UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________to _________
Commission file number 0-8639
CONSOLIDATED CAPITAL GROWTH FUND
(Exact name of small business issuer as specified in its charter)
California 94-2382571
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, PO Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Issuer's telephone number)
Check whether the issuer (i) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No ___
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL GROWTH FUND
BALANCE SHEET
(Unaudited)
(in thousands, except unit data)
September 30, 2004
Assets
Cash and cash equivalents $ 156
Receivables and deposits 518
Restricted escrows 99
Other assets 124
Investment property:
Land $ 946
Buildings and related personal property 16,482
17,428
Less accumulated depreciation (13,179) 4,249
$ 5,146
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 239
Tenant security deposit liabilities 89
Accrued property taxes 188
Other liabilities 264
Due to affiliates (Note B) 517
Mortgage note payable 12,240
Partners' Deficit
General partner $ (3,148)
Limited partners (49,196 units issued and
outstanding) (5,243) (8,391)
$ 5,146
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
Revenues:
Rental income $ 735 $ 735 $ 2,046 $ 2,229
Other income 63 59 178 185
Casualty gain (Note D) -- -- 34 33
Total revenues 798 794 2,258 2,447
Expenses:
Operating 559 422 1,322 1,284
General and administrative 11 96 134 326
Depreciation 218 224 676 681
Property taxes 64 60 190 185
Interest 226 219 673 655
Total expenses 1,078 1,021 2,995 3,131
Loss from continuing operations (280) (227) (737) (684)
Loss from discontinued operations (Note C) -- (3,741) -- (4,366)
Gain on sale of discontinued operations (Note C) -- 26,048 -- 34,879
Net (loss) income $ (280) $22,080 $ (737) $29,829
Net (loss) income allocated to general partners $ (2) $ 3,607 $ (7) $ 4,832
Net (loss) income allocated to limited partners (278) 18,473 (730) 24,997
$ (280) $22,080 $ (737) $29,829
Net (loss) income per limited partnership unit:
Loss from continuing operations $ (5.65) $ (4.57) $(14.84) $(13.76)
Loss from discontinued operations -- (75.27) -- (87.85)
Gain on sale of discontinued operations -- 455.34 -- 609.72
$ (5.65) $375.50 $(14.84) $508.11
Distribution per limited partnership unit $ -- $240.89 $ -- $322.71
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENT OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 49,196 $ 1 $ 49,196 $ 49,197
Partners' deficit at
December 31, 2003 49,196 $(3,141) $ (4,513) $ (7,654)
Net loss for the nine months
ended September 30, 2004 -- (7) (730) (737)
Partners' deficit at
September 30, 2004 49,196 $(3,148) $ (5,243) $ (8,391)
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND
STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2004 2003
Cash flows from operating activities:
Net (loss) income $ (737) $ 29,829
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation 676 1,388
Amortization of loan costs 16 40
Bad debt expense, net 92 253
Casualty gain (34) (33)
Loss on early extinguishment of debt -- 4,245
Gain on sale of discontinued operations -- (34,879)
Change in accounts:
Receivables and deposits (224) (302)
Other assets (26) (12)
Accounts payable (228) (322)
Tenant security deposit liabilities 10 (227)
Accrued property taxes 188 184
Due to affiliates 17 --
Other liabilities (92) (56)
Net cash (used in) provided by operating activities (342) 108
Cash flows from investing activities:
Property improvements and replacements (345) (713)
Net (deposits to) withdrawals from restricted escrows (61) 163
Insurance proceeds received 40 39
Net proceeds from sales of investment properties -- 41,581
Net cash (used in) provided by investing activities (366) 41,070
Cash flows from financing activities:
Advances from affiliates 500 --
Principal payments on mortgage notes payable -- (177)
Distributions to partners -- (18,412)
Repayment of mortgage notes payable -- (22,716)
Loan costs paid -- (5)
Net cash provided by (used in) financing activities 500 (41,310)
Net decrease in cash and cash equivalents (208) (132)
Cash and cash equivalents at beginning of period 364 559
Cash and cash equivalents at end of period $ 156 $ 427
Supplemental disclosure of cash flow information:
Cash paid for interest $ 640 $ 1,539
Supplemental disclosure of non-cash activity:
Net proceeds from sale of investment properties have been adjusted by
approximately $3,840,000 to reflect prepayment penalties paid by the buyer.
See Accompanying Notes to Financial Statements
CONSOLIDATED CAPITAL GROWTH FUND
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited financial statements of Consolidated Capital Growth
Fund (the "Partnership" or "Registrant") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Article 310(b) of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of ConCap Equities, Inc. (the "General Partner"), all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended September 30, 2004, are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2004. For further
information, refer to the financial statements and footnotes thereto included in
the Partnership's Annual Report on Form 10-KSB/A No. 1 for the year ended
December 31, 2003. The General Partner is a wholly owned subsidiary of Apartment
Investment and Management Company ("AIMCO"), a publicly traded real estate
investment trust.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statements of operations for the three and nine
months ended September 30, 2003 reflect the operations of Breckenridge Square,
Churchill Park and Doral Springs Apartments as loss from discontinued operations
due to their sales in January 2003, July 2003 and September 2003, respectively.
Note B - Transactions with Affiliated Parties
The Partnership has no employees and depends on the General Partner and its
affiliates for the management and administration of all Partnership activities.
The Partnership Agreement provides for (i) certain payments to affiliates for
services and (ii) reimbursement of certain expenses incurred by affiliates on
behalf of the Partnership.
Affiliates of the General Partner are entitled to receive 5% of gross receipts
from the Partnership's properties for providing property management services.
The Partnership paid to such affiliates approximately $109,000 and $325,000 for
the nine months ended September 30, 2004 and 2003, respectively, which is
included in operating expenses and loss from discontinued operations.
An affiliate of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $92,000 and $240,000 for the
nine months ended September 30, 2004 and 2003, respectively, which is included
in general and administrative expenses and investment properties. Included in
these amounts are fees related to construction management services of
approximately $7,000 and $23,000 for the nine months ended September 30, 2004
and 2003, respectively. The construction management service fees are calculated
based on a percentage of additions to the investment properties.
The Partnership Agreement provides for a fee equal to 9% of the total
distributions made to the limited partners from "cash available for
distribution" (as defined in the Partnership Agreement) to be paid to the
General Partner for executive and administrative management services. During the
nine months ended September 30, 2003, affiliates of the General Partner received
approximately $28,000 for providing these services, which is included in general
and administrative expenses. No fees were earned or paid for the nine months
ended September 30, 2004.
Pursuant to the Partnership Agreement and in connection with the sale of
Breckinridge Square in January 2003, Churchill Park in July 2003, and Doral
Springs in September 2003, the General Partner is entitled to a commission of up
to 3% for its assistance in the sale. During the nine months ended September 30,
2003, approximately $603,000 was paid to the General Partner.
During the nine months ended September 30, 2004, an affiliate of the General
Partner advanced the Partnership approximately $500,000 to assist in paying city
taxes related to the sales of two investment properties and to fund replacement
reserves at The Lakes Apartments. Interest was charged at the prime rate plus 2%
(6.75% at September 30, 2004) and was approximately $17,000 for the nine months
ended September 30, 2004. Advances and accrued interest are shown as due to
affiliates on the accompanying balance sheet.
The Partnership insures its property 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 property above the AIMCO limits through
insurance policies obtained by AIMCO from insurers unaffiliated with the General
Partner. During the nine months ended September 30, 2004 and 2003, the
Partnership was charged by AIMCO and its affiliates approximately $64,000 and
$127,000, respectively, for insurance coverage and fees associated with policy
claims administration.
Note C- Sale of Investment Property
On January 16, 2003, the Partnership sold Breckinridge Square to a third party
for net proceeds of approximately $10,990,000 after payment of closing costs.
The Partnership realized a gain of approximately $8,831,000 as a result of the
sale. The Partnership used approximately $6,000,000 of net proceeds to repay the
mortgage encumbering the property. In addition, the Partnership recorded a loss
on early extinguishment of debt of approximately $689,000 as result of
unamortized loan costs being written off and prepayment penalties. This amount
is included in loss from discontinued operations in the accompanying statements
of operations. Included in loss from discontinued operations for the nine months
ended September 30, 2003 is approximately $175,000 of revenue generated by the
property.
On July 25, 2003 the Partnership sold Churchill Park to a third party for net
proceeds of approximately $12,604,000 after payment of closing costs. The
Partnership realized a gain of approximately $9,176,000 as a result of the sale.
The Partnership used approximately $6,450,000 of the net proceeds to repay the
mortgage encumbering the property. In addition, the Partnership recorded a loss
on early extinguishment of debt of approximately $650,000 as a result of
unamortized loan costs being written off and prepayment penalties. This amount
is included in loss from discontinued operations in the accompanying statements
of operations. Included in loss from discontinued operations for the nine months
ended September 30, 2003 is approximately $1,357,000 of revenue generated by the
property.
On September 4, 2003, the Partnership sold Doral Springs to a third party for
net proceeds of approximately $21,827,000 after payment of closing costs. The
Partnership realized a gain of approximately $16,872,000 as a result of the
sale. The Partnership used approximately $10,266,000 of the net proceeds to
repay the mortgage encumbering the property. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $2,906,000 as a
result of unamortized loan costs being written off and prepayment penalties.
This amount is included in loss from discontinued operations in the accompanying
statements of operations. Included in loss from discontinued operations for the
nine months ended September 30, 2003 is approximately $2,136,000 of revenue
generated by the property.
Note D - Casualties
In October 2003, the Partnership's investment property, The Lakes Apartments,
incurred damage to four apartment units as a result of a fire. As a result of
the damage, approximately $32,000 of fixed assets and $26,000 of accumulated
depreciation were written off resulting in a net write off of approximately
$6,000. During the nine months ended September 30, 2004, the property received
approximately $40,000 in insurance proceeds from the insurance company to repair
the damaged units. For financial statement purposes, a casualty gain of
approximately $34,000 was recognized during the nine months ended September 30,
2004 as a result of the difference between the proceeds received and the net
book value of the assets written off.
In December 2002, one of the Partnership's investment properties, The Lakes,
incurred damages to its buildings as a result of a hailstorm. As a result of the
damage, approximately $26,000 of fixed assets and $20,000 of accumulated
depreciation were written off resulting in a net write off of approximately
$6,000. The property received approximately $39,000 in proceeds from the
insurance company to repair the damaged units. For financial statement purposes,
a casualty gain of approximately $33,000 was recognized during the nine months
ended Septemebr 30, 2003 as a result of the difference between the proceeds
received and the net book value of the assets written off.
Note E - OSHA Settlement
In 2003, the Partnership accrued approximately $100,000 related to a projected
OSHA penalty arising from various citations at The Lakes Apartments. During the
nine months ended September 30, 2004, the Partnership was able to settle the
penalty for approximately $25,000. The reserve in excess of estimated legal
costs was reversed and is reflected as a reduction in operating expenses for the
nine months ended September 30, 2004.
Note F - Contingencies
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 captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. 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 (the "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. The Objector filed a second
appeal challenging the court's use of a referee and its order requiring Objector
to pay those fees.
On January 28, 2004, the Objector filed his opening brief in the Appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. The plaintiffs have also
filed a brief in support of the settlement. On June 4, 2004, Objector filed a
reply to the briefs submitted by the General Partner and Plaintiffs. In addition
both the Objector and plaintiffs filed briefs in connection with the second
appeal. The Court of Appeals heard oral argument on both appeals on September
22, 2004 and took the matters under submission.
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.
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. On March 5, 2004 the plaintiffs filed
an amended complaint also naming NHP Management Company, which is also an
affiliate of the General Partner. 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 defendants have
filed an answer to the amended complaint denying the substantive allegations.
Some discovery has taken place and settlement negotiations continue. Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
financial condition or results of operations. Similarly, the General Partner
does not believe that the ultimate outcome will have a material adverse effect
on the Partnership's financial condition or results of 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.
As previously disclosed, the Central Regional Office of the United States
Securities and Exchange Commission (the "SEC") is conducting a formal
investigation relating to certain matters. Although the staff of the SEC is not
limited in the areas that it may investigate, AIMCO believes the areas of
investigation include AIMCO's miscalculated monthly net rental income figures in
third quarter 2003, forecasted guidance, accounts payable, rent concessions,
vendor rebates, capitalization of payroll and certain other costs, and tax
credit transactions. AIMCO is cooperating fully. AIMCO is not able to predict
when the matter will be resolved. AIMCO does not believe that the ultimate
outcome will have a material adverse effect on its consolidated financial
condition or results of operations. Similarly, the General Partner does not
believe that the ultimate outcome will have a material adverse effect on the
Partnership's consolidated financial condition or results of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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.
The Partnership's remaining investment property consists of one apartment
complex. The following table sets forth the average occupancy of the property
for the nine months ended September 30, 2004 and 2003:
Average Occupancy
Property 2004 2003
The Lakes 77% 84%
Raleigh, North Carolina
The General Partner attributes the decrease in occupancy at The Lakes Apartments
to increased credit standards for tenants.
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment property, interest
rates on mortgage loans, costs incurred to operate the investment property,
general economic conditions and weather. As part of the ongoing business plan of
the Partnership, the General Partner monitors the rental market environment of
its investment property 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. Further,
a number of factors that are outside the control of the Partnership such as the
local economic climate and weather can adversely or positively affect the
Partnership's financial results.
Results of Operations
The Partnership's net loss for the three and nine months ended September 30,
2004 was approximately $280,000 and $737,000, respectively, compared to net
income of approximately $22,080,000 and $29,829,000 for the same periods in
2003. Net income decreased for the three and nine month periods due to the
recognition of gains on the sales of Breckinridge Square, Churchill Park, and
Doral Spring Apartments, partially offset by a decrease in loss from
discontinued operations.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the accompanying consolidated statements of operations for the three and nine
months ended September 30, 2003 reflect the operations of Breckinridge Square,
Churchill Park, and Doral Spring Apartments as loss from discontinued operations
due to their sales in January 2003, July 2003 and September 2003, respectively.
On January 16, 2003, the Partnership sold Breckinridge Square to a third party
for net proceeds of approximately $10,990,000 after payment of closing costs.
The Partnership realized a gain of approximately $8,831,000 as a result of the
sale. The Partnership used approximately $6,000,000 of net proceeds to repay the
mortgage encumbering the property. In addition, the Partnership recorded a loss
on early extinguishment of debt of approximately $689,000 as result of
unamortized loan costs being written off and prepayment penalties. This amount
is included in loss from discontinued operations in the accompanying statements
of operations. Included in loss from discontinued operations for the nine months
ended September 30, 2003 is approximately $175,000 of revenue generated by the
property.
On July 25, 2003 the Partnership sold Churchill Park to a third party for net
proceeds of approximately $12,604,000 after payment of closing costs. The
Partnership realized a gain of approximately $9,176,000 as a result of the sale.
The Partnership used approximately $6,450,000 of the net proceeds to repay the
mortgage encumbering the property. In addition, the Partnership recorded a loss
on early extinguishment of debt of approximately $650,000 as a result of
unamortized loan costs being written off and prepayment penalties. This amount
is included in loss from discontinued operations in the accompanying statements
of operations. Included in loss from discontinued operations for the nine months
ended September 30, 2003 is approximately $1,357,000 of revenue generated by the
property.
On September 4, 2003, the Partnership sold Doral Springs to a third party for
net proceeds of approximately $21,827,000 after payment of closing costs. The
Partnership realized a gain of approximately $16,872,000 as a result of the
sale. The Partnership used approximately $10,266,000 of the net proceeds to
repay the mortgage encumbering the property. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $2,906,000 as a
result of unamortized loan costs being written off and prepayment penalties.
This amount is included in loss from discontinued operations in the accompanying
statements of operations. Included in loss from discontinued operations for the
nine months ended September 30, 2003 is approximately $2,136,000 of revenue
generated by the property.
Excluding the impact of the gain on sale and the loss from discontinued
operations, the Partnership realized a loss from continuing operations of
approximately $280,000 and $737,000 for the three and nine month periods ended
September 30, 2004, respectively, compared to a loss from continuing operations
of approximately $227,000 and $684,000 for the corresponding periods in 2003.
The increase in loss from continuing operations for the three month period is
due to an increase in total expenses. The increase in loss from continuing
operations for the nine month period is due to a decrease in total revenue
partially offset by a decrease in total expenses. Total revenue decreased for
the nine month period due to a decrease in rental income. Rental income
decreased due to a decrease in occupancy at The Lakes Apartments.
In October 2003, the Partnership's investment property, The Lakes Apartments,
incurred damage to four apartment units as a result of a fire. As a result of
the damage, approximately $32,000 of fixed assets and $26,000 of accumulated
depreciation were written off resulting in a net write off of approximately
$6,000. During the nine months ended September 30, 2004, the property received
approximately $40,000 in insurance proceeds from the insurance company to repair
the damaged units. For financial statement purposes, a casualty gain of
approximately $34,000 was recognized during the nine months ended September 30,
2004 as a result of the difference between the proceeds received and the net
book value of the assets written off.
In December 2002, one of the Partnership's investment properties, The Lakes,
incurred damages to its buildings as a result of a hailstorm. As a result of the
damage, approximately $26,000 of fixed assets and $20,000 of accumulated
depreciation were written off resulting in a net write off of approximately
$6,000. The property received approximately $39,000 in proceeds from the
insurance company to repair the damaged units. For financial statement purposes,
a casualty gain of approximately $33,000 was recognized during the nine months
ended September 30, 2003 as a result of the difference between the proceeds
received and the net book value of the assets written off.
Total expenses increased for the three month period due to an increase in
operating expenses partially offset by a decrease in general and administrative
expenses. Total expenses decreased for the nine month period due to a decrease
in general and administrative expenses, partially offset by an increase in
operating expenses. Operating expenses for both periods increased due to
increases in advertising and property expenses, partially offset by a decrease
in administrative expense. Advertising expenses increased due to an increase in
leasing promotions at the investment property. Property expenses increased due
to increases in payroll and related benefits, utilities and corporate unit
expense at The Lakes Apartments. Administrative expenses decreased due to the
accrual in 2003 for a projected OSHA penalty arising from various citations at
The Lakes Apartments. The penalty was settled during the nine months ended
September 30, 2004 for approximately $25,000 and the reserve in excess of the
settlement and estimated legal costs was reversed.
General and administrative expenses for both periods decreased due to decreases
in the cost of services included in management reimbursements to the General
Partner, as allowed under the Partnership Agreement and in Partnership
management fees due to no cash from operations being distributed in 2004. For
2004 and 2003, 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.
Liquidity and Capital Resources
At September 30, 2004, the Partnership had cash and cash equivalents of
approximately $156,000 compared to approximately $427,000 at September 30, 2003.
Cash and cash equivalents decreased approximately $208,000 from December 31,
2003 due to approximately $342,000 and $366,000 of cash used in operating and
investing activities, respectively, partially offset by approximately $500,000
of cash provided by financing activities. Cash used in investing activities
consisted of property improvements and replacements and net deposits to
restricted escrows maintained by the mortgage lender partially offset by
insurance proceeds received. Cash provided by financing activities consisted of
advances received from an affiliate of the General Partner. The Partnership
invests its working capital reserves in interest bearing accounts.
The sufficiency of existing liquid assets to meet future liquidity and capital
expenditure requirements is directly related to the level of capital
expenditures required at the 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. For example, 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. Capital improvements planned for the Partnership's property are
detailed below.
The Lakes Apartments
During the nine months ended September 30, 2004, the Partnership completed
approximately $345,000 of capital improvements at The Lakes Apartments,
consisting primarily of major landscaping, interior decoration, interior
lighting, fire safety equipment, exterior painting, casualty repairs and water
heater, appliance and floor covering replacements. These improvements were
funded from operating cash flow and insurance proceeds. The Partnership
evaluates the capital improvement needs of the property during the year and
currently expects to complete an additional $9,000 in capital improvements
during the remainder of 2004. Additional capital improvements may be considered
and will depend on the physical condition of the property as well as replacement
reserves and anticipated cash flow generated by the property.
Additional capital expenditures will be incurred only if cash is available from
operations and Partnership reserves. To the extent that such budgeted capital
improvements are completed, the 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 investment property of approximately $12,240,000
requires monthly interest only payments until December 1, 2005 at which time a
balloon payment is due. The General Partner will attempt to refinance such
indebtedness and/or sell the property prior to such maturity date. If the
property cannot be refinanced or sold for a sufficient amount, the Partnership
will risk losing the property through foreclosure.
The Partnership distributed the following amounts during the nine months ended
September 30, 2004 and 2003 (in thousands, except per unit data):
Nine Months Ended Per Limited Nine Months Ended Per Limited
September 30, Partnership September 30, Partnership
2004 Unit 2003 Unit
Operations $ -- $ -- $ 317 $ 6.38
Sale proceeds (1) -- -- 18,095 316.33
$ -- $ -- $18,412 $322.71
(1) Proceeds from the sales of Breckinridge Square, Churchill Park and Doral
Springs Apartments.
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
maturity, refinancing, and/or property sale. There can be no assurance that the
Partnership will generate sufficient funds from operations, after required
capital expenditures, to permit any distributions to its partners during the
remainder of 2004 or subsequent periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 32,142.75 limited partnership units
(the "Units") in the Partnership representing 65.34% of the outstanding Units at
September 30, 2004. 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, unit holders 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 65.34% of the
outstanding Units, AIMCO and its affiliates are in a position to control all
such 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
The financial statements are prepared in accordance with accounting principles
generally accepted in the United States, which require the Partnership to make
estimates and assumptions. The Partnership believes that of its significant
accounting policies, the following may involve a higher degree of judgment and
complexity.
Impairment of Long-Lived Assets
Investment property is 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 property. 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 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 3. 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
fiscal quarter to which this report relates that have materially affected, or
are reasonably likely to materially affect, the Partnership's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. 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 captioned Heller v. Insignia Financial Group (the "Heller action") was
filed against the same defendants that are named in the Nuanes action. 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 (the "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. The Objector filed a second
appeal challenging the court's use of a referee and its order requiring Objector
to pay those fees.
On January 28, 2004, the Objector filed his opening brief in the Appeal. On
April 23, 2004, the General Partner and its affiliates filed a response brief in
support of the settlement and the judgment thereto. The plaintiffs have also
filed a brief in support of the settlement. On June 4, 2004, Objector filed a
reply to the briefs submitted by the General Partner and Plaintiffs. In addition
both the Objector and plaintiffs filed briefs in connection with the second
appeal. The Court of Appeals heard oral argument on both appeals on September
22, 2004 and took the matters under submission.
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.
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. On March 5, 2004 the plaintiffs filed
an amended complaint also naming NHP Management Company, which is also an
affiliate of the General Partner. 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 defendants have
filed an answer to the amended complaint denying the substantive allegations.
Some discovery has taken place and settlement negotiations continue. Although
the outcome of any litigation is uncertain, AIMCO Properties, L.P. does not
believe that the ultimate outcome will have a material adverse effect on its
financial condition or results of operations. Similarly, the General Partner
does not believe that the ultimate outcome will have a material adverse effect
on the Partnership's financial condition or results of operations.
ITEM 6. EXHIBITS
See Exhibit Index attached.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONSOLIDATED CAPITAL GROWTH FUND
By: CONCAP EQUITIES, INC.
General Partner
By: /s/Martha L. Long
Martha L. Long
Senior Vice President
By: /s/Stephen B. Waters
Stephen B. Waters
Vice President
Date: November 12, 2004
EXHIBIT INDEX
Exhibit
3 Certificate of Limited Partnership, as amended to date.
10.30 Multifamily Note dated November 30, 1995 between
Consolidated Capital Growth Fund, a California limited
partnership, and Lehman Brothers Holdings Inc. d/b/a Lehman
Capital, A Division of Lehman Brothers Holdings, Inc.
(Incorporate by reference to the Annual Report on Form
10-KSB for the year ended December 31, 1995).
10.32 Purchase and Sale Contract between Registrant and Brookside
Properties, Inc., dated November 22, 2002. (Incorporate by
reference to the Current Report on Form 8-K dated January
16, 2003 and filed January 27, 2003).
10.33 First Amendment to Purchase and Sale Contract between
Registrant and Brookside Properties, Inc., dated November
22, 2002. (Incorporate by reference to the Current Report
on Form 8-K dated January 16, 2003 and filed January 27,
2003).
10.34 Second Amendment to Purchase and Sale Contract between
Registrant and Brookside Properties, Inc., dated November
22, 2002. (Incorporate by reference to the Current Report
on Form 8-K dated January 16, 2003 and filed January 27,
2003).
10.35 Assignment of Purchase Agreement between Brookside
Properties, Inc. and Breckinridge Multifamily, LLC, dated
January 16, 2003. (Incorporate by reference to the Current
Report on Form 8-K dated January 16, 2003 and filed January
27, 2003).
10.36 Purchase and Sale Contract between Registrant and Churchill
Park Investors, LLC, dated May 7, 2003. (Incorporate by
reference to the Current Report on Form 8-K dated July 29,
2003 and filed August 13, 2003).
10.37 Reinstatement and Amendment to Purchase and Sale Contract
between Registrant and Churchill Park Investors, LLC dated
June 24, 2003. (Incorporate by reference to the Current Report
on Form 8-K dated July 29, 2003 and filed August 13, 2003).
10.38 Purchase and Sale Contract between Registrant and FF Realty,
LLC, dated June 6, 2003. (Incorporate by reference to the
Current Report on Form 8-K dated September 4, 2003 and filed
September 18, 2003).
10.39 Reinstatement and Amendment to Purchase and Sale Contract
between Registrant and FF Realty, LLC dated July 11, 2003.
(Incorporate by reference to the Current Report on Form 8-K
dated September 4, 2003 and filed September 18, 2003).
10.40 Second Amendment to Purchase and Sale Contract between
Registrant and FF Realty, LLC dated August 15, 2003.
(Incorporate by reference to the Current Report on Form 8-K
dated September 4, 2003 and filed September 18, 2003).
10.41 Escrow Agreement between Registrant and FF Realty, LLC dated
June 6, 2003. (Incorporate by reference to the Current Report
on Form 8-K dated September 4, 2003 and filed September 18,
2003).
10.42 Assignment and Assumption of Real Estate Sales Agreement
between FF Realty, LLC and Fairfield Doral Springs, LLC dated
August 22, 2003. (Incorporate by reference to the Current
Report on Form 8-K dated September 4, 2003 and filed September
18, 2003).
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.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Consolidated
Capital Growth Fund;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: November 12, 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, Stephen B. Waters, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Consolidated
Capital Growth Fund;
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 small business issuer as of, and for, the periods presented in this
report;
4. The small business issuer'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 small business issuer 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
small business issuer, 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 small business issuer'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 small business issuer's
internal control over financial reporting that occurred during the
small business issuer's most recent fiscal quarter (the small
business issuer's fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the small business issuer's internal control over
financial reporting; and
5. The small business issuer's other certifying officer(s) and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's auditors and the audit
committee of the small business issuer'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 small business issuer'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 small business
issuer's internal control over financial reporting.
Date: November 12, 2004
/s/Stephen B. Waters
Stephen B. Waters
Vice President 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 Quarterly Report on Form 10-QSB of Consolidated Capital
Growth Fund (the "Partnership"), for the quarterly period ended September 30,
2004 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 Stephen B. Waters, 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: November 12, 2004
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 12, 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.