Lender
with an escrow agent acceptable to Lender, in an amount
sufficient to make payment of the full amount which might in any
event be payable in order to satisfy such claim or claims. If
required by Lender, Borrower also shall certify to Lender that
such portion of the Repairs is in compliance with all applicable
zoning ordinances;
(c) Engineer's Certificate. If required by Lender, a certificate signed by the
professional engineer employed by Lender to the effect that the Repairs
have been completed in a good and workmanlike manner in compliance with
the Schedule of Work and all applicable building codes, zoning ordinances
and other rules and regulations promulgated by applicable regulatory or
governmental authorities; and
(d) Other Certificates. Any other certificates of approval, acceptance or
compliance required by Lender from or by the city, county, state or
federal governmental authorities having jurisdiction over the Property and
the Repairs.
4. Lien Protection. Borrower shall promptly pay or cause to be paid, when
due, all costs, charges and expenses incurred in connection with the
construction and completion of the Repairs, and shall keep the Property
free and clear of any and all liens other than the lien of the Security
Instrument and any other junior lien which may be consented to by Lender.
5. Adverse Claims. Borrower shall promptly advise Lender in writing of any
litigation, liens, or claims affecting the Property, and of all complaints
and charges made by any governmental authority or any governmental
department, bureau, commission or agency exercising supervision or control
over Borrower or its business, which may delay or adversely affect the
Repairs.
6. Compliance With Laws; Insurance Requirements.
(a) Compliance With Laws. All Repairs shall comply with all applicable laws,
ordinances, rules and regulations of all governmental authorities having
jurisdiction over the Property, and with all applicable insurance
requirements including, without limitation, applicable building codes,
special use permits, environmental regulations, and requirements of
insurance underwriters.
(b) Insurance Requirements. In addition to any insurance required under
the Loan Documents, Borrower shall provide or cause to be
provided workers' compensation, builder's risk (if required by
Lender), and public liability insurance and other insurance
required under applicable law in connection with any of the
Repairs. All such policies shall be in form and amount
satisfactory to Lender. All such policies that can be endorsed
with standard mortgage clauses making losses payable to Lender or
its assigns shall be so endorsed. The originals of such policies
shall be deposited with Lender.
7. Right to Complete Repairs. If Borrower abandons or fails to proceed
diligently with the Repairs or otherwise is in default under this
Agreement, Lender shall have the right (but not the obligation) to
enter upon the Property and take over and cause the completion of the
Repairs. Any contracts entered into or indebtedness incurred upon the
exercise of such right may be in the name of Borrower, and Lender is
hereby irrevocably appointed the attorney in fact of Borrower, such
appointment being coupled with an interest, to enter into such
contracts, incur such obligations, enforce any contracts or agreements
made by or on behalf of Borrower (including the prosecution and defense
of all actions and proceedings in connection with the Repairs and the
payment, settlement, or compromise of all claims for materials and work
performed in connection with the Repairs) and do any and all things
necessary or proper to complete the Repairs including signing
Borrower's name to any contracts and documents as may be deemed
necessary by Lender. In no event shall Lender be required to expend
its own funds to complete the Repairs, but Lender may, in Lender's sole
discretion, advance such funds. Any funds advanced shall be added to
the outstanding balance of the Note, secured by the Security Instrument
and payable to Lender by Borrower in accordance with the provisions of
the Security Instrument pertaining to the protection of Lender's
security and advances made by Lender. Borrower waives any and all
claims it may have against Lender for materials used, work performed or
resultant damage to the Property.
8. Post Default. If Borrower defaults in the performance of its obligations
under this Agreement or under the Note, Security Instrument or any other
Loan Document, Lender and its successors and assigns shall have all
remedies available to them under the Loan Documents and a default under
this Agreement shall be a default under the Loan Documents.
9. Termination. This Agreement shall terminate upon the completion of the
Repairs in accordance with this Agreement to Lender's satisfaction.
10. No Amendment. Nothing contained in this Agreement shall be construed to
amend, modify, alter, change or supersede the terms and provisions of the
Note, Security Instrument or any other Loan Document and, if there shall
exist a conflict between the terms and provisions of this Agreement and
those of the Note, Security Instrument or other Loan Documents, then the
terms and provisions of the Note, Security Instrument and other Loan
Documents shall control.
11. Release; Indemnity.
(a) Release. Borrower covenants and agrees that, in performing any of its
duties under this Agreement, none of Lender, any Loan Servicer, or any of
their respective agents or employees, shall be liable for any losses,
costs or damages which may be incurred by any of them as a result thereof,
except that no such party will be released from liability for any losses,
costs or damages arising out of the willful misconduct or gross negligence
of such party.
(b) Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender, Loan Servicer, and their respective agents and employees,
against any and all losses, claims, damages, liabilities and
expenses including, without limitation, reasonable attorneys'
fees and costs, which may be imposed or incurred by any of them
in connection with this Agreement, except that no such party will
be indemnified from any losses, claims, damages, liabilities and
expenses arising out of the willful misconduct or gross
negligence of such party.
12. Choice of Law. This Agreement shall be construed and enforced in
accordance with the laws of the Property Jurisdiction.
13. Successors and Assigns. Lender may assign its rights and interests
under this Agreement in whole or in part and upon any such assignment,
all the terms and provisions of this Agreement shall inure to the
benefit of such assignee to the extent so assigned. The terms used to
designate any of the parties herein shall be deemed to include the
heirs, legal representatives, successors and assigns of such parties;
and the term "Lender" shall also include any lawful owner, holder or
pledgee of the Note. Reference herein to "person" or "persons" shall
be deemed to include individuals and entities. Borrower may not assign
or delegate its rights, interests, or obligations under this Agreement
without first obtaining Lender's prior written consent.
14. Attorneys' Fees. In the event that Lender shall engage the services of an
attorney at law to enforce the provisions of this Agreement against
Borrower, then Borrower shall pay all costs of such enforcement, including
any reasonable attorneys' fees and costs (including those of Lender's
in-house counsel) actually incurred.
15. Remedies Cumulative. In the event of Borrower's default under this
Agreement, Lender may exercise all or any one or more of its rights and
remedies available under this Agreement, at law or in equity. Such
rights and remedies shall be cumulative and concurrent, and may be
enforced separately, successively or together, and Lender's exercise of
any particular right or remedy shall not in any way prevent Lender from
exercising any other right or remedy available to Lender. Lender may
exercise any such remedies from time to time as often as may be deemed
necessary by Lender.
16. Determinations by Lender. In any instance where the consent or
approval of Lender may be given or is required, or where any
determination, judgment or decision is to be rendered by Lender under
this Agreement, the granting, withholding or denial of such consent or
approval and the rendering of such determination, judgment or decision
shall be made or exercised by Lender (or its designated representative)
at its sole and exclusive option and in its sole and absolute
discretion.
17. Completion of Repairs. Lender's acknowledgment of completion of any
Repair in a manner satisfactory to Lender shall not be deemed a
certification by Lender that the Repair has been completed in
accordance with applicable building, zoning or other codes, ordinances,
statutes, laws, regulations or requirements of any governmental
authority or agency. Borrower shall at all times have the sole
responsibility for insuring that all Repairs are completed in
accordance with all such governmental requirements.
18. No Agency or Partnership. Nothing contained in this Agreement shall
constitute Lender as a joint venturer, partner or agent of Borrower, or
render Lender liable for any debts, obligations, acts, omissions,
representations or contracts of Borrower.
19. Entire Agreement. This Agreement and the other Loan Documents
represent the final agreement between the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements. There are no unwritten oral agreements between the
parties. All prior or contemporaneous agreements, understandings,
representations, and statements, oral or written, are merged into this
Agreement and the other Loan Documents. Neither this Agreement nor any
of its provisions may be waived, modified, amended, discharged, or
terminated except in writing signed by the party against which the
enforcement of the waiver, modification, amendment, discharge, or
termination is sought, and then only to the extent set forth in that
writing; provided, however, that in the event of a Transfer requiring
Lender's consent under the terms of the Security Instrument, any one or
more, or all, of the Modifications to Agreement set forth in Exhibit
"D" (if any) may be modified or rendered void by Lender at Lender's
option by notice to Borrower/transferee.
20. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original document and all of which
together shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement effective
as of the day and year first above written.
BORROWER:
POST RIDGE ASSOCIATES, LTD., LIMITED
PARTNERSHIP, a Tennessee limited
partnership, also known as POST RIDGE
ASSOCIATES, LTD.
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
Borrower's Social Security or
Taxpayer Identification No.:
58-1763207
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
LENDER:
GMAC COMMERCIAL MORTGAGE CORPORATION, a
California corporation
By: /s/Max W. Foore
Max W. Foore
Vice President
Prepared by, and after recording return to:
Bernice H. Cilley, Esquire
Troutman Sanders LLP
P.O. Box 1122 Richmond, Virginia 23218-1122
CROSS-COLLATERALIZATION AGREEMENT
(First Lien and Second Lien)
Exhibit 10.92
FHLMC Loan No. 002694271(First)
002704935 (Second)
Post Ridge Apartments
CROSS-COLLATERALIZATION AGREEMENT
(First Lien and Second Lien)
THIS CROSS-COLLATERALIZATION AGREEMENT (this "Agreement") is made as of
the 22nd day of October, 2003 between FEDERAL HOME LOAN MORTGAGE CORPORATION, a
corporation organized and existing under the laws of the United States of
America ("Lender") and POST RIDGE ASSOCIATES, LTD., LIMITED PARTNERSHIP, a
Tennessee limited partnership, also known as POST RIDGE ASSOCIATES, LTD.
RECITALS
A. GMAC Commercial Mortgage Corporation, a California corporation
("Original Lender") made (i) a loan to Borrower in the original
principal amount of $4,500,000.00 (the "First Lien Loan"), and (ii) a
loan to Borrower in the original principal amount of $375,300.00 (the
"Second Lien Loan"). The First Lien Loan is secured by a Multifamily
Deed of Trust, Assignment of Rents and Security Agreement dated as of
December 20, 2001 and recorded in the Office of the County Clerk of
Davidson County, Tennessee (the "Clerk's Office") as Instrument No.
20011228-0143685 (the "First Mortgage") upon real property identified
in Exhibit A hereto and other property included within the definition
of "Mortgaged Property" in the First Mortgage and constituting or
related to a residential multifamily apartment project known as Post
Ridge Apartments. The Second Lien Loan is secured by a Multifamily
Deed of Trust, Assignment of Rents and Security Agreement of even date
with, and recorded in the Clerk's Office prior to, this Agreement. The
First Mortgage was assigned by Original Lender to Lender by Assignment
of Security Instrument dated as of December 20, 2001 and recorded in
the Clerk's Office as Instrument No. 20011228-0143687. The Second
Mortgage was assigned by Original Lender to Lender by Assignment of
Security Instrument of even date with, and recorded in the Clerk's
Office immediately prior to, this Agreement. The First Lien Loan and
the Second Lien Loan shall be referred to, together, hereinafter as the
"Post Ridge Loans". The First Mortgage and Second Mortgage are
referred to, together, hereinafter as the "Post Ridge Mortgages".
B. Lender owns and is modifying, by Modification Agreement of even date
herewith, another mortgage loan (the "Related Loan") to an affiliate of
Borrower, secured by a Multifamily Deed to Secure Debt (the "Related
Mortgage") upon another residential multifamily apartment project (the
"Related Property"), all as more fully set forth in the following table:
Related Loan Amount Related Borrower Related Property Related Property
Name Location
$5,400,000.00 - 1st Foothill Chimney Chimney Hill Marietta (Cobb
mortgage Associates Limited Apartments County), GA
Partnership
C. Borrower acknowledges that a condition of Lender modifying the Related
Loan and acquiring the Second Lien Loan is that the Mortgaged Property
serves as collateral for the Related Loan and that the Related
Property serves as collateral for the Post Ridge Loans. Borrower is
executing this Agreement to satisfy such condition. Borrower further
acknowledges that the benefits derived by Borrower from this Agreement
and from that certain Related Cross-Collateralization Agreement
entered into in connection with the Related Loan are equivalent to the
burdens imposed upon Borrower and the Mortgaged Property by this
Agreement, notwithstanding that the Post Ridge Loans and the Related
Loan may be of differing amounts.
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated:
"Event of Default" shall have the meaning set forth in Section 4.
"Foreclosure" means a judicial or non-judicial foreclosure of or trustee's sale
under either or both of the Post Ridge Mortgages or the Related Mortgage, a deed
in lieu of such foreclosure or sale, a sale of any of the Total Property
pursuant to lawful order of a court of competent jurisdiction in a bankruptcy
case filed under Title 11 of the United States Code, or any other similar
disposition of any of the Total Property.
"Fraudulent Transfer Laws" means Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law, including any
provisions of the Uniform Fraudulent Conveyance Act or Uniform Fraudulent
Transfer Act, as adopted under state law.
"Indebtedness" means the "Indebtedness" as defined in the Post Ridge Mortgages,
exclusive of any sums payable by Borrower solely by reason of this Agreement.
"Loans" means the Post Ridge Loans and the Related Loan.
"Related Borrower" means the original borrower under the Related Loan and any
successor to the interest of such borrower in the Related Property who acquires
the Related Property subject to, or who assumes, the Related Mortgage.
"Related Cross-Collateralization Agreement" means the Cross-Collateralization
Agreement of even date herewith, executed by the Related Borrower.
"Related Indebtedness" means the "Indebtedness" as defined in the Related
Mortgage.
"Related Loan Documents" means the "Loan Documents" as defined in the Related
Mortgage.
"Total Indebtedness" means the aggregate of the Indebtedness plus the Related
Indebtedness.
"Total Loan Documents" means the "Loan Documents" as defined in the Post Ridge
Mortgages and the Related Loan Documents. This Agreement is among the Loan
Documents as defined in the Post Ridge Mortgages, and the
Cross-Collateralization Agreement entered into in connection with the Related
Loan is among the Related Loan Documents.
"Total Property" means the aggregate of the Mortgaged Property and the
"Mortgaged Property" described in the Related Mortgage.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in the Post Ridge Mortgages.
2. Assumption and Integration of Related Indebtedness; Obligations Absolute.
Borrower hereby acknowledges that:
(a) Borrower shall pay not only the Indebtedness, but also all of the
Related Indebtedness in accordance with the Related Loan Documents. Borrower and
the Related Borrower are jointly and severally liable for the payment of the
Total Indebtedness. Lender at its option may treat the Post Ridge Loans and the
Related Loan as separate and independent obligations of Borrower, or may treat
some or all of the Loans, and all or any part of the Total Indebtedness, as a
single, integrated indebtedness of Borrower.
(b) No invalidity, irregularity or unenforceability of all or any part of
the Related Indebtedness shall affect, impair or be a defense to the recovery by
Lender of the Indebtedness.
(c) It is the intention of Lender and Borrower that Borrower's obligations
to pay the Related Indebtedness shall be independent, primary, and absolute, and
shall be performed without demand by Lender and shall be unconditional
irrespective of the genuineness, validity, regularity or enforceability of any
of the Related Loan Documents, and without regard to any circumstance, other
than payment in full of the Related Indebtedness, which might otherwise
constitute a legal or equitable discharge of a borrower, a mortgagor, a surety,
or a guarantor. Borrower waives, to the fullest extent permitted by law, all
rights to require Lender to proceed against the Related Borrower or against any
guarantor of any of the Total Indebtedness or to pursue any other right or
remedy Lender may now or hereafter have against the Related Borrower or any
collateral for any of the Total Indebtedness.
3. Amendment of Post Ridge Mortgages to Grant Additional Security. The Post
Ridge Mortgages are hereby amended to provide that the Post Ridge Mortgages
secure the obligation of Borrower to pay the Related Indebtedness as well as the
obligation of Borrower to pay the Indebtedness.
4. Events of Default. Each of the following events shall constitute an "Event of
Default" under this Agreement:
(a) a default or breach by Borrower of any provision of this Agreement;
and
(b) any event or condition constituting an "Event of Default" under any of
the Total Loan Documents.
5. Amendment of Post Ridge Mortgages to Provide for Cross-Default. The Post
Ridge Mortgages are hereby amended to provide that any Event of Default under
this Agreement shall constitute an Event of Default under the Post Ridge
Mortgages.
6. Remedies.
(a) Upon the occurrence of an Event of Default, Lender, in its sole and
absolute discretion, may exercise any or some or all of the following remedies,
in such order and at such time or times as Lender shall elect:
(i) declare immediately due and payable the entire Total
Indebtedness or any portion thereof; and
(ii) exercise any or some or all of Lender's rights and remedies
under this Agreement, any of the Total Loan Documents, or applicable law.
(b) Lender may exercise such remedies in one or more proceedings, whether
contemporaneous or consecutive or a combination of both, to be determined by
Lender in its sole discretion. Lender may enforce its rights against the
Mortgaged Property or the Total Property, or any portions of the Mortgaged
Property or the Total Property, in such order and manner as Lender may elect in
Lender's sole discretion. The enforcement of the Post Ridge Mortgages or the
Related Mortgage or any other of the Total Loan Documents shall not constitute
an election of remedies, and shall not limit or preclude the enforcement of the
Post Ridge Mortgages or the Related Mortgage or any other of the Total Loan
Documents, through one or more additional proceedings. Lender may bring any
action or proceeding, including but not limited to foreclosure proceedings,
without regard to the fact that one or more other proceedings may have been
commenced elsewhere with respect to other of the Total Property or any portion
thereof. Borrower, for itself and for any and all persons or entities now or in
the future holding or claiming any lien on, security interest in, or other
interest or right of any nature in or to any of the Mortgaged Property, hereby
unconditionally and irrevocably waives any rights Borrower may have, now or in
the future, whether at law or in equity, to require Lender to enforce or
exercise any of Lender's rights or remedies under this Agreement, under the Post
Ridge Mortgages, or under any other of the Total Loan Documents in any
particular manner or order or in any particular state or county, or to apply the
proceeds of any foreclosure in any particular manner or order.
(c) No judgment obtained by Lender in any proceeding enforcing any of the
Total Loan Documents shall merge any of the Total Indebtedness into that
judgment, and all Total Indebtedness, which remains unpaid, shall remain a
continuing obligation of Borrower. Notwithstanding any foreclosure of the Post
Ridge Mortgages or the Related Mortgage, Borrower shall remain bound under this
Agreement.
7. Application of Proceeds. Proceeds of the enforcement or foreclosure of the
Post Ridge Mortgages or the Related Mortgage shall be applied to the payment of
the Total Indebtedness (including prepayment premiums) in such order as Lender
may determine in Lender's sole discretion.
8. Adjustment of Obligations. If Borrower's incurring of the obligation to pay
the Related Indebtedness provided for in Section 2 above, or the amendment of
the Post Ridge Mortgages provided for in Section 3 above, becomes subject to
avoidance under any Fraudulent Transfer Law, then automatically, the Related
Indebtedness for which Borrower will be liable and the amount of the Related
Indebtedness for which the Mortgaged Property shall constitute security, shall
be limited to the largest amount that would not be subject to avoidance under
such Fraudulent Transfer Law.
9. Borrower's Rights of Subrogation, Etc. Until the Total Indebtedness has been
paid in full and there has expired the maximum possible period thereafter during
which any payment to Lender with respect to the Total Indebtedness could be
deemed a preference under the United States Bankruptcy Code, Borrower shall have
no right of, and hereby waives any claim for, subrogation, contribution,
reimbursement or indemnity (whether contractual, statutory, equitable, under
common law or otherwise) which Borrower has now or may have in the future
against the Related Borrower or the Related Property or against any guarantor or
security for any of the Total Indebtedness. Borrower understands that the
exercise by Lender of certain rights and remedies contained in the Post Ridge
Mortgages or the Related Mortgage may affect or eliminate Borrower's right of
subrogation against the Related Borrower and that Borrower may therefore incur a
partially or totally nonreimburseable liability under this Agreement.
Nevertheless, Borrower hereby authorizes and empowers Lender, in Lender's sole
and absolute discretion, to exercise any right or remedy, or any combination
thereof, which may then be available.
10. Subordination of Obligations to Borrower. Any indebtedness or other
obligation of the Related Borrower held by Borrower shall be subordinate to the
rights of Lender against the Related Borrower. If Lender so requests at a time
when an Event of Default has occurred, Borrower shall enforce and collect any
such indebtedness or other obligation as trustee for Lender and shall pay over
to Lender any amount collected, on account of the Total Indebtedness.
11. Lender's Rights. At any time and from time to time and without the consent
of, or notice to, Borrower, without incurring liability to Borrower, and without
impairing or releasing Borrower's liability for the Related Indebtedness, Lender
may:
(a) change the manner, place or terms of payment, or change or extend the
time of payment of, or renew, increase, accelerate or alter, any of the Related
Indebtedness, any security for the Related Indebtedness, or any liability
incurred directly or indirectly with respect to the Related Indebtedness;
(b) take and hold security for the payment of any of the Related
Indebtedness, and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property pledged or mortgaged to
secure any of the Related Indebtedness;
(c) exercise or refrain from exercising any rights against Borrower, the
Related Borrower, the Mortgaged Property, or the Related Property;
(d) release or substitute any one or more endorsers, guarantors, or other
obligors with respect to the Related Indebtedness;
(e) settle or compromise the Related Indebtedness, or subordinate the
payment of all or any part of the Related Indebtedness to the payment of any
liability (whether due or not) of the Related Borrower to its creditors other
than Lender; and
(f) consent to or waive any breach by Borrower or the Related Borrower
of, or any act, omission or default by Borrower or the Related Borrower under,
this Agreement or any of the Total Loan Documents.
12. Waivers of Presentment, Marshalling, Certain Suretyship Defenses, etc.
(a) With respect to its obligations under this Agreement and the Total
Loan Documents, Borrower waives presentment, demand, and 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 such obligations.
(b) Lender shall have the right to determine in its discretion whether and
the order in which any or all of the Total Property or portions thereof shall be
subjected to the remedies provided in the Total Loan Documents or applicable
law. Lender shall have the right to determine in its discretion the order in
which any or all portions of the Total Indebtedness are satisfied from the
proceeds realized upon the exercise of such remedies. Borrower and any party who
now or in the future acquires a lien on or security interest or other interest
in any of the Mortgaged Property hereby unconditionally and irrevocably waives
any and all right to require the marshalling of assets or to require that any of
the Total Property or portions thereof be sold in the inverse order of
alienation or in parcels or as an entirety in connection with the exercise of
any such remedies.
13. Limited-Recourse Liability. Borrower's personal liability (liability beyond
Borrower's interest in the Mortgaged Property) for the Related Indebtedness
shall be limited to the same extent as the personal liability of the Related
Borrower is limited in the Related Loan Documents. Borrower shall have no
personal liability for the exceptions to non-recourse liability set forth in
Section 9 of the Note for the Related Loan, except as may be specifically
assumed in any Limited Guaranty or Guaranty executed by Borrower with respect to
the Related Loan. Notwithstanding the foregoing, nothing herein shall be deemed
to limit Lender's rights to exercise its remedies with respect to the Mortgaged
Property, the Related Property or against the Borrower personally with respect
to the exceptions to non-recourse liability in the Loan Documents relating to
the Post Ridge Loans.
14. Release Provisions.
(a) Anything in the Post Ridge Mortgages to the contrary notwithstanding,
Lender will release the Mortgaged Property from this Agreement and the lien
created hereby only upon (i) payment in full of the Related Indebtedness, or
(ii) upon a release of the Related Property from the Related
Cross-Collateralization Agreement, under the terms and conditions more
particularly defined therein.
(b) As a condition of any release under subsection (a) above, Lender must
receive an endorsement to the title insurance policies insuring the Post Ridge
Mortgages, redating each title insurance policy to the date of the recording of
the release and, if applicable, assumption agreement, and confirming that
notwithstanding the specified release, the Post Ridge Mortgages remain first
priority and second priority liens, respectively, upon the Mortgaged Property
subject only to the exceptions to insurance originally contained in the title
insurance policies and any additional matters previously approved in writing by
Lender.
15. Notices. All notices to Borrower under this Agreement shall be in writing
and shall be given in the manner provided in the Post Ridge Mortgages for
notices to Borrower. All notices to Lender by Borrower under this Agreement
shall be in writing and shall be given in the manner in the Post Ridge Mortgages
for notices to Lender.
16. Governing Law; Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State in which the Mortgaged
Property is located. Borrower irrevocably submits to the jurisdiction of any
federal or state court sitting in (i) the state or jurisdiction in which the
Mortgaged Property or the Related Property is located, and (ii) the Commonwealth
of Virginia, over any suit, action or proceeding arising out of or relating to
this Agreement. Borrower hereby submits to the in personam jurisdiction of each
such court in any matter involving this Agreement. Borrower irrevocably waives,
to the fullest extent permitted under applicable law, any objections it may now
or hereafter have to the venue of any suit, action or proceeding brought in any
such court and any claim that the same has been brought in an inconvenient
forum. Borrower acknowledges that it has received material and substantial
consideration for the cross-collateralization of the Mortgaged Property and the
Related Properties and that the foregoing venue provision is integral to the
Lender's realization of its rights hereunder. Borrower further acknowledges that
it is not in disparate bargaining position, that it is a commercial enterprise,
with sophisticated financial, legal and economic experience, that the venue
selections contained herein are not unreasonable, unjust, inconvenient or
overreaching.
17. Captions, Cross References and Exhibits. The captions assigned to provisions
of this Agreement are for convenience only and shall be disregarded in
construing this Agreement. Any reference in this Agreement to a "Section", a
"Subsection" or an "Exhibit" shall, unless otherwise explicitly provided, be
construed as referring to a section of this Agreement, to a subsection of the
section of this Agreement in which the reference appears or to an Exhibit
attached to this Agreement. All Exhibits referred to in this Agreement are
hereby incorporated by reference.
18. Number and Gender. Use of the singular in this Agreement includes the
plural, use of the plural includes the singular, and use of one gender includes
all other genders, as the context may require.
19. Statutes and Regulations. Any reference in this Agreement to a statute or
regulation shall include all amendments to and successors to such statute or
regulation, whether adopted before or after the date of this Agreement.
20. No Partnership. This Agreement is not intended to, and shall not, create a
partnership or joint venture among the parties, and no party to this Agreement
shall have the power or authority to bind any other party except as explicitly
provided in this Agreement.
21. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, successors, and
assigns.
22. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity of any other provision, and all other
provisions shall remain in full force and effect.
23. Waiver; No Remedy Exclusive. Any forbearance by a party to this Agreement in
exercising any right or remedy given under this Agreement or existing at law or
in equity shall not constitute a waiver of or preclude the exercise of that or
any other right or remedy. Unless otherwise explicitly provided, no remedy under
this Agreement is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies given
under this Agreement or existing at law or in equity.
24. Third Party Beneficiaries. Neither any creditor of any party to this
Agreement, nor any other person, is intended to be a third party beneficiary of
this Agreement.
25. Course of Dealing. No course of dealing among the parties to this Agreement
shall operate as a waiver of any rights of any party under this Agreement.
26. Further Assurances and Corrective Instruments. To the extent permitted by
law, the parties shall, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements to this
Agreement and such further instruments as may reasonably be required for
carrying out the intention of or facilitating the performance of this Agreement.
27. No Party Deemed Drafter. No party shall be deemed the drafter of this
Agreement, and this Agreement shall not be construed against either party as the
drafter of the Agreement.
28. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
AGREEMENT 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
BORROWER:
POST RIDGE ASSOCIATES, LTD., LIMITED
PARTNERSHIP, a Tennessee limited
partnership, also known as POST RIDGE
ASSOCIATES, LTD.
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
STATE OF COLORADO, DENVER County ss:
On this ____ day of October, 2003, before me personally appeared Patti K.
Fielding, Executive Vice President of ConCap Equities, Inc., a Delaware
corporation, general partner of Post Ridge Associates, Ltd., Limited
Partnership, a Tennessee limited partnership, also known as Post Ridge
Associates, Ltd. to me known to be the person who executed the foregoing
instrument on behalf of said partnership and acknowledged the execution of the
same to be the free act and deed of said partnership. Witness my hand and
official seal.
My Commission Expires:
______________________________________________________________________________
Notary Public
LENDER:
FEDERAL HOME LOAN MORTGAGE CORPORATION
By: _________________________________
Name: ____________________
Title: _____________________
STATE OF __________________, _______________ County ss:
On this ____ day of October, 2003, before me personally appeared
_________________, _________________ of Federal Home Loan Corporation, to me
known to be the person who executed the foregoing instrument on behalf of said
corporation and acknowledged the execution of the same to be the free act and
deed of said corporation. Witness my hand and official seal.
My Commission Expires:
______________________________________________________________________________
Notary Public
Prepared by, and after recording return to:
Bernice H. Cilley, Esquire
Troutman Sanders LLP
P.O. Box 1122 Richmond, Virginia 23218-1122
CROSS-COLLATERALIZATION AGREEMENT
Exhibit 10.93
FHLMC Loan No. 734079508
Chimney Hill Apartments
CROSS-COLLATERALIZATION AGREEMENT
THIS CROSS-COLLATERALIZATION AGREEMENT (this "Agreement") is made as of
the 22nd day of October, 2003 between FEDERAL HOME LOAN MORTGAGE CORPORATION, a
corporate instrumentality of the United States of America ("Lender") and
FOOTHILL CHIMNEY ASSOCIATES LIMITED PARTNERSHIP, a Georgia limited partnership
("Borrower").
RECITALS
A. Lehman Brothers Holdings Inc. (doing business as Lehman Capital, A
Division of Lehman Brothers Holdings Inc.), a Delaware corporation,
(the "Original Lender") made a loan to Borrower in the original
principal amount of Five Million Four Hundred Thousand and 00/100
Dollars ($5,400,000.00) (the "Loan"). The Loan is secured by a
Multifamily Deed to Secure Debt, Assignment of Rents and Security
Agreement, dated as of November 30, 1995 and recorded in the Office of
the Clerk of the Superior Court of Cobb County, Georgia (the "Clerk's
Office") on December 21, 1995 in Book 9312, Page 205 (the "Original
Mortgage"), upon real property identified in Exhibit A hereto and other
property included within the definition of "Mortgaged Property" in the
Mortgage and constituting or related to a residential multifamily
apartment project known as Chimney Hill Apartments. The Original
Mortgage was assigned by Original Lender to Lender by Assignment of
Security Instrument, dated as of November 30, 1995 and recorded in the
Clerk's Office on December 21, 1995 in Book 9312, Page 229.
B. Pursuant to the terms of a Modification Agreement of even date herewith
by and between Lender and Borrower (the "Modification Agreement"),
certain modifications and additions are being made to the Mortgage and
the other documents evidencing and/or securing the Loan. A condition
of Lender's agreement to execute the Modification Agreement, among
others, is Borrower's execution of this Agreement. As used herein, the
term "Mortgage" shall mean the Original Mortgage, as modified by the
Modification Agreement.
C. Lender has purchased and is modifying, or is purchasing, other mortgage
loans (collectively, the "Related Loans") to an affiliate of Borrower,
secured by Multifamily Mortgages or Deeds of Trust (collectively, the
"Related Mortgages") upon other residential multifamily apartment projects
(collectively, the "Related Properties"), all as more fully set forth in
the following table:
Related Loan Amount Related Borrower Related Property Related Property
Location
Name
$4,500,000.00 - 1st Post Ridge Post Ridge Nashville
mortgage Associates, Ltd., Apartments (Davidson
Limited Partnership County), TN
$375,300.00 - 2nd mortgage Post Ridge Post Ridge Nashville
Associates, Ltd., Apartments (Davidson
Limited Partnership County), TN
D. Borrower acknowledges that a condition of Lender modifying and/or
purchasing the Loan and the Related Loans is that the Mortgaged
Property serves as collateral for each of the Related Loans and that
each of the Related Properties serves as collateral for the Loan.
Borrower is executing this Agreement to satisfy such condition.
Borrower further acknowledges that the benefits derived by Borrower
from this Agreement and from those certain Cross-Collateralization
Agreements entered into or to be entered into in connection with the
Related Loans are equivalent to the burdens imposed upon Borrower and
the Mortgaged Property by this Agreement, notwithstanding that the Loan
and the Related Loans may be of differing amounts.
1. Definitions. For purposes of this Agreement, the following terms shall
have the meanings indicated:
"Event of Default" shall have the meaning set forth in Section 4.
"Foreclosure" means a judicial or non-judicial foreclosure of or trustee's sale
under the Mortgage or a Related Mortgage, a deed in lieu of such foreclosure or
sale, a sale of any of the Total Property pursuant to lawful order of a court of
competent jurisdiction in a bankruptcy case filed under Title 11 of the United
States Code, or any other similar disposition of any of the Total Property.
"Fraudulent Transfer Laws" means Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law, including any
provisions of the Uniform Fraudulent Conveyance Act or Uniform Fraudulent
Transfer Act, as adopted under state law.
"Indebtedness" means the "Indebtedness" as defined in the Mortgage, exclusive of
any sums payable by Borrower solely by reason of this Agreement.
"Loans" means the Loan and the Related Loans.
"Related Borrowers" means the original borrower under each of the Related Loans
and any successor to the interest of each such borrower in any of the Related
Properties who acquires such Related Property subject to, or who assumes, a
Related Mortgage.
"Related Indebtedness" means the aggregate of the "Indebtedness" as defined in
each of the Related Mortgages.
"Related Loan Documents" means the "Loan Documents" as defined in each of the
Related Mortgages.
"Total Indebtedness" means the aggregate of the Indebtedness plus the Related
Indebtedness.
"Total Loan Documents" means the "Loan Documents" as defined in the Mortgage and
the Related Loan Documents. This Agreement is among the Loan Documents as
defined in the Mortgage, and the Cross-Collateralization Agreements entered into
in connection with the Related Loans are among the Related Loan Documents.
"Total Property" means the aggregate of the Mortgaged Property and the
"Mortgaged Property" described in each of the Related Mortgages.
Capitalized terms not otherwise defined in this Agreement shall have the
meanings set forth in the Mortgage.
2. Assumption and Integration of Related Indebtedness; Obligations Absolute.
Borrower hereby acknowledges that:
(a) Borrower shall pay not only the Indebtedness, but also all of the
Related Indebtedness in accordance with the Related Loan Documents. Borrower and
the Related Borrowers are jointly and severally liable for the payment of the
Total Indebtedness. Lender at its option may treat the Loan and each of the
Related Loans as separate and independent obligations of Borrower, or may treat
some or all of the Loans, and all or any part of the Total Indebtedness, as a
single, integrated indebtedness of Borrower.
(b) No invalidity, irregularity or unenforceability of all or any part of
the Related Indebtedness shall affect, impair or be a defense to the recovery by
Lender of the Indebtedness.
(c) It is the intention of Lender and Borrower that Borrower's obligations
to pay the Related Indebtedness shall be independent, primary, and absolute, and
shall be performed without demand by Lender and shall be unconditional
irrespective of the genuineness, validity, regularity or enforceability of any
of the Related Loan Documents, and without regard to any circumstance, other
than payment in full of the Related Indebtedness, which might otherwise
constitute a legal or equitable discharge of a borrower, a mortgagor, a surety,
or a guarantor. Borrower waives, to the fullest extent permitted by law, all
rights to require Lender to proceed against any Related Borrower or against any
guarantor of any of the Total Indebtedness or to pursue any other right or
remedy Lender may now or hereafter have against any Related Borrower or any
collateral for any of the Total Indebtedness.
3. Amendment of Mortgage to Grant Additional Security. The Mortgage is hereby
amended to provide that the Mortgage secures the obligation of Borrower to pay
the Related Indebtedness as well as the obligation of Borrower to pay the
Indebtedness.
4. Events of Default. Each of the following events shall constitute an "Event of
Default" under this Agreement:
(a) a default or breach by Borrower of any provision of this Agreement;
and
(b) any event or condition constituting an "Event of Default" under any of
the Total Loan Documents.
5. Amendment of Mortgage to Provide for Cross-Default. The Mortgage is hereby
amended to provide that any Event of Default under this Agreement shall
constitute an Event of Default under the Mortgage.
6. Remedies.
(a) Upon the occurrence of an Event of Default, Lender, in its sole and
absolute discretion, may exercise any or some or all of the following remedies,
in such order and at such time or times as Lender shall elect:
(i) declare immediately due and payable the entire Total
Indebtedness or any portion thereof; and
(ii) exercise any or some or all of Lender's rights and remedies
under this Agreement, any of the Total Loan Documents, or applicable law.
(b) Lender may exercise such remedies in one or more proceedings, whether
contemporaneous or consecutive or a combination of both, to be determined by
Lender in its sole discretion. Lender may enforce its rights against the
Mortgaged Property or the Total Property, or any portions of the Mortgaged
Property or the Total Property, in such order and manner as Lender may elect in
Lender's sole discretion. The enforcement of the Mortgage or any Related
Mortgage or any other of the Total Loan Documents shall not constitute an
election of remedies, and shall not limit or preclude the enforcement of the
Mortgage or any other Related Mortgage or any other of the Total Loan Documents,
through one or more additional proceedings. Lender may bring any action or
proceeding, including but not limited to foreclosure proceedings, without regard
to the fact that one or more other proceedings may have been commenced elsewhere
with respect to other of the Total Property or any portion thereof. Borrower,
for itself and for any and all persons or entities now or in the future holding
or claiming any lien on, security interest in, or other interest or right of any
nature in or to any of the Mortgaged Property, hereby unconditionally and
irrevocably waives any rights Borrower may have, now or in the future, whether
at law or in equity, to require Lender to enforce or exercise any of Lender's
rights or remedies under this Agreement, under the Mortgage, or under any other
of the Total Loan Document in any particular manner or order or in any
particular state or county, or to apply the proceeds of any foreclosure in any
particular manner or order.
(c) No judgment obtained by Lender in any proceeding enforcing any of the
Total Loan Documents shall merge any of the Total Indebtedness into that
judgment, and all Total Indebtedness, which remains unpaid, shall remain a
continuing obligation of Borrower. Notwithstanding any foreclosure of the
Mortgage or any of the Related Mortgages, Borrower shall remain bound under this
Agreement.
7. Application of Proceeds. Proceeds of the enforcement or foreclosure of the
Mortgage or any Related Mortgage shall be applied to the payment of the Total
Indebtedness (including prepayment premiums) in such order as Lender may
determine in Lender's sole discretion.
8. Adjustment of Obligations. If Borrower's incurring of the obligation to pay
the Related Indebtedness provided for in Section 2 above, or the amendment of
the Mortgage provided for in Section 3 above, becomes subject to avoidance under
any Fraudulent Transfer Law, then automatically, the Related Indebtedness for
which Borrower will be liable and the amount of the Related Indebtedness for
which the Mortgaged Property shall constitute security, shall be limited to the
largest amount that would not be subject to avoidance under such Fraudulent
Transfer Law.
9. Borrower's Rights of Subrogation, Etc. Until the Total Indebtedness has been
paid in full and there has expired the maximum possible period thereafter during
which any payment to Lender with respect to the Total Indebtedness could be
deemed a preference under the United States Bankruptcy Code, Borrower shall have
no right of, and hereby waives any claim for, subrogation, contribution,
reimbursement or indemnity (whether contractual, statutory, equitable, under
common law or otherwise) which Borrower has now or may have in the future
against any of the Related Borrowers or any of the Related Properties or against
any guarantor or security for any of the Total Indebtedness. Borrower
understands that the exercise by Lender of certain rights and remedies contained
in the Mortgage or any one or more of the Related Mortgages may affect or
eliminate Borrower's right of subrogation against a Related Borrower and that
Borrower may therefore incur a partially or totally nonreimburseable liability
under this Agreement. Nevertheless, Borrower hereby authorizes and empowers
Lender, in Lender's sole and absolute discretion, to exercise any right or
remedy, or any combination thereof, which may then be available.
10. Subordination of Obligations to Borrower. Any indebtedness or other
obligation of a Related Borrower held by Borrower shall be subordinate to the
rights of Lender against that Related Borrower. If Lender so requests at a time
when an Event of Default has occurred, Borrower shall enforce and collect any
such indebtedness or other obligation as trustee for Lender and shall pay over
to Lender any amount collected, on account of the Total Indebtedness.
11. Lender's Rights. At any time and from time to time and without the consent
of, or notice to, Borrower, without incurring liability to Borrower, and without
impairing or releasing Borrower's liability for the Related Indebtedness, Lender
may:
(a) change the manner, place or terms of payment, or change or extend the
time of payment of, or renew, increase, accelerate or alter, any of the Related
Indebtedness, any security for the Related Indebtedness, or any liability
incurred directly or indirectly with respect to the Related Indebtedness;
(b) take and hold security for the payment of any of the Related
Indebtedness, and sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property pledged or mortgaged to
secure any of the Related Indebtedness;
(c) exercise or refrain from exercising any rights against Borrower, any
Related Borrower, the Mortgaged Property, or any Related Properties;
(d) release or substitute any one or more endorsers, guarantors, or other
obligors with respect to any of the Related Indebtedness;
(e) settle or compromise any of the Related Indebtedness, or subordinate
the payment of all or any part of the Related Indebtedness to the payment of any
liability (whether due or not) of any Related Borrower to its creditors other
than Lender; and
(f) consent to or waive any breach by Borrower or any Related Borrower of,
or any act, omission or default by Borrower or any Related Borrower under, this
Agreement or any of the Total Loan Documents.
12. Waivers of Presentment, Marshalling, Certain Suretyship Defenses, etc.
(a) With respect to its obligations under this Agreement and the Total
Loan Documents, Borrower waives presentment, demand, and 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 such obligations.
(b) Lender shall have the right to determine in its discretion whether and
the order in which any or all of the Total Property or portions thereof shall be
subjected to the remedies provided in the Total Loan Documents or applicable
law. Lender shall have the right to determine in its discretion the order in
which any or all portions of the Total Indebtedness are satisfied from the
proceeds realized upon the exercise of such remedies. Borrower and any party who
now or in the future acquires a lien on or security interest or other interest
in any of the Mortgaged Property hereby unconditionally and irrevocably waives
any and all right to require the marshalling of assets or to require that any of
the Total Property or portions thereof be sold in the inverse order of
alienation or in parcels or as an entirety in connection with the exercise of
any such remedies.
13. Limited-Recourse Liability. Borrower's personal liability (liability beyond
Borrower's interest in the Mortgaged Property) for the Related Indebtedness
shall be limited to the same extent as the personal liability of the Related
Borrowers is limited in the Related Loan Documents.
14. Release Provisions.
(a) Anything in the Mortgage to the contrary notwithstanding, Lender will
release the Mortgaged Property from this Agreement and the lien created hereby
only upon payment in full of the Indebtedness, or as set forth in Section 14(b)
below.
(b) Lender will release the Mortgaged Property from this Agreement upon
the satisfaction of all of the following conditions:
(i) Lender has received from Borrower at least thirty (30) days' prior written
notice of the date proposed for such release (the "Release Date"), which notice
shall include the materials necessary to evidence Borrower's satisfaction of the
conditions set forth below.
(ii) No Event of Default has occurred following the date of this Agreement and
no event or circumstance exists on the Release Date which, with the giving of
notice or the passage of time or both, could constitute such an Event of
Default.
(iii) Borrower shall have paid to Lender in full all of Lender's costs and
expenses; including, without limitation, attorneys' fees (outside and in-house
counsel), in connection with the release of the Mortgaged Property.
(iv) Construction at the Mortgaged Property, as defined in the Modification
Agreement and the Construction Agreement defined therein, shall be complete, as
determined by Lender in its sole discretion, and the Mortgaged Property shall be
leased to, and occupied by, residential tenants in accordance with the terms of
the Mortgage.
(v) Lender shall have received and approved the Modification Policy Endorsement
and the Revised Survey defined in the Modification Agreement.
(vi) The Mortgaged Property must meet the following requirement, as determined
by Lender in Lender's sole and absolute discretion: The Mortgaged Property must
have achieved, for six (6) consecutive months prior to the Release Date, on an
annualized basis, a Debt Service Coverage Ratio of not less than 1.20:1.
Borrower shall provide Lender with such financial statements and other
information as Lender may require to make its determination hereunder, certified
by the chief financial officer of Borrower as being true, correct and complete
in all material respects. In addition, Lender, at Borrower's expense, may obtain
an MAI appraisal of the Mortgaged Property in order to assist Lender in making
its determination hereunder. As used in this Agreement, "Debt Service Coverage
Ratio" shall mean the ratio of the Net Operating Income of the Mortgaged
Property for a given month to the monthly payment of principal and interest due
under the Note for such month; Net Operating Income shall mean the collected
monthly rental income and other recurring income from the Mortgaged Property, as
determined by Lender, minus Permitted Expenses; and "Permitted Expenses" shall
mean actual monthly operating expenses, routine maintenance expenses (excluding
interest, depreciation and amortization) and the required monthly escrow
deposits established for the benefit of Lender in conjunction with the Loan.
(c) As a condition of any release under subsection (b) above, Lender must
receive an additional endorsement to the Modification Title Policy, redating the
Modification Title Policy to the date of the recording of the release and
confirming that, notwithstanding the release, the Mortgage remains a first
priority lien upon the Mortgaged Property, subject only to the exceptions to
insurance originally contained in the Modification Title Policy and any
additional matters previously approved in writing by Lender.
(d) Lender shall have the right to delegate the determinations to be made
under this Section 14 to Servicer, as defined in the Modification Agreement.
15. Notices. All notices to Borrower under this Agreement shall be in writing
and shall be given in the manner provided in the Mortgages for notices to
Borrower. All notices to Lender by Borrower under this Agreement shall be in
writing and shall be given in the manner in the Mortgage for notices to Lender.
16. Governing Law; Jurisdiction and Venue. This Agreement shall be governed by
and construed in accordance with the laws of the State in which the Mortgaged
Property is located. Borrower irrevocably submits to the jurisdiction of any
federal or state court sitting in (i) any state or jurisdiction in which the
Mortgaged Property or any of the Related Properties is located, and (ii) the
Commonwealth of Virginia, over any suit, action or proceeding arising out of or
relating to this Agreement. Borrower hereby submits to the in personam
jurisdiction of each such court in any matter involving this Agreement. Borrower
irrevocably waives, to the fullest extent permitted under applicable law, any
objections it may now or hereafter have to the venue of any suit, action or
proceeding brought in any such court and any claim that the same has been
brought in an inconvenient forum. Borrower acknowledges that it has received
material and substantial consideration for the cross-collateralization of the
Mortgaged Property and the Related Properties and that the foregoing venue
provision is integral to the Lender's realization of its rights hereunder.
Borrower further acknowledges that it is not in disparate bargaining position,
that it is a commercial enterprise, with sophisticated financial, legal and
economic experience, that the venue selections contained herein are not
unreasonable, unjust, inconvenient or overreaching.
17. Captions, Cross References and Exhibits. The captions assigned to provisions
of this Agreement are for convenience only and shall be disregarded in
construing this Agreement. Any reference in this Agreement to a "Section", a
"Subsection" or an "Exhibit" shall, unless otherwise explicitly provided, be
construed as referring to a section of this Agreement, to a subsection of the
section of this Agreement in which the reference appears or to an Exhibit
attached to this Agreement. All Exhibits referred to in this Agreement are
hereby incorporated by reference.
18. Number and Gender. Use of the singular in this Agreement includes the
plural, use of the plural includes the singular, and use of one gender includes
all other genders, as the context may require.
19. Statutes and Regulations. Any reference in this Agreement to a statute or
regulation shall include all amendments to and successors to such statute or
regulation, whether adopted before or after the date of this Agreement.
20. No Partnership. This Agreement is not intended to, and shall not, create a
partnership or joint venture among the parties, and no party to this Agreement
shall have the power or authority to bind any other party except as explicitly
provided in this Agreement.
21. Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties and their respective heirs, successors, and
assigns.
22. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity of any other provision, and all other
provisions shall remain in full force and effect.
23. Waiver; No Remedy Exclusive. Any forbearance by a party to this Agreement in
exercising any right or remedy given under this Agreement or existing at law or
in equity shall not constitute a waiver of or preclude the exercise of that or
any other right or remedy. Unless otherwise explicitly provided, no remedy under
this Agreement is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies given
under this Agreement or existing at law or in equity.
24. Third Party Beneficiaries. Neither any creditor of any party to this
Agreement, nor any other person, is intended to be a third party beneficiary of
this Agreement.
25. Course of Dealing. No course of dealing among the parties to this Agreement
shall operate as a waiver of any rights of any party under this Agreement.
26. Further Assurances and Corrective Instruments. To the extent permitted by
law, the parties shall, from time to time, execute, acknowledge and deliver, or
cause to be executed, acknowledged and delivered, such supplements to this
Agreement and such further instruments as may reasonably be required for
carrying out the intention of or facilitating the performance of this Agreement.
27. No Party Deemed Drafter. No party shall be deemed the drafter of this
Agreement, and this Agreement shall not be construed against either party as the
drafter of the Agreement.
28. WAIVER OF TRIAL BY JURY. BORROWER AND LENDER EACH (A) COVENANTS AND AGREES
NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS
AGREEMENT 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
BORROWER:
FOOTHILL CHIMNEY ASSOCIATES LIMITED
PARTNERSHIP, a Georgia limited
partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
Borrower's Social Security/Tax ID Number:
94-2768342
Signed, sealed and delivered in the presence of:
_________________________________
Print Name: _____________________, Unofficial Witness
_________________________________
Notary Public, ____________ County,
________________
Date: _______________
My Commission Expires: _______________
LENDER:
FEDERAL HOME LOAN MORTGAGE CORPORATION
By: _________________________________
Name: ____________________
Title: _____________________
Signed, sealed and delivered in the presence of:
_________________________________
Print Name: _____________________, Unofficial Witness
_________________________________
Notary Public, ____________ County,
________________
Date: _______________
My Commission Expires: _______________
Exhibit 10.94
FHLMC Loan No. 734079508
Chimney Hill Apartments
DEBT SERVICE ESCROW AGREEMENT
This DEBT SERVICE ESCROW AGREEMENT ("Agreement") is executed as of the
22nd day of October, 2003 by and between FOOTHILL CHIMNEY ASSOCIATES LIMITED
PARTNERSHIP, a Georgia limited partnership ("Borrower") and FEDERAL HOME LOAN
MORTGAGE CORPORATION, a corporate instrumentality of the United States of
America ("Lender") and its successors and assigns.
RECITALS:
A. Lehman Brothers Holdings Inc. (doing business as Lehman Capital, A Division
of Lehman Brothers Holdings Inc.), a Delaware corporation, (the "Original
Lender") made a loan to Borrower in the original principal amount of Five
Million Four Hundred Thousand and 00/100 Dollars ($5,400,000.00) (the "Loan").
The Loan is evidenced by the Note and secured by the Security Instrument and
Loan Documents defined below. The Note, Security Instrument and other Loan
Documents have been assigned by Original Lender to Lender.
B. As a condition to its approval of certain modifications to the Loan and the
Loan Documents, as evidenced by that certain Modification Agreement of even date
herewith (the "Modification Agreement"), Lender has required that Borrower
execute this Debt Service Escrow Agreement and establish the Debt Service
Escrow, to ensure that adequate funds are available, for among other things, the
payment of any Monthly Deficit, as defined below, and to further secure
Borrower's obligations under the Loan Documents, as modified, and to set forth
the terms under which the Debt Service Escrow shall be maintained and governed.
COVENANTS:
NOW, THEREFORE, for and in consideration of the modification of the Loan,
the mutual promises and covenants contained in this Agreement, and other good
and valuable consideration, the receipt and sufficiency of which are
acknowledged, Lender and Borrower agree as follows:
1. Definitions. The following terms used in this Agreement shall have the
meanings set forth below:
(a) "Debt Service Escrow" means the account established pursuant to this
Agreement.
(b) "Escrow Period" means the period during which the Debt Service Escrow is
held by Lender.
(c) "Jurisdiction" means the State in which the Property is located.
(d) "Loan" means the mortgage loan defined above, as evidenced by the Note and
secured by the Security Instrument.
(e) "Loan Documents" means, collectively, the Note, Security Instrument,
Modification Agreement and all other instruments and documents executed in
connection with the Loan, as modified by the Modification Agreement.
(f) "Monthly Debt Service Coverage Ratio" means the ratio of the monthly Net
Operating Income of the Property for a given month to the monthly payment of
principal and interest due under the Note for that month. The Monthly Debt
Service Coverage Ratio will be determined by Lender.
(g) "Monthly Deficit" means any difference between (i) the monthly payment of
principal and interest due to Lender under the Note, and (ii) the monthly
payment actually received from Borrower.
(h) "Net Operating Income" means the collected monthly rental income and other
recurring income from the Property, as determined by Lender, minus Permitted
Expenses. Net Operating Income shall be computed monthly on an unaudited basis
and adjusted annually, if applicable, by audit to a precise basis.
(i) "Note" means the promissory note from Borrower to Lender evidencing the
Loan.
(j) "Permitted Expenses" means actual monthly operating expenses, routine
maintenance expenses (excluding interest, depreciation and amortization) and the
required monthly deposits established for the benefit of Lender in connection
with the Loan. Note: Pursuant to the Second Amendment to Replacement Reserve
Agreement executed by Borrower and Lender of even date herewith, Borrower's
obligation to make monthly deposits to the Replacement Reserve shall be waived
during the Construction Period defined in the Modification Agreement.
(k) "Property" means the real property and improvements described on Exhibit "A"
of this Agreement.
(l) "Required Debt Service Coverage Ratio" has the meaning defined in Section 5
below.
(m) "Security Instrument" means the deed to secure debt, encumbering the
Property and securing Borrower's repayment of the Note.
2. Debt Service Escrow.
(a) Borrower shall deposit with Lender the sum of Three Hundred Seventy Five
Thousand Three Hundred and 00/100 Dollars ($375,300.00) in the form of cash.
(b) Borrower and Lender agree that all moneys deposited into the Debt Service
Escrow shall be held by Lender in an interest bearing account. Any interest
earned on the funds shall be added to the principal balance of the Debt Service
Escrow and disbursed in accordance with the provisions of this Agreement. Lender
shall not be responsible for any losses resulting from investment of moneys in
the Debt Service Escrow or for obtaining any specific level or percentage of
earnings on such investment. Lender shall not be required to invest the Debt
Service Escrow in accordance with the instructions of Borrower. Lender shall be
entitled to deduct from the Debt Service Escrow a one-time fee for establishing
the Debt Service Escrow in the amount of Two Hundred and 00/100 Dollars
($200.00).
(c) Subject to the pledge and security interest, and other rights of Lender set
forth in this Agreement, the Debt Service Escrow shall be maintained for the
purpose of assuring Lender that adequate funds are available for the payment of
any Monthly Deficit during the Escrow Period and to further secure Borrower's
obligations under the Loan Documents.
3. Operating Statements. Upon completion of Construction, as defined in the
Modification Agreement, Borrower shall provide to Lender by the fifth (5th) day
of each calendar month during the remaining term of this Agreement, a certified
rent roll, together with monthly operating statements reflecting all items of
income and expense in connection with the operation of the Property or in
connection with any services provided in connection with the operation of the
Property. This rent roll shall be prepared in accordance with generally accepted
accounting principles consistently applied, and certified as true and complete
by a principal of Borrower (who may rely upon Borrower's agent in making such
certification, if such reliance is stated in the certification). In addition,
upon request by Lender, Borrower shall provide to Lender any other information
prepared or used by Borrower in connection with the operation of the Property.
4. Disbursements to Lender.
(a) During the Escrow Period, Borrower will make monthly principal and interest
payments as required by the Note. Nothing contained in this Section shall
relieve Borrower of the obligation to pay monthly principal and interest
payments. Notwithstanding the foregoing, Lender shall have the right to deduct
funds from the Debt Service Escrow at such times and in such amounts as Lender
shall determine are necessary to cover any Monthly Deficit.
(b) Additional disbursements from the Debt Service Escrow may be made, at
Lender's discretion, if Borrower fails to pay any escrows or other amounts due
to Lender under the Loan Documents.
5. Release of Funds to Borrower.
Lender will release and return to Borrower the balance of the Debt
Service Escrow upon the satisfaction of the following conditions:
(a) Lender has received from Borrower at least thirty (30) days'
prior written notice of the date proposed for such release (the "Release Date"),
which notice shall include the materials necessary to evidence Borrower's
satisfaction of the conditions set forth below.
(b) No Event of Default, as defined in the Security Instrument, has
occurred following the date of this Agreement and no event or circumstance
exists on the Release Date which, with the giving of notice or the passage of
time or both, could constitute such an Event of Default.
(c) Borrower shall have paid to Lender in full all of Lender's costs
and expenses; including, without limitation, attorney's fees (outside and
in-house counsel) in connection with the release.
(d) Construction at the Property, as defined in the Modification
Agreement and the Construction Agreement defined therein, shall be complete, as
determined by Lender in its sole discretion, and the Property shall be leased
to, and occupied by, residential tenants in accordance with the terms of the
Security Instrument.
(e) Lender shall have received and approved the Modification Policy
Endorsement and the Revised Survey defined in the Modification Agreement.
(f) The Property has achieved a Monthly Debt Service Coverage Ratio
of 1.20:1 (on an annualized basis) for six (6) consecutive months, as determined
by Lender (the "Required Debt Service Coverage Ratio").
(g) Lender shall have the right to delegate the determinations to be
made under this Section 5 to Servicer, as defined in the Modification Agreement.
6. Security Agreement. Borrower hereby conveys, pledges, transfers and grants to
Lender a security interest pursuant to the Uniform Commercial Code of the
Jurisdiction or any other applicable law in and to all money in the Debt Service
Escrow, as that may increase or decrease from time to time.
7. Post Default. If Borrower defaults in the performance of its obligations
under this Agreement or under any Loan Document, Lender and its successors and
assigns shall have all remedies available to them under Article 9 of the Uniform
Commercial Code of the Jurisdiction and under any other applicable law. In
addition, Lender may retain all money in the Debt Service Escrow, including
interest, and, Lender may apply such amounts, without restriction and without
any specific order of priority, to the payment of any and all indebtedness or
obligations of Borrower set forth in any Loan Documents, including, but not
limited to, principal, interest, taxes, insurance, attorneys' fees actually
incurred, repairs to the Property, and any expenses of collection and/or
foreclosure.
8. Taxes. Any taxes due on any interest accruing on any moneys held in
accordance with this Agreement shall be the sole obligation of Borrower, whether
or not such moneys and interest are ultimately paid to or on behalf of Borrower.
9. Termination.
(a) If not sooner terminated by the release of the balance of the Debt Service
Escrow to Borrower, as set forth in Section 5, this Agreement shall terminate
upon payment in full of the indebtedness, principal and interest and all other
sums due under the Note and the other Loan Documents.
(b) In addition to those items required by Section 3 above, Borrower agrees to
provide Lender with financial statements and any other items as Lender may
request in order to determine if the Required Debt Service Coverage Ratio has
been achieved.
(c) Within sixty (60) days after termination of this Agreement, Lender shall pay
to Borrower all funds remaining in the Debt Service Escrow.
10. No Amendment. Nothing contained in this Agreement shall be construed to
amend, modify, alter, change or supersede the terms and provisions of any other
Loan Document. If there is a conflict between the terms and provisions of this
Agreement and those of any other Loan Document, then the terms and provisions of
or such other Loan Document shall control.
11. Release Indemnity.
(a) Release. Borrower covenants and agrees that, in performing any of its
duties under this Agreement, none of Lender and Servicer or any of their
respective agents or employees, shall be liable for any losses, costs or damages
which may be incurred by any of them as a result thereof, except that no party
will be released from liability for any losses, costs or damages arising out of
the willful misconduct or gross negligence of such party.
(b) Indemnity. Borrower hereby agrees to indemnify and hold harmless
Lender, Servicer, and their respective agents and employees, against any and all
losses, claim, damages, liabilities and expenses including, without limitation,
reasonable attorneys' fees and costs, which may be imposed or incurred by any of
them in connection with this Agreement, except that no such party will be
indemnified from any losses, claims, damages, liabilities and expenses arising
out of the willful misconduct or gross negligence of such party.
12. Choice of Law. This Agreement shall be construed and enforced in accordance
with the laws of the Jurisdiction.
13. Successors and Assigns. Lender may assign its rights and interests under
this Agreement in whole or in part and upon any such assignment, all the terms
and provisions of this Agreement shall inure to the benefit of such assignee to
the extent so assigned. The terms used to designate any of the parties herein
shall be deemed to include the heirs, legal representatives, successors and
assigns of such parties; and the term "Lender" shall also include any lawful
owner, holder or pledgee of the Note. Reference herein to "person" or "persons"
shall be deemed to include individuals and entities. Borrower may not assign its
rights, interests, or obligations under this Agreement without first obtaining
Lender's prior written consent.
14. Attorneys' Fees. In the event that Lender or its successors or assigns shall
engage the services of an attorney to enforce the provisions of this Agreement
against Borrower, then Borrower shall pay all costs of such enforcement,
including any reasonable attorneys' fees and costs (including those of Lender's
in-house counsel) actually incurred.
15. Remedies Cumulative. If Borrower defaults under this Agreement, Lender may
exercise all or any one or more of its rights and remedies available under this
Agreement or the Loan Documents, at law or in equity. Such rights and remedies
shall be cumulative and concurrent, and may be enforced separately, successively
or together, and Lender's exercise of any particular right or remedy shall not
in any way prevent Lender from exercising any other right or remedy available to
Lender. Lender may exercise any such remedies from time to time as often as may
be deemed necessary by Lender.
16. Determinations by Lender. In any instance where the consent or approval of
Lender may be given or is required, or where any determination, judgment or
decision is to be rendered by Lender under this Agreement, the granting,
withholding or denial of such consent or approval and the rendering of such
determination, judgment or decision shall be made or exercised by Lender (or its
designated representative) at its sole and exclusive option and in its sole and
absolute discretion.
17. No Agency or Partnership. Nothing contained in this Agreement shall
constitute Lender as a joint venturer, partner or agent of Borrower, or render
Lender liable for any debts, obligations, acts, omissions, representations or
contracts of Borrower.
18. Notifications. For the purpose of this Agreement, whenever Borrower is
required to notify Lender, deliver documentation or other items to Lender,
obtain Lender's consent or approval, or otherwise communicate with Lender, such
notification, delivery, requests and communications shall be made to Lender at
the address provided in the Modification Agreement.
19. Entire Agreement. This writing, together with references to this Agreement
contained in the Modification Agreement, constitutes the entire agreement of the
parties relative to the Debt Service Escrow. Any modification or amendment of
this Agreement shall be ineffective unless in writing and signed by Lender and
Borrower.
20. Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall constitute an original document and all of which together
shall constitute one agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
BORROWER:
FOOTHILL CHIMNEY ASSOCIATES LIMITED
PARTNERSHIP, a Georgia limited
partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
94-2768742
Borrower's Social Security/Employer ID
Number
LENDER:
FEDERAL HOME LOAN MORTGAGE CORPORATION
By:_______________________________________
Name:
Title
Exhibit 10.95
FHLMC Loan No. 734079508
Chimney Hill Apartments
SECOND MODIFICATION TO REPLACEMENT RESERVE AGREEMENT
This SECOND MODIFICATION TO REPLACEMENT RESERVE AGREEMENT ("Second
Modification"), dated as of this 22nd day of October, 2003, by FOOTHILL CHIMNEY
ASSOCIATES LIMITED PARTNERSHIP, a Georgia limited partnership ("Borrower") and
FEDERAL HOME LOAN MORTGAGE CORPORATION, a corporate instrumentally of the United
States of America ("Lender").
RECITALS:
1. Borrower and Lehman Brothers Holdings Inc. (doing business as Lehman
Capitol, A Division of Lehman Brothers Holdings Inc.) ("Original Lender"),
predecessor to Lender, entered into a certain Replacement Reserve Agreement
dated as of November 30, 1995, as amended by Amendment to Replacement
Reserve Agreement dated as of December 20, 1995 (together, the
"Agreement"), in conjunction with a loan (the "Loan") from Original Lender
to Borrower in the original principal amount of Five Million Four Hundred
Thousand and 00/100 Dollars ($5,400,000.00).
2. The Loan is evidenced by a Multifamily Note dated as of November 30, 1995
(the "Note"), and secured by a Multifamily Deed to Secure Debt,
Assignment of Rents and Security Agreement dated as of November 30, 1995
(the "Security Instrument"), encumbering property owned by Borrower in
Cobb County, Georgia.
3. Lender is the current holder of the Note and the beneficiary of the
Security Instrument and the Agreement.
4. Borrower and Lender now desire to modify and amend certain terms of the
Loan, as more particularly set forth in the Modification Agreement (the
"Modification Agreement") of even date between Borrower and Lender, and
in conjunction therewith have agreed to modify the Agreement as set forth
below.
5. All capitalized terms used in this Second Modification and not defined
herein shall have the meanings defined in the Agreement.
MODIFICATIONS:
1. Notwithstanding anything contained in the Agreement or the Security
Instrument to the contrary, Lender defers its right to require Borrower
to make monthly deposits to the Replacement Reserve Fund (collectively,
"Monthly Deposits") until the expiration of the Construction Period
defined in the Modification Agreement. Borrower's obligation to make
Monthly Deposits shall be automatically reinstated upon the expiration of
the Construction Period.
2. In all other respects, except as set forth in the Modification Agreement,
the terms and conditions of the Security Instrument and the Agreement
remain unchanged and, by their execution of this Second Modification,
Borrower and Lender hereby ratify all such other terms and conditions in
their entirety.
3. Borrower and Lender have entered into this Second Modification as of the
date and year above written.
FOOTHILL CHIMNEY ASSOCIATES LIMITED
PARTNERSHIP, a Georgia limited partnership
By: ConCap Equities, Inc., a Delaware
corporation, its general partner
By: /s/Patti K. Fielding
Patti K. Fielding
Executive Vice President
Borrower's Social Security/Tax ID No.
94-2768742
FEDERAL HOME LOAN MORTGAGE CORPORATION, a
corporate instrumentality of the United States
of America
By:
Name:
Title: