UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________to _________
Commission file number 0-11002
CONSOLIDATED CAPITAL PROPERTIES IV
(Exact Name of Registrant as Specified 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)
(864) 239-1000
(Registrant's telephone number)
Check 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 proceeding
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 whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes ___ No X_
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
June 30, December 31,
2005 2004
(Unaudited) (Restated)
(Note)
Assets
Cash and cash equivalents $ 9,180 $ 4,539
Receivables and deposits 1,133 1,187
Restricted escrows 5,349 426
Other assets 1,620 1,359
Investment properties:
Land 11,030 11,030
Buildings and related personal property 117,078 107,750
128,108 118,780
Less accumulated depreciation (77,500) (76,096)
50,608 42,684
$ 67,890 $ 50,195
Liabilities and Partners' Deficit
Liabilities
Accounts payable $ 1,336 $ 3,704
Tenant security deposit liabilities 334 306
Accrued property taxes 825 991
Other liabilities 1,058 868
Due to affiliates (Note B) 643 33
Distributions payable 715 715
Mortgage notes payable 72,539 53,520
77,450 60,137
Partners' Deficit
General partners (5,928) (5,791)
Limited partners (342,773 units issued and
outstanding) (3,632) (4,151)
(9,560) (9,942)
$ 67,890 $ 50,195
Note: The consolidated balance sheet at December 31, 2004, has been derived from
the audited financial statements at that date but does not include all the
information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
(Restated) (Restated)
Revenues:
Rental income $ 4,439 $ 3,845 $ 8,548 $ 7,694
Other income 487 517 973 1,006
Casualty gains (Note C) 2 355 52 399
Total revenues 4,928 4,717 9,573 9,099
Expenses:
Operating 2,486 2,022 4,654 3,798
General and administrative 206 263 377 510
Depreciation 835 496 1,434 1,081
Interest 1,127 952 1,813 1,901
Property taxes 364 321 754 621
Total expenses 5,018 4,054 9,032 7,911
(Loss) income from continuing operations (90) 663 541 1,188
Income from discontinued operations -- 86 -- 228
Gain on sale of discontinued operations -- -- -- 3,141
Net (loss) income $ (90) $ 749 $ 541 $ 4,557
Net (loss) income allocated to general
partners (4%) $ (4) $ 30 $ 22 $ 182
Net (loss) income allocated to limited
partners (96%) (86) 719 519 4,375
$ (90) $ 749 $ 541 $ 4,557
Per limited partnership unit:
(Loss) income from continuing operations $ (0.25) $ 1.85 $ 1.51 $ 3.32
Income from discontinued operations -- 0.25 -- 0.64
Gain on sale of discontinued operations -- -- -- 8.80
Net (loss) income $ (0.25) $ 2.10 $ 1.51 $ 12.76
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' DEFICIT
(Unaudited)
(in thousands, except unit data)
Limited Total
Partnership General Limited Partners'
Units Partners Partners Deficit
Original capital contributions 343,106 $ 1 $171,553 $171,554
Partners' deficit at
December 31, 2004, as restated 342,773 $ (5,791) $ (4,151) $ (9,942)
Distributions to partners -- (159) -- (159)
Net income for the six months
ended June 30, 2005 -- 22 519 541
Partners' deficit at
June 30, 2005 342,773 $ (5,928) $ (3,632) $ (9,560)
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL PROPERTIES IV
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Six Months Ended
June 30,
2005 2004
Cash flows from operating activities:
Net income $ 541 $ 4,557
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 1,434 1,358
Amortization of loan costs 98 98
Casualty gains (52) (399)
Loss on early extinguishment of debt -- 48
Gain on sale of discontinued operations -- (3,141)
Change in accounts:
Receivables and deposits 54 1
Other assets (176) (515)
Accounts payable (1,010) 304
Tenant security deposit liabilities 28 (40)
Accrued property taxes (166) (345)
Other liabilities 190 30
Due to affiliates 13 --
Net cash provided by operating activities 954 1,956
Cash flows from investing activities:
Property improvements and replacements (10,716) (5,141)
Net deposits to restricted escrows (4,923) (339)
Insurance proceeds received from casualties 52 399
Proceeds from sales of discontinued operations -- 3,794
Net cash used in investing activities (15,587) (1,287)
Cash flows from financing activities:
Proceeds from mortgage notes payable 19,250 3,810
Loan costs paid (183) (149)
Repayment of mortgage notes payable -- (2,204)
Payments on mortgage notes payable (231) (440)
Distributions to partners (159) (5)
Advances from affiliates 5,091 900
Payments on advances from affiliates (4,494) (900)
Net cash provided by financing activities 19,274 1,012
Net increase in cash and cash equivalents 4,641 1,681
Cash and cash equivalents at beginning of period 4,539 1,537
Cash and cash equivalents at end of period $ 9,180 $ 3,218
Supplemental Disclosures of Cash Flow Information and Non-Cash Activities:
Cash paid for interest was approximately $1,977,000 and $2,487,000 for the six
months ended June 30, 2005 and 2004, respectively.
At June 30, 2005, property improvements and replacements of approximately
$1,184,000 were included in accounts payable. At December 31, 2004, property
improvements and replacements of approximately $3,307,000 were included in
accounts payable, of which approximately $2,542,000 was paid during the six
months ended June 30, 2005. 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
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Properties IV (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-Q and Article 10 of Regulation
S-X. 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. ("CEI" or 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 six months ended June 30, 2005, are not necessarily indicative of the
results that may be expected for the fiscal year ending December 31, 2005. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Partnership's Annual Report on Form 10-K/A No.
1 for the fiscal year ended December 31, 2004. The General Partner is a
subsidiary of Apartment Investment and Management Company ("AIMCO"), a publicly
traded real estate investment trust.
The Partnership amended its Form 10-K for the year ended December 31, 2004 and
its Form 10-Q for the three months ended March 31, 2005 to adjust for
capitalizing interest expense related to the redevelopment of one of the
investment properties. In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 34, the Partnership should have considered the total
consolidated debt of the Partnership in determining the amount of interest
expense to capitalize. In addition, the Partnership paid a pre-payment penalty
associated with the retirement of the mortgage encumbering the investment
property in 2004 and this pre-payment penalty should also have been capitalized,
as the Partnership was required by the mortgage lender to repay the mortgage.
Because of the errors noted above, the balance sheet as of December 31, 2004,
including the partners' deficit, has been restated to reflect the correction of
these errors.
In accordance with SFAS No. 144, the consolidated statements of operations for
the three and six months ended June 30, 2004 have been restated to reflect the
operations of Briar Bay and Nob Hill Villa Apartments as income from
discontinued operations due to their sales in October 2004. For the six months
ended June 30, 2004, the operations of Briar Bay and Nob Hill Villa Apartments
include approximately $943,000 and $1,233,000, respectively, of revenue
generated by the properties. In addition, the operations of Point West
Apartments are included in income from discontinued operations due to its sale
in March 2004.
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 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 receive 5% of gross receipts from all the
Partnership's properties as compensation for providing property management
services. The Partnership paid to such affiliates approximately $460,000 and
$545,000 for the six months ended June 30, 2005 and 2004, respectively, which is
included in operating expenses and income from discontinued operations.
Affiliates of the General Partner received reimbursement of accountable
administrative expenses amounting to approximately $355,000 and $402,000 for the
six months ended June 30, 2005 and 2004, respectively, which is included in
general and administrative expenses and investment properties. The portion of
these reimbursements included in investment properties for the six months ended
June 30, 2005 and 2004, are fees related to construction management services
provided by an affiliate of the General Partner of approximately $93,000 and
$21,000, respectively. The construction management service fees are calculated
based on a percentage of additions to investment properties.
The 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. There were no such special management fees paid or earned
during the six months ended June 30, 2005 and 2004.
For acting as real estate broker in connection with the sale of South Port
Apartments in 2003, the General Partner was paid a real estate commission of
approximately $295,000. When the Partnership terminates, the General Partner
will have to return this commission if the limited partners do not receive their
original invested capital plus a 6% per annum cumulative return.
In accordance with the Partnership Agreement, an affiliate of the General
Partner advanced the Partnership approximately $5,091,000 and $900,000 during
the six months ended June 30, 2005 and 2004, respectively, primarily to assist
with the construction of Belmont Place Apartments. During the same periods, the
Partnership repaid principal and interest of approximately $4,545,000 and
$905,000, respectively. Interest on advances is charged at prime plus 2%, or
8.25% at June 30, 2005. Interest expense was approximately $51,000 and $5,000
for the six months ended June 30, 2005 and 2004, respectively. At June 30, 2005,
the amount of the outstanding loans and accrued interest was approximately
$643,000 and is shown as due to affiliates on the accompanying consolidated
balance sheet.
Subsequent to June 30, 2005, an affiliate of the General Partner advanced the
Partnership approximately $539,000 to assist in the construction of Belmont
Place Apartments. In addition, the Partnership repaid approximately $1,182,000
of advances and accrued interest.
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, general
liability 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 six months ended June 30, 2005
and 2004, the Partnership was charged by AIMCO and its affiliates approximately
$282,000 and $377,000, respectively, for insurance coverage and fees associated
with policy claims administration.
Note C - Casualty Gains
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $92,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $44,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. During the six months ended June 30, 2004, the Partnership
received insurance proceeds of approximately $190,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $161,000 during the six months ended June 30,
2004 as the damaged assets were fully depreciated at the time of the casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of the
rental units. Insurance proceeds of approximately $47,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $47,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty. During the
six months ended June 30, 2005, the Partnership received approximately $2,000 in
additional proceeds which was recognized as a casualty gain.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $55,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In July 2004, Citadel Village Apartments suffered hail and wind damage to some
of its rental units. Insurance proceeds of approximately $50,000 were received
during the six months ended June 30, 2005. The Partnership recognized a casualty
gain of approximately $50,000 during the six months ended June 30, 2005 as the
damaged assets were fully depreciated at the time of the casualty.
Note D - Disposition of Investment Property
On March 31, 2004, the Partnership sold Point West Apartments to a third party,
for a gross sales price of $3,900,000. The net proceeds realized by the
Partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the six months ended June 30,
2004, as a result of this sale. The property's operations, a loss of
approximately $39,000 for the six months ended June 30, 2004 includes revenues
of approximately $189,000 and are included in income from discontinued
operations. In addition, the Partnership recorded a loss on early extinguishment
of debt of approximately $48,000 for the six months ended June 30, 2004 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 - Redevelopment of Belmont Place Apartments
During 2003, the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003. At June 30, 2005, all 326 units had been
substantially completed.
The Partnership entered into a construction contract with Casden Builders, Inc.
(a related party) to develop the new Belmont Place Apartments at an estimated
cost of approximately $26.9 million. The construction contract provides for the
payment of the cost of the work plus a fee without a maximum guaranteed price.
Construction was completed in 2005 at a total project cost of approximately
$32.2 million. At June 30, 2005, total costs of approximately $30.9 million had
been incurred. The Partnership has funded construction expenditures from
operating cash flow, proceeds from a cross collateralized loan, Partnership
reserves, loans from an affiliate of the General Partner and sales proceeds.
During the six months ended June 30, 2005 and 2004, approximately $6,601,000 and
$4,491,000 of construction costs were incurred, respectively. Included in these
construction costs are capitalized interest costs of approximately $394,000 and
$198,000 for the six months ended June 30, 2005 and 2004, respectively,
capitalized tax and insurance expenses of approximately $6,000 and $111,000 for
the six months ended June 30, 2005 and 2004, respectively, and other
construction period operating costs of approximately $10,000 for 2005. The
Partnership anticipates additional construction costs of approximately $1.5
million during 2005, which will be funded from the mortgage obtained on the
property (see Note F).
Note F - Mortgage Financing
On April 29, 2005, the Partnership obtained a mortgage in the principal amount
of $19,250,000 on Belmont Place Apartments. The Partnership received proceeds
from the mortgage of approximately $14,084,000 after payment of closing costs
and the funding of two letters of credit, as discussed below. Closing costs of
approximately $183,000 were capitalized and are included in other assets. The
new mortgage requires monthly payments of interest beginning on June 1, 2005
until November 1, 2006. Beginning December 1, 2006, monthly payments of
principal and interest of $108,180 are required until the loan matures November
1, 2034. The lender can exercise a call option on the mortgage on June 1, 2012
and every fifth anniversary thereafter. The interest rate is fixed at 5.14% for
the life of the mortgage.
In conjunction with the mortgage, the Partnership has provided to the lender two
letters of credit, each in the amount of $2,500,000, to secure the Partnership's
obligations under the mortgage. The letters of credit are secured by proceeds
from the mortgage financing which were deposited into an escrow account. The
lender will release the first letter of credit when the property has achieved
annual rental income of approximately $2.9 million from 60% of the rental units
and will release the second letter of credit when the property has achieved
annual rental income of approximately $3.9 million from 88% of the rental units.
On June 8, 2004, the Partnership obtained a second mortgage loan on Lake Forest
Apartments in the amount of $2,500,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (6.34% at June 30, 2005). Capitalized loan costs incurred on the
financing were approximately $83,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Lake Forest Apartments.
The modification of terms consisted of an interest rate of 7.43%, a payment of
approximately $44,000 due on July 1, 2004 and monthly payments of approximately
$42,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $5,255,000 is due. The previous
terms consisted of monthly payments of approximately $51,000 with a stated
interest rate of 7.13% through the maturity date of October 1, 2021, at which
time the loan was scheduled to be fully amortized.
On June 18, 2004, the Partnership obtained a second mortgage loan on Citadel
Apartments in the amount of $1,310,000. The second mortgage requires monthly
payments of interest beginning August 1, 2004 until the loan matures July 1,
2007. Interest is variable and is equal to the one month LIBOR rate plus 300
basis points (6.34% at June 30, 2005). Capitalized loan costs incurred on the
financing were approximately $66,000.
In connection with the new financing, the Partnership agreed to certain
modifications on the existing mortgage loan encumbering Citadel Apartments. The
modification of terms consisted of an interest rate of 8.55%, a payment of
approximately $38,000 due on July 1, 2004 and monthly payments of approximately
$33,000, commencing August 1, 2004 through the maturity of July 1, 2014, at
which time a balloon payment of approximately $3,748,000 is due. The previous
terms consisted of monthly payments of approximately $40,000 with a stated
interest rate of 8.25% through the maturity date of March 1, 2020, at which time
the loan was scheduled to be fully amortized.
Note G - 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 28, 2002, the trial
court granted defendants motion to strike the complaint. Plaintiffs took an
appeal form this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. 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 May 4, 2004 the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial Court's order striking the
first amended complaint.
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.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the General Partner, are defendants in a lawsuit alleging that
they 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 attempts to bring 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. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. On June 23, 2005 the Court conditionally certified the collective
action on both the on-call and overtime issues. The Court ruling allows
plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. 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
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.
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.
Environmental
Various Federal, state and local laws subject property owners or operators to
liability for management, and the costs of removal or remediation, of certain
hazardous substances present on a property. Such laws often impose liability
without regard to whether the owner or operator knew of, or was responsible for,
the release or presence of the hazardous substances. The presence of, or the
failure to manage or remedy properly, hazardous substances may adversely affect
occupancy at affected apartment communities and the ability to sell or finance
affected properties. In addition to the costs associated with investigation and
remediation actions brought by government agencies, and potential fines or
penalties imposed by such agencies in connection therewith, the presence of
hazardous substances on a property could result in claims by private plaintiffs
for personal injury, disease, disability or other infirmities. Various laws also
impose liability for the cost of removal, remediation or disposal of hazardous
substances through a licensed disposal or treatment facility. Anyone who
arranges for the disposal or treatment of hazardous substances is potentially
liable under such laws. These laws often impose liability whether or not the
person arranging for the disposal ever owned or operated the disposal facility.
In connection with the ownership, operation and management of its properties,
the Partnership could potentially be liable for environmental liabilities or
costs associated with its properties.
Mold
The Partnership is aware of lawsuits against owners and managers of multifamily
properties asserting claims of personal injury and property damage caused by the
presence of mold, some of which have resulted in substantial monetary judgments
or settlements. The Partnership has only limited insurance coverage for property
damage loss claims arising from the presence of mold and for personal injury
claims related to mold exposure. Affiliates of the General Partner have
implemented a national policy and procedures to prevent or eliminate mold from
its properties and the General Partner believes that these measures will
minimize the effects that mold could have on residents. To date, the Partnership
has not incurred any material costs or liabilities relating to claims of mold
exposure or to abate mold conditions. Because the law regarding mold is
unsettled and subject to change the General Partner can make no assurance that
liabilities resulting from the presence of or exposure to mold will not have a
material adverse effect on the Partnership's consolidated financial condition or
results of operations.
SEC Investigation
The Central Regional Office of the United States Securities and Exchange
Commission (the "SEC") continues its 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 have included 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, tax credit transactions and
tender offers for limited partnership interests. AIMCO is cooperating fully.
AIMCO is not able to predict when the investigation 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 OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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 investment properties consist of eleven apartment complexes.
The following table sets forth the average occupancy of the properties for the
six months ended June 30, 2005 and 2004:
Average Occupancy
Property 2005 2004
The Apartments (1) 94% 89%
Omaha, NE
Arbours of Hermitage Apartments (2) 90% 93%
Nashville, TN
Belmont Place (3) 24% --
Marietta, GA
Citadel Apartments 90% 92%
El Paso, TX
Citadel Village Apartments 82% 83%
Colorado Springs, CO
Foothill Place Apartments (4) 92% 86%
Salt Lake City, UT
Knollwood Apartments (5) 94% 88%
Nashville, TN
Lake Forest Apartments (6) 91% 94%
Omaha, NE
Post Ridge Apartments (5) 93% 90%
Nashville, TN
Rivers Edge Apartments (7) 92% 96%
Auburn, WA
Village East Apartments (8) 67% 69%
Cimarron Hills, CO
(1) The General Partner attributes the increase in occupancy at The
Apartments to better staffing and an improved pricing structure
developed to maintain competiveness with other properties in the market.
(2) The General Partner attributes the decrease in occupancy at The Arbours
Apartments to renovation work that was being done at the property.
(3) The General Partner attributes the increase in occupancy at Belmont
Place Apartments to units becoming available as the redevelopment
project is completed. (see discussion below).
(4) The General Partner attributes the increase in occupancy at Foothill
Place Apartments to an improved local economy.
(5) The General Partner attributes the increase in occupancy at Knollwood
and Post Ridge Apartments to a more stable tenant base after stricter
credit policies were enacted in 2004 and strong marketing efforts by the
leasing staff.
(6) The General Partner attributes the decrease in occupancy at Lake Forest
Apartments to a decline in a stable tenant base.
(7) The General Partner attributes the decrease in occupancy at Rivers Edge
Apartments to less competitive pricing and floor plans.
(8) The General Partner attributes the low occupancy at Village East
Apartments to a weak economy in the local area as a result of military
deployments.
During 2003, the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003. At June 30, 2005, all 326 units had been
substantially completed.
The Partnership entered into a construction contract with Casden Builders, Inc.
(a related party) to develop the new Belmont Place Apartments at an estimated
cost of approximately $26.9 million. The construction contract provides for the
payment of the cost of the work plus a fee without a maximum guaranteed price.
Construction was completed in 2005 at a total project cost of approximately
$32.2 million. At June 30, 2005, total costs of approximately $30.9 million had
been incurred. The Partnership has funded construction expenditures from
operating cash flow, proceeds from a cross collateralized loan, Partnership
reserves, loans from an affiliate of the General Partner and sales proceeds.
During the six months ended June 30, 2005 and 2004, approximately $6,601,000 and
$4,491,000 of construction costs were incurred, respectively. Included in these
construction costs are capitalized interest costs of approximately $394,000 and
$198,000 for the six months ended June 30, 2005 and 2004, respectively,
capitalized tax and insurance expenses of approximately $6,000 and $111,000 for
the six months ended June 30, 2005 and 2004, respectively, and other
construction period operating costs of approximately $10,000 for 2005. The
Partnership anticipates additional construction costs of approximately $1.5
million during 2005, which will be funded from the mortgage obtained on the
property.
The Partnership's financial results depend upon a number of factors including
the ability to attract and maintain tenants at the investment properties,
interest rates on mortgage loans, costs incurred to operate the investment
properties, 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 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. 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 and net income for the three and six months ended
June 30, 2005 was approximately $90,000 and $541,000, respectively, compared to
net income of approximately $749,000 and $4,557,000 for the three and six months
ended June 30, 2004, respectively. The decrease in net income for the three
months ended June 30, 2005 is due to a decrease in income from discontinued
operations and an increase in total expenses partially offset by an increase in
total revenues from continuing operations. The decrease in net income for the
six months ended June 30, 2005 is primarily due to the gain on sale of
discontinued operations recognized in 2004 as well as an increase in total
expenses for 2005 partially offset by an increase in total revenues.
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
the consolidated statements of operations for the three and six months ended
June 30, 2004 have been restated to reflect the operations of Briar Bay and Nob
Hill Villa Apartments as income from discontinued operations due to their sales
in October 2004. The operations of Briar Bay and Nob Hill Villa Apartments
include approximately $943,000 and $1,233,000, respectively, of revenue
generated by the properties. In addition, the operations of Point West
Apartments are included in income from discontinued operations due to its sale
in March 2004.
On March 31, 2004, the Partnership sold Point West Apartments to a third party,
for a gross sales price of $3,900,000. The net proceeds realized by the
Partnership were approximately $3,794,000 after payment of closing costs of
approximately $106,000. The Partnership used approximately $2,204,000 of the net
proceeds to repay the mortgage encumbering the property. The Partnership
realized a gain of approximately $3,141,000 for the six months ended June 30,
2004, as a result of this sale. The property's operations, a loss of
approximately $39,000 for the six months ended June 30, 2004 includes revenues
of approximately $189,000 and are included in income from discontinued
operations. In addition, the Partnership recorded a loss on early extinguishment
of debt of approximately $48,000 for the six months ended June 30, 2004 due to
the write off of unamortized loan costs, which is also included in income from
discontinued operations.
Excluding the discontinued operations and gain on sale of discontinued
operations, the Partnership's loss and income from continuing operations for the
three and six months ended June 30, 2005 was approximately $90,000 and $541,000,
respectively, compared to income from continuing operations of approximately
$663,000 and $1,188,000 for the corresponding periods in 2004. Income from
continuing operations decreased for the three and six month periods due to an
increase in total expenses partially offset by an increase in total revenues.
Total revenues for the three and six month periods increased due to an increase
in rental income partially offset by decreases in other income and casualty
gains. Rental income increased due to an increase in the average rental rates at
nine of the investment properties, an increase in occupancy at five of the
investment properties, and a decrease in bad debt expense at most of the
Partnership's investment properties, partially offset by a decrease in occupancy
at six of the investment properties. Other income decreased due to a decrease in
lease cancellation fees at most of the investment properties.
In October 2003, Citadel Village Apartments suffered fire damage to five
apartment units. Insurance proceeds of approximately $92,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $92,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In November 2003, Lake Forest Apartments suffered water damage to some of the
rental units. Insurance proceeds of approximately $44,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $44,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In February 2004, The Apartments suffered damage to 180 apartment units due to
an ice storm. During the six months ended June 30, 2004, the Partnership
received insurance proceeds of approximately $190,000, which included
approximately $29,000 for emergency expenses. The Partnership recognized a
casualty gain of approximately $161,000 during the six months ended June 30,
2004 as the damaged assets were fully depreciated at the time of the casualty.
In February 2004, Knollwood Apartments suffered fire damage to some of the
rental units. Insurance proceeds of approximately $47,000 were received during
the six months ended June 30, 2004. The Partnership recognized a casualty gain
of approximately $47,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty. During the
six months ended June 30, 2005, the Partnership received approximately $2,000 in
additional proceeds which was recognized as a casualty gain.
In March 2004, Village East Apartments suffered an electrical fire that damaged
six apartment units. Insurance proceeds of approximately $55,000 were received
during the six months ended June 30, 2004. The Partnership recognized a casualty
gain of approximately $55,000 during the six months ended June 30, 2004 as the
damaged assets were fully depreciated at the time of the casualty.
In July 2004, Citadel Village Apartments suffered hail and wind damage to some
of its rental units. Insurance proceeds of approximately $50,000 were received
during the six months ended June 30, 2005. The Partnership recognized a casualty
gain of approximately $50,000 during the six months ended June 30, 2005 as the
damaged assets were fully depreciated at the time of the casualty.
Total expenses for the three months ended June 30, 2005 increased due to
increases in operating, depreciation, interest and property tax expenses
partially offset by a decrease in general and administrative expenses. Total
expenses for the six months ended June 30, 2005 increased due to increases in
operating, depreciation and property tax expenses partially offset by decreases
in general and administrative and interest expenses. Operating expenses for both
periods increased due to increases in advertising and property expenses.
Advertising expenses increased due to increased leasing promotions at Belmont
Place Apartments as the property begins leasing completed units. Property
expense increased due to increases in payroll and related benefits and utilities
at most of the investment properties. Depreciation expense for both periods
increased primarily due to completed assets being placed into service at Belmont
Place Apartments. Interest expense for the three month period increased due to
the new mortgage financing at Belmont Place Apartments and the second mortgages
on Lake Forest and Citadel Apartments. Interest expense for the six month period
decreased due to an increase in capitalized interest costs associated with the
reconstruction at Belmont Place Apartments. Property tax expense for both
periods increased due to fewer capitalized costs associated with the
reconstruction of Belmont Place Apartments.
General and administrative expense decreased due to a decrease in management
reimbursements to the General Partner, due to the sale of investment properties
in 2004, as allowed under the Partnership Agreement. Also included in general
and administrative expenses for the six months ended June 30, 2005 and 2004 are
costs associated with the quarterly and annual communications with investors and
regulatory agencies and the annual audit required by the Partnership Agreement.
Liquidity and Capital Resources
At June 30, 2005, the Partnership had cash and cash equivalents of approximately
$9,180,000 compared to approximately $3,218,000 at June 30, 2004. The increase
in cash and cash equivalents of approximately $4,641,000 from December 31, 2004,
is due to approximately $954,000 of cash provided by operating activities and
approximately $19,274,000 of cash provided by financing activities partially
offset by approximately $15,587,000 of cash used in investing activities. Cash
provided by financing activities consisted of advances received from an
affiliate of the General Partner, and proceeds from the new mortgage encumbering
Belmont Place Apartments partially offset by payments made on advances from the
General Partner, principal payments on the mortgages encumbering the investment
properties, distributions to the General Partner and loan costs paid. Cash used
in investing activities consisted of property improvements and replacements and
net deposits to restricted escrows partially offset by insurance proceeds
received. The Partnership invests its working capital reserves in interest
bearing accounts.
On April 29, 2005, the Partnership obtained a mortgage in the principal amount
of $19,250,000 on Belmont Place Apartments. The Partnership received proceeds
from the mortgage of approximately $14,084,000 after payment of closing costs
and the funding of two letters of credit, as discussed below. Closing costs of
approximately $183,000 were capitalized and are included in other assets. The
new mortgage requires monthly payments of interest beginning on June 1, 2005
until November 1, 2006. Beginning December 1, 2006, monthly payments of
principal and interest of $108,180 are required until the loan matures November
1, 2034. The lender can exercise a call option on the mortgage on June 1, 2012
and every fifth anniversary thereafter. The interest rate is fixed at 5.14% for
the life of the mortgage.
In conjunction with the mortgage, the Partnership has provided to the lender two
letters of credit, each in the amount of $2,500,000, to secure the Partnership's
obligations under the mortgage. The letters of credit are secured by proceeds
from the mortgage financing which were deposited into an escrow account. The
lender will release the first letter of credit when the property has achieved
annual rental income of approximately $2.9 million from 60% of the rental units
and will release the second letter of credit when the property has achieved
annual rental income of approximately $3.9 million from 88% of the rental units.
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 each of the Partnership's
properties are detailed below.
The Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $134,000 of capital improvements at The Apartments, consisting
primarily of floor covering and gutter replacements, building improvements, and
light fixture upgrades. These improvements were funded from operating cash flow.
The Partnership regularly evaluates the capital improvement needs of the
property. While the Partnership has no material commitments for property
improvements and replacements, certain routine capital expenditures are
anticipated during 2005. Such capital expenditures 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 six months ended June 30, 2005, the Partnership completed
approximately $808,000 of capital improvements at Arbours of Hermitage
Apartments, consisting primarily of fire safety upgrades, water/sewer upgrades
and floor covering and appliance replacements. These improvements were funded
from operating cash flow. The Partnership regularly evaluates the capital
improvement needs of the property. While the Partnership has no material
commitments for property improvements and replacements, certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Belmont Place Apartments
During 2003, the General Partner determined that Belmont Place Apartments
suffered from severe structural defects in the buildings' foundation and as
such, demolished the property. The General Partner designed and approved a
redevelopment plan for the property. Site work on the redevelopment began during
the fourth quarter of 2003. At June 30, 2005, all 326 units had been
substantially completed.
The Partnership entered into a construction contract with Casden Builders, Inc.
(a related party) to develop the new Belmont Place Apartments at an estimated
cost of approximately $26.9 million. The construction contract provides for the
payment of the cost of the work plus a fee without a maximum guaranteed price.
Construction was completed in 2005 at a total project cost of approximately
$32.2 million. At June 30, 2005, total costs of approximately $30.9 million had
been incurred. The Partnership has funded construction expenditures from
operating cash flow, proceeds from a cross collateralized loan, Partnership
reserves, loans from an affiliate of the General Partner and sales proceeds.
During the six months ended June 30, 2005 and 2004, approximately $6,601,000 and
$4,491,000 of construction costs were incurred, respectively. Included in these
construction costs are capitalized interest costs of approximately $394,000 and
$198,000 for the six months ended June 30, 2005 and 2004, respectively,
capitalized tax and insurance expenses of approximately $6,000 and $111,000 for
the six months ended June 30, 2005 and 2004, respectively, and other
construction period operating costs of approximately $10,000 for 2005. The
Partnership anticipates additional construction costs of approximately $1.5
million during 2005, which will be funded from the mortgage obtained on the
property.
Citadel Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $99,000 of capital improvements at Citadel Apartments, consisting
primarily of roof and floor covering replacements and parking lot resurfacing.
These improvements were funded from operating cash flow. The Partnership
regularly evaluates the capital improvement needs of the property. While the
Partnership has no material commitments for property improvements and
replacements, certain routine capital expenditures are anticipated during 2005.
Such capital expenditures will depend on the physical condition of the property
as well as replacement reserves and anticipated cash flow generated by the
property.
Citadel Village Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $164,000 of capital improvements at Citadel Village Apartments,
consisting primarily of structural improvements and appliance and floor covering
replacements. These improvements were funded from operating cash flow and
insurance proceeds. The Partnership regularly evaluates the capital improvement
needs of the property. While the Partnership has no material commitments for
property improvements and replacements, certain routine capital expenditures are
anticipated during 2005. Such capital expenditures will depend on the physical
condition of the property as well as anticipated cash flow generated by the
property.
Foothill Place Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $602,000 of capital improvements at Foothill Place Apartments,
consisting primarily of counter top, appliance and floor covering replacements,
structural upgrades and balcony replacements. These improvements were funded
from operating cash flow. The Partnership regularly evaluates the capital
improvement needs of the property. While the Partnership has no material
commitments for property improvements and replacements, certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Knollwood Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $285,000 of capital improvements at Knollwood Apartments,
consisting primarily of appliance and floor covering replacements and structural
upgrades. These improvements were funded from operating cash flow. The
Partnership regularly evaluates the capital improvement needs of the property.
While the Partnership has no material commitments for property improvements and
replacements, certain routine capital expenditures are anticipated during 2005.
Such capital expenditures will depend on the physical condition of the property
as well as anticipated cash flow generated by the property.
Lake Forest Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $165,000 of capital improvements at Lake Forest Apartments,
consisting primarily of interior painting, floor covering replacements, and
swimming pool upgrades. These improvements were funded from operating cash flow.
The Partnership regularly evaluates the capital improvement needs of the
property. While the Partnership has no material commitments for property
improvements and replacements, certain routine capital expenditures are
anticipated during 2005. Such capital expenditures will depend on the physical
condition of the property as well as replacement reserves and anticipated cash
flow generated by the property.
Post Ridge Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $344,000 of capital improvements at Post Ridge Apartments,
consisting primarily of exterior light fixtures, floor covering replacements,
swimming pool upgrades, and structural improvements. These improvements were
funded from operating cash flow. The Partnership regularly evaluates the capital
improvement needs of the property. While the Partnership has no material
commitments for property improvements and replacements, certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Rivers Edge Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $67,000 of capital improvements at Rivers Edge Apartments,
consisting primarily of structural improvements. These improvements were funded
from operating cash flow. The Partnership regularly evaluates the capital
improvement needs of the property. While the Partnership has no material
commitments for property improvements and replacements, certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the property as well as anticipated cash flow
generated by the property.
Village East Apartments
During the six months ended June 30, 2005, the Partnership completed
approximately $89,000 of capital improvements at Village East Apartments,
consisting primarily of floor covering and heating improvements. These
improvements were funded from operating cash flow. The Partnership regularly
evaluates the capital improvement needs of the property. While the Partnership
has no material commitments for property improvements and replacements, certain
routine capital expenditures are anticipated during 2005. Such capital
expenditures will depend on the physical condition of the property as well as
anticipated cash flow generated by the property.
Capital expenditures will be incurred only if cash is available from operations
or from Partnership reserves. To the extent that 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 $72,539,000 matures at various dates between 2005 and 2034 with
balloon payments of approximately $27,130,000, $3,810,000, $9,003,000 and
$173,000 due in 2005, 2007, 2014 and 2022, respectively. The General Partner
intends to refinance the indebtedness maturing in 2005 before the maturity
dates. The General Partner will attempt to refinance the other indebtedness
and/or sell the properties prior to their maturity dates. If a property cannot
be refinanced or sold for a sufficient amount, the Partnership will risk losing
such property through foreclosure.
In conjunction with the transfer of funds from their certain majority-owned
sub-tier limited partnerships to the Partnership, approximately $159,000 and
$5,000 was distributed to the general partner of the majority owned sub-tier
limited partnerships during the six months ended June 30, 2005 and 2004,
respectively.
Future cash distributions will depend on the levels of cash generated from
operations and the timing of debt maturities, property sales and/or
refinancings. 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 planned capital improvement
expenditures, to permit any distributions to its partners in 2005 or subsequent
periods.
Other
In addition to its indirect ownership of the general partner interest in the
Partnership, AIMCO and its affiliates owned 224,358 limited partnership units
(the "Units") in the Partnership representing 65.45% of the outstanding Units at
June 30, 2005. 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 65.45% of the
outstanding units, AIMCO is 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 consolidated 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 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 impairment of the Partnership's
assets.
Revenue Recognition
The Partnership generally leases apartment units for twelve-month terms or less.
The Partnership will offer rental concessions during particularly slow months or
in response to heavy competition from other similar complexes in the area.
Rental income attributable to leases, net of any concessions, is recognized on a
straight-line basis over the term of the lease. 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.
Item 3. 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 95% of its debt as fixed rate in
nature by borrowing on a long-term basis. Based on interest rates at June 30,
2005, a 100 basis point increase or decrease in market interest rates would have
no material impact on the Partnership.
The following table summarizes the Partnership's fixed rate debt obligations at
June 30, 2005. The interest rates represent the weighted-average rates. The fair
value of the total debt obligations approximated the recorded value as of June
30, 2005.
Principal amount by expected maturity:
Long Term Debt
Fixed Rate Debt Average Interest Rate
(in thousands)
2005 $27,397 7.766%
2006 563 7.240%
2007 898 7.240%
2008 960 7.240%
2009 1,028 7.240%
Thereafter 37,883 7.240%
Total $68,729
ITEM 4. 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 were not effective due to the
Partnership's failure to properly record capitalized interest costs. Actions
taken include improving the education of accounting personnel to ensure the
understanding and application of appropriate accounting treatment, as well as
improving the Partnership's accounting review procedures. The Partnership's
management believes that, as of the date of this filing, the Partnership's
ineffective disclosure controls have been fully remediated.
(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 28, 2002, the trial
court granted defendants motion to strike the complaint. Plaintiffs took an
appeal from this order.
On January 8, 2003, the parties filed a Stipulation of Settlement in proposed
settlement of the Nuanes action and the Heller action. 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 May 4, 2004, the Objector filed a
second appeal challenging the court's use of a referee and its order requiring
Objector to pay those fees.
On March 21, 2005, the Court of Appeals issued opinions in both pending appeals.
With regard to the settlement and judgment entered thereto, the Court of Appeals
vacated the trial court's order and remanded to the trial court for further
findings on the basis that the "state of the record is insufficient to permit
meaningful appellate review". With regard to the second appeal, the Court of
Appeals reversed the order requiring the Objector to pay referee fees. On April
26, 2005, the Court of Appeals lifted the stay of a pending appeal related to
the Heller action and the trial court's order striking the complaint. On April
28, 2005, the Objector filed a Petition for Review with the California Supreme
Court in connection with the opinion vacating the order approving settlement and
remanding for further findings. On June 10, 2005, the California Supreme Court
denied Objector's Petition for Review and the Court of Appeals sent the matter
back to the trial court on June 21, 2005. The parties intend to ask the trial
court to make further findings in connection with settlement consistent with the
Court of Appeal's remand order. With respect to the related Heller appeal, on
July 28, 2005, the Court of Appeal reversed the trial Court's order striking the
first amended complaint.
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.
As previously disclosed, AIMCO Properties L.P. and NHP Management Company, both
affiliates of the General Partner, are defendants in a lawsuit alleging that
they 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 attempts to bring 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. and NHP
Management Company failed to compensate maintenance workers for time that they
were required to be "on-call". Additionally, the complaint alleges AIMCO
Properties L.P. and NHP Management Company failed to comply with the FLSA in
compensating maintenance workers for time that they worked in excess of 40 hours
in a week. On June 23, 2005 the Court conditionally certified the collective
action on both the on-call and overtime issues. The Court ruling allows
plaintiffs to provide notice of the collective action to all non-exempt
maintenance workers from August 7, 2000 through the present. Those employees
will have the opportunity to opt-in to the collective action. Defendants have
asked the court to reconsider its ruling or in the alternative certify the
ruling for appeal on that issue. After the notice goes out, defendants will have
the opportunity to move to decertify the collective action. The Court further
denied plaintiffs' Motion for Certification of the state subclass. 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
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 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
See Exhibit Index.
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/Stephen B. Waters
Stephen B. Waters
Vice President
Date: August 19, 2005
CONSOLIDATED CAPITAL PROPERTIES IV
EXHIBIT INDEX
Exhibit
3 Certificate of Limited Partnership, as amended to date.
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.* (mortgage for Village East)
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.* (mortgage for Knollwood)
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.* (mortgage for Citadel
Village)
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.* (mortgage for Arbour East)
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).
10.81 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.)
10.85 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.** (mortgage for Lake
Forest)
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.***
10.89 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 of 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.****
10.96 Purchase and Sale Contract between Point West Associates
Limited Partnership, a Georgia limited partnership, as Seller
and Focus Development, Inc., a Georgia corporation, as
Purchaser, effective November 17, 2003. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.97 First Amendment to Purchase and Sale Contract dated January
23, 2004 between Point West Associates Limited Partnership, a
Georgia limited partnership, as Seller and Focus Development,
Inc., a Georgia corporation, as Purchaser. (Incorporated by
reference to Form 8-K dated March 31, 2004).
10.98 Multifamily Note dated June 21, 2004 between Concap Citadel
Associates, Ltd., a Texas limited partnership, and GMAC
Commercial Mortgage Bank. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended June
30, 2004).
10.99 Replacement Reserve Agreement dated June 21, 2004 between
Concap Citadel Associates, Ltd. a Texas limited
partnership, and GMAC Commercial Mortgage Bank.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).
CONSOLIDATED CAPITAL PROPERTIES IV
EXHIBIT INDEX - CONTINUED
10.100 Allonge and Amendment to Multifamily Note dated June 21,
2004 between Concap Citadel Associates, Ltd., a Texas
limited partnership, and Federal Home Loan Mortgage
Corporation. (Incorporated by reference to the Quarterly
Report on Form 10-Q for the quarter ended June 30, 2004).
10.101 Multifamily Note dated June 8, 2004 between Consolidated
Capital Properties IV, a California limited partnership, doing
business in Nebraska as Consolidated Capital Properties IV
Limited Partnership and GMAC Commercial Mortgage Bank.
(Incorporated by reference to the Quarterly Report on Form
10-Q for the quarter ended June 30, 2004).
10.102 Replacement Reserve Agreement dated June 8, 2004 between
Consolidated Capital Properties IV, a California limited
partnership, doing business in Nebraska as Consolidated
Capital Properties IV Limited Partnership and GMAC
Commercial Mortgage Bank. (Incorporated by reference to the
Quarterly Report on Form 10-Q for the quarter ended June
30, 2004).
10.103 Allonge and Amendment to Multifamily Note dated June 8, 2004
between Consolidated Capital Properties IV, a California
limited partnership, doing business in Nebraska as
Consolidated Capital Properties IV Limited Partnership and
Federal Home Loan Mortgage Corporation. (Incorporated by
reference to the Quarterly Report on Form 10-Q for the quarter
ended June 30, 2004).
10.104 Purchase and Sale Contract between Briar Bay Associates,
Ltd., a Texas limited partnership, as Seller, and Victoria
Real Estate Management, Inc., a Florida corporation, as
Purchaser, effective September 13, 2004. (Incorporated by
reference to Form 8-K dated September 13, 2004).
10.105 Purchase and Sale Contract between Nob Hill Villa Apartments
Associates, L.P., a Tennessee limited partnership, as Seller,
and DAMA Realty Investors, LLC, a New York limited liability
company, as Purchaser, effective August 18, 2004.
(Incorporated by reference to Form 8-K dated October 29,
2004.)
10.106 Assignment and Assumption of Real Estate Agreement between The
DAMA Realty Investors, LLC, and Nob Hill General Partnership,
dated August 18, 2004. (Incorporated by reference to Form 8-K
dated October 29, 2004.)
10.107 Promissory Note dated April 29, 2005 between Foothill Chimney
Associates Limited Partnership, a Georgia limited partnership
and ING USA Annuity and Life Insurance Company.(Incorporated
by reference to Form 8-K dated April 29, 2005)
10.108 Form of Letter of Credit dated April 29, 2005 between Foothill
Chimney Associates Limited Partnership, a Georgia limited
partnership and ING USA Annuity and Life Insurance
Company.(Incorporated by reference to Form 8-K dated April 29,
2005)
10.109 Deed to Secure Debt and Security Agreement dated April 29,
2005 between Foothill Chimney Associates Limited Partnership,
a Georgia limited partnership and ING USA Annuity and Life
Insurance Company.(Incorporated by reference to Form 8-K dated
April 29, 2005)
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 of equivalent of Chief Executive Officer and
Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
*(Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1995).
**(Incorporated by reference to the Quarterly Report on Form 10-Q for the
quarter ended September 30, 2001).
***(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 2001).
****(Incorporated by reference to the Annual Report on Form 10-K for the
year ended December 31, 2003).
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q 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: August 19, 2005
/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-Q 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: August 19, 2005
/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-Q of Consolidated Capital
Properties IV (the "Partnership"), for the quarterly period ended June 30, 2005
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: August 19, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: August 19, 2005
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.