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 September 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 0-10831
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
(Exact Name of Registrant as Specified in Its Charter)
California 94-2744492
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Beattie Place, P.O. Box 1089
Greenville, South Carolina 29602
(Address of principal executive offices)
(864) 239-1000
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No___
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 120-2 of the Exchange Act). Yes ____ No __X__
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes ___ No _X__
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except unit data)
September 30, December 31,
2005 2004
(Unaudited) (Restated)
(Note A)
Assets
Cash and cash equivalents $ 1,456 $ 955
Receivables and deposits 799 1,155
Restricted escrows 261 662
Other assets 1,318 989
Investment in affiliated partnerships (Note D) 634 624
Investment properties:
Land 20,365 20,365
Buildings and related personal property 106,091 98,265
126,456 118,630
Less: Accumulated depreciation (31,661) (27,837)
94,795 90,793
$ 99,263 $ 95,178
Liabilities and Partners' Capital
Liabilities
Accounts payable $ 370 $ 1,499
Tenant security deposit liabilities 841 825
Accrued property taxes 713 100
Other liabilities 1,148 1,229
Due to affiliates (Note C) 6,698 2,596
Mortgage notes payable 64,945 65,768
74,715 72,017
Partners' Capital
General partner 147 133
Limited partners (199,043.2 units issued and
outstanding) 24,401 23,028
24,548 23,161
$ 99,263 $ 95,178
Note: The restated 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 generally accepted
accounting principles for complete financial statements.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Revenues: (Restated)
(Note A)
Rental income $ 5,817 $ 5,629 $17,213 $16,305
Other income 499 504 1,477 1,554
Casualty gain (Note H) 51 -- 51 --
Total revenues 6,367 6,133 18,741 17,859
Expenses:
Operating 2,736 2,973 7,966 8,694
General and administrative 177 225 589 710
Depreciation 1,289 1,318 3,830 3,989
Interest 1,104 1,157 3,371 3,465
Property taxes 514 451 1,425 1,317
Casualty loss (Note H) -- 427 125 453
Total expenses 5,820 6,551 17,306 18,628
Income (loss) from continuing
operations 547 (418) 1,435 (769)
Loss from discontinued operations
(Notes A and E) -- (13) -- (1,113)
(Loss) gain on sale of discontinued
operations (Note E) -- -- (58) 1,716
Gain on foreclosure of real
estate (Note B) -- -- -- 156
Equity in income from investment
(Note D) 10 -- 10 17
Net income (loss) $ 557 $ (431) $ 1,387 $ 7
Net income (loss) allocated to general
partner (1%) $ 6 $ (4) $ 14 $ --
Net income (loss) allocated to limited
partners (99%) 551 (427) 1,373 7
$ 557 $ (431) $ 1,387 $ 7
Per limited partnership unit:
Income (loss) from continuing operations 2.72 (2.08) 7.14 (3.82)
Loss from discontinued operations -- (0.07) -- (5.54)
(Loss) gain on sale of discontinued
operations -- -- (0.29) 8.54
Gain on foreclosure of real estate -- -- -- 0.77
Equity in income from investment 0.05 -- 0.05 0.08
Net income (loss) per limited
partnership unit $ 2.77 $ (2.15) $ 6.90 $ 0.03
Distributions per limited partnership
unit $ -- $ 11.63 $ -- $ 20.76
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
(Unaudited)
(in thousands, except unit data)
Limited
Partnership General Limited
Units Partner Partners Total
Original capital contributions 200,342.0 $ 1 $200,342 $200,343
Partners' capital at
December 31, 2004, as restated
(Note A) 199,043.2 $ 133 $ 23,028 $ 23,161
Net income for the nine months
ended September 30, 2005 -- 14 1,373 1,387
Partners' capital at
September 30, 2005 199,043.2 $ 147 $ 24,401 $ 24,548
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended
September 30,
2005 2004
(Restated)
(Note A)
Cash flows from operating activities:
Net income $ 1,387 $ 7
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 3,830 4,126
Amortization of loan costs, lease commissions and
mortgage premiums (128) (155)
Casualty (gain) loss, net 74 453
Equity in income of investment (10) (17)
Loss on sale of discontinued operations 58 (1,716)
Loss on early extinguishment of debt -- 1,161
Gain on foreclosure of real estate -- (156)
Change in accounts:
Receivables and deposits 107 (483)
Other assets (328) (501)
Accounts payable (34) 52
Tenant security deposit liabilities 16 (100)
Accrued property taxes 613 193
Other liabilities (81) (135)
Due to affiliates (154) (200)
Net cash provided by operating activities 5,350 2,529
Cash flows from investing activities:
Net proceeds from sale of discontinued operations -- 12,589
Net receipts from restricted escrows 401 43
Property improvements and replacements (9,041) (3,270)
Insurance proceeds received 232 284
Receipts on Master Loan -- 156
Net cash (used in) provided by investing activities (8,408) 9,802
Cash flows from financing activities:
Distributions to partners -- (4,132)
Payments on mortgage notes payable (1,285) (1,232)
Repayment of mortgage note payable (3,925) (7,099)
Proceeds from mortgage notes payable 4,600 --
Prepayment penalties -- (1,527)
Loan costs paid (49) --
Lease commissions paid (38) (6)
Advances from general partner 4,933 --
Repayment of advances from general partner (677) --
Net cash provided by (used in) financing activities 3,559 (13,996)
Net increase (decrease) in cash and cash equivalents 501 (1,665)
Cash and cash equivalents at beginning of period 955 2,417
Cash and cash equivalents at end of period $ 1,456 $ 752
Supplemental disclosure of cash flow information:
Cash paid for interest $ 3,869 $ 3,789
Supplemental disclosure of non-cash activity:
Property improvements and replacements in accounts
payable $ 177 $ 868
Included in property improvements and replacements for the nine months ended
September 30, 2005 are approximately $1,272,000 of improvements which were
included in accounts payable at December 31, 2004.
See Accompanying Notes to Consolidated Financial Statements
CONSOLIDATED CAPITAL INSTITUTIONAL PROPERTIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements of Consolidated
Capital Institutional Properties (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. (the "General
Partner"), which is ultimately owned by Apartment Investment and Management
Company ("AIMCO"), a publicly traded real estate investment trust, 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, 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.
2 for the fiscal year ended December 31, 2004.
The Partnership amended its Form 10-K for the year ended December 31, 2004 to
adjust for the recording in 2002 of an investment in an affiliated partnership
and to reverse the related equity in gains on sale of investment properties in
the affiliated partnership recognized in 2003 and 2004. The value of the
investment in 2002 should have been recorded at the discounted value of
operating cash flows that were reasonably expected at the date the Partnership
foreclosed on the investment. In addition, the equity in gains on sale of
investment properties recognized in 2003 and 2004 should not have been
recognized because the related sales proceeds will not be distributed to the
Partnership. Because of the errors noted above, the balance sheet as of December
31, 2004, the statement of operations for the nine months ended September 30,
2004, the statement of cash flows for the nine months ended September 30, 2004
and the partners' capital account at December 31, 2004, have been restated to
reflect the correction of these errors in the restated financial statements.
Certain 2004 balances have been reclassified to conform with the 2005
presentation.
As a result of the sales of Silverado Apartments and Tates Creek Village
Apartments to third parties during the nine months ended September 30, 2004 and
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the
accompanying consolidated statements of operations for the three and nine months
ended September 30, 2004 reflect the operations of Silverado Apartments and
Tates Creek Village Apartments as loss from discontinued operations of
approximately $13,000 and $1,113,000 for the three and nine months ended
September 30, 2004, respectively, including revenues of approximately $1,043,000
for the nine months ended September 30, 2004.
Segment Reporting: Statement of Financial Accounting Standards ("SFAS") SFAS No.
131, "Disclosure about Segments of an Enterprise and Related Information"
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. It also established standards for related disclosures
about products and services, geographic areas, and major customers. (See "Note
G" for detailed disclosure of the Partnership's segments).
Note B - Net Investment in Master Loan
The Partnership was initially formed for the benefit of its limited partners to
lend funds to Consolidated Capital Equity Partners ("CCEP"), a California
general partnership. The general partner of CCEP is an affiliate of the General
Partner.
The Partnership loaned funds to CCEP subject to a nonrecourse note with a
participation interest (the "Master Loan"). The loans were made to, and the real
properties that secured the Master Loan were purchased and owned by CCEP.
The Master Loan matured in November 2000. The General Partner had been
negotiating with CCEP with respect to its options which included foreclosing on
the properties which collateralized the Master Loan or extending the terms of
the Master Loan. The General Partner decided to foreclose on the properties that
collateralized the Master Loan. The General Partner began the process of
foreclosure or executing deeds in lieu of foreclosure during 2002 on all the
properties in CCEP. During August 2002, the General Partner executed deeds in
lieu of foreclosure on four of the active properties of CCEP: Silverado, The
Knolls, Indian Creek Village and Tates Creek Village Apartments. In addition,
one of the properties held by CCEP was sold in December 2002. On November 10,
2003 the Partnership acquired the four remaining properties held by CCEP:
Plantation Gardens Apartments, Regency Oaks Apartments, The Dunes Apartments,
and Palm Lake Apartments. These properties were sold at a foreclosure sale due
to CCEP's inability to repay the Master Loan and accrued interest. As the deeds
were executed, title in the properties previously owned by CCEP was transferred
to the Partnership subject to the existing liens on such properties, including
the first mortgage loans. As a result, during the years ended December 2003 and
2002, the Partnership assumed responsibility for the operations of such
properties. During the nine months ended September 30, 2004, the Partnership
received approximately $156,000 from CCEP as the final payment on the Master
Loan. The results of operations of the eight properties foreclosed on in 2003
and 2002 are reflected in the accompanying consolidated statements of operations
for the three and nine month periods ended September 30, 2005 and 2004.
Note C - Related Party Transactions
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 receive 5% of gross receipts from the
Partnership's properties for providing property management services. The
Partnership paid to such affiliates approximately $913,000 and $926,000 for the
nine months ended September 30, 2005 and 2004, respectively, which is included
in operating expenses and loss from discontinued operations.
Affiliates of the General Partner charged the Partnership for reimbursement of
accountable administrative expenses amounting to approximately $956,000 and
$872,000 for the nine months ended September 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 nine months ended September 30, 2005 and 2004 are fees
related to construction management services provided by an affiliate of the
General Partner of approximately $526,000 and $328,000, respectively. The
construction management fees are calculated based on a percentage of additions
to investment properties.
In connection with the sale of Silverado Apartments on March 31, 2004 (see "Note
E"), the General Partner earned a disposition fee of approximately $333,000. In
connection with the sale of Tates Creek Village Apartments on June 28, 2004 the
General Partner earned a disposition fee of approximately $349,000. These fees
are included in gain on sale of discontinued operations and were paid during the
nine months ended September 30, 2004.
In accordance with the Partnership Agreement, the General Partner advanced the
Partnership approximately $4,933,000 for expenses at the Partnership's
properties, to fund redevelopment costs at The Sterling Apartment Homes and The
Knolls Apartments and to fund capital improvements and refinance deposits at The
Loft Apartments during the nine months ended September 30, 2005. Interest was
charged at the prime rate plus 2% (8.75% at September 30, 2005) and amounted to
approximately $299,000 for the nine months ended September 30, 2005. There were
no advances to the Partnership or associated interest expense during the nine
months ended September 30, 2004. During the nine months ended September 30,
2005, the Partnership made payments on the outstanding loans and accrued
interest of approximately $945,000. At September 30, 2005, the amount of the
outstanding loans and accrued interest was approximately $6,698,000 and is
included in due to affiliates.
Subsequent to September 30, 2005, the Partnership made a payment on the
outstanding loans and accrued interest of approximately $1,100,000.
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 nine months ended September
30, 2005 and 2004, the Partnership was charged by AIMCO and its affiliates
approximately $290,000 and $282,000, respectively, for insurance coverage and
fees associated with policy claims administration.
Note D - Investment in Affiliated Partnerships
Ownership Investment Balance
Partnership Type of Ownership Percentage September 30, 2005
(in thousands)
Consolidated Capital Special Limited
Growth Fund Partner 0.40% $ 12
Consolidated Capital Special Limited
Properties III Partner 1.85% 18
Consolidated Capital Special Limited
Properties IV Partner 1.85% 604
$ 634
These investments were assumed during the foreclosure of investment properties
from CCEP (see "Note B") and are accounted for on the equity method of
accounting. Distributions from the affiliated partnerships are accounted for as
a reduction of the investment balance until the investment balance is reduced to
zero. When the investment balance has been reduced to zero, subsequent
distributions received are recognized as income in the accompanying statements
of operations. During the nine months ended September 30, 2005, the Partnership
recognized approximately $10,000 in equity in income from investment related to
its allocated share of the income (loss) for the investments. During the nine
months ended September 30, 2004, the Partnership recognized approximately
$17,000 in equity in income from investment related to its allocated share of
the income (loss) for the investments.
Note E - Sale of Investment Property
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to a third party for $6,650,000. After payment of closing costs,
the net sales proceeds received by the Partnership were approximately
$6,169,000. The Partnership used a portion of the proceeds to repay the mortgage
encumbering the property of approximately $3,248,000. The sale resulted in a
gain on sale of investment property of approximately $1,510,000 during the nine
months ended September 30, 2004. In addition, the Partnership recorded a loss on
early extinguishment of debt of approximately $685,000 as a result of prepayment
penalties paid, partially offset by the write off of the unamortized mortgage
premium which is included in loss from discontinued operations. Pursuant to the
Partnership Agreement and in conjunction with the sale, a disposition fee of
approximately $333,000 was earned by and paid to the General Partner during the
nine months ended September 30, 2004. Included in loss from discontinued
operations for the nine months ended September 30, 2004 are results of the
property's operations of a loss of approximately $672,000, including revenues of
approximately $339,000.
On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located
in Lexington, Kentucky, to a third party for $6,980,000. After payment and
accrual of closing costs, the net sales proceeds received by the Partnership
were approximately $6,420,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,851,000. The
sale resulted in a gain on sale of investment property of approximately $206,000
during the nine months ended September 30, 2004. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $476,000 as a
result of prepayment penalties paid, partially offset by the write off of the
unamortized mortgage premium which is included in loss from discontinued
operations. Pursuant to the Partnership Agreement and in conjunction with the
sale, a disposition fee of approximately $349,000 was earned by and paid to the
General Partner during the nine months ended September 30, 2004. Included in
loss from discontinued operations for the three months ended September 30, 2004
are results of the property's operations of approximately $13,000. There were no
revenues included in loss from discontinued operations during the three months
ended September 30, 2004. Included in loss from discontinued operations for the
nine months ended September 30, 2004 are results of the property's operations of
approximately $441,000, including revenues of approximately $704,000.
During the nine months ended September 30, 2005, the Partnership recognized a
reduction of the gain on the sale of Tates Creek Village Apartments of
approximately $58,000 due to the revision of the collectibility of receivables
expected at the time of the sale.
Note F - Refinancing of Mortgage Note Payable
On August 31, 2005, the Partnership refinanced the mortgage encumbering The Loft
Apartments. The refinancing replaced the existing mortgage of approximately
$3,925,000 with a new mortgage in the amount of approximately $4,600,000. The
new mortgage requires monthly payments of principal and interest beginning on
October 10, 2005 until the loan matures September 10, 2012, with a fixed
interest rate of 5.04% and a balloon payment due at maturity of approximately
$4,076,000. The Partnership may not prepay the new mortgage loan prior to
October 10, 2007. On or after this date the Partnership may prepay subject to a
prepayment penalty. Total capitalized loan costs were approximately $49,000 and
are included in other assets. Unamortized loan costs for the prior mortgage of
approximately $4,000 were written off and are included in interest expense. As a
condition to making the new mortgage loan, the lender required AIMCO to
guarantee the obligations and liabilities of the Partnership with respect to the
new mortgage.
Note G - Segment Reporting
Description of the types of products and services from which the reportable
segment derives its revenues: The Partnership has two reportable segments:
residential properties and commercial property. The Partnership's property
segments consist of seven apartment complexes one each in North Carolina,
Colorado, and Kansas, four in Florida and one multiple use facility consisting
of apartment units and commercial space in Pennsylvania. The Partnership rents
apartment units to tenants for terms that are typically less than twelve months.
The commercial property leases space to various medical offices, career service
facilities, and retail shops at terms ranging from month to month to six years.
Measurement of segment profit and loss: The Partnership evaluates performance
based on segment profit (loss) before depreciation. The accounting policies of
the reportable segments are the same as those described in the summary of
significant accounting policies.
Factors management used to identify the enterprise's reportable segment: The
Partnership's reportable segments are business units (investment properties)
that offer different products and services. The reportable segments are each
managed separately because they provide distinct services with different types
of products and customers.
Segment information for the three and nine months ended September 30, 2005 and
2004 is shown in the tables below (in thousands). The "Other" Column includes
partnership administration related items and income and expense not allocated to
reportable segments.
For the three months ended
September 30, 2005 Residential Commercial Other Totals
Rental income $ 5,477 $ 340 $ -- $ 5,817
Other income 462 36 1 499
Casualty gain 51 -- -- 51
Equity in income of investment -- -- 10 10
Interest expense 912 55 137 1,104
Depreciation 1,214 75 -- 1,289
General and administrative expense -- -- 177 177
Segment profit (loss) 887 (27) (303) 557
For the nine months ended
September 30, 2005 Residential Commercial Other Totals
Rental income $ 16,149 $ 1,064 $ -- $17,213
Other income 1,372 102 3 1,477
Casualty gain 51 -- -- 51
Equity in income of investment -- -- 10 10
Loss on sale of discontinued
operations (58) -- -- (58)
Interest expense 2,900 164 307 3,371
Depreciation 3,613 217 -- 3,830
General and administrative expense -- -- 589 589
Casualty loss (125) -- -- (125)
Segment profit (loss) 2,392 (122) (883) 1,387
Total assets 96,879 1,686 698 99,263
Capital expenditures 7,841 105 -- 7,946
For the three months ended
September 30, 2004 Residential Commercial Other Totals
Rental income $ 5,267 $ 362 $ -- $ 5,629
Other income 457 46 1 504
Casualty loss (427) -- -- (427)
Interest expense 1,099 56 2 1,157
Depreciation 1,233 85 -- 1,318
General and administrative expenses -- -- 225 225
Loss from discontinued operations (13) -- -- (13)
Segment loss (126) (79) (226) (431)
For the nine months ended
September 30, 2004 Residential Commercial Other Totals
(restated)
Rental income $15,232 $ 1,073 $ -- $16,305
Other income 1,453 98 3 1,554
Equity in income from investment -- -- 17 17
Casualty loss (453) -- -- (453)
Interest expense 3,292 167 6 3,465
Depreciation 3,773 216 -- 3,989
General and administrative expense -- -- 710 710
Gain on sale of investment 1,716 -- -- 1,716
Loss from discontinued operations (1,113) -- -- (1,113)
Gain on foreclosure of real estate 156 -- -- 156
Segment profit (loss) 1,121 (418) (696) 7
Total assets 90,319 1,710 1,109 93,138
Capital expenditures 3,423 715 -- 4,138
Note H - Casualty Events
During the nine months ended September 30, 2004, the Partnership's investment
property, Regency Oaks Apartments, sustained damages from Hurricanes Charlie,
Frances and Jeanne. The damages incurred totaled approximately $329,000, which
will not be covered by insurance proceeds. There was a casualty loss of
approximately $204,000 recorded at Regency Oaks Apartments related to the
damages to the property caused by the hurricanes during 2004 of which $142,000
was recorded during the nine months ended September 30, 2004. During the nine
months ended September 30, 2005 the Partnership recognized an additional
casualty loss of approximately $105,000 as a result of the write-off of
additional undepreciated damaged assets. In 2004, the Partnership estimated
total clean up costs from the hurricanes would be approximately $73,000. During
the nine months ended September 30, 2005, the Partnership revised downward the
total estimated clean up costs related to hurricane damage and reduced the
estimate by approximately $24,000. This income is included in operating expenses
and these costs are not covered by insurance proceeds.
During the nine months ended September 30, 2004, the Partnership's investment
property, The Dunes Apartments, sustained damages from Hurricanes Frances and
Jeanne. The damages incurred totaled approximately $62,000, which will not be
covered by insurance proceeds. There was a casualty loss of approximately
$38,000 recorded at The Dunes Apartments during 2004 related to the damages to
the property caused by the hurricanes of which approximately $34,000 was
recorded during the nine months ended September 30, 2004. During the nine months
ended September 30, 2005 the Partnership recognized an additional casualty loss
of approximately $20,000 as a result of the write off of additional
undepreciated damaged assets. During 2004, the Partnership estimated total clean
up costs from the hurricanes would be approximately $16,000. During the nine
months ended September 30, 2005, the property incurred approximately $35,000 in
additional clean up costs which were not covered by insurance proceeds. These
costs are included in operating expenses.
During the nine months ended September 30, 2004, the Partnership's investment
property, Palm Lake Apartments, sustained damages from Hurricane Frances. There
was a casualty loss of approximately $51,000 recorded at Palm Lake Apartments
during the nine months ended September 30, 2004. During the fourth quarter of
2004, the casualty loss was reversed and recorded as clean up costs. During the
nine months ended September 30, 2005, the Partnership revised downward the total
estimated clean up costs related to hurricane damage and reduced the estimate by
approximately $30,000. This income is included in operating expenses and these
costs are not covered by insurance proceeds.
In July 2004 there was a fire at Indian Creek Village Apartments that damaged
nine units. The property suffered damages of approximately $482,000. During the
nine months ended September 30, 2004 a casualty loss of approximately $200,000
was recorded as the result of the write off of net fixed assets of approximately
$442,000, net of the receipt of insurance proceeds of approximately $242,000.
This loss was reversed during the fourth quarter of 2004 due to a revision in
the estimated insurance proceeds to be received. During the nine months ended
September 30, 2005, there was a casualty gain of approximately $51,000 recorded
as a result of the receipt of additional insurance proceeds of approximately
$232,000 related to this fire, net of the write off of net fixed assets of
approximately $181,000.
During the nine months ended September 30, 2004, there was a casualty loss of
approximately $26,000 recorded at Regency Oaks Apartments related to a fire that
damaged four apartment units. The loss was the result of the write off of net
fixed assets of approximately $79,000, net of the receipt of insurance proceeds
of approximately $42,000 and a receivable for an additional $11,000 of insurance
proceeds, which was received subsequent to September 30, 2004.
Note I - 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 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 Appeals reversed the trial court's order striking
the first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
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.
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, filed in the
United States District Court for the District of Columbia, 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. In June 2005 the Court
conditionally certified the collective action on both the on-call and overtime
issues, which allows the 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,
and AIMCO Properties, L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses, on September 26, 2005, the plaintiffs filed
a class action with the same allegations in the Superior Court of California
(Contra Costa County). 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.
Note J - Redevelopment of Property
One of the Partnership's investment properties, The Knolls Apartments, is
currently under redevelopment. Based on current redevelopment plans, the General
Partner anticipates the redevelopment, which began in 2004, to be completed
during 2005 at a total estimated cost of approximately $8,341,000 of which
approximately $5,871,000 was completed as of September 30, 2005. Included in
these construction costs are capitalized interest costs of approximately
$304,000, capitalized property tax expenses of approximately $11,000 and other
construction period operating costs of approximately $19,000 for the nine months
ended September 30, 2005.
In addition, The Sterling Apartment Homes is also under redevelopment. Based on
current redevelopment plans, the General Partner anticipates the redevelopment,
which began in 2004, to be completed during 2007 at a total estimated cost of
approximately $24,201,000 of which approximately $1,023,000 was completed as on
September 30, 2005.
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 eight properties. The
Sterling is a multiple-use facility which consists of an apartment complex and
commercial space. The following table sets forth the average occupancy of the
properties for the nine months ended September 30, 2005 and 2004:
Average Occupancy
Property 2005 2004
The Loft Apartments 87% 86%
Raleigh, North Carolina
The Sterling Apartment Homes 93% 93%
The Sterling Commerce Center (2) 82% 79%
Philadelphia, Pennsylvania
The Knolls Apartments (3) 52% 84%
Colorado Springs, Colorado
Indian Creek Village Apartments (1) 91% 88%
Overland Park, Kansas
Plantation Gardens Apartments (1) 97% 91%
Plantation, Florida
Palm Lake Apartments (1) 96% 93%
Tampa, Florida
The Dunes Apartments (1) 97% 94%
Indian Harbor, Florida
Regency Oaks Apartments (1) 97% 93%
Fern Park, Florida
(1) The General Partner attributes the increase in occupancy at Indian Creek
Village Apartments, Plantation Gardens Apartments, Palm Lake Apartments,
The Dunes Apartments and Regency Oaks Apartments to an increase in
marketing outreach and promotions.
(2) The General Partner attributes the increase in occupancy at The Sterling
Commerce Center to improved market conditions.
(3) The General Partner attributes the decrease in occupancy at The Knolls
Apartments to a redevelopment project currently in process. The
redevelopment project, which began during the fourth quarter of 2004 is
scheduled to be completed during the fourth quarter of 2005. The low
occupancy for the nine months ended September 30, 2005 was partially due
to 57 units not rented due to ongoing redevelopment work.
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 income for the three and nine months ended September 30,
2005 was approximately $557,000 and $1,387,000 compared to net (loss) income of
approximately $(431,000) and $7,000 for the corresponding periods in 2004. The
increase in net income for the three and nine months ended September 30, 2005 as
compared to the three and nine months ended September 30, 2004 is primarily due
to an increase in total revenues, a decrease in total expenses and decrease in
the loss from discontinued operations during the three and nine months ended
September 30, 2004 partially offset by the decrease in gain on the sale of
Silverado Apartments and Tates Creek Village Apartments and gain on foreclosure
of real estate during the nine months ended September 30, 2004.
On March 31, 2004, the Partnership sold Silverado Apartments, located in El
Paso, Texas, to a third party for $6,650,000. After payment of closing costs,
the net sales proceeds received by the Partnership were approximately
$6,169,000. The Partnership used a portion of the proceeds to repay the mortgage
encumbering the property of approximately $3,248,000. The sale resulted in a
gain on sale of investment property of approximately $1,510,000 during the nine
months ended September 30, 2004. In addition, the Partnership recorded a loss on
early extinguishment of debt of approximately $685,000 as a result of prepayment
penalties paid, partially offset by the write off of the unamortized mortgage
premium which is included in loss from discontinued operations. Pursuant to the
Partnership Agreement and in conjunction with the sale, a disposition fee of
approximately $333,000 was earned by and paid to the General Partner during the
nine months ended September 30, 2004. Included in loss from discontinued
operations for the nine months ended September 30, 2004 are results of the
property's operations of a loss of approximately $672,000, including revenues of
approximately $339,000.
On June 28, 2004, the Partnership sold Tates Creek Village Apartments, located
in Lexington, Kentucky, to a third party for $6,980,000. After payment and
accrual of closing costs, the net sales proceeds received by the Partnership
were approximately $6,420,000. The Partnership used a portion of the proceeds to
repay the mortgage encumbering the property of approximately $3,851,000. The
sale resulted in a gain on sale of investment property of approximately $206,000
during the nine months ended September 30, 2004. In addition, the Partnership
recorded a loss on early extinguishment of debt of approximately $476,000 as a
result of prepayment penalties paid, partially offset by the write off of the
unamortized mortgage premium which is included in loss from discontinued
operations. Pursuant to the Partnership Agreement and in conjunction with the
sale, a disposition fee of approximately $349,000 was earned by and paid to the
General Partner during the nine months ended September 30, 2004. Included in
loss from discontinued operations for the three months ended September 30, 2004
are results of the property's operations of approximately $13,000. There were no
revenues included in loss from discontinued operations during the three months
ended September 30, 2004. Included in loss from discontinued operations for the
nine months ended September 30, 2004 are results of the property's operations of
approximately $441,000, including revenues of approximately $704,000.
During the nine months ended September 30, 2005, the Partnership recognized a
reduction of the gain on the sale of Tates Creek Village Apartments of
approximately $58,000 due to the revision of the collectibility of receivables
expected at the time of the sale.
During the nine months ended September 30, 2004, the Partnership received
approximately $156,000 from CCEP as the final payment on the Master Loan which
is recognized as gain on foreclosure of real estate.
The Partnership's net income from continuing operations for the three and nine
months ended September 30, 2005 was approximately $547,000 and $1,435,000
compared to net loss of approximately $418,000 and $769,000 for the
corresponding periods in 2004. The increase in income from continuing operations
for the three and nine months ended September 30, 2005 as compared to the three
and nine months ended September 30, 2004 is due to an increase in total revenues
and a decrease in total expenses.
The increase in total revenues during the three and nine months ended September
30, 2005 is primarily due to an increase in rental income and casualty gain (as
discussed below). The increase in total revenues during the nine months ended
September 30, 2005 was partially offset by a decrease in other income. The
increase in rental income during the nine months ended September 30, 2005 is
primarily due to an increase in average rental rates at seven of the
Partnership's properties and occupancy at seven of the Partnership's properties
and a decrease in bad debt expense at all of the Partnership's apartment
properties, partially offset by a decrease in rental rates at The Sterling
Commerce Center and Indian Creek Village Apartments and a decrease in occupancy
at The Knolls Apartments. The increase in rental income during the three months
ended September 30, 2005 is primarily due to an increase in average rental rates
at all of the Partnership's apartment properties and occupancy at four of the
Partnership's investment properties, partially offset by a decrease in rental
rates at The Sterling Commerce Center and a decrease in occupancy at three of
the Partnership's investment properties. The decrease in other income during the
nine months ended September 30, 2005 is primarily due to a decrease in lease
cancellation fees at The Knolls, Regency Oaks and Plantation Gardens Apartments.
Total expenses decreased during the three and nine months ended September 30,
2005 primarily due to decreases in operating, general and administrative,
depreciation and interest expenses and casualty loss, as discussed below,
partially offset by an increase in property tax expense. Operating expense
decreased primarily due to decreases in property and maintenance expenses. The
decrease in property expenses during the nine months ended September 30, 2005 is
primarily due to reduced utility expenses at The Sterling Commerce Center and
the Sterling Apartment Homes. The decrease in property expense during the nine
months ended September 30, 2005 was partially offset by increased salary and
related benefit expenses at Plantation Gardens Apartments. The decrease in
property expenses during the three months ended September 30, 2005 is primarily
due to reduced utility expenses at The Sterling Commerce Center, salary and
related benefit expenses at The Knolls Apartments and contract courtesy patrol
expenses at The Sterling Commerce Center. Maintenance expense decreased
primarily due to a decrease in contract services at most of the Partnership's
properties, construction period expenses at The Knolls Apartments that were
capitalized as part of the redevelopment project and a decrease in clean up
costs incurred during the nine months ended September 30, 2005 from hurricanes
in 2004 at Regency Oaks Apartments partially offset by an increase in clean up
costs incurred during the nine months ended September 30, 2005 from the 2004
hurricanes at The Dunes Apartments, estimated clean up costs incurred due to
hurricane Katrina at Plantation Gardens and casualty cleanup costs incurred at
Indian Creek Village Apartments related to a fire that occurred in 2004.
Depreciation expense decreased primarily due to capital improvements and
replacements becoming fully depreciated at The Sterling Apartment Homes during
2004. Interest expense decreased primarily due to the capitalization of
construction period interest at the Knolls Apartments due to the redevelopment
project as discussed below. This decrease was partially offset by an increase in
interest incurred on advances from affiliates. There were no advances during the
nine months ended September 30, 2004. Property tax expense increased due to
increases in the assessed values of The Sterling Apartment Homes and Commerce
Center and due to a refund received during 2004 at Palm Lake Apartments of prior
year taxes. No similar refund was received during the nine months ended
September 30, 2005. The increase in property tax expense is also due to
additional taxes being recorded during the three months ended September 30, 2005
at Plantation Gardens Apartments as a result of the settlement of an appeal of
the appraised value of the property. The appeal was settled during the three
months ended September 30, 2005 and the settled appraised value was higher than
the amount anticipated.
During the nine months ended September 30, 2004, the Partnership's investment
property, Regency Oaks Apartments, sustained damages from Hurricanes Charlie,
Frances and Jeanne. The damages incurred totaled approximately $329,000, which
will not be covered by insurance proceeds. There was a casualty loss of
approximately $204,000 recorded at Regency Oaks Apartments related to the
damages to the property caused by the hurricanes during 2004 of which $142,000
was recorded during the nine months ended September 30, 2004. During the nine
months ended September 30, 2005 the Partnership recognized an additional
casualty loss of approximately $105,000 as a result of the write-off of
additional undepreciated damaged assets. In 2004, the Partnership estimated
total clean up costs from the hurricanes would be approximately $73,000. During
the nine months ended September 30, 2005, the Partnership revised downward the
total estimated clean up costs related to hurricane damage and reduced the
estimate by approximately $24,000. This income is included in operating expenses
and these costs are not covered by insurance proceeds.
During the nine months ended September 30, 2004, the Partnership's investment
property, The Dunes Apartments, sustained damages from Hurricanes Frances and
Jeanne. The damages incurred totaled approximately $62,000, which will not be
covered by insurance proceeds. There was a casualty loss of approximately
$38,000 recorded at The Dunes Apartments during 2004 related to the damages to
the property caused by the hurricanes of which approximately $34,000 was
recorded during the nine months ended September 30, 2004. During the nine months
ended September 30, 2005 the Partnership recognized an additional casualty loss
of approximately $20,000 as a result of the write off of additional
undepreciated damaged assets. During 2004, the Partnership estimated total clean
up costs from the hurricanes would be approximately $16,000. During the nine
months ended September 30, 2005, the property incurred approximately $35,000 in
additional clean up costs which were not covered by insurance proceeds. These
costs are included in operating expenses.
During the nine months ended September 30, 2004, the Partnership's investment
property, Palm Lake Apartments, sustained damages from Hurricane Frances. There
was a casualty loss of approximately $51,000 recorded at Palm Lake Apartments
during the nine months ended September 30, 2004. During the fourth quarter of
2004, the casualty loss was reversed and recorded as clean up costs. During the
nine months ended September 30, 2005, the Partnership revised downward the total
estimated clean up costs related to hurricane damage and reduced the estimate by
approximately $30,000. This income is included in operating expenses and these
costs are not covered by insurance proceeds.
In July 2004 there was a fire at Indian Creek Village Apartments that damaged
nine units. The property suffered damages of approximately $482,000. During the
nine months ended September 30, 2004 a casualty loss of approximately $200,000
was recorded as the result of the write off of net fixed assets of approximately
$442,000, net of the receipt of insurance proceeds of approximately $242,000.
This loss was reversed during the fourth quarter of 2004 due to a revision in
the estimated insurance proceeds to be received. During the nine months ended
September 30, 2005, there was a casualty gain of approximately $51,000 recorded
as a result of the receipt of additional insurance proceeds of approximately
$232,000 related to this fire, net of the write off of net fixed assets of
approximately $181,000.
During the nine months ended September 30, 2004, there was a casualty loss of
approximately $26,000 recorded at Regency Oaks Apartments related to a fire that
damaged four apartment units. The loss was the result of the write off of net
fixed assets of approximately $79,000, net of the receipt of insurance proceeds
of approximately $42,000 and a receivable for an additional $11,000 of insurance
proceeds, which was received subsequent to September 30, 2004.
General and administrative expenses decreased primarily due to a decrease in the
costs of services included in the management reimbursements to the General
Partner as allowed under the Partnership Agreement, costs associated with the
annual audit required by the Partnership Agreement and reduced legal fees
related to the foreclosures of the properties held by CCEP during 2003 partially
offset by an increase in business privilege taxes paid to the city of
Philadelphia. Also included in general and administrative expenses are costs
associated with the quarterly and annual communications with investors and
regulatory agencies.
Liquidity and Capital Resources
At September 30, 2005, the Partnership had cash and cash equivalents of
approximately $1,456,000 compared to approximately $752,000 at September 30,
2004. Cash and cash equivalents increased approximately $501,000 since December
31, 2004 due to approximately $5,350,000 and $3,559,000 of cash provided by
operating and financing activities, respectively partially offset by
approximately $8,408,000 of cash used in investing activities. Cash provided by
financing activities consisted of proceeds from the refinancing of The Loft
Apartments and advances from affiliates partially offset by repayment of
mortgage notes payable, principal payments made on the mortgages encumbering the
Partnership's properties, repayments of advances from affiliates, lease
commissions paid and the payment of loan costs. Cash used in investing
activities consisted of property improvements and replacements partially offset
by net receipts from restricted escrow accounts maintained by the mortgage
lenders and insurance proceeds received. 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. The Partnership regularly evaluates the capital improvements needs
of all its properties for the upcoming year. Certain routine capital
expenditures are anticipated during 2005. Such capital expenditures will depend
on the physical condition of the properties as well as replacement reserves and
anticipated cash flow generated by the properties. In addition, the Partnership
has material commitments to complete rehabilitation projects at The Sterling
Apartment Homes and The Knolls Apartments. The budget for these two projects for
2005 is approximately $10,566,000. It is anticipated that a substantial portion
of the costs associated with the rehabilitation projects will be funded from
advances from affiliates of the General Partner. Other capital expenditures will
be incurred only if cash is available from operations and 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 Loft Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $412,000 of capital improvements at The Loft Apartments consisting
primarily of floor covering replacements, insulation upgrades, asphalt
replacement, plumbing upgrades, roof replacement and interior lighting. These
improvements were funded from operating cash flow and advances from the General
Partner. 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.
The Sterling Apartment Homes and Commerce Center
During the nine months ended September 30, 2005, the Partnership completed
approximately $1,023,000 of capital improvements at The Sterling Apartment Homes
and Commerce Center arising from the redevelopment of the property. Additional
capital improvements of approximately $195,000 were completed during the nine
months ended September 30, 2005 consisting primarily of floor covering
replacements, air conditioning upgrades, tenant improvements, and structural
improvements. These improvements were funded from operating cash flow, advances
from the General Partner and replacement reserves. The redevelopment project,
which began in 2004 is scheduled to be completed during 2007. The project budget
is approximately $24,201,000. Approximately $2,272,000 of redevelopment costs
were incurred in 2004 and approximately $4,329,000 are budgeted for 2005. The
Partnership plans to fund these redevelopment expenditures from operating cash
flow, partnership reserves and advances from the General Partner. Approximately
$300,000 was advanced during the nine months ended September 30, 2005 to pay for
redevelopment project costs at this property. The Partnership regularly
evaluates the capital improvement needs of the property. Certain routine capital
expenditures are anticipated during 2005. Additional 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.
The Knolls Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $3,767,000 of capital improvements at The Knolls Apartments
arising from the redevelopment of the property, which includes capitalized
construction period interest of approximately $304,000, real estate taxes of
approximately $11,000 and other construction period expenses of approximately
$19,000. Additional capital improvements of approximately $75,000 were completed
during the nine months ended September 30, 2005 consisting primarily of interior
and exterior building improvements. These improvements were funded from
operating cash flow, advances from the General Partner and capital reserves. The
redevelopment project, which began in 2004 is scheduled to be completed during
2005. The project budget is approximately $8,341,000. Approximately $2,104,000
of redevelopment costs were incurred in 2004 and approximately $6,237,000 are
budgeted for 2005. The Partnership plans to fund these redevelopment
expenditures from operating cash flow, partnership reserves and advances from
the General Partner. Approximately $3,340,000 was advanced during the nine
months ended September 30, 2005 to pay for redevelopment project costs. The
Partnership regularly evaluates the capital improvement needs of the property.
Certain routine capital expenditures are anticipated during 2005. Additional
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.
Indian Creek Village Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $1,126,000 of capital improvements at Indian Creek Village
Apartments consisting primarily of floor covering and appliance replacements,
roof replacement, wood siding and other wood replacement, termite prevention,
exterior painting and reconstruction of damages to the property caused by a fire
in 2004. These improvements were funded from operating cash flow, advances from
the General Partner 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.
Plantation Gardens Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $450,000 of capital improvements at Plantation Gardens Apartments
consisting primarily of floor covering and appliance replacements, structural
improvements, roof replacement, wood replacement and exterior painting. 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.
Palm Lake Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $339,000 of capital improvements at Palm Lake Apartments
consisting primarily of floor covering replacements, roof replacement, exterior
painting and wood replacement. These improvements were funded from operating
cash flow and advances from the General Partner. 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.
The Dunes Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $126,000 of capital improvements at The Dunes Apartments
consisting primarily of floor covering replacements, swimming pool decking
replacement, air conditioning unit replacements, furniture and fixtures and
reconstruction of damages to the property caused by Hurricane Jeanne. 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.
Regency Oaks Apartments
During the nine months ended September 30, 2005, the Partnership completed
approximately $433,000 of capital improvements at Regency Oaks Apartments
consisting primarily of floor covering, air conditioning unit and appliance
replacements, roof replacement, major landscaping, structural improvements and
reconstruction of damages to the property caused by Hurricanes Charlie, Frances
and Jeanne. These improvements were funded from operating cash flow and advances
from the General Partner. 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 improvements at the Partnership's properties will be made only to the
extent of cash available from operations, Partnership reserves or advances from
affiliates. 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 properties of approximately
$64,945,000 requires monthly payments of principal and interest and balloon
payments of approximately $19,975,000, $31,040,000 and $4,076,000 during 2008,
2010, and 2012, respectively. The General Partner will attempt to refinance such
indebtedness and/or sell the properties prior to such maturity dates. If the
properties cannot be refinanced or sold for a sufficient amount, the Partnership
may risk losing such properties through foreclosure.
The Partnership distributed the following amounts during the nine months ended
September 30, 2005 and 2004 (in thousands, except per unit data):
Nine Months Per Limited Nine Months Per Limited
Ended September 30, Partnership Ended September 30, Partnership
2005 Unit 2004 Unit
Operations $ -- $ -- $ 39 $ 0.20
Sale (1) -- -- 4,093 20.56
Total $ -- $ -- $4,132 $20.76
(1) From the sale of Silverado Apartments in March 2004 and the sale of
Tates Creek Village in June 2004.
Future cash distributions will depend on the levels of cash generated from
operations, the timing of debt maturities, refinancings, and/or property sales.
The Partnership's cash available for distribution is reviewed on a monthly
basis. Given the balance of outstanding loans to the General Partner, it is not
expected that the Partnership will generate sufficient funds from operations,
after planned capital improvement expenditures, to permit any distributions to
its partners during 2005 or for the foreseeable future.
Other
In addition to its indirect ownership of the general partner interests in the
Partnership, AIMCO and its affiliates owned 146,260.10 limited partnership units
(the "Units") in the Partnership representing 73.48% of the outstanding Units at
September 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 would 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 73.48% 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 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. The investment properties foreclosed upon in the third
quarter of 2002 and fourth quarter of 2003 were recorded at fair market value at
the time of the foreclosure. 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 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.
The Partnership leases certain commercial space to tenants under various lease
terms. The leases are accounted for as operating leases in accordance with SFAS
No. 13, "Accounting for Leases". Some of the leases contain stated rental
increases during their term. For leases with fixed rental increases, rents are
recognized on a straight-line basis over the terms of the leases. For all other
leases, minimum rents are recognized over the terms of the leases.
ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
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 its
borrowing activities used to maintain liquidity and fund business operations. To
mitigate the impact of fluctuations in U.S. interest rates, the Partnership
maintains its debt as fixed rate in nature by borrowing on a long-term basis.
Based on interest rates at September 30, 2005, a 100 point increase or decrease
in market interest rates would not have a material impact on the Partnership.
The following table summarizes the Partnership's debt obligations at September
30, 2005. The interest rates represent the weighted-average rates. The fair
value of the debt obligations approximated the recorded value as of September
30, 2005.
Principal Amount by Expected Maturity
Fixed Rate Debt
Long-term Average Interest
Debt Rate 7.25%
(in thousands)
2005 $ 385
2006 1,814
2007 1,956
2008 21,971
2009 1,829
Thereafter 35,535
Total $ 63,490
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 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 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 Appeals reversed the trial court's order striking
the first amended complaint.
On August 18, 2005, Objector and his counsel filed a motion to disqualify the
trial court based on a peremptory challenge and filed a motion to disqualify for
cause on October 17, 2005. On or about October 13, 2005 Objector filed a motion
to intervene and on or about October 19, 2005 filed both a motion to take
discovery relating to the adequacy of plaintiffs as derivative representatives
and a motion to dissolve the anti-suit injunction in connection with settlement.
On October 27, 2005, the Court denied Objector's peremptory challenge and struck
Objector's motion to disqualify for cause. No hearing has been set on Objector's
remaining motions. On November 3, 2005, Objector and his counsel filed a writ of
mandate to the Court of Appeals challenging the court's October 27, 2005 order.
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.
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, filed in the
United States District Court for the District of Columbia, 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. In June 2005 the Court
conditionally certified the collective action on both the on-call and overtime
issues, which allows the 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,
and AIMCO Properties, L.P. and NHP Management Company will have the opportunity
to move to decertify the collective action. Because the court denied plaintiffs'
motion to certify state subclasses, on September 26, 2005, the plaintiffs filed
a class action with the same allegations in the Superior Court of California
(Contra Costa County). 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 Attached.
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 INSTITUTIONAL PROPERTIES
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 14, 2005
EXHIBIT INDEX
S-K Reference
Number Description
3 Certificates of Limited Partnership, as amended to date.
(Incorporated by reference to the Annual Report on Form
10-K for the year ended December 31, 1991 ("1991 Annual
Report")).
10.20 Mortgage and Security Agreement between Kennedy Boulevard
Associates I, L.P., and Lehman Brothers Holdings, Inc.,
dated August 25, 1998, securing The Sterling Apartment Home
and Commerce Center filed in Form 10-Q for the quarter
ended September 30, 1998.
10.21 Repair Escrow Agreement between Kennedy Boulevard
Associates I, L.P., and Lehman Brothers Holdings, Inc.,
dated August 25, 1998, securing The Sterling Apartment Home
and Commerce Center filed in Form 10-Q for the quarter
ended September 30, 1998.
10.22 Replacement Reserve and Security Agreement between Kennedy
Boulevard Associates I, L.P., and Lehman Brothers Holdings,
Inc., dated August 25, 1998, securing The Sterling
Apartment Home and Commerce Center filed in Form 10-Q for
the quarter ended September 30, 1998.
10.23 Third Amendment to the Limited Partnership Agreement filed as
Exhibit 10.23 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2001 and incorporated herein
by reference.
10.24 Fourth Amendment to the Limited Partnership Agreement filed as
Exhibit 10.24 to the Registrant's Annual Report on Form 10-K
for the year ended December 31, 2001 and incorporated herein
by reference.
10.28 Form of Amended Order Setting Foreclosure Sale Date pursuant
to amending the foreclosure date filed on September 25, 2003
(Schedules and supplemental materials to this exhibit filed
herewith have been omitted but will be provided to the
Securities and Exchange Commission upon request).*
10.29 Form of Certificate of Sale as to Property "1" pursuant to
sale of Palm Lake Apartments to CCIP Palm Lake, L.L.C.
filed October 28, 2003.*
10.30 Form of Certificate of Sale as to Property "2" pursuant to
sale of Regency Oaks Apartments to CCIP Regency Oaks,
L.L.C. filed October 28, 2003.*
10.31 Form of Certificate of Sale as to Property "3" pursuant to
sale of The Dunes Apartments (formerly known as Society Park
East Apartments) to CCIP Society Park East, L.L.C.
filed October 28, 2003.*
10.32 Form of Certificate of Sale as to Property "4" pursuant to
sale of Plantation Gardens Apartments to CCIP Plantation
Gardens, L.L.C. filed October 28, 2003.*
10.33 Purchase and Sale contract between Consolidated Capital Equity
Partner, LP, a California limited partnership and Cash
Investments of El Paso, LLC, a Texas limited liability company
dated December 8, 2003 filed as exhibit 10.33 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.
10.34 Assignment of purchase and sale contract between Consolidated
Capital Equity Partners, LP, a California limited partnership
and CCIP Silverado, LP, a Delaware limited partnership dated
December 8, 2003 filed as exhibit 10.34 to the Quarterly
Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.
10.35 Reinstatement and first amendment to purchase and sale
contract by and between CCIP Silverado, LP, a Delaware limited
partnership, assignee of Consolidated Capital Equity Partners,
LP, a California limited liability partnership, and Cash
Investments of El Paso, LLC, a Texas limited liability company
and EPT San Mateo Apartments, LP, a Texas limited liability
partnership, assignee of original purchaser dated February 6,
2004 filed as exhibit 10.35 to the Quarterly Report on Form
10-Q for the quarter ended March 31, 2004 and incorporated
herein by reference.
10.36 Purchase and Sale contract between CCIP Tates Creek Village,
LLC, a Delaware limited liability company and Tates Creek
Investments, LLC, a Michigan limited liability company dated
April 13, 2004 for the sale of Tates Creek Village Apartments
filed as exhibit 10.36 to the Quarterly Report on Form 10-Q
for the quarter ended September 30, 2004 and incorporated
herein by reference.
10.37 Amendment of purchase and sale contract between CCIP Tates
Creek Village, LLC and Tates Creek Investments, LLC, dated May
27, 2004 filed as exhibit 10.37 to the Quarterly Report on
Form 10-Q for the quarter ended September 30, 2004 and
incorporated herein by reference.
10.38 Deed of Trust, Assignment of Leases and Rents and Security
Agreement dated August 31, 2005 between CCIP Loft, LLC, a
Delaware limited liability company and New York Life Insurance
Company, filed as exhibit 10.38, to the Current Report on Form
8-K filed on September 7, 2005 and incorporated herein by
reference.**
10.39 Promissory Note dated August 31, 2005 between CCIP Loft, LLC,
a Delaware limited liability company and New York Life
Insurance Company, filed as exhibit 10.39 to the Current
Report on Form 8-K filed on September 7, 2005 and incorporated
herein by reference.**
10.40 Guaranty dated August 31, 2005 between AIMCO Properties, L.P.,
for the benefit of New York Life Insurance Company, filed as
exhibit 10.40 to the Current Report on Form 8-K filed on
September 7, 2005 and incorporated herein by reference.**
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 the equivalent of the 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.
*Filed as exhibits 10.28 through 10.32 in the Registrant's
Quarterly Form 10-Q for the quarter ended September 30, 2003
incorporated herein by reference.
**Schedules and supplemental materials to the exhibits have
been omitted but will be provided to the Securities and
Exchange Commission upon request.
Exhibit 31.1
CERTIFICATION
I, Martha L. Long, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Consolidated Capital
Institutional Properties;
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: November 14, 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
Institutional Properties;
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: November 14, 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
Institutional Properties (the "Partnership"), for the quarterly period ended
September 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: November 14, 2005
/s/Stephen B. Waters
Name: Stephen B. Waters
Date: November 14, 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.